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Appeal No. 256 of 1954.
Appeal from the judgment and decree dated July 3, 1953, of the Calcutta High Court in Appeal from Original Order No. 7 of 1953, arising out of the judgment and decree dated August 5, 1952, of the said High Court in Matter No. 84 of 1952.
823 N. C. Chatterjee, section K. Kapur and I. N. Shroff, for the appellant.
C. K. Daphtary Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for respondents Nos. 1 to 3.
B. Sen, section N. Mukherjee, and B. N. Ghosh, for respondent No. 4.
Veda Vyasa and B. P. Maheshwari, for respondent No. 5. 1958.
May 9.
The Judgment of the Court was delivered by section K. DAS J.
This appeal has come to us on a certificate granted by the High Court of Judicature at Calcutta that the case is a fit one for appeal to this Court.
The appellant is Shewpujanrai lndrasanrai Ltd., a private limited company incorporated under the Indian Companies Act, 1913 and carrying on business at 69, Manohar Das Street, Calcutta.
Respondents I and 3 are the Customs authorities concerned; respondent 2 is the Union of India, and respondents 4 and 5 are two banks, called respectively Nationale Handels Bank N. V., a foreign company carrying On business at 1, Royal Exchange Place, Calcutta, and Bharat Bank Ltd., a company incorporated under the Indian Companies Act, 1913, and having its registered office at 143, Cotton Street, Calcutta.
The material facts are these.
The appellant Company carries on business as a bullion merchant and in that capacity used to buy gold and silver in the Calcutta and Bombay markets and sell the same either direct or through bankers at the aforesaid two places.
It is stated that between November 14,1950, and November 20, 1950, the appellant Company, ill the usual course of its business, purchased about 9,478 tolas of gold, and in respect of the said purchases, borrowed money from respondents 4 and 5.
The gold so purchased was deposited with the respondent banks as security for the loans taken, 7,044 tolas being deposited with respondent 4 and about 2,437 tolas 105 824 with respondent 5.
With the consent of the appellant Company, the two Banks respondents 4 and 5, sent the gold to the Calcutta Min for the purpose of assaying.
On November 20, 1950, the Collector of Customs, Calcutta, asked the Mint authorities not to part with the gold, and on November 21, 1950, the gold was seized at the instance of the Customs authorities, Calcutta, in pursuance of a search warrant issued by the Chief Presidency Magistrate, Calcutta.
On the same day, certain books of account of the appellant company were.
also seized from its place of business at 69, Manohar Das Street.
Oil November 22, 1950, the appellant Company received a letter signed by one Jasjit Singh of the Customs Department, requesting the presence of the appellant at the Customs House on November 27, 1950, for opening and checking the bags of bullion which had been seized from the Mint.
Thereafter followed some correspondence, details whereof are not necessary for our purpose, between the Customs authorities and Messrs. Sawday & Co., acting on behalf of the appellant Company.
On December 19, 1950, the appellant Company made an application in the High Court of Calcutta under article 226 of the Constitution in which it asked for the issue of appropriate writs or orders quashing the orders of seizure and detention of its gold and books of account, and for a further direction that the Customs authorities be prohibited from giving effect to the said orders of detention and seizure or from taking any steps in connection with the gold or the books of account seized.
This writ application was heard and disposed of by an order made by Bose J. of the Calcutta High Court on April 23, 1951, the result of which was that the rule was made absolute to this extent only that the seizure of the books of account was declared to be illegal and a direction was made that the books be returned forthwith to the appellant Company.
No order was made about the gold seized and detained.
On June 20, 1951, the Customs authorities sent a notice to the appellant Company which was in these terms: 825 Subject : Seizure of 9,478 19 tolas of gold at the Government of India Mint, Strand Road, Calcutta.
I have been directed by the Collector of Customs to inform you that the above case has been placed before him for adjudication by the Superintendent, Preventive Service.
A copy of the note submitted by the latter together with copies of the assay reports therein referred to are enclosed herewith.
You are requested to show cause in writing within fourteen days from date hereof why penal action should not be taken against you and the 9,478.19 tolas of gold in question under the provisions of sections 167 clause 8 and 168 of the , for alleged violation of section 19 of the same Act read with section 8 of the Foreign Exchange Regulation Act, 1947.
You are also requested to send copies of all documentary evidence including all books of account, vouchers etc., along with your explanation.
On receipt of your explanation, the Collector has directed me to further inform you that in this case a date and time will be fixed for hearing at which you will be required to produce all oral evidence in support of your explanation and also to make your submissions.
" This notice was issued on the strength of an information contained in a note which the Superintendent, Preventive Service of the Customs authorities, submitted and which said that the gold in question had been smuggled into India in violation of the provisions of the (hereinafter referred to as the ) and the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the Foreign Exchange Act) and that the gold had been sent to the Mint for processing; that is, for melting and casting the same into bars, weighing and stamping the same with the Mint Marks, and also assaying small portions thereof.
On July 3, 1951, the appellant Company submitted its explanation in answer to the aforesaid notice.
The parties were then heard by the then Collector of Customs, Sri Raja Ram Rao; but before the hearing could conclude, Sri Raja Ram.
826 Rao was transferred.
His successor, Mr. J. W. Orr, heard the parties on some days; but on October 11, 1951, Mr. Orr was succeeded by Sri A. N. Puri.
This latter officer heard the parties afresh and concluded the hearing on February 8, 1952.
On May 14, 1952, Sri A. N. Puri passed the order impugned in this case, in which he came to the conclusion that the gold in question (9,478.19 tolas) was smuggled gold and that there was a contravention of the provisions of section 19 of the read with section 8 of the Foreign Exchange Act.
The final order which he made was in these terms : " I accordingly order that the entire quantity of the gold seized on the 21st November, 1950, amounting to 9,478.19 tolas be confiscated under section 167(8) of the .
In lieu of confiscation, however, I give the owner of the said gold an option under section 183 ibid to pay a fine of Rs. 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charge leviable thereon within four months from the date of the despatch of this order.
The release of the gold will be further subject to the production of a permit from Reserve Bank of India within the aforesaid period.
" On June 19, 1952, the appellant Company filed a second writ petition in the High Court of Calcutta in which it asked that (a) a writ of certiorari do issue against respondents I to 3 calling upon them to produce the record of the proceeding resulting in the impugned order of May 14,1952, and for quashing the same; (b) a writ of mandamus do issue requiring respondents 1 to 3 to forbear from giving effect to the orders of seizure, detention and confiscation of the appellant 's gold and further requiring the said respondents to return the gold to the appellant; and (e) a writ of prohibition do issue restraining the said respondents from taking any further steps in pursuance of the order of confiscation etc.
This second writ application was dealt with and disposed of by Bose J. by his order dated August 5, 1952.
Broadly speaking, the two main grounds on which he held the impugned order to be bad ",ere these.
The learned Judge held 827 that by purporting to proceed under 182 of the in the present case, the Customs authorities had acted in prejudice to the provisions of section 23 of the Foreign Exchange Act and this was in violation of section 8(3) of the Foreign Exchange Act as it stood at the relevant time.
He said: " If the petitioners had not been implicated in the charge it might have been open to the Customs authorities to proceed under section 182 if steps were intended to be taken only against the offending goods but the notice to show cause makes it clear that that is not the case.
Although I am not prepared to go to the length of holding that section 23 of the Foreign Exchange Regulation Act altogether excludes the operation of section 182 of the and although I have no doubt, that in appropriate cases where section 23 is not attracted, recourse can be had to section 182 of the , the present case is one in which adoption of the procedure under section 182 of the has prejudiced section 23 of the Foreign Exchange Regulation Act.
The entire proceedings before the Customs authorities must therefore be held to be without jurisdiction.
" Secondly, he held that the conditions which the Collector of Customs had imposed in the impugned order for release of the confiscated gold were not warranted by the statute, and as the impugned order was one composite order, different parts whereof could not be severed one from the other, the entire order must be held to have been made without jurisdiction.
On these findings, the rule was made absolute, the impugned order was quashed and respondents I to 3 were directed to forbear from giving effect to the order.
Then there was an appeal which was heard by a Division Bench consisting of Das and Mookerjee JJ.
That Bench held that the proceeding under the was in the nature of a proceeding in rem and an order of confiscation or penalty passed in such a proceeding was not a quasi judicial act, but an administrative or executive act, in respect of which no application for the issue of a writ of certiorari under 828 article 226 of the Constitution lay.
On a construction of section 8(3) of the Foreign Exchange Act, as it stood at the relevant time, it held that the restrictions mentioned therein had a double effect and the remedies available under section 167(8) of the and under section 23 of the Foreign Exchange Act were cumulative in nature.
It said: " The former remedy (meaning the remedy under the ) is intended to levy the customs duties and is mainly directed against the goods; the latter is penal, intended to punish the person concerned in the act of smuggling.
There is thus no question of the former proceeding prejudicing the latter proceeding. " Accordingly the Division Bench held that the first ground on which Bose J. had held the impugned order to be bad was not sustainable.
With regard to the conditions imposed in the impugned order for the release of the confiscated gold, it held that the invalidity, if any, of the imposition of such conditions did not affect the main order of confiscation.
It said Section 183 casts an imerative duty on the officer adjudging confiscation to give the owner of the goods an option to party such a fine as the officer thinks fit in lieu of confiscation.
The duty so cast is an exercise of jurisdiction by the officer concerned quite separate from the exercise of his jurisdiction under section 167(8) imposing confiscation and penalty.
If any illegality has attached in the matter of exercise of his jurisdiction under section 183, the illegal condition may be set aside.
" In the result, it accepted the appeal and set aside the judgment and order of Bose J.
The present appeal is from the aforesaid judgment and order of the Division Bench dated July 3, 1953.
There are two preliminary points which we may conveniently dispose of here, before we go on to the main contentions urged on behalf of the appellant Company.
In giving a certificate in this case the learned Chief Justice, with whom Das Gupta J. agreed, expressed the view that the question whether the proceeding in which the order appealed from was 829 made was of a civil or crinlinal nature, or was, in the language of article 132 of the Constitution, other proceeding ' was not free from difficulty; he added that, in any event, article 135 of the Constitution applied in the present case, because it was not disputed that certain questions of interpretation of the Constitution were involved and, therefore, the case was clearly one where an appeal would lie to the Federal Court immediately before the commencement of the Constitution.
The learned Solicitoreneral, who has appeared before us on behalf ' of respondents I to 3, has not accepted as correct the view that article 135 justified the grant of a certificate in this case.
He has not, however, pressed us to decide in this case the question of the competency of the certificate given by the High Court, and has raised no objection to a decision of the appeal on merits.
The question whether a proceeding on a writ application is of a civil or criminal nature within the meaning of those expressions in articles 133 and 134 of the Constitution has led to some divergence of opinion in the High Courts, and we understand that it is one of the questions for decision in some cases which we have recently admitted.
In the view which we have taken of the present case on merits and the further eircumstance that it is open to us to give special leave to the appellant under Art,. 136 of the Constitution, we do not think that it is necessary in the present case to decide the question mooted by the learned Chief Justice in his order dated December 1, 1953, and we prefer not to express any opinion thereon.
The other point relates to the view expressed by the High Court in the order under appeal that an order of confiscation or penalty under the is a mere administrative or executive act, in respect of whic` no application for a writ of certiorari lies.
It is necessary to state that the point is now concluded by two recent decisions of this Court.
In F. N. Roy vs Collector Of Customs, Calcutta (1), this Court held that the imposition of a fine under section 167(8) of the was really a quasi judicial act and in the (1) ; 830 later decision of Leo Roy Frey vs The Superintendent, District Jail, Amritsar and another (1), it has been held that in imposing confiscation and penalties under the , the Collector acts judicially.
Therefore, the view that an order of confiscation or penalty under the is a mere administrative or executive act is no longer tenable.
Now, we proceed to a consideration of the two main points urged on behalf of the appellant Company.
It has been argued before us that on a proper construction of section 8 (3) of the Foreign Exchange Act (as it stood at the relevant time) read with section 19 of the , it was not legally open to the customs authorities in the present case to take any action against the appellant Company under the , as such action prejudiced the provisions of section 23 of the Foreign Exchange Act.
To appreciate this point it is necessary to read some of the relevant sections of the Foreign Exchange Act and the .
Sub sections (1) and (2) of section 8 of the Foreign Exchange Act impose restrictions on import and export of currency and bullion.
Sub section (1) states, inter alia, that the Central Government may, by notification in the official gazette, order that, subject to such exemption, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank, bring or send into the States any gold or silver.
Such a notification was published on August 25, 1948, which said in substance that except with the permission of the Reserve Bank, no person shall bring into the States from any place outside India.
any gold, bullion, etc, sub section (3) was at the relevant time in these terms 8 (3) The restrictions imposed by subsections (1) and (2) shall be deemed to have been imposed under section 19 of the , without prejudice to the provisions of section 23 of this Act, and all the provisions of that Act shall have effect accordingly.
" The aforesaid sub section was later deleted by Act (i) ; 831 VIII of 1952, and a new section, namely, section 23A,was introduced which provided inter alia that the restrictions imposed by sub sections
(1) and (2) of section 8 shall be deemed to have been imposed under section 19 of the and all the provisions of that Act shall have effect accordingly except that section 183 thereof shall have effect as if for the word " shall " therein, the word " may " were substituted.
At the time relevant for the purpose of the present case, sub section
(3) of section 8 was in full force and effect and the question under our consideration has to be decided with reference to that sub section.
We then come to section 23 of the Foreign Exchange Act which at the relevant time was in these terms: " 23.
Penalty and Procedure. (1) Whoever contravenes any of the provisions of this Act or of any rule, direction or order made thereunder shall be punishable with imprisonment for a term which may extend to two years or with fine or with both, and any Court trying any such contravention may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that any currency, security, gold or silver, or goods or other property in respect of which the contravention has taken place shall be confiscated.
(2). . . . . . . . . . (3) No Court shall take cognisaince of any offence punishable under this section. except upon a complaint in writing made by a person authorised in this behalf by the Central Government or the Reserve Bank by a general or special order: Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.
(4) If the person committing an offence punishable under this section is a company or other body corporate, every director, manager, secretary, or other 106 832 officer thereof shall, unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent its commission, be deemed to be guilty of such offence.
" Turning now to the , we start with section 19 which is in Chapter IV.
It says " 19.
The Central Government may, from time to time, by notification in the Official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government.
" Section 167 occurs in Chapter XVI of the and in so far as it is relevant for our purpose, it states " 167.
The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Section of Offences.
this Act to Penalties.
which offence has reference.
If any goods the Such goods shall be importation or liable to confiscation exportation of and any person concerned which is for the in any such offence shall time being prohibited be liable to a penalty or restricted by or 18 $ 19 not exceeding three times under Chapter IV of this the value of the goods, Act, be imported into or not exceeding one or exported from India thousand rupees contrary to such prohibition or restriction; Section 182 of the deals with adjudication of confiscation and penalties referred to in section 167 aforesaid.
It states 833 " 182.
In every case, except the cases mentioned in section 167, Nos 26, 72 and 74 to 76, both inclusive, in which, under this Act, anything is liable to confiscation or to increased rates of duty; or any person is liable to a penalty, such confiscation, increased rate of duty or penalty may be adjudged (a) without limit, by a Deputy Commissioner Deputy Collector of Customs, or a Customs collector; (b) up to confiscation of goods not exceeding two hundred and fifty rupees in value, and imposition of penalty or increased duty, not exceeding one hundred rupees, by an Assistant Commissioner or Assistant Collector of Customs; (c) up to confiscation of goods not exceeding fifty rupees in value, and imposition of penalty or increased duty not exceeding ten rupees, by such other subordinate officers of Customs as the Chief Customs authority may, from time to time, empower in that behalf in virtue of their office: Provided that the Chief Customs authority may, in the case of any officer performing the duties of a Customs collector, limit his powers to those indicated in clause (b) or in clause (c) of this section, and may confer on any officer, by name or in virtue of his office, the powers indicated in clauses (a), (b) or (c) of this section.
" Section 183 has an important bearing on one of the questions urged before us and is in these terms: " 183.
Whenever confiscation is authorised by this Act, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit.
" Section 184 of the states that whenever anything is confiscated under section 182, such thing shall thereupon vest in Government, and the officer adjudging confiscation shall take and hold possession of the thing confiscated and every officer of police, on the requisition of such officer, shall assist in taking and holding such possession.
Section 186 of the states, inter alia, that the award of any confiscation, penalty or increased rate of duty under the Act by an officer of Customs shall not prevent the 834 infliction of any punishment to which the person affected thereby is liable under any other law.
Now, the argument urged on behalf of the appellant arising as it does out of section 8(3) of the Foreign Exchange Act and section 19 of the is this.
Under sub section
(3) of section 8 a restriction imposed by a notification made under sub section
(1) of the section shall be deemed to have been imposed under section 19 of the and all the provisions of the shall have effect accordingly; but the argument is that this deeming provision is subject to an important qualification contained in the words without prejudice to the provisions of section 23 of this Act ', meaning thereby the Foreign Exchange Act.
The contention is that though the restriction imposed under sub section
(1) of section 8 is to be deemed to have been imposed under section 19 of the , such deeming is to be without prejudice to, that is, subject to the provisions of section 23 of the Foreign Exchange Act; therefore, where a contravention of any of the provisions of the Foreign Exchange Act has taken place such as is punishable under section 23 thereof, the only remedy available in such a case is the one under section 23 and it is not open to the Customs authorities to take action against the offender under sections 167 (8), 182 and 183 of the .
It is contended that this is the true scope and effect of sub section
(3) of section 8 of the Foreign Exchange Act, if due regard is paid to the clause 'without prejudice to the provisions of section 23 of this Act occurring therein.
It is further pointed out that there is power under section 23 itself to confiscate the goods in respect of which the contravention has taken place.
On behalf of respondents I to 3, however, it is contended that the clause " without prejudice to the provisions of section 23 " does not mean "subject to the provisions of section 23 " and its true effect is merely this: when there is contravention of the restrictions imposed by sub section
(1) and (2) of section 8, which restrictions are deemed to have been imposed under section 19 of the , the contravention may have a double effect; it involves a violation of the provisions of the and may at the same time involve 835 a violation of the provisions of the ForeignExchange Act and, if the offender is known, two remedies may be available to the authoritiesconcerned; one remedy is to proceed under the relevant provisions of the and the other under the relevant provisions of the Foreign Exchange Act.
These two are concurrent remedies, which are not mutually exclusive, though in the matter of punishment the question may arise whether a person can be punished twice for the same act or offence.
On a careful consideration of these rival contentions we have come to the conclusion that it is not necessary on the facts of the present case to decide the larger question as to whether two remedies are available to the authorities concerned in respect of a contravention which comes both under the and the Foreign Exchange Act and if so, to what extent the two remedies are concurrent, cumulative or otherwise.
Let us confine ourselves to the application of sub section
(3) of section 8 of the Foreign Exchange Act to the facts of this case.
That sub section states firstly, that the restrictions imposed by sub sections
(1) and (2) shall be deemed to have been imposed under section 19 of the ; secondly, it states that the aforesaid deeming provision shall be without prejudice to the provisions of section 23 of the Foreign Exchange Act; and thirdly, it states that all the provisions of the shall have effect accordingly.
The construction put forward on behalf of the appellant Company is that where section 23 of the Foreign Exchange Act is applicable, any other remedy under the is barred; because that is the effect of the second part of the sub section which says that the deeming provision shall be without prejudice to the provisions of section 23 and the concluding part of the sub section which says that all the provisions of the shall have effect accordingly is controlled by the second part, as is indicated by the use of the word ' accordingly therein.
The learned Solicitor General has put forward a different construction.
According to him, the second part of the sub section when it says without prejudice to the provisions of section 23 ' merely 836 means that the remedy under section 23 is also available in an appropriate case, but it does not bar the remedy available under the ; otherwise, the third and concluding part of the sub section is renderedotiose.
He has further suported his contention by a reference to section 23A, inserted in 1952, which repeats the phraseology of deleted sub section
(3) of section 8 but makes it sufficiently clear what the meaning of the clause I without prejudice to the provisions of section 23 is.
We do not so decide, but let us assume that the construction put forward on behalf of the appellant is the one that should be accepted in this case.
The question then is does section 23 of the Foreign Exchange Act apply to the facts of this case and could the appellant Company be proceeded against under that section ? A distinction must at once be drawn between an action in rem and a proceeding in personal.
Section 23 of the Foreign Exchange Act is a proceeding against the offender, and is applicable to the person who contravenes any of the provisions of that Act, even though on a conviction for such contravention, the Court may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that the goods in respect of which the contravention has taken place be confiscated.
In substance it is a proceeding against a person for the purpose of penalising him for a contravention of the provisions of the Foreign Exchange Act, and such a proceeding is available when the offender is known.
Take, however, a case where the offender (the smuggler, for example) is not known, but the goods in respect of which the contravention has taken place are known and have been seized.
Section 167(8) of the contemplates a case of this nature, when it describes the offence in col. 1 in the following words ,, If any goods, the importation or exportation of which is. . prohibited or restricted be imported into or exported from India contrary to such prohibition or restriction.
" The penalty provided is that the goods shall be liable to confiscation.
There is a further provision in the penalty column that any person concerned in any such 837 offence shall be liable to a penalty not exceeding three times the value of the goods etc.
The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in and the penalty is enforced against the goods whether the offender is known or not known; the order of confiscation under section 182, , operates directly upon the status of the property, and under section 184 transfers an absolute title to Government.
Therefore, in a case where the Customs authorities can proceed only against the goods, there can be no question of applying section 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant Company as respects section 8(3), the remedy under the against the smuggled goods cannot be barred; when on the facts of the case section 23 can have no application, no question of prejudicing its provisions by the adoption of the procedure under the can at all arise.
Bose J. was fully aware of this distinction between section 23 of the Foreign Exchange Act and section 167(8) of the .
Indeed, he expressly said that he had no doubt that in appropriate cases where section 23 is not attracted, recourse can be had to section 182 of the ; but lie thought that the notice which was issued to the appellant Company in this case on June 20, 1951, showed that the intention was to proceed against the offender also, and this, according to him, made a difference and brought in section 23.
We are unable to agree.
We have quoted.
the notice in an earlier part of this judgment.
The notice asked the appellant to show cause why penal action should not be taken against it and the gold under the provisions of section 167(8) for alleged violation of section 19, , and section 8, Foreign Exchange Act.
Neither the notice, nor the note of the Superintendent, Preventive Service (enclosed with the notice) suggested that the appellant was the smuggler and, therefore, liable to penalty under section 23 of the Foreign Exchange Act.
Section 167(8) of the provides for two kinds of penalties when contraband goods are imported into or exported from India; one is confiscation of the 838 goods which is an order in rem and the other is a penalty on the person concerned in any such offence; that is, the offence described in column I of item (8).
Taking the view most favourable to the appellant, it may be said that the notice contemplated both kinds of proceedings namely one in rem and the other in personam and asked the appellant to show cause against the imposition of both penalties mentioned in the third column of section 167(8); but the notice did not show any intention, nor did it suggest even a pos sibility, of proceeding against the appellant under section 23 of the Foreign Exchange Act.
There is, we think, an appreciable difference between the expression any person concerned in any such offence ' occurring in the third column of section 167(8) of the and the expression whoever contravenes any of the provisions of this Act occurring in section 23 of the Foreign Exchange Act.
A person may be concerned in the importation of smuggled gold, without being a smuggler himself or without himself contravening any of the provisions of the Foreign Exchange Act.
In this sense, the scope of section 167(8), , is different from that of section 23 of the Foreign Exchange Act.
Moreover, in the case under our consideration, the only penalty imposed under section 167(8) was the confiscation of the gold which indicates that the authorities proceeded with the proceeding in rem and dropped the proceeding in personam; therefore, no question of prejudicing the provisions of section 23, Foreign Exchange Act, arose in this case.
We think that Bose J. was in error in thinking that the adoption of the procedure under the prejudiced in any way the provisions of section 23, Foreign Exchange Act, in the present case.
On this finding, it is unnecessary to go into any of the larger questions which were canvassed before us in the course of arguments.
We were addressed at some length on (1) what would happen to the smuggled goods if the offender died in the course of a trial tinder section 23 and the provisions of the were not available; (ii) what would be the position if two contradictory findings were given with regard to the 839 goods one by the Customs authorities under the and the other by the Court tinder section 23, Foreign Exchange Act in case two concurrent remedies were open; and (iii) what would happen to the safeguards given to an accused person under section 23, if it were open to the Customs authorities to by pass section 23,and proceed under the .
These are interesting and, may be, important questions; and we have no doubt that they will be decided when they really fall for decision in an appropriate case.
In the case under present consideration, it is sufficient to state that on the facts found, no prejudice was caused to the provisions of section 23 by adopting the procedure resulting in the impugned order of confiscation, and the contention of the appellant that the Customs authorities had no jurisdiction to adopt the procedure under the cannot be accepted as correct.
This brings us to the second main contention urged on behalf of the appellant.
By the impugned order the Collector of Customs confiscated the gold, and in lieu thereof gave the appellant an option to pay a fine of Rs 10,00,000 (Rupees ten lakhs).
It is not disputed that the impugned order up to the extent stated above was within his jurisdiction to make.
The Collector, however, imposed two other conditions for the release of the confiscated gold; one was the production of a permit from the Reserve Bank of India in respect of the gold within four months from the date of despatch of the impugned order and the other was the payment of proper customs duties and other charges leviable in respect of the gold within the same period of four months.
The High Court held, rightly in our opinion that the Collector had no jurisdictin to imposposed the aforesaid two conditions.
It has been fairly concened by the learned Solicitor General that there is no provision in the Foreign Exchange Act or the under which the Reserve Bank could give permission in respect of smuggled gold with retrospective effect; if it could, there would be no offence under section 167(8) and the order of confiscation itself would be 107 840 bad.
As to the second condition of payment of customs duty etc., the learned Solicitor General referred us to a decision of the Bombay High Court in Keki Hormasji Elavia vs The Union of India (Civil Application No. 1296 of 1953 decided on August 18, 1953) referred to in a Compilation of.
Judgments in Customs Cases, published by the Central Board of Revenue, and submitted that customs duty was payable under section 88 of the , as in the Bombay case.
The facts of the Bombay case were entirely different; it was found there that the goods, which were toilet and perfumery goods, had been smuggled through the port of Kantiajal near Surat without payment of any duty and in those circumstances, it was held that section 88 applied.
In the case before us there is no finding by what means the gold was smuggled by sea or landand it is difficult to see how section 88, which relates to goods not cleared or warehoused within four months after entry of vessel, can be of any help in the present Case.
We are, therefore, of the view that the Collector of Customs had no jurisdiction to impose any of the two conditions mentioned above .
What then is the result? On behalf of the appellant it has been argued that the order being a composite and integrated order, it is not severable; and secondly, it is contended that on an application for a writ of certiorari, the superior Court must quash the whole order when it is found to be bad and in excess of jurisdiction even as to a part thereof The question of severability does not present any great difficulty.
It has been the subject of consideration in more than one decision of this Court, and in the recent decision in R. M. D. Chamarbaugwalla vs Union of India (1) the principles governing it have been summarised.
Applying those principles we find no difficulty in holding that the invalid conditions imposed by the Collector are not so inextricably mixed up that they cannot be separated from the valid order of confiscation and fine in lieu thereof; there is also no doubt that the Collector would have passed the order of confiscation and fine in lieu thereof on his finding (1)[1957] S.C.R. 930.
841 that the gold was smuggled gold, even if he realised that the conditions he was imposing were invalid; it is also clear that the conditions do not form part of a single scheme which can be operative only as a whole.
Learned counsel for the appellant has referred us to the sixth rule enunciated in Chamarbaugwalla 's decision (supra) and has contended that if the invalid conditions are expunged, what remains of the impugned order cannot be enforced without making an alteration or modification as to the time limit fixed, and therefore the whole order must be struck down as void.
We are unable to agree.
The sixth rule aforesaid is based on the ground that the Court cannot make alterations or modifications in order to enforce what remains of a statute after expunging the invalid portions thereof ; otherwise it will amount to judicial legislation.
No such consideration arises in the case before us.
There is no legal difficulty in enforcing the rest of the impugned order after separating the invalid conditions therefrom; on the passing of the order of confiscation, the gold vests in Government and section 183 does not make it obligatory on the Collector to fix a time limit for payment of the fine in lieu of confiscation.
It is really for the benefit of the owner that a time is fixed for payment of the fine.
Even if the time limit is altered, by no stretch of imagination can it be said that such alteration amounts to judicial legisla tion.
For these reasons we agree with the Division Bench of the High Court that the invalid conditions imposed by the Collector in this case are severable from the rest of the impugned order.
Learned counsel has relied on the decision in The King vs Willesden Justices, Ex parte Utley(1) for his contention that the High Court has no power, on certiorari, to amend the impugned order by striking out the invalid conditions; nor has this Court, on an appeal from an order on an application for the issue of a writ of certiorari, any power higher than that of the High Court.
He has contended that the essence of the remedy of certiorari is that it necessarily involves revising the decision of the inferior court to which it is (1)[1948] 1 K. B. 397. 842 directed in one of three ways: (a) by quashing it ; (b) by removing the case and trying it in a court of competent jurisdiction ; or (c) by causing it to be reheard.
According to English precedents, so argues learned counsel, certiorari involves an examination of a decision of the Court to which it is addressed to see " What of right and according to the law and custom of England we shall see fit to be done " (see Short and Mellor 's Practice of the Crown Office, 2nd Edn.
504 505).
We do not think that we are called upon in this case to go into the early history of the prerogative writ of certiorari in England or even to decide.
what is the extent of the power of the High Court, on a prayer for the issue of a writ in the nature of a, writ of certiorari, under article 226 of the Constitution.
Broadly speaking, it is true that an essential feature of a writ of certiorari is that the control which is exercised through it over judicial or quasi judicial tribunals or bodies is not in an appellate but supervisory capacity.
This Court observed in T. C. Basappa vs T. Nagappa and Another (1), at p. 257 " In granting a writ of certiorari the superior Court does not exercise the powers of an appellate Tribunal.
It does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based.
It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal.
The offending order or proceeding so to say is put out of the way as one which should not be used to the detriment of any person.
" In the same decision, it was also observed: " In view of the express provisions in our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges.
We can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner, so long as we keep (1)[1955] 1 S.C.R 250.
843 to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law.
" In King vs Willesden Justices (supra) the applicant was convicted and fined pound 15 for failure to stop his vehicle on being so required by a police constable in uniform, contrary to the Road Traffic Act, 1930, section 20, sub section 3.
The ground for the application was that the maximum penalty prescribed by section 20, subsection 3, for the offence in question was a fine of pound 5 and that therefore the penalty of pound 15 imposed by the justices was bad in law and in excess of their jurisdiction.
Lord Goddard C. J. said: " Our attention has been called to several cases, including Reg.
vs Stade, , Reg.
vs Kay, (1873) L. R. 8 Q. B. 324, and Reg.
vs Cridland, (1857) 7 E. & B. 853, but having considered them all, my opinion remains as it was at the outset, that if a sentence be imposed which is not authorised by law for the offence for which the defendant is convicted, that makes the conviction bad on its face and being a bad conviction, it can be brought up here to be quashed, and when so brought up, must be quashed, for this court has no power, and never has had any power, on certiorari, to amend the conviction.
" It is worthy of note that the decision proceeded on the footing that the man had a penalty imposed upon him which the law did not permit him to suffer and that made the conviction bad; and the conviction being bad, the applicant was entitled to his order of certiorari.
But we think that there is a more convincing answer to the contention urged on behalf of the appellant.
In an earlier part of this judgment.
we have quoted in extenso the prayers which the appellant had made in its petition in the High Court.
The appellant did not confine itself to asking for a writ of certiorari only, but asked for a mandamus requiring respondents I to 3 to forbear from giving effect to the orders of seizure, detention and confiscation of the gold and further requiring them to return the gold, and also asked for a writ of prohibition restraining respondents 844 1 to 3 from taking further steps in pursuance of the order of confiscation.
These prayers were neither unnecessary nor a inere surplusage; they were appropriate for the purpose of avoiding the conditions which the Collector had imposed for release of the gold.
It is well settled that where proceedings in an inferior court or tribunal are partly within and partly without its jurisdiction, prohibition will lie against doing what is in excess of jurisdiction.
(see Halsbury 's Laws of England, 3rd Edn.
11, para.
216, p. 116).
In the recent decision in Dalmia 's case, Shri Ram Krishna Dalmia V. Shri Justice section R. Tendolkar and others(1), this Court held a part of a notification made under section 3 of the Commission of Enquiry Act (LX of 1952) to be bad, and holding that it was severable from the rest of the notification, deleted it and held that rest of the notification to be good.
Therefore, we do not see any insuperable difficulty in the present case in prohibiting respondents I to 3 from enforcing the two invalid conditions which the Collector of Customs had imposed for release of the gold on payment of the fine in lieu of confiscation, and the time limit of four months fixed by the Collector must accordingly run from the date of this order.
The only other points that require consideration are the points urged on behalf of the two banks, respondents 4 and 5.
These respondents say that though the general property in the goods pledged remained with the pledgor, a special property passed to the pledgee in order that he might be able to sell the pledge if and when his right to sell arose.
They complain that they have been deprived of this special property by reason of the proceeding resulting in the impugned order, adopted under the by the Collector of Customs; they contend that their right is guaranteed under article 19(1)(f) of the Constitution, and the provisions of the in so far as they take away the pledgee 's right without providing for a notice to the pledgee or an option to pay the fine in lieu of confiscation are not reasonable restrictions in the interests of the general (1)[1959] S.C.R. 279.
845 public within the meaning of el.
(5) of the said Article.
Our attention has been drawn to section 19A of the which enables the Central Government to make regulations, either general or special, respecting the detention and confiscation of goods the importation of which is prohibited, and the conditions, if any, to be fulfilled before such detention and confiscation, and also to subsection (1) thereof under which the Chief Customs Officer may require the regulations to be complied with and may satisfy himself in accordance with those regulations that the goods are such as are prohibited to be imported.
It is pointed out that no regulations have yet been made, and in the absence of any regulations the Customs officers have an uncontrolled and unguided power in the matter of detention and confiscation of goods.
So far as the Nationale Handels Bank N. V., respondent 4, is concerned, it has no right under article 19.
Assuming that a company can be a citizen as defined in the Constitution, respondent 4 admittedly is a foreign Company possessing no rights of a citizen of this country.
On the same assumption the Bharat Bank Ltd., respondent 5, being an Indian Company may have the rights of a citizen under article 19; but in the circumstances which we shall presently state, we do not think that its complaint as to the infraction of a fundamental right can be raised at this stage.
Apart altogether from the considerations which the learned Solicitor General has pressed (as to which it is un necessary for us to express any final opinion), namely, (1) that a pledgee cannot have a right higher than that of the pleader, (ii) that the pledgor does not cease to be the owner by reason of the pledge, and (iii) that in an action in rem the order operators directly upon the status of the property and, as in this case, vests the property absolutely in Government, there are certain other circumstances which militate against the claim now put forward by respondent 5.
The order of the Collector shows that all throughout the adjudication proceedings respondent 5 was represented by counsel before the Collector.
The Collector passed his order oil May 14, 1952, and a copy was forwarded 846 to respondent 5.
The respondent took no steps against the order, but was content with its position as respondent to the application which the present appellant filed in the High Court.
It is also to be noticed that the Collector 's order shows that he was not fully satisfied with the story of the appellant that the gold had been pledged with the Banks in the manner suggested.
So far as the transactions with the Bharat Bank are concerned, he said: " The Majud Bahi (stock book) of the firm showed a closing balance of gold weighing tolas 2,457 6 0 as lying with the Bharat Bank Ltd., on 17th November, 1950, whereas the closing balance on that date according to the Bank 's statement was tolas 4,651 14 0.
The firm 's representative gave reasons for this difference which was mainly that instructions were given to the Bharat Bank on the 17th November, 1950 to send gold weighing tolas 2,236 7 0 to Sewadin Bansilal of Bombay but the actual delivery of this gold to this person at Bombay did not take place until the 22nd November 1950.
The Auditors, however, observed that they had not seen any correspondence with the Bank in support of the above information which they received verbally.
" In the High Court when the case was before Bose J. respondent 5 challenged the order of the Collector on several points including the alleged infraction of his fundamental right.
This objection was not, however, accepted, and Bose J. allowed the writ application on two other grounds which we have mentioned earlier.
In the appeal before the Division Bench, respondent 5 again relied on article 19 (1) (f ), and the Division Bench affirmed the finding of Bose J. that as the did not directly legislate in respect of the freedom guaranteed by article 19 (1) (f ), that Article had no application.
Again, respondent No. 5 took no steps against the judgment and order of the Division Bench dated July 3, 1953 a judgment and order which it now challenges as incorrect.
All along the line, it preferred to sail with the appellant but figuring as a respondent only; it was the appellant who moved the High Court for a certificate, obtained such 847 certificate and brought this appeal to this Court.
Respondent 5 took no action against the judgment and order of which it now complains.
In these circumstances, we do not think that respondent 5 can now be allowed to complain of a violation of its fundamental right, apart from and independently of the appellant.
The result, therefore, is as follows.
The impugned order is good as to the confiscation of the gold and the payment of fine in lieu thereof.
The Collector of Customs had jurisdiction to make that order on his finding that the gold was smuggled gold.
He, however, had no jurisdiction to impose the other two conditions which he imposed for the release of the gold.
Though the High Court held on appeal that the invalid conditions were severable from the rest of the order, it did not give any appropriate direction regard ing those conditions as it should have done, but allowed the appeal and dismissed the writ application in too.
We think that the appropriate order to pass in this case is to dismiss the writ application in so far as it seeks to quash the impugned order of confiscation of the gold and the payment of fine in lieu thereof, and to allow it in so far as it wants a direction restraining respondents 1 to 3 from enforcing the two invalid conditions imposed by the Collector of Customs, which the Collector had no jurisdiction to impose.
The time limit of four months given by the Collector will accordingly run from the date of this order.
The appeal is accordingly allowed to the very limited extent indicated above but dismissed as to the rest, and in the circumstances of this case, particularly in view of the invalid conditions imposed by the Collector, we direct that the parties must bear their own costs of the hearing in this Court.
Appeal allowed in part.
| The appellant company was carrying on business as a bullion merchant and in that capacity purchased about 9478 tolas of gold.
On information that the gold in question was smuggled, the customs authorities issued a notice to the appellant to the effect that the case had been placed before the Collector of Customs for adjudication by the Superintendent, Preventive Service, The notice stated inter alia : " You are requested to show cause . why penal action should not be taken against you and the 9478,19 tolas of gold in question under the provisions of sections 167(8) and 168 of the , for alleged violation of section 19 of the same Act read with section 8 of the Foreign Exchange Regulation Act, 1947 ".
The Collector of Customs, after hearing the parties, came to the conclusion that the gold in question was smuggled gold and that there was a contravention of the provisions of section 19 of the read with section 8 of the Foreign Exchange Regulation Act, and made an order in these terms: " I accordingly order that the entire quantity of the gold seized on the 21st November, 1950, amounting to 9478.19 tolas be confiscated under section 167(8) of the .
In lieu of confiscation, however, I give the owner of the said gold an option, under section 183 ibid to pay a fine of Rs. 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charge leviable thereon within four months from the date of the despatch of this order.
The release of the gold will be further subject to the production of a permit from the Reserve Bank of India within the aforesaid period ".
The appellant challenged the validity of the order and contended (i) that on a proper construction of section 8(3) of the Foreign Exchange Regulation Act read with section 19 of the , it was not legally open to the customs authorities to take any action against it under the , as such action would prejudice the provisions of section 23 of the Foreign Exchange Regulation Act, and (2) that, in any case, the conditions which the Collector of Customs had imposed in the impugned order for release of the confiscated gold were not warranted by the statute, 822 and that as the order was a composite and integrated one it was not severable and, therefore, should be quashed : Held, (1) that the scope of section 167(8) of the , is different from that of section 23 Of the Foreign Exchange Regulation Act, 1947.
Whereas under section 23 Of the Foreign Exchange Regulation Act proceedings are taken in Personam against the offender for the purpose of penalising him for the contravention of the provisions of the Act, an order for confiscation of the smuggled goods under section 167(8) Of the is one in rem.
There is a difference between the expression " any person concerned in any such offence " occurring in the third column of section 167(8) of the and the expression "whoever contravenes any of the provisions of this Act " occurring in section 23 of the Foreign Exchange Regulation Act.
A person may be concerned in the importation of smuggled goods, without being a smuggler himself or without himself contravening any of the provisions of the Foreign Exchange Regulation Act.
In this case, the only penalty imposed under section 167(8) Of the was confiscation of the gold, which indicated that the customs authorities had dropped the proceedings in personam; consequently, the adoption of the procedure under the did not prejudice in any manner the provisions Of. section 23 Of the Foreign Exchange Regulation Act.
The question whether two remedies are available to the authorities concerned in respect of a contravention which comes both under the and the Foreign Exchange Act was left open.
(2) The Collector of Customs had no jurisdiction to impose the two conditions for the release of the confiscated gold ; but, as the aforesaid conditions are severable from the rest of the impugned order, the latter is valid as to the confiscation of the gold and the payment of fine in lieu thereof.
R. M. D. Chamarbaugwalla vs Union of India, [1957] S.C.R. 930 and Shri Ram Krishna.
Dalmia vs Shri justice section R. Tendolkar and others; , , applied.
The relevant sections of the , and the Foreign Exchange Regulation Act, 1947, are set out in the judgment.
|
Civil Appeal No. 43(NT) of 1975.
306 From the Judgment and Order dated 23.1.1974 of the Gujarat High Court in Income Tax Reference No. 78 of 1970.
T.A. Ramachandran, Mrs. J. Ramachandran and S.C. Patel for the Appellant.
C.M. Lodha, M.N. Tandon and Ms. A.S. Subhashini, for the Respondent.
The Judgment of the Court was delivered by VENKATACHALIAH, J.
This appeal by the assessee, The Alembic Chemicals Works Co. Ltd., arises out of and are directed against the judgment dated 23.1.1974, of the High Court of Gujarat in Income Tax Reference 78 of 1970, answer ing in favour of the Revenue a question of law referred to it under Section 256(1) of the Income Tax Act, 1961, (Act) by the Income Tax Appellate Tribunal.
On 8.6.1961, the assessee, a company engaged in the manufacture of antibiotics and pharmaceuticals was granted licence for the manufacture, on its plant, of the well known antibiotic, penicillin.
In the initial years of its venture the assessee was able to achieve only moderate yields from the pencillin producing strains used by it which yielded only about 5000 units of penicillin per millilitre of the culturemedium.
In the year 1963, with a view to increasing the yield of penicillin, the assessee negotiated with M/s. Meiji Seika Kaishna Limited ("Meiji" for short), a reputed enterprise engaged in the manufacture of antibiotics in Japan, which agreed to supply to the assessee the requisite technical know how so as to achieve substantially higher levels of performance of production of more than 10,000 units of penicillin per millilitre of 'cultured broth ' with the aid of better technology and process of fermentation and with better yielding penicillin strains developed by Meiji.
The negotiations culminated in an agreement dated 9.10.1963, whereunder Meiji, in consideration of the 'once for all ' payment of 50,000 U.S. dollars (then equivalent to Rs.2,39,625) agreed to supply to the assessee the "sub cultures of the Meiji 's most suitable penicillin producing strains", the technical information, know now and written description of Meiji 's process for fermentation of penicil lin alongwith a flow sheet of the process on a pilot plant; the design and specifications of the main equipments in such pilot plant; arrange for the visits to and training at assessee 's expense, 307 of technical representatives of the assessee to Meiji 's plant at Japan and to advise the assessee in the large scale manufacture of penicillin for a period limited to 2 years from the effective date of the agreement.
It was also stipu lated that the technical know how supplied by Meiji was to be kept confidential and secret by the assessee which was prohibited from parting with the technical know how in favour of others or to seek any patent for the process.
In the proceedings for assessment to Income tax for the assessment year 1964 65 the assessee claimed that Rs.2,39,625 paid under the agreement to 'Meiji ' was one laid out wholly and exclusively for the purpose of the business and claimed its deduction as a revenue expenditure.
The Income tax Officer, on the view that the expenditure was for the acquisition of an asset or advantage of an enduring benefit, held it to be a capital outlay and declined the deduction.
This view was affirmed by the Appellate Asst.
Commissioner in the assessee 's first appeal.
The Income tax Appellate Tribunal, Ahmedabad Bench, dismissed the further appeal of the assessee holding that the arrangements with Meiji envisaged the setting up of a large commercial plant for the production of the antibiotic modelled on the lines of the pilot plant and that, there fore, the out lay could not be treated as an expenditure laid out on and for purposes of the existing business, but must be regarded as one incurred for a new venture on a new process with a new technology on a new type of plant.
The Tribunal held that the payment was 'once for all payment ' and was made for the acquisition of a capital asset.
The Tribunal inter alia held: "The sub cultures and the information design and flow sheet etc., were to be fur nished once for all.
Meiji also agreed to advise the assessee in respect of any diffi culty the assessee may encounter in applying the subcultures and informations obtained by the assessee from Meiji to the large scale manufacture of penicillin.
It is apparent from the agreement and the correspondence which has been made available to us that Meiji agreed to give the designs etc., not only for a pilot plant but for the manufacture of penicillin according to Meiji 's process on commercial scale.
The assessee has to put in a larger plant modelled on the pilotplant." " . .
It is in consideration for Meiji 's agreeing to 308 supply the assessee with complete details of the technical know how, the design, subcul tures, flow sheet and written descriptions of the process once for all that the assessee paid to Meiji the stipulated sum of $ 50,000." " . .
It would thus appear that the payment was made for acquiring a capital asset in the shape of technical know how and other allied information.
It was not made in the course of carrying out of an existing business of the assessee but was for the purpose of setting up a new plant and a new process.
It would, therefore, appear that the revenue authorities have rightly treated the payment as of capital nature." " . .
The process which the assessee took over from Meiji was not the same as it was working heretofore.
In the present case the outlay was incurred for a complete replacement of the equipment of the business inasmuch us a new process with a new type of plant was to be put up in place of old process and old plant . . . ." (Underlining Supplied) 4.
At the instance of the assessee the Tribunal stated a case and referred the fol lowing question of law for the opinion of the High Court: "Whether the sum of Rs.2,39,625 was a revenue expenditure admissible to the asses see for the purpose of computation of its total income?" The High Court by the judgment under appeal answered the question in the negative and against the assessee.
This part of the judgment is assailed by the assessee in CA 43 of 1975.
The reasoning of the High Court in support of its conclusion was on the following lines: " .
It is true that the expenditure was manifestly laid out for the purpose of obtain ing benefits and advantages such as sub cul tures of penicillin producing strains, design of a pilot and exchange of technical personnel with a view to acquiring know how.
But the finding of the Tribunal, as we 309 read it, is that all the benefits which asses see received under the agreement were as a part of the transaction which was undertaken with the ultimate view of a setting up a new plant and a new process.
In view of the find ings recorded by the Tribunal, no conclusion other than that the expenditure was incurred once and for all with a view to bringing into existence an asset or advantage for the endur ing benefit of the manufacturing trade of the assessee is possible.
The expenditure was incurred for introducing a new process of manufacturing and with a view to installing a new plant, even if not immediately then at a later stage, and on that conclusion the only possible answer to the first question referred to us can be in the negative and against the assessee." (Emphasis Supplied) Before the High Court, the assessee also moved an application under Section 256(2) of the Act ITA No. 24 of 1971 for a direction to the Tribunal to refer another question of law, also stated to arise out of the order of the Tribunal.
The question of law respecting which the supplementary reference was sought was this: "Whether there was any evidence or material before the Tribunal to hold that (1) a completely new plant with a completely new process and new technical know how was ob tained by the assessee from Messrs Meiji under the said agreement, dated 9.10.1963; and (2) to work out that process separate plant or machinery had to be designed, constructed, installed and operated? The High Court dismissed this application observing that the Tribunal had no where recorded a finding to the effect that a completely new plant was obtained by the assessee from Meiji and that the finding of the Tribunal that under the agreement the assessee had obtained a new process and a new technical know now from Meiji was not without evidence.
Against the dismissal of ITA 24 of 1971 by the High Court, the assessee has preferred Civil Appeal No. 44 of 1975.
On 24.2.1987, this Court while directing the Tribunal to draw up a supplementary statement of the case and refer for the opinion of this Court the further question of law which, according to the assessee, arose out of the Tribu nal 's order and which was the subject matter of the asses see 's appeal in C.A. 44 of 1975, however, disposed of that 310 appeal formally, leaving the question of law arising out of the supplemental reference to be considered in the present appeal i.e. CA No. 43 of 1975.
The Tribunal has since sub mitted the supplementary statement of the case and has referred that question of law also.
This is how both the questions of law, are now before us.
While in regard to the first question the correctness of the opinion rendered by the High Court requires to be examined, the second question has to be answered for the first time as the reference is called by this court directly.
We have heard Shri T.A. Ramachandran, learned Senior Counsel for the assessee and Shri Lodha, learned senior counsel for the revenue.
In computing the income chargeable under the head "Profits and Gains of Business or Profession", section 37 of the 'Act ' enables the deduction of any expenditure laid out or expended wholly and exclusively for the purpose of the business or profession, as the case may be.
The fact that an item of expenditure is wholly and exclusively laid out for purposes of the business, by itself, is not sufficient to entitle its allowance in computing the income chargeable to tax.
In addition, the expenditure should not be in the nature of a capital expenditure.
In the infinite variety of situational diversities in which the concept of what is capital expenditure and what is revenue arises it is well nigh impossible to formulate any general rule, even in generality of cases sufficiently accurate and reasonably comprehensive, to draw any clear line of demarcation.
Howev er, some broad and general tests have been suggested from time to time to ascertain on which side of the line the out lay in any particular case might reasonably be held to fall.
These tests are generally efficacious and serve as useful servants; but as masters they tend to be over exact ing.
One of the early pronouncements which serves to indicate a broad area of distinction is City of London Contract Corporation vs Styles, where Bowen, L.J. indicated that the out lay on the "acquisition of the con cern" would be capital while an outlay in "carrying on the concern" is revenue.
In Vallambrosa Rubber Co. vs Farmer, Lord Dunedin suggested as 'not a bad crite rion ' the test that if the expenditure is 'once for all ' it is capital and if it is 'going to recur every year it is revenue.
In the oft quoted case on the subject, viz, British Insulated Helsby Cables Ltd. vs Atherton, Viscount Cave L.C. said: "But when an expenditure is made, not only once and for 311 all, but with a view to bringing into exist ence an asset or an advantage for the enduring benefit of trade, I think that there is very good reason (in the absence of special circum stances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital." .8.
In Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax, [1955]27 ITR 34, this Court observed: "If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure.
If on the other hand it is made not for the purpose of bring ing into existence any such asset or advantage but for running the business or working it with a view to produce the profits, it is a revenue expenditure." "The aim and object of the expendi ture would determine the character of the expenditure whether it is a capital expendi ture or a revenue expenditure." In Sitalpur Sugar Works Ltd. vs Commissioner of Income tax, [1963] 49 ITR (SC) 160; Lakshmiji Sugar Mills Co. Ltd. vs Commissioner of Income tax, and in Travancore Cochin Chemicals Ltd. vs Commissioner of Income tax, the enunciation made in Assam Bengal Cement Company 's case , which in turn, referred with approval to Lord Cave 's dictum was affirmed.
In Sun News Papers Ltd. & Associated News Papers Ltd. vs Federal Commissioner of Taxation; , Dixon J while indicating that the distinction between revenue and capital corresponds with the distinction between the "busi ness entity, structure or organisation set up or established for the earning of profit" on the one hand and "the process by which such an organization operates to obtain regular returns" on the other, however, went on to say that: "The business structure or entity or organiza tion may assume any of an almost infinite variety of shapes and it may be difficult to comprehend under one description all the forms in which it may be manifested . " 312 The learned judge further observed: " . .
There are, I think, three matters to be considered, (a) the character of the advan tage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment . . " 9.
In Regent Oil Co. Ltd. vs Strick, Lord Reid emphasised the futility of a strict application of and exclusive dependence on any single principle in the search for the true position and pointed out the difficulty arising from taking too literally the general statements made in earlier cases and seeking to apply them to a different case which their authors certainly did not have in mind.
The Learned Lord also identified as another source of difficulty the tendency in some cases to treat some one criterion as paramount and to press it to its logical conclusion without proper regard to the other factors in the case.
Lord Reid further said: "So it is not surprising that no one test or principle or rule of thumb is paramount.
The question is ultimately a question of law for the court, but is a question which must be answered in the fight of all the circumstances which it is reasonable to take into account, and the weight which must be given to a par ticular circumstance in a particular case must depend rather on common sense than on strict application of any single legal principle.
" The question in each case would necessarily be whether the tests relevant and significant in one set of circum stances are relevant and significant in the case on hand also.
Judicial metaphors, it is truly said, are narrowly to be watched, for, starting as devices to liberate thought they end often by enslaving it.
The non determinative quali ty, by itself, of any particular test is highlighted in B.P. Australia vs Commr.
of Taxation of the Commonwealth of Australia, Lord Pearce said: "The solution to the problem is not to be found by 313 any rigid test or description.
It has to be derived from many aspects of the whole set of circumstances some of which may point in one direction, some in the other.
One considera tion may point so clearly that it dominates other and vaguer indications in the contrary direction.
It is a common sense appreciation of all the guiding features which must provide the ultimate answer . " (Emphasis Supplied) The idea of 'once for all ' payment and 'enduring bene fit ' are not to be treated as something akin to statutory conditions; nor are the notions of "capital" or "revenue" a judical fetish.
What is capital expenditure and what is revenue are not eternal varities but must needs be flexible so as to respond to the changing economic realities of business.
The expression "asset or advantage of an enduring nature" was evolved to emphasise the element of a sufficient degree of durability appropriate to the context.
The words of Rich J. in Herring vs Federal Commissioner of Taxation, 1946.72 CLR 543, dealing with an analogous provision in sec.
51 of Income tax Assessment Act of Australia may be re called. " . .
Lord Cave L.C., in using the phrase 'enduring benefit ' in British Insulated and Helsby Cables Ltd. vs Atherton, 1926 A.C. 205,213 (HL), was not thinking of advantages that are permanent.
There is a difference between the lasting and the everlasting.
The time over which the thing 'endures ' is a matter of degree and one element only to be considered.
Horses in the old days and motor trucks in these days are plant and their acquisition for the purpose of transport in business usually involves a capital expendi ture.
But the horses were not immortal any more than the trucks have proved to be . . " 10.
Shri Ramachandran submitted that the approach to the question by the Tribunal was influenced by an erroneous assumption that Meiji 's agreement envisaged the imperative of a totally new plant, for the exploitation of Meiji 's improved fermentation technology.
Learned counsel invited our attention to the following passage in the order of the Tribunal where this postulate is found: "On the other hand, a completely new plant with a completely new process and a completely new technical know how was obtained by the assessee from Meiji and it 314 was in consideration of obtaining this techni cal know how that the assessee made the pay ment of $ 50,000." Shri Ramachandran submitted that the Tribunal had failed to take into account that even before the agreement, the assessee had set up a plant for the production of penicillin at an out lay of more Rs.66 lakhs and that the purpose of the agreement with Meiji was only to increase the yield; of penicillin and that no new venture envisaging the setting up of a new plant was ever intended by the assessee.
The pro duction of penicillin which was the established line of business of the assessee, says learned counsel, was to be improved upon with the use of an improved process of fermen tation with new penicillin producing strains isolated and developed by Meiji so as to increase the unit yield of penicillin per milli litre of the culture medium.
The supply of the technical know how and the flow sheet of the process and the written description of the specifications of the pilot plant from Meiji were incidental to and for the effec tive exploitation of the high penicillin yielding strains of the culture to be supplied by Meiji.
Learned counsel submit ted that the whole range of the operations envisaged by the agreement, pertained to the area of the "profit earning process" and not the "profit earning machinery or apparatus".
The cost relationship between what was involved in the improvisation of the process and the investment on the plant did, says counsel, indicate that the extant "profit earning machinery" was not sought to be supplanted.
Learned counsel also urged that there was no material for the Tribunal to hold that the use of new process and tech nology from Meiji amounted to a new venture not already in the line of the assessee 's existing business or that it required the erection of a new plant discarding and sup planting the huge investment already existing.
Learned counsel submitted that it was no body 's case that with the introduction of the Meiji process of fermentation with improved penicillin strains the existing plant and machinery of over Rs.66 lakhs had become obsolete and irrelevant or that the assessee had had to set up an altogether new plant to work out the improvised Meiji process of fermentation.
Learned counsel for the Revenue, however, sought to maintain that all the criteria relevant to the question indicated that the assessee had acquired a new technical know how for a new process which required the setting up of a new plant.
There was, according to Shri Lodha, a new venture based on a new technology and know how of unlimited duration which required a new plant for its commercial exploitation.
There were, according to Shri Lodha, both the acquisition of 315 an enduring asset, and the commencement of a new venture.
On a consideration of the matter we are persuaded to hold that there was no material for the Tribunal to record the finding that the assessee had obtained under the agree ment a 'completely new plant ' with a completely new process and a completely new technical know how from Meiji.
Indeed, the High Court recognised the fallacy in this assumption of the Tribunal that a completely new plant was obtained by the assessee, though, however, the High Court attributed the inaccuracy to what it considered to be some inadvertence or misapprehension on the part of the Tribunal in that regard.
But the High Court was inclined to the view that a complete ly new process and technical know how was obtained from Meiji under the agreement.
Certain assumptions fundamental to, and underlying, the approach of the High Court are that the agreement dated 9.10.1963 envisaged a new process and a new technology so alien to the extant infrastructure, equip ment, plant and machinery in the assessee 's enterprise as to amount to an entirely a new venture unconnected with and different from the line of assessee 's extant business.
It is in that sense that the expense was held not incurred for the purposes of the day to day business of the assessee but for acquiring a new capital asset.
The business of the assessee from the commencement of its plant in 1961, it is undisputed, was the manufacture of penicillin.
Even after the agreement the product manufac tured continued to be penicillin.
The agreement with Meiji stipulated the supply of the "most suitable sub cultures" evolved by Meiji for purposes of augmentation of the unit yield of penicillin milli litres of the culture medium.
Scientific literature on the bio synthesis of penicillin indicates that penicillin is derived from a fermentation process.
Some penicillins are obtained from direct fermenta tion and some others by a combination of fermentation and subsequent chemical manipulation of the fermentation product.
The manufacturing process, it is stated, consists of four processes: Fermentation, isolation, chemical modifi cation and finishing.
Referring to the common basis of commercial production of penicillin in the New Encyclopaedia Britannica, (Micropaedia, Vol.
VII) it is mentioned: "penicillin, antibiotic, the discovery of which in 1928 by Sir Alexander Fleming marked the beginning of the antibioticera.
Fleming observed that colonies of Staphylococ cus aureus (the pus producing bacterium) failed to grow in those areas of a culture that had been accidentally contaminated 316 by the green mold Penicillium notatum.
After isolating the mold, he found that it produced a substance capable of killing many of the common bacteria that infect human beings.
This antibacterial substance, to which Fleming gave the name penicillin, was liberated into the fluid in which the mold was grown.
This proc ess is the basis of all commercial production of penicillin . . " (p. 850) (Emphasis Supplied) In Encyclopedia of Chemical technology (Kirk Othmer) III Edn.
2 it is found mentioned: " .
The specific characteristics of the industrial microbial strains, media, and fermentation conditions cannot be described in detail since these facts are considered trade secrets.
The origin of strains, and general principles of culture maintenance, fermenta tion equipment, innoculum preparation, media, and fermentation conditions for penicillin and cephalosporin production, are public knowledge and are reviewed here.
. . . . . Fleming 's original strain of P. notatum provided only low yields of penicillin . . .
Superior penicil lin producing strain of P. chrysogenum have since been obtained by random screening of variant strains following mutation induction.
All of the present day high yielding industri al strains are descendants of the NRRL 1951 strain. . " "Once a high yielding strain has been isolat ed, it is essential that the organism be maintained so that it remains viable and capable of producing the antibiotic at its original rate (54) . . .
Under suit able conditions highyielding strains can be preserved for many years without loss of viability or antibiotic producing ability . . " (p. 899 90) We are inclined to agree with Shri Ramachandran that there was no material for the Tribunal to hold that the area of improvisation was not a part of the existing business or that the entire gamut of the 317 existing manufacturing operations for the commercial produc tion of penicillin in the assessee 's existing plant had become obsolete or inappropriate in relation to the exploi tation of the new sub cultures of the high yielding strains of penicillin supplied by Meiji and that the mere introduc tion of the new bio synthetic source required the erection and commissioning of a totally new and different type of plant and machinery.
Shri Ramachandran is again fight in the submission that the mere improvement in or updating of the fermentation process would not necessarily be inconsistent with the relevance and continuing utility of the existing infra structure, machinery and plant of the assessee.
It would, in our opinion, be unrealistic to ignore the rapid advances in Researches in antibiotic medical microbiology and to attribute a degree of endurability and permanance to the technical know how at any particular stage in this fast changing area of medical science.
The state of the Art in some of these areas of high priority.
research is constantly updated so that the know how cannot be said to be the element of the requisite degree of durability and none phemerality to share the requirements.
and qualifications of an enduring capitalasset.
The rapid strides in science and technology in the field should make us a little slow and circumspect in too readily pigeon holing an outlay, such as this as capital.
The circumstance that the agreement in so far as it placed limitations on the right of the assessee in dealing with the know how and the conditions as to non partibility, confidentiality and secrecy of the know how incline towards the inference that the right pertained more to the use of the know how than to its exclusive acquisi tion.
In the present case, the principal reason that influ enced the option of the High Court was that the initiation and exploitation of the new process brought in their wake a new venture requiring an altogether new plant.
We are afraid, this view may not be justified.
Clauses 2, 4 and 6 of the agreement provide: "(2) For and in consideration of the subcultures, design, flow sheet and written description to be furnished by Meiji to ALEM BIC PURSUANT to paragraph (1) hereof, Alembic shall pay to MEIJI in advance and in lump sum, such as amount as MEIJI is able to collect Fifty thousand U.S. Dollars ($ 50,000) net in Tokyo after deducting any taxes and charges to be imposed in India upon MEIJI with respect to the said payment to MEIJI.
" 318 "4.
MEIJI will give advice, to the extent considered necessary be MEIJI, on any diffi culty ALEMBIC may encounter in applying the subcultures and informations obtained by ALEM BIC from MEIJI to the large scale manufacture.
The above provision shall be in force after MEIJI 's receipt of the amount set forth in paragraph (2) hereof until the end of two (2) years from the effective date of this agree ment . " "(6) Any of the subcultures and informations obtained by ALEMBIC from MEIJI shall be re garded as strictly confidential by ALEMBIC and its personnel and shall be used by ALEMBIC only in its Penicillin G plant in India, and shall not be disclosed to any other person, firm or agency, governmental or private.
Alembic shall take all reasonable steps to ensure that such subcultures and information will not be communicated.
ALEMBIC shall take all possible precautions against the escape from its premises of the strain obtained from MEIJI of propagated therefrom.
ALEMBIC shall not apply for any patent to any country in relation to any of the subcultures and information obtained by ALEMBIC from MEIJI." As notified earlier the Tribunal in the course of its order, held: " .
Meiji agreed to give the designs etc., not only for a pilot plant but for the manufacture of penicillin according to Meiji 's process on commercial scale.
The assessee has to put in a larger plant modelled on the pilotplant." (Emphasis Supplied) Having regard to the terms of Clause 4 of the agreement, this conclusion is non sequitur.
The improvisation in the process and technology in some areas of the enterprise was supplemental to the existing business and there was no material to hold that it amounted to a new or fresh venture.
The further circumstance that the agreement pertained to a product already in the line of assessee 's established business and not to a new product indicates that what was stipulated was an improvement in the operations of the existing business and its efficiency and profitability not removed from the area of the day to day business of the assessee 's established enterprise.
319 14.
It appears to us that the answer to the questions referred should be on the basis that the financial outlay under the agreement was for the better conduct and improve ment of the existing business and should, therefore, be held to be a revenue expenditure.
Reference may also be made to the observations of this Court in C.I.T.v.
CIBA of India Ltd.; , at 705.
There is also no single definitive criterion which, by itself, is determinative whether a particular outlay is capital or revenue.
The 'once for all ' payment test is also inconclusive.
What is relevant is the purpose of the outlay and its intended object and effect, considered in a common sense way having regard to the business realities.
In a given case, the test of 'enduring benefit ' might break down.
In Commissioner of Income tax, Bombay vs Associated Cement Co. Ltd., (JT 282 2 287 at 290) this Court said: " . .
As observed by the Supreme Court in the decision in Empire Jute Co. Ltd. vs Com missioner of Income Tax, [1980] 124 I.T.R.S.C.p. 1 that there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down.
It is not every advantage of enduring nature acquired by an assessee that brings the case within the principles 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 . " 15.
In the result, for the foregoing reasons the appeal succeeds and is allowed and the question of law referred to the High Court for its opinion in Income Tax Reference No. 78 of 1970 is answered in the affirmative and against the revenue.
The judgment under appeal is set aside.
, Likewise, the supplementary question of law raised in ITA 24 of 1971 before the High Court and now constituting the subject matter of the supplementary reference made by the Tribunal to this Court is answered in the negative and against Revenue.
The appeal is accordingly allowed, but with no order as to costs.
G.N. Appeal al lowed.
| The appellant assessee, a company engaged in the manu facture of penicillin, in order to increase its production, entered into an agreement with a Japanese firm (Meiji) for supply of sub cultures of penicillin producing strains, technical know how, training, written description of the process on a pilot plant, design and specifications of the main equipment in such pilot plant, and to advise the asses see in the largescale manufacture of penicillin for a limit ed period of two years.
As per the agreement, the assessee paid Rs.2,39,625 to Meiji and claimed the same as revenue expenditure in its Income tax assessment for the assessment year 1964 65.
Disallowing the claim the Income Tax Officer held that the expenditure was for the acquisition of an asset or advantage of an enduring benefit and thus a capital outlay.
The Appel late Assistant Commissioner confirmed the order of the Income Tax Officer.
The further appeal of the assessee was dismissed by the Income Tax Appellate Tribunal holding that the payment made to Meiji was 'once for all payment ' made for the acquisition of a capital asset.
At the instance of the assessee, the Tribunal referred to the High Court, the question as to whether the sum paid to Meiji was a revenue expenditure.
The High Court answered the question in the negative.
The present appeal is against that order of the High Court.
The assessee also moved an application before the High Court 303 seeking a direction to the Tribunal to refer another ques tion of law as to whether a new plant was obtained or in stalled by the assessee consequent upon the agreement.
Declining to interfere, the High Court observed that the Tribunal has not recorded a finding to the effect that a completely new plant was obtained by the assessee and the Tribunal 's decision that the assessee, had obtained a new process and a new technical know how from Meiji was not without evidence.
Against the above order of the High Court, the assessee preferred an appeal to this Court, which was formally dis posed of with a direction to the Tribunal to draw up a supplementary statement of the case and refer for the opin ion of this Court, the further question of law as sought for by the assessee; and such a question to be considered in the present appeal.
On behalf of the assessee, it was submitted that the Tribunal was influenced by an erroneous assumption that the agreement, envisaged the setting up of a new plant, whereas the objective of the agreement was only to increase the yield of penicillin in the existing plant itself.
The Revenue contended that there was a new venture based on a new technology and know how of unlimited duration which required a new plant for its commercial exploration.
Allowing the appeal, HELD: 1.
The financial outlay under the agreement was for the better conduct and improvement of the existing business 'and should, therefore, be held to be a revenue expenditure.
There is also no single definitive criterion which, by itself, is determinative whether a particular outlay is capital or revenue.
The 'once for all ' payment test is also inconclusive.
What is relevant is the purpose of the outlay and its intended object and effect, considered in a common sense way having regard to the business reali ties.
The rapid strides in science and technology in the field should make this Court a little slow and circumspect in too readily pigeon holing an outlay, such as this, as capital.
The circumstance that the agreement in so far as it placed limitations on the right of the assessee in dealing with the know how and the conditions as to non partibility, confidentiality and secrecy of the know how incline towards the inference that the right pertained more to the use of the know how than to its exclusive acquisition.
[319A, B C; 317D E] CIT vs CIBA of India Ltd., ; ; CIT, Bombay vs 304 Associated Cement Co. Ltd., JT 282 (2) 287, relied on.
The idea of 'once for all ' payment and 'enduring benefit ' are not to be treated as something akin to statuto ry conditions; nor are the notions of "capital" or "revenue" a judicial fetish.
What is capital expenditure and what is revenue are not eternal verities but must needs be flexible so as to respond to the changing economic realities of business.
The expression "asset or advantage of an enduring nature" was evolved to emphasise the element of a sufficient degree of durability .appropriate to the context.
[313C] Herring vs Federal Commissioner of Taxation, ; , referred to.
In computing the income chargeable under the head "Profits and Gains of Business or Profession", section 37 of the Income tax Act enables the deduction of any expenditure laid out or expended wholly and exclusively for the purpose of the business or profession, as the case may be.
The fact that an item of expenditure is wholly and exclusively laid out for purposes of the business, by itself, is not suffi cient to entitle its allowance in computing the income chargeable to tax.
In addition, the expenditure should not be in the nature of a capital expenditure.
In the infinite variety of situational diversities in which the concept of what is capital expenditure and what is revenue arises it is well nigh impossible to formulate any general rule, even in generality of cases sufficiently accurate and reasonably comprehensive, to draw any clear line of demarcation.
Howev er, some broad and general tests have been suggested from time to time to ascertain on which side of the line the out lay in any particular case might reasonably be held to fail.
These tests are generally efficacious and serve as useful servants; but as masters they tend to be over exact ing.
The question in each case would necessarily be whether the tests relevant and significant in one set of circum stances are relevant and significant in the case on hand also.
[310C F; 312G] City of London Contract Corporation vs Styles, ; Vallambrosa Rubber Co. vs Farmer, ; British Insulated Helsby Cables Ltd. vs Atherton, ; Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax, ; Sitalpur Sugar Works Ltd. vs Commissioner of Income tax, [1963] 49 ITR (SC) 160; Laksh miji Sugar Mills Co. Ltd. vs Commissioner of Income tax, ; Travancore Cochin Chemicals Ltd. vs Commissioner of Income tax, ; Sun News Papers 305 Ltd. & Associated News Papers Ltd. vs Federal Commissioner of Taxation, ; ; Regent Oil Co. Ltd. vs Strick, and B.P. Australia vs Commr.
of Taxa tion of the Commonwealth of Australia, ; re ferred to. 4.
The improvisation in the process and technology in some areas of the enterprise was supplemental to the exist ing business and there was no material to hold that it amounted to a new or fresh venture.
The further circumstance that the agreement pertained to a product already in the line of assessee 's established business and not to a new product indicates that what was stipulated was an improve ment in the operation of the existing business and its efficiency and profitability not removed from the area of the day to day business of the assessee 's established enter prise.
[318G H] 5.
There was no material for the Tribunal to record the finding that the assessee had obtained under the agreement a 'completely new plant ' with a completely new process and a completely new technical know how from Meiji.
Indeed, the High Court recognised the fallacy in this assumption of the Tribunal that a completely new plant was obtained by the assessee, though, however, the High Court attributed the inaccuracy to what it considered to be some inadvertence or misapprehension on the part of the Tribunal in that regard.
But the High Court was inclined to the view that a complete ly new process and technical know how was obtained from Meiji under the agreement.
Certain assumptions fundamental to, and underlying, the approach of the High Court are that the agreement envisaged a new process and a new technology so alien to the extent infra structure, equipment, plant and machinery in the assessee 's enterprise as to amount to an entirely new venture unconnected with and different from the line of assessee 's extant business.
It is in that sense that the expense was held not incurred for the purposes of the day to day business of the assessee but for acquiring a new capital asset.
But mere improvement in or updating of the fermentation process would not necessarily be inconsistent with the relevance and continuing utility of the existing infra structure, machinery and plant of the assessee.
[315A D; 317B] The New Encyclopaedia Britannica, Micropaedia, Vol.
II; Encyclopedia of Chemical Technology, Kirk Othmen, 3rd Edn.
2, referred to.
|
91, 99, 100, 101, 103 Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
AND & CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.699 703 of 1957.
Appeals by special leave from the decision of the Wage Board for Working Journalists published in the Gazette of India Extraordinary (Part IT, Section 3) dated May 11, 1957.
Dec. 3, 4, 5, 6, 10, 11, 12, 13, 17, 18, 19, 20. 1958.
Jan. 8, 9, 10, 14, 15, 16, 17, 21, 22, 23, 24, 28.
M. K. Nambiar and G. Gopalakrishnan, for the petitioners in Petition No. 91 of 1957.
The Working Journalists Act, 1955, is ultra vires as it infringes the fundamental rights of the Petitioners guaranteed by the Constitution under articles 19 (1) (a), 19 (1) (g), 14 and 32.
Article 19 (1) (a) which guarantees freedom of speech and expression includes the freedom of the employment of means to exercise those rights and consequently comprehends the freedom of the Press.
The guarantee of an abstract freedom of expression would be meaningless unless it contemplated and included in its ambit all the means necessary for the practical application of the freedom.
(Freedom of the Press A Framework of Principles Report of the Commission on Freedom of Press in the United States of America, 1947; Report of the Royal Commission for the Press in the United Kingdom 1949; Ramesh Thapar vs The State of Madras, [1950] section C. R. 594; Brij Bhusan vs State of Delhi, ; ; Ex parte Jackson, ; ; Lovell v, City of Griffin; , ; Orosjean vs American Press Co., ; ; Schneider vs Irvington, ; 17 Constitution of the United States of America, Revised and Annotated (1952), U. section Govt.Printing Office pp. 792, 988).
If the impugned Act is viewed as a whole it will appear that it authorised the fixation of salary of working journalists at a level which disables the running of the press.
The impugned Act thus, impedes, controls and prohibits the free employment of the agencies of expression on that section of the Press which form its vocal chord and therefore the Act infringes the freedom contemplated under article 19 (1) (a) and is not saved by article 19 (2).
In judging the validity of the enactment it must be tested by its operation and effect (Dwarkadas Srinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd., ; , 683; Minnesota Ex Rel.
Olson, ; The Act also violates the right guaranteed by article 19 (1) (g) of the Constitution as it places unreasonable restraint on the petitioners ' freedom to carry on business (Chintaman Rao vs The State of Madhya Pradesh, ; ; cited with approval in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh, ; and Ch.
Tika Ramjidas vs State of U. P. ; ; The State of Madras vs V. G. Row, ; , 606 607; The State of West Bengal vs Subodh Gopal Bose, [1954] section (C. R. 587; Virendra vs State of Punjab, A. 1.R. 1957 section C. 896).
The law imposing restrictions on fundamental rights must be reasonable not only in its substantive content but in its procedural content as well (Dr. N. B. Khare vs State of Delhi, ; ; Ourbachan vs State of Punjab, ; The relevant criteria for the fixation of wages were not laid down in section 9 (1) of the Act.
The criteria for the fixation of wages laid down in the Act were only relevant for fixing minimum rates of wages, though the word " minimum" used in the Bill 13 of 1955 as introduced in the Rajya Sabha was subsequently dropped before the Bill became the Act.
It was not made incumbent on the Wage Board to consider the capacity of industry to pay as an essential criterion or a major factor in 3 18 fixing wages.
The other circumstances, viz., " any other circumstances which to the Board may seem relevant " mentioned in section 9 (1) of the Act was left to be determined by the Board on its subjective satisfaction which could not be controlled by any higher authority.
The Act thus enables the Board to exercise arbitrary powers in regard to the same and that is unreasonable by itself (Thakur Raghbir Singh vs Court of Wards, Ajmer; , ; R. M. Seshadri vs District Magistrate, Tanjore, ; The procedure to be followed by the Wage Board was not laid down in the Act (c. f. The Bombay Industrial Relations Act, 1946, as amended) and it Was open to the Board to follow any arbitrary procedure disregarding the principle of audi alteration parted and as such the Act is unreasonable.
The Wage Board was not exercising legislative functions but functions, which were quasi judicial in character.
The intention of the Legislature was to assimilate the Wage Board as much as possible to an Industrial Tribunal constituted under the .
If it is held that section 11 of the Act is an enabling provision, and gave the Board the arbitrary discretion whether to exercise the same powers and follow the same procedure of an Industrial Tribunal or any procedure it liked, it is unreasonable.
The provisions of sections 2 (f), 3, 4, 5, 8 to 11, 12, 14, 15 and 17 place restraints on newspaper establishments which would have the effect of destroying the business of the petitioners.
The right to impose restrictions on the right to carry on business under article 19 (6) conferred no power on the Legislature to destroy the business itself (Stone vs Farmers Loan and Trust Co., ; ; Municipal Corporation of the City of Toronto, vs Virgo, ; A. G.,for Ontario vs A. G. for the Dominion, [1896] A. C. 348).
The Act is discriminatory in character and violates article 14 of the Constitution.
It is restricted in its scope to a selected section of newspaper employees.
it gives them the benefit of the wage fixation by devising machinery in the form of a Pay Commission without the existence of any industrial dispute, without prescribing the major criterion of capacity to pay to be taken into consideration; (Britannia Bldg.
and Iron Co. Ltd., , 654; Union Drug Co. Ltd., , 767; Report of the Committee on Fair Wages, pp.
13 15, paras.
21, 23 and 24); or following the procedure prescribed by the , even in disregard of principles of audi alteram partem.
The employers of the newspaper establishments are subjected to discriminatory treatment by the Act in that (1) they are singled out from all other industrial employers who are covered by the ordinary law regulating industrial relations under the ; (ii) they have been saddled with new burdens in regard to a section of their workers in matters of gratuity, compensation, hours of work and wages; (iii) section 12 of the Act makes the decision of the Wage Board binding only on the employers and not on the employees and(iv) section 17 provides for recovery of money from employers only and not from employees in the same manner as an arrear of land revenue.
The classification made by the impugned Act is arbitrary and unreasonable in so far as it removes the newspaper employers vis a vis the working journalists from the general operation of the .
The right to apply to Supreme Court for enforcement of a fundamental right under article 32 is itself a fundamental right guaranteed by the Constitution (Ramesh Thapar V. The State of Madras, ; , 597).
The right to claim a writ of certiorari against a decision is dependent on the fact that the impugned decision on its face is a " speaking order ".
(Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw, 1, affirmed by the Court of Appeal in ; ; A. K. Gopalan vs The State of Madras; , , 243).
The Act 20 contravenes article 32 of the Constitution because it does not provide for giving any reasons for the decision to be made by the Wage Board.
Decision of the Wage Board is illegal and void because (1) the Act under which it is made was ultra vires (Mohd Yasin vs Town Area Committee of Jalalabad, ; ; Himatalal Harilal Mehta vs State of U. P., [1954] section C.R. 1122); (ii) the decision itself infringes the fundamental rights of the petitioners (Bidi Supply Co. vs Union of India, ; and (iii) the decision is ultra vires the Act) Pandit Ram Narain vs State of U. P., ; The reconstitution of the Board oil the retirement of one of its members was ultra vires and unauthorised by the Act as it stood at the time, the Rules having been published on July 10, 1956.
The procedure followed by the Board offended the principles of natural justice and is therefore invalid.
It did not follow the procedure of ail Industrial Tribunal even though on two occasions, viz., when the questionnaire was issued and when a number of newspapers failed to reply to the questionnaire, the Board asserted that it had the powers of an Industrial Tribunal.
Neither in the questionnaire nor at any time thereafter were concrete proposals submitted by the Board to the newspaper establishments.
The classification of newspapers on the basis of gross revenue is contrary to the provisions of the Act.
In the gross revenue which is earned by newspaper establishments advertisement revenue ordinarily forms a large bulk of such revenue and unless the proportion of advertisement revenue to the gross revenue were taken into consideration it would not be possible to form a correct estimate of the financial status of a newspaper establishment with a view to its classification.
Profit and loss of newspaper establishment should be the proper test and if that 21 test were adopted it would give an altogether different picture.
The wages which are normally fixed after a general inquiry ' applicable to the whole industry have always been minimum wages.
Assessment of a wage level and scale only by reference to gross revenue was erroneous.
The decision suffers from another major defect in computing gross revenue not for each newspaper but collectively for the Organization which might be running a number of papers.
The result of this mode of calculation was that an organisation publishing a large number of papers might well fall within the top class by virtue of its gross revenue although each one of the papers taken individually might be running at a loss.
This process of considering the multiple units or a chain of newspapers as one establishment has affected the petitioners adversely and is unauthorised by the Act.
The Wage Board was not authorised by the Act to fix the wages of working journalists in relation to the whole industry but could do so only in respect of individual establishments as will appear from the definition of a " newspaper establishment " given in section 2(d) of the Act.
An establishment can only mean " an establishment " and not a group of them, even though such an individual establishment may produce or publish one or more newspapers.
(Pravat Kumar vs W. T. C. Parker, A. 1.
R. , 118; section R. V. Service Co. Ltd. vs State of Madras,A. 1.
R. , 121 122).
The decision of the Wage Board is illegal as it does not disclose that the capacity to pay of the individual establishment was ever taken into consideration.
There is nothing on record to suggest that both as regard rates of wages and the scales of pay the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region wise.
Even as regards the fixation of wages the Wage Board does 22 not seem to have taken into account the other provisions of the Act which conferred upon the working journalists other benefits which would affect the paying capacity of the newspaper establishments.
Furthermore the working Journalists constitute only 1/5 of the total staff employed by various newspaper establishments.
If the conditions of service of working journalists were to be improved by the Wage Board the other employees who form 85% were bound to be restive and likely to raise industrial disputes for betterment of their conditions of service.
This would impose an additional financial burden on the newspaper establishments and would substantially affect their capacity to pay.
The Wage Board exceeded its power in giving retrospective operation to its decision.
The Wage Board had acted illegally in fixing scales of pay for a period of three years when the Act does not give it such authority.
Further the Wage Board was handicapped for want of Cost of Living Index.
K. M. Munshi, L. K. Jha, section section Shukla, Balbhadra Prasad Sinha and R. J. Joshi, for the petitioners in Petitions Nos.99 to 101 of 1957.
The freedom of the Press is a fundamental personal right of the petitioners.
It rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.
This is a " preferred right ".
The purpose of the constitutional guarantee of free speech is to prevent public authority from assuming the guardianship of the public mind (Thomas vs Collins, 89 L. Ed. 430; The Supreme Court and the right of Free Speech and Press Annotation in ; Beauhairnais vs Illinois; , , 943dissenting opinion of Douglas, J.).
While the Press enjoys no immunity from the application of the general laws relating to industrial relations, an Act or any 23 of its provision would violate the right of free speech and expression if it lays a direct and preferential burden on the freedom of the Press ; if it has a tendency to curtail circulation and thereby narrow the scope of disseminating information; if it fetters the petitioners ' freedom to choose the means of exercising ' their right to freedom of expression and if it is likely to undermine the independence of the Press by having to seek Government aid.
The Act singles out the Press for levying upon it a direct burden which is excessive and so restrictive as to be prohibitive.
It begets a class of workers whose benefits and rights are given a preferential enforceability parallel to that of a public debt.
The impugned Act by section 9 leaves, in violation of the Constitution, the fixation of wages to an agency invested with arbitrary and uncannily power to impose an indeterminate burden on the wage structure of the Press, such employer and employee relations at its discretion as it thinks fit, and such burden and restrictions for such time as it thinks fit.
The Act and the decision of the Wage Board, which under the Act becomes enforceable as a part of it, have imposed an excessive and prohibitive burden which will have a tendency to curtail the revenue and restrict circulation which is the means of imparting information and giving free expression to speech, impose a penality on the petitioners ' right to choose the instruments for its exercise or to seek alternative media of expression, drive the Press to seek Government aid in order to survive and prevent newspapers from being started.
The Act has created an impossible situation in which the petitioner could only say " I cannot live, I cannot die and I cannot commit suicide ".
Even if the petitioners were to close down their business and dispose of all their assets they would not be in a position to meet all the liabilities.
The Constitution does not permit any abridgment of the fundamental right of freedom of speech and expression unless it falls within the categories of restrictions mentioned in article 19(2).
When the permitted restrictions were incorporated special care was taken by the framers of the Constitution to see that 24 freedom of speech was protected and that the right should not be at the mercy of the legislature which might want to impose excessive burden on the Press.
It is for this reason that the " Public interest " restriction in article 19(6) appearing against the fundamental right in article 19(1)(g) is not to be found in article 19(2).A distinction has to be drawn between the Constitution of U. section A. and India.
What is known as the " due process of law " in America has been specifically omitted from the Constitution of India.
In U. section A. the " due process " clause enabled the Supreme Court to read into the Constitution any doctrine restrictive of the fundamental right, e. g., in the 1930 's the U. section Supreme Court had held that statutory fixation of minimum wage in the newspaper industry was violation of fundamental rights of free speech, but after some years the same Court acting under the discretion given by the due process clause took cognizance of altered circumstances in labour relations and held that the imposition of a minimum wage on the Press did not violate the fundamental right (Constitution of the United States of America, Revised and Annotated (1952), U. section Govt.
Printing Office, pp. 792, 988).
The Indian Constitution does not permit restriction of freedom of speech except under the limitation set by article 19(2).
Restrictions that could be held intra vires in respect of other industries would still be ultra vires under article 19(1)(a) of the Constitution in respect of the Press industry because of the special privilege of right of free speech.
Any direct restriction placed by Government on the Press would be violation of article 19(1)(a), and therefore even if the Government had sought to impose a minimum wage for the Press by direct legislation it would have been equally unconstitutional.
This illegality, however, would not attach to the finding of an adjudicatory machinery such as was contemplated under the .
Where Government provided a media for the settlement of disputes and claims between citizen,,, and citizens there was no question of any contravention of fundamental rights which were protected against governmental encroachment.
25 The various sections of the Act have the effect of placing restrictions on the press which would in evitably have the effect of restricting the freedom of speech and expression in contravention of article 19 (1) (a).
The Act has created a privileged class of working journalists above the other workers either in this country or anywhere also, above contract and above the law of the land.
The Wage Board has exceeded its authority and has arrived at conclusions and findings which restricts the fundamental rights of the petitioners.
The Act authorizes the Central Government to constitute a Wage Board for fixing rates of wages.
This does not authorize the Board to enter into the wider question of determination of scales of pay.
Fixing could only mean fixing with reference to a point of time.
The Legislature did not contemplate that single wage should determine the wage scales, for all time to come The whole framework of the Act was based on minimum wage and the sudden removal of the word " minimum " has caused all these difficulties.
" Rates of wages " and not " scales of wages", the Wage Board was to consider.
The term " rates of wages applies only to a particular point of time.
[Sinha, J. Section 9 (2) of the Act says that the Board may fix "rates of wages for time work and for piece work ".
They cannot have any reference to scales.
The same words in the statute mean the same thing.
They cannot mean different things in different sections.] Yes.
These words are used again and again in the Act.
In the Minimun Wages Act, the Payment of Wages Act, etc., where the same expression " rates of wages " is used to indicate a wage fixed in time and amount.
The Wage Board has exceeded its power in fixing the scales of wages and increments and thereby places a fetter on the Press, not contemplated by the Act.
The Act and the Wage Board have disregarded all considerations which according to authority and law were germane to the proper fixation of wages without 4 26 placing restrictions on fundamental rights.
Even the Minimum Wages Act provides for periodical reviews, and proposals for minimum wages should be notified for inviting the opinions.
The decision of the Wage Board has been arrived at in violation of the procedure prescribed by section 11 of the impugned Act and in violation of the rules of natural justice and is thus illegal.
The Wage Board has been unreasonable in basing wages on revenue from all sources rather than on the revenue which the working journalists contributed by their labour.
Classification of newspapers on the basis of the gross revenue of all papers run by an Organisation and fixation of wages on such classification has led to results which are absurd and discriminatory in effect and ignore the principle enunciated by the Act itself.
As an example, take the case of a paper with small circulation in Kutch which is placed in a higher category than a paper in Bombay simply because the former is part of a larger Organisation.
The Wage Board has not taken care to remain within the terms of the impugned Act, namely, that the wages should be based on regional consideration.
The Wage Board has given its decision in complete disregard of the newspapers ' capacity to pay.
it did not take proper care in framing its decision.
Lack of such care in framing its decision makes it unreasonable and hence restrictive of fundamental rights.
The Wage Board has exceeded its authority by giving retrospective effect to the wage structure devised by it.
This is invalid and ultra vires the Act.
Section 12 of the Act creates one sided obligation by making decision of the Board binding only on the employers.
Such one sided obligation can be appropriate when a minimum subsistence wage is fixed but cannot attach to payment of wages at luxury levels.
This unilateral obligation on the employer leaves it open to the journalists to agitate for an increase in wages before an industrial tribunal, but it precludes the employer from seeking any alteration under any circumstances.
The Act has provided no machinery 27 for a review or revision of the wage structure even if circumstances changed.
Restrictions on fundamental right to do business arise because the Act and the decision of the Wage Board have the effect, firstly, of considerably increasing the operating cost and, secondly, of fettering the conditions of service or the terms of the contract of service between the employer and the employee.
By disregarding the disparity in regional conditions the Wage Board has discriminated between paper and paper, employer and employer and employee and employee.
section P. Sinha, Gurbachan Singh, Harbans Singh and R. Patnaik, for the petitioners in Petition No. 103 of 1957.
section section Shukla, for the petitioners in Petitions Nos.
116 to 118 of 1957.
M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for respondent No. I (The Union of India) in all the Petitions.
Before going into the merits of the case it is necessary to examine the background and the perspective in which the Act was enacted, the careful inquiry which preceded its enactment and the conditions which the Act was designed to meet.
(Report of the Press Commission, dated July 14, 1954; Report of the Inquiry Committee constituted in 1947; Report of the C. P. and Berar Press Inquiry Committee constituted on March 27, 1948).
The Act does not infringe any of the fundamental rights of the petitioners guaranteed under articles 19(J) (a), 19(1)(g), 14 and 32 of the Constitution.
The functions of the Wage Board constituted tinder section 8 of the Act were not judicial or quasi judicial in character; the fixation of the rates of wages by the Wage Board was a legislative act and not a judicial one; the Wage Board arrived at its decision on a consideration of all the criteria laid down in section 9(1) of the Act for fixation of wages and the material as well as the evidence placed before it; a large number of the decisions of the Wage Board was unanimous; under the Act the Wage Board has the power and authority to fix the 28 scales of wages also and to give retrospective operation to its decision.
The financial position of the petitioners was not such as to lead to their collapse as a sequel to the enactment of the provisions of the Act and the decision of the Wage Board.
Regarding alleged infringement of article 19(1)(a), I submit that the legislation should be examined in order to determine whether it is legislation directly in respect to the fundamental rights mentioned in the Constitution.
The principle enunciated by the Supreme Courtney several decisions is that when a legislation is attacked on the round of contravention of a fundamental right, the Court must first examine whether it directly deals with the fundamental right.
If the legislation is not one directly with respect to a fundamental right no further question arises, (A. K. Gopalan vs The State of Madras, [1950] section C. R. 88, per Kania, C. J., Ram Singh vs State of Delhi, ; , 455).
The Supreme Court has also in this connection invoked the doctrine of "pith and substance ".
The fact that a legislation, directed in its path and substance to regulate gambling, incidentally placed certain restrictions on business was held not to make the law violative of the fundamental right to carry on business.
(State of Bombay vs R. M. D. Chamarbaugwala, [1957] section C. R. 874).
The provisions of the Act are clearly designed to regulate the conditions of service of journalists and not the freedom of expression or speech, and therefore no question of the infringement of fundamental right under article 19(1)(a) arises.
The contention of the petitioners based on American decisions, e. g., Minnesota Ex Rel.
Olson (75 L. Ed. 1357) cannot be sustained.
First, the provisions of the American Constitution are substantially different; secondly, the American Courts have adopted the same view as our Supreme Court in A. K. Gopalan vs The State of Madras, ; , and other cases.
(The Associated Press vs The National Labour Relations Board, ; ,960 966; Mabee vs White Plains Publishing Co., ; , 613 where application of U. section Fair Labour Standards Act, 1938, to newspaper undertakings was held not to 29 infringe freedom of speech; Oklahoma Press Publishing Co. vs Walling; , , 621; Murdock vs Pennsylvania, 87 L. Ed. 1292).
The restrictions under article 19(6) on the freedom to carry oil business under article 19(1)(g) will not cease to be reasonable even if such restrictions resulted in prohibition of carrying on business in certain cases.
Such restrictions can be imposed if they are in the interest of the general public.
The Act follows the recommendations of the Press Commission for the most part.
The only important deviation it has made is that whereas the Press Commission had recommended fixation of a minimum wage, the Act provides for fixation of all wages.
Under the directive principles of State Policy (article 43 of the Constitution) the goal was not merely a minimum wage but a fair wage and a living wage.
We have to march to that goal.
[Gajendragadkar, J. True, but in marching to that goal we have to consider the capacity to pay.] Yes, capacity to pay region wise and capacity to pay country wise but not capacity to pay unit wise, that is, according to each newspaper 's capacity.
The Court has to consider what the Legislature intended.
The term " minimum wage" has been understood in two different senses, the first being an " industrial minimum wage " and the second a " statutory minimum wage ".
Is it an " industrial minimum ", or is it a " statutory minimum " ? An " industrial minimum " is a subsistence wage that has to be paid by any unit if it wishes to exist; a " statutory minimum " is someting more than a subsistence level wage and may be any level which the Legislature thinks fit to impose.
" Wages " has been defined 30 very comprehensively in section 2(rr) of the , and in the Third and Fourth Schedule to that Act wages are stated to include the period and mode of payment.
[Sinha, J. Does it refer to scales ?] Wages include in its ambit the scales.
It was on this basis that various Industrial Tribunals have fixed scales.
Even the Supreme Court decided that way.
[Sinha, J. My point is whether the question has been raised and decided or has it been only assumed ?] The matter, so far as I know, has not been raised and decided.
It has only been assumed.
" Wages " in sections 9 and 8 of the Act has been used in a comprehensive sense.
The correct approach is to see what the term " wages " means and to see whether the word " rates " cuts down that meaning.
In order to construe the section.
One of the criteria specified in section 9(1) of the Act is the prevalent rates of wages for comparable employments.
This has no reference to minimum wage (Nellimarla Jute Mills, It shows that section 9(1) contemplates fixation of rates of wages which are higher than the bare subsistence or industrial minimum wage.
The criterion " the circumstances relating to newspaper industry in different regions of the country " in section 9(1) can have no other meaning than the capacity to pay region wise.
It is the Board which has to decide what is relevant and what is not.
Such power is neither unreasonable nor arbitrary.
The general policy with regard to the Wage Board was that they were given the widest discretion and there was no question of their discretion being fettered.
Even if the Legislature left the fixation of wage to the Board without laying down any criteria it would have been a competent legislative Act because of the nature of the 31 Board.
In fact, three criteria have been laid down in section 9(1) of the Act.
Having regard to the variety and complexity of the matters involved it was not possible for the Legislature itself to visualise or indicate the various circumstances which might be relevant.
There is nothing unusual or arbitrary in leaving to the Wage Board a wide discretion in the matter of its procedure.
In U. K. the Central Co ordinating Committee under the Wage Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulation Act, 1924, are authorised to regulate their own proceedings.
No formal procedure has been prescribed for Wage Boards in Australia.
The inclusion of proofreaders in the definition of "Working Journalist" in section 2(1) of the Act is not unreasonable.
Proof readers occupy a very important position in the editorial staff of a newspaper (Kemsley Manual of Journalism, p. 337, B. Sen Gupta Journalism as a Career (1955 Edn.).
There is nothing unreasonable in the period of notice for retrenchment in section 3(2) of the Act.
(Halsbury 's Laws of England, 2nd Edn., Vol. 22, p. 150, para.
249 foot note (e)).
The retrospective operation of compensation in certain cases given by section 4 of the Act is designed to meet the few cases of retrenchment by the management anticipating the implementation of the recommendation of the Press Commission and cannot be said to be unreasonable.
There is nothing unusual in section 5 of the Act which provides for a gratuity.
Under the law of various countries payment of indemnity to an employee who voluntarily resigns is provided for (Legislation for Press, Film and Radio in the World Today (1957) UNESCO publication at p. 404 ; Collective Agreement between the Geneva Press Association and the Geneva Union of Newspaper Publishers dated April 1, 1948).
Even in India Labour Courts have awarded gratuity on voluntary resignation (Cipla Ltd., , 358; Indian Oxygen and Acetylene Co. Ltd., (1956) 1 L. L. J. 435).
The hours of work provided in section 6 of 32 the Act cannot be said to be unreasonable having regard to the nature of work to be done by a working journalist.
Such hours of work are fixed by section 54 of the , (See also, ; Shops and Establishments Acts of different States in India).
Sections 8 to II deal with the constitution of the Wage Board and the fixation of rates of wages by the Board.
The Wage Board was to consist of an equal number of representatives of employers and employees and an independent chairman.
There is nothing unreasonable in the constitution of the Board.
The principles for the guidance of the Wage Board in the matter of fixation of wages have been laid down by the Act.
It cannot, therefore, be said that these provisions are unreasonable.
Section 17 of the Act relates only to the mode of recovery of money from an employer and does not impose any financial burden; therefore it could not be said that it infringes article 19(1)(g).
Article 14 of the Constitution does not forbid reasonable classification for the purpose of legislation (Budhan Choudhry vs The State of Bihar, ; , 1048).
The work of a journalist is peculiar and demands a high degree of general education and some kind of specialised training (Report of the Press Commission, para.
512; Legislation for Press, Film and Radio in the World Today (1951) UNESCO publication at p. 403).
The working journalists are a class by themselves apart from the other employees of the newspaper establishments and also employees in other industries.
They can be singled out for the purpose of ameliorating their conditions of service.
There would be no discrimination if special.
legislation is enacted for the benefit of this class and a special machinery is created for fixing the rates of its wages different from the machinery for other workmen.
Even if the Act be considered as a social welfare measure the State c an only make a beginning somewhere.
Such a measure need not be all embracing.
There is nothing unreasonable in section 12 of the Act which makes the decision of the Board binding on the employers only.
A provision which has for its object the protection of 33 employees cannot be said to be repugnant to article 14 on the ground that it discriminates against the employers (South Bank Ltd. vs Pichuthayappan, A. 1.R. 1954 Madras 377).
Similar provision is to be found in section 33C of the .
There is nothing discriminatory in a provision which governs employees in other industries being extended to working journalists.
The object sought to be achieved by the Act is the amelioration of the conditions of service of working journalists.
The classification is based on intelligible differentiate which distinguish them from other employees of the newspaper establishments and also in other industries.
These differentiae have a rational basis.
The legislation amply fulfils the conditions of permissible classification.
It is " fantastic " to contend that the Act infringes article 32 of the Constitution.
The Act does not prohibit the Wage Board from giving a reason for its decision.
No question therefore arises of the infringement of the fundamental right of the petitioners under article 32.
Assuming any provision of the Act is void then the question will be whether it is severable.
If it is severable then the whole Act will not be void but only the section.
Similarly, if the court finds that the Act is constitutional but a decision of the Wage Board is ultra vires the Act or unconstitutional the Court will strike down such decision.
That will not affect the validity of the Act.
(State of Bombay vs F. N. Balsara, ; ; State of Bombay vs The United Motors (India) Ltd., [1953] section C. R. 1069 and R. M.,D. Chamarbaugwala vs The Union of India, ; In regard to the decisions of the Wage Board the Court has to consider first, whether the decisions are intra vires the Act since an authority to whom the power of subordinate legislation is delegated cannot act contrary to the statute, and secondly, do the decisions being a part of the Act in any way contravene the Constitution.
These are the only questions which 34 arise in regard to the decisions of the Wage Board.
[Bhagwati, J. They say it is contrary to the principles of natural justice audi alteram partem.] That is a maxim about which we have heard so much.
It has, no application to this case of delegated legislation.
[Bhagwati, J. Can it not be urged, having regard to section 11, that the Legislature did not contemplate that the Wage Board was to function as delegated authority because it gives the choice of the provisions of the being followed by the Board ?] No, even for a subordinate legislative authority there are procedures to be followed for arriving at certain conclusions.
[Kapur, J. Is it not necessary to hear everybody who may be affected by the decisions of the Board ?] No question of hearing arises.
It is a question of a subordinate legislative authority gathering such information as it wants and it is obliged to take into consideration all the relevant circumstances.
Certiorari and prohibition lie only in respect of judicial or quasi judicial acts.
(Halsbury 's Laws of England, 3rd Edn.
11, p. 55, para.
The principle audi alteram partem also applies only to judicial or quasi judicial proceedings.
(Patterson vs Dist.
Commr.
of Accrator, For a distinction between judicial and legislative functions, See Cooley 's Constitutional Limitations, 8th Edn.
Vol. 1, p. 185; Prentis vs Atlantic Coast Co. Ltd., ; , 226 227, Per Holmes J.; Mitchell Coal Co. vs Pennsylvania, 57 L. Ed. 1479, 1482; Louisville and Nashville Railroad Co. vs Green Garrett, ; , 239).
The functions of the Wage Board in the United Kingdom have been characterised by writers as legislative in character.
(Robson 's Justice and Administrative Law, 3rd Edn.
p. 608; Griffith 's Principles of Administrative Law, p. 39; Barbara Wootton, Social Foundations of Wage Policy, Modern methods of 35 Wage determination, p. 88).
This is also the case in Australia.
(Federated Saw Mills Case; , ; Australian Boot Trade Employees Federation vs Whybrow and Co., ; , 289, 317, per Isaacs, J.).
The Labour and Industry Act, 1953, of Victoria (Australia) in section 39 (2) gives statutory recognition to the decisions in 8 C. L. R. 365 and ; , by providing that every determination shall have force, validity and effect as if enacted in the Act.
The very constitution of the Wage Board under the impugned Act, with an equal number of representatives of employers and employees with an independent chairman is against its being judicial or quasi judicial in character, for, no man should be judge in his own cause.
(Franklin vs Minister of Town and Country Planning, ; , 103).
It is incorrect to infer that once the Wage Board is constituted under section 8 of the Act the power of the Government under the Act is exhausted and nothing more can be done.
The power to constitute the Board can by virtue of section 14 of the , be used from time to time as the occasion demands.
There was nothing wrong in the Central Government reconstituting the Board on the resignation of Shri K. P. Keshava Menon.
The decision by majority is provided by Rules framed by the Central Government under section 20 of the Act which became a part of the Act.
Hence a decision by a majority in conformity with the Rules under the Act cannot be impeached.
(Pacific States Box and Basketing Co. vs White, ; ; Under section II of the Act the Wage Board "may" exercise the powers and follow the procedure laid down under the .
There is nothing to warrant the provision being read as obligatory or mandatory.
The provisions of the are basically enacted for the adjudication of disputes between two parties and they are on 36 their face inapplicable to the Wage Board.
That is precisely why the Board was given the option to exercise some of the powers conferred by the or to follow procedures prescribed in that Act.
It is not incumbent under the Act on the Wage Board to give any reasons for its decisons.
The Board would be perfectly within its right if it chose not to give any reasons.
While judging the reasonableness of the wage structure for the whole industry it would be entirely fallacious to see how it hit a particular newspaper or a unit.
Multiple units or chains could be classified on the basis of the total gross revenues of all the constituent units because economies would be possible in group operations resulting in the reduction of the cost of production.
There is nothing in the Act which prohibits the Wage Board from grouping into chains or multiple units.
Further, there is nothing in the Act to prohibit the treating of several newspaper establish ments publishing one or more newspapers though in different parts of the country as one establishment for fixing rates of wages.
Some sort of classification was inevitable when the newspaper establishments all over the country had to be considered for fixing the rates of wages.
If the Wage Board adopted gross revenue as a workable basis for classification there was nothing wrong and that fact could not vitiate its decision.
Profits of newspaper establishments were vague and difficult to ascertain as many things are mixed up in calculating profit.
It would be dangerous to go by the profit and loss of individual concerns to ascertain their capacity to pay.
Even the Bank Award has taken the "turnover" or the aggregate resources as the basis of the classification.
The basis of gross revenue was the only proper and convenient method of ascertaining the actual status of a newspaper establishment for fixing a wage structure.
Wage structure recommended by the Board would show that compared with the scales and salaries obtaining now in many of the newspaper
establishments the scales given by the Board were not exorbitant or 37 unreasonable.
What is to be considered is the industry region wise and not individual units.
It may be that individual units may suffer hardship or even go out of existence but that would not be a relevant consideration.
[Gajendragadkar, J. If the decisions are to be attacked effectively under article 19(1)(g), petitioners have to show that A or B or C class of paper will cease to exist, or, taken as a class they cannot bear the burden.] That is the way the matter should be approached.
The figures in individual statements of the petitioners furnish no evidence whatsoever of the unreasonableness of the wage fixation.
The decision is given retrospective effect from the date of constitution of the Board.
The Act itself in section 13 contemplates interim relief.
Instead of granting any interim relief the Board decided to give retrospective effect to its decision.
A.V. Viswanatha Sastri, section Viswanathan, B. R. L. lyengar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 3 in Petition No. 91 of 1957.
The balance sheets and profit and loss accounts of the petitioner company for several years when analysed show that with normally prudent management the earnings of the Indian Express group of newspapers admit of payment to working journalists on the scale fixed by the Wage Board and the decision of the Wage Board was legally valid and just having regard to the several factors to be taken into consideration in fixing a fair wage.
N. C. Chatterjee, A. section R. Chari, section Viswanathan,A. N. Sinha, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the Indian Federation of Working Journalists in all the Petitions, and for the ]Delhi Union of Journalists in Petition No. 103 of 1957.
It is open to Parliament to delegate to the Wage Board the power to legislate with regard to certain subjects.
The so called decision of the Wage Board was a valid exercise of such power by a subordinate legislative body functioning under specified conditions under Parliamentary mandate with the limits prescribed by the Constitution.
38 Even if the Wage Board is held to be a quasijudicial body, it acted according to the principle of audi alteram partem and no prerogative writ should be issued to disturb findings arrived at by such a body.
M. K. Nambiar, in reply.
The Wage Board was not intended to exercise powers of legislation but those of a judicial nature.
Under section 10 of the Working Journalist, , Act the Board has to make a "decision", and this term has been used in several enactments to indicate a determination by a judicial tribunal.
Under section 8 the decision of the Board has to be made in accordance with the provisions of the Act and therefore the Board had the function of applying the law and not making a law.
The Wage 'Board is required under section 11 to adopt the law procedure as is adopted by Industrial Tribunal. ,.
The decision of the Board is declared to be binding only on some persons and not all.
It can be executed in the same manner as the award of an Industrial Tribunal.
Its character is identical to that of an award made by an industrial tribunal and the Supreme Court has held that a tribunal does not exercise legislative functions.
Parliament did not intend to confer any powers of subordinate legislation on the Board.
This is clear from the rules of business of the Lok Sabha read with the Statement of Objects and Reasons to the Bill.
In, the memorandum regarding delegated legislation appended to the Bill the constitution of the Wage Board in the matter of fixation of wages had not been shown as a piece of delegated legislation.
(The Rules of Procedure and Conduct of Business in Lok Sabha (1957) Rule 70).
The decision of the Wage Board was not to be laid before both the Houses of Parliament.
This would have been so had the fixation of wages by the Board was a delegated legislation (laid Rule 317).
The Wage Board was not constituted as sub legislative authority.
The question is not what the legislature could have enacted but whether by virtue of powers of the Wage Board under the Act as enacted, it is a legislative body or a tribunal with adjudicators functions The Board does not possess any powers of delegated legislation, It has been given all the trappings which 39 were necessary to characterize it as a judicial body.
In interpreting the Act the Court is entitled to take into consideration the surrounding circumstances, the object of the legislation and also whether a particular term used in legislation was considered by the legislature at the time of enactment.
The court ought to take into consideration the entire background and the effect of dropping of the term "minimum" from the enactment.
The Press Commission had directed its attention exclusively to the question of fixing minimum wage and the Act in section 9 followed the pattern and purported to implement the recommendations of the Press Commission.
The Press Commission in considering minimum wage ignored the capacity to pay.
The Act, similarly, being based on the Report of the Press Commission has made no provision for considering the capacity to pay.
This omission which was appropriate with regard to minimum wages rendered the fixation of wages at a different level unreasonable and therefore void.
The content of the term "minimum wage" would not be changed by merely calling it a "statutory" minimum.
Section 14 of the , can apply if the enactment does not rule it out by necessary implication.
The entire scheme of the impugned Act shows that only one Wage Board and one decision is contemplated.
It is not open to the Government to reconstitute the Wage Board as and when they desire.
Munshi, in reply.
Whether or not the Act imposes a direct burden, the Court should see if the Act is a special law singling out an industry for laying the burden on it.
If it does so, as in the present Act, it will amount to a direct burden.
If it is a general law it would not be a direct burden.
The Act stands alone in being arbitrary and excessive and is without parallel in any other country.
The Act is unique in that (1) it provides for gratuity even on voluntary resignation.
(2) it gives power to the Wage Board to fix indeterminate wages investing them with attributes of minimum wages, and (3) it confers on the Board power to fix wages (i) without specifying 40 essential standards, (ii) without casting a duty to follow a reasonable procedure, (iii) without any control by an appellate tribunal or court, and (iv) without providing any opportunity to the parties concerned to be heard on the merits of the proposal it makes.
In other countries there are various safeguards and checks against arbitrary wage decisions.
(U. K. Wage Councils Act, 1945; U. section Fair Labour Standards Act, 1938; Factories and Shops Act, 1905, new Act of 1928 of Victoria, Australia).
If the mechanism of the Act itself is such that it is unreasonably restrictive of rights to trade then the Act has to be struck down as void under article 19 (1)(g).
Even if it is held that there was no excessive delegation, it is still open to the Court to see whether the restrictions impinged on the Constitutional safeguards tinder article 19 (1)(g).
Fixation of scales of wages on the basis of grossrevenue without taking into account the liability of newspapers is a devastating doctrine in industrial relations.
The Wage Board is not a sub legislative body; but even if it is, it has to act judicially and is subject to writs of certiorari.
Even if its decisions become assimilated in the Act it must be considered to be a quasi judicial body, since it is expected to carry out a preliminary investigation before recording its findings.
The functions of the Wage Board cannot be characterised either exclusively legislative or exclusively judicial.
The functions performed by administrative agencies do not fall in water tight compartments.
They may be partly legislative, partly judicial and partly administrative (Stason and Cooper, Cases and other Materials on Administrative Tribunals).
The Court has to consider whether the administrative agency performs a predominantly legislative or judicial function and determine its character accordingly (Village of Saratoga Springs vs Saratoga Gas Electric Light and Power Co., (1908) 191 New York 123 People 41 ex rel.
Central Park North and East River Co. vs Willcox, (1909) 194 New York 383).
In the United Kingdom the decisions of the Wage Councils in the shape of wage regulations proposal acquires legislative character from the order made by the Minister giving effect to the proposals.
In Australia the Factories and Shops Act, 1905, and the Labour and Industry Act, 1953, Section 39(2) of Victoria by express provision invests the determination of the Special Board with the characteristics of a legislative act.
Under the Fair Labour Standards Act, 1938, of U. section A. the Wage orders ultimately approved by the Administrator are subject to judicial review.
In India under the , the recommendations of the Committees are forwarded to the appropriate Government who by notification as a token of approval, in the official Gazette, fix minimum wages in respect of each scheduled employment.
Under the recent amendment of the Bombay Industrial Relations Act, 1946, the Wage Boards constituted under the Act are to follow the procedure of the Industrial Court in respect of arbitration proceedings and it cannot be said that they perform any legislative function.
The Wage Board under the impugned Act, in spite of its being an administrative body or sub legislative body may nevertheless be exercising quasi judicial functions if certain conditions are fulfilled (Halsbury 's Laws of England, 3rd Edn., Vol.
11, pp.
55 56; Rex vs Manchester Legal Aid Committee, Ex parte R. A. Brand and Co. Ltd., , 428; Rex vs The London County Council, Ex parte the Entertainments Protection Association Ltd., , 233 234; Board of Edu cation vs Rice, ,182; Allen C. K. Law and Order 1956 Edn., pp. 102, 256, 257).
The Wage Board has not given any attention to the paramount consideration of capacity to pay as it should, in reason, have done.
At no time was any question asked as to the wage burden the Wage Board 's scales would impose on the industry as a ,whole or on a particular unit.
The specific burden which the Board proposed to impose has never been 6 42 put even indirectly.
At no time has it been considered what would be the potential burden on the industry if the non journalists in newspaper establishments made similar demands.
No consideration has ever been given about the effect on the industry or on a unit of the retrospective operation of the wage scales.
A. section R. Chari, section Viswanathan, B. R. L. Iyengar,J. B. Dadachanji and section N. Andley, for the Federation of Press Trust of India Employees ' Union, Bombay Union of Journalists and Gujrat Working Journalists Union.
R. Ganapathy Iyer and G. Gopalakrishnan, for the ' appellants in C. A. No. 699 of 1957.
L. K. Jha, section section Shukla and R. J. Joshi, for the appellants in C. A. Nos. 700 to 702 of 1957.
section P. Sinha, Harbans Singh and R. Patnaik, for the appellants in C. A. No. 703 of 1957.
B. Sen and R. H. Dhebar, for respondent No. I in all the appeals.
N. C. Chatterjee, J. B. Dadachanji and section N. Andley, for the Indian Federation of Working Journalists in all appeals, respondent No. 2 in C. A. No. 700 of 1957 and respondent No. 3 in C. A. No. 703 of 1957.
B. R. L. Iyengar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 3 in C. A. 699 of 1957.
March 19.
The Judgment of the Court was delivered by BHAGWATI J.
As they raise common questions of law and fact they can be dealt with under one common judgment.
In order to appreciate the rival contentions of the parties it will be helpful to trace the history of the events which led to the enactment of the impugned Act.
The newspaper industry in India did not originally start as an industry, but started as individual 43 newspapers founded by leaders in the national, political, social and economic fields.
During the last half a century, however, it developed characteristics of a profit making industry in which big industrialists invested money and combines controlling several newspapers all over the country also became the special feature of this development.
The working journalists except for the comparatively large number that were found concentrated in the big metropolitan cities, were scattered all over the country and for the last ten years and more agitated that some means should be found by which those working in the newspaper industry were enabled to have their wages and salaries, their dearness allowance and other allowances, their retirement benefits, their rules of leave and conditions of service, enquired into by some impartial agency or authority, who would be empowered to fix just and reasonable terms and conditions of service for working journalists as a whole.
Isolated attempts were made by the Uttar Pradesh and Madhya Pradesh Governments in this behalf.
On June 18, 1947, the Government of Uttar Pradesh appointed a committee to enquire into the conditions of work of the employees of the newspaper industry in the Uttar Pradesh.
On March 27, 1948, the Government of Central Provinces & Berar also appointed an Inquiry Committee to examine and report on certain questions relating to the general working of the newspaper industry in the province, including the general conditions of work affecting the editorial and other staff of newspapers, their emoluments including dearness allowance, leave, provident fund, pensionary benefits, etc.
The Committees aforesaid made their reports on the respective dates March 31, 1949, and March 27, 1948, making certain recommendations.
The All India problem, however, remained to be tackled and during the debate in Parliament on the Constitution (First Amendment) Bill, 1951, the Prime Minister said that he was prepared to appoint a committee or a commission, including representatives of the Press, to examine 44 the state of the Press and its content.
He elaborated the idea further on June 1, 1951, when he indicated that an enquiry covering the larger issue of the Press, such as had been carried out in the United Kingdom by the Royal Commission, might be productive of good for the Press and the development of this very important aspect of public affairs.
The idea was further discussed during the debate in Parliament on the Press (Incitement to Crimes) Bill, later named the Press (Objectionable Matter) Act, 1952.
At its session held in April, 1952, at Calcutta, the Indian Federation of Working Journalists adopted a resolution for the appointment of a Commission to enquire into the condi tions of the Press in India with a view to improving its place, status and functioning in the new democratic set up.
The appointment of the Press Commission was thereafter announced in a Communique issued by the Govt.
The terms of reference inter alia were: "2.The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine:. . . (iv) the method of recruitment, training, scales of remuneration, benefits and other conditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission completed its enquiry and submitted its report on July 14, 1954.
The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine:. . . (iv) the method of recruitment, training, scales of remuneration, benefits and other conditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission completed its enquiry and submitted its report on July 14, 1954.
The industry taken as a whole had returned a profit of about 6 lakhs of rupees on a capital investment of about 7 crores, or less than I per cent.
per annum.
It found that proof readers as a class could not be regarded as working journalists, for there were proof readers even in presses doing job work.
It came to the conclusion that if a person had been 45 employed as a proof reader only for the purpose of making him a more efficient sub editor, then it was obvious that even while he was a proof reader, he should be regarded as a working journalist but in all other instances, he would not be counted as a journalist but as a member of the press staff coming within the purview of the .
to the capacity of the paper to make adequate payment. .
In this connection it may be stated that the Federation of Working Journalists also agreed, when it was put to them, that apart from suggesting a minimum wage it would not be possible for the Commission to undertake standardisation of designations or to fix scales of pay or other conditions of service for the different categories of employees for different papers in different regions.
They have stated that these details must be left to be settled by collective bargaining or where an agreement is not possible the dispute could be settled by reference to an industrial court or an adjudicator with the assistance of a Wage Board, if necessary.
The All India Newspaper Editors ' Conference and Indian Language Newspapers ' Association have also stated that it would not be possible to standardise designations and that any uniformity of salaries as between one newspaper and another would be impossible.
The resources of different newspapers vary and the conditions of service are not the same.
We agree in principle that there should be uniformity as far as possible, in the conditions of service in respect of working journalists serving in the same area or locality.
But this can be achieved only by a settlement or an adjudication to which the employers, and the employees collectively are parties.
" 46 539: DEARNESS ALLOWANCE:. .
This again, is a matter which would require very detailed study of the rise in the index numbers of the cost of living for various places where the newspapers are published.
We do not know of any case where a uniform rate has been prescribed for dearness allowance applicable all over the country irrespective of the economic conditions at different centres and the paying capacity of the various units.
This must be a matter for mutual adjustment between the employers and the employees and if there is no agreement, some machinery must be provided by which disputes between the parties could be resolved.
" The position of a journalist was thus characterised by the Commission: " A journalist occupies a responsible position in life and has powers which he can wield for good or evil.
It is he who reflects and moulds public opinion.
He has to possess a certain amount of intellectual equipment and should have attained a certain educational standard without which it would be impossible for him to perform his duties efficiently.
His wage and his conditions of service should therefore be such as to attract talent.
This must involve constant study, contact with personalities and a general acquaintance with world 's problems.
" It considered therefore that there should be a certain minimum wage paid to a journalist.
The possible impact of such a minimum wage was also considered by it and it was considered not unlikely that the fixation of such a minimum wage may make it impossible for small papers to continue to exist as such but it thought that if a newspaper could not afford to pay the minimum wage to the employee which would enable him to live decently and with dignity, that newspaper had no business to exist.
It recommended division of localities for taking into account the differential cost of living in different parts of India, and determining what should be the reasonable 47 minimum wage in respect of each area.
It endorsed the concept of a minimum wage which has been adopted.
In India, however, the level of the national income is so low at present that it is generally accepted that the country cannot afford to prescribe a minimum wage corresponding to the concept of a living wage.
However, a minimum wage even here must provide not merely for the bare subsistence of living, but for the efficiency of the worker.
For this purpose, it must also provide for some measure of education, medical requirements and amenities." and suggested that the basic minimum wage all over India for a working journalist should be Rs. 125 with Rs. 25 as dearness allowance making a total of Rs. 150.
It also suggested certain dearness allowance and City allowance in accordance with the location of the areas in which the working journalists were employed.
It compared the minimum wage recommended by it with the recommendations of the Uttar Pradesh and Madhya Pradesh Committees and stated that its recommendations were fairly in line with the recommendations of those Committees particularly having regard to the rise in the cost of living which bad taken place since those reports were made.
It then considered the applicability of the to the working journalists and after referring to the award of the Industrial Tribunal at Bombay in connection with the dispute between " Jam e Jamshed " and their workman and the decision of the Patna High Court in the case of V. N. N. Sinha vs Bihar Journals Limited (1), it came to the conclusion that the working journalists did not come within the definition of workman as it stood at that time in the nor could a question with regard to them be raised by others who were admittedly governed by the Act.
It thereafter con (1) (1953) 1.
L. R. 32 Pat.
48 sidered the questions as to the tenure of appointment and the minimum period of notice for termination of the employment of the working journalists, hours of work, provision for leave, retirement benefits and gratuity, made certain recommendations and suggested legislation for the regulation of the newspaper industry which should embody its recommendations with regard to (i) notice period; (ii) bonus; (iii) minimum wages; (iv) Sunday rest; (v) leave, and (vi) provident fund and gratuity.
Almost immediately after the Report of the Press Commission, Parliament passed the Working Journalists (Industrial ]Disputes) Act, 1955 (I of 1955) which received the assent of the President on March 12, 1955.
It was an Act to apply the , to working journalists.
" Working Journalist " was defined in section 2 (b) of the Act to mean " a person whose principal avocation is that of a journalist and who is employed as such in, or in relation to, any establishment for the production or publication of a newspaper or in, or in relation to, any news agency or syndicate supplying material for publication in any newspaper, and includes an editor, a letter writer, news editor, sub editor, feature writer, copy taster, reporter, correspondent, cartoonist, news photographer and proof reader but does not include any such person who: (i)is employed mainly in a managerial or admini strative capacity, or (ii)being employed in a supervisory capacity,exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
Section 3 of that Act provided that the provisions of the , shall apply to, or in relation to, working journalists as they apply to or in relation to workmen within the meaning of that Act.
The application of the , to the working journalists was not, however, deemed sufficient to meet the requirements of the situation.
There was considerable agitation in Parliament for the implementation of the recommendations 49 of the Press Commission, and on November 30, 1955, the Union Government introduced a Bill in the Rajya, Sabha, being Bill No. 13 of 1955.
It was a Bill to regulate conditions of service of working journalists and other persons employed in newspaper establishments.
The recommendations of the Press Commission in regard to minimum period of notice, bonus, Sunday rest, leave, and provident fund and gratuity, etc., were all incorporated in the Bill; the fixation of the minimum rates of Wages however was left to a minimum wage Board to be constituted for the purpose by the Central Government.
The provisions of the (20 of 1946) and the Employees ' Provident Funds Act, 1952 (19 of 1952) were also sought to be applied in respect of establishments exceeding certain minimum size as recommended by the Commission.
It appears that during the course of discussion in the Rajya Sabha, the word " minimum " was dropped from the Bill wherever it occurred, the Minister for Labour having been responsible for the suggested amendment.
The reason for dropping the same was stated by him as under: " Let the word " minimum " be dropped and let it be a proper wage board which will look into this question in all its aspects.
Now, if that is done, I believe, from my own experience of the industrial disputes with regard to wages, in a way it will solve the question of wages to the working journalists for all time to come.
" The Act as finally passed was entituled " The Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955) and received the assent of the President on December 20, 1955.
The relevant provisions of the Act may now be referred to.
It was an Act to regulate certain conditions of service of working journalists and other persons employed in newspaper
Newspaper establishment " was defined in section 2 (d) to mean " an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more 50 newspapers or for conducting any news agency or syndicate ".
The definition of " working journalist " was almost in the same terms as that in the Working Journalists (Industrial Disputes) Act, 1955, and included a proof reader.
All words and expressions used but not defined in this Act and defined in the , were under section 2 (g) to have the meanings respectively assigned to them in that Act.
Section 3 applied the provisions of the , as it was in force for the time being, to working journalists as they applied to, or in relation to workmen within the meaning of that Act subject to the modification that section 25 (F) of that Act in its application to working journalists in regard to the period of notice in relation to the retrenchment of a workman was to be construed as substituting six months in the case of the retrenchment of an editor and three months, in the case of any other working journalist.
The period which lapsed between the publication of the report and the enactment of the Working Journalists (Industrial Disputes) Act, 1955, viz., from July 14, 1954, to March 12, 1955, was sought to be bridged over by section 4 enacting special provisions in respect of certain cases of retrenchment during that period.
Section 5 provided for the payment of gratuity, inter alia, to a working journalist who had been in continuous service, whether before or after the commencement of the Act, for not less than three years in any newspaper establishment even when he voluntarily resigned from service of that newspaper establishment.
Section 6 laid down that no working journalist shall be required or allowed to work in any newspaper establishment for more than one hundred and forty four hours during any period of four consecutive weeks, exclusive of the time for meals.
Every working journalist was under section 7 entitled to earned leave and leave on medical certificate on the terms therein specified without prejudice to such holidays, casual leave or other kinds of leave as might be prescribed.
After thus providing for retrenchment compensation, payment of gratuity, hours of work, and leave, sections 8 to 1 1 of the Act provided 51 for fixation of the rates of wages in respect of working journalists.
Section 8 authorised the Central Government by notification in the Official Gazette to constitute a Wage Board for fixing rates of wages in respect of the working journalists in accordance with the provisions of the Act, which Board was to consist of an equal number of persons nominated by the Central Government to represent employers in relation to the newspaper establishments and working journa lists, and an independent person appointed by the Central Government as the Chairman thereof.
Section 9 laid down the circumstances which the Wage Board was to have regard to in fixing rates of wages and these circumstances were the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstance which to the Board may seem relevant.
The decision of the Board fixing rates of wages was to be communicated as soon as practicable to the Central Government and this decision was under section 10 to be published by the Central Government in such manner as it thought fit within a period of one month from the date of its receipt by the Central Government and the decision so published was to come into operation with effect from such date as may be specified, and where no date was so specified on the date of its publication.
Section 11 prescribed the powers and procedure of the Board and stated that subject to any rules of procedure which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , exercised or followed for the purpose of adjudicating an industrial dispute referred to it.
The decision of the Board under section 12 was declared to be binding on all employers in relation to newspaper establishments and every working journalist was entitled to be paid wages at a rate which was to be in no case less than the rate of wages fixed by the Board.
Sections 14 and 15 applied the provisions of the Industrial Employment (Standing Orders) , as it was in force for the time being and also the provisions of the Employees ' Provident Funds Act, 1952, as it was in force for the time being, to every newspaper establishment in which twenty or more persons were employed.
Section 17 provided for the recovery of money due from an employer and enacted that where any money was due to a newspaper employee from an employer under any of the provisions of the Act, whether by way of compensation, gratuity or wages, the newspaper employee might, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the money due to him, and if the State Government or such authority as the State Government might specify in this behalf was satisfied that any money was so due, it shall issue a certificate for that amount to the collector and the collector shall proceed to recover that amount in the same manner as an arrear of land revenue.
Section 20 empowered the Central Government by.
notification in the Official Gazette to make rules to carry out the purposes of the Act and in particular and without prejudice to the generality of the foregoing power, such rules were to provide inter alia for the procedure to be followed by the Board in fixing rates of wages.
All rules made under this section, as soon as practicable after they were made were to be laid before both Houses of Parliament.
The Working Journalists (Industrial Disputes) Act, 1955, was repealed by section 21 of the Act.
In pursuance of the power given under section 20 of the Act the Central Government published by a notification in the Gazette of India Part II Section 3, dated July 30,1956, The Working Journalists Wage Board Rules, 1956 Rule 8 provided that every question considered at a meeting of the Board was to be decided by a majority of the votes of the members present and voting.
In the event of equality of votes the Chairman was to have a casting vote.
Rule 13 provided for the resignation of the Chairman or any member from his office or membership, as the case may be.
The seat held by them was to be deemed to have fallen vacant with effect from the date the 53 resignation of the Chairman or the member was accepted by the Central Government.
When a vacancy thus arose in the office of the Chairman or in the membership of the Board, the Central Government was to take immediate steps to fill the vacancy in accordance with the Act and the proceedings might ' be continued before the Board so reconstituted from the stage at which the vacancy was so filled.
By a notification dated May 2, 1956, the Central Government constituted a Wage Board under section 8 of the Act for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act, consisting of equal representatives of employers in relation to newspaper establishments and working journalists and appointed Shri H. V. Divatia, Retired Judge of the High Court of Judicature, Bombay, as the Chairman of the Board.
The three members of the Board who were nominated to represent employers in relation to newspaper establishments were (1) Shri G. Narasimhan, Manager, The Hindu, Madras and President, Indian and Eastern Newspaper Society; (2) Shri A. R. Bhat, M.L.C., who had been a member of the Press Commission and was the President of the Indian Language Newspapers Association, as also the Chairman of the Minimum Wages Inquiry Committee for the Printing Industry in Bombay and, (3) Shri K. P. Kesava Menon, Editor, Mathrubhumi, Calicut.
The other three members of the Board who were nominated to represent working journalists were: (1) Shri G. Venkataraman, M. P., (2) Shri C. Raghavan, Secretary General, Indian Federation of Working Journalists, and (3) Shri G. N. Acharya, Assistant Editor, Bombay Chronicle.
Shri H. V. Divatia, the Chairman of the Board, had wide and considerable experience as Chairman of the Textile Labour Enquiry Committee, Bombay, had been the President of the First Industrial Court to be set up in India in 1938, and had worked as an Industrial Tribunal dealing with several disputes as between several banks and employees, as well as between several insurance companies and their employees.
54 The first meeting of the Board was held on May 26, 1956, in the Bharatiya Vidya Bhavan at Bombay.
Sri Kesava Menon and Shri G. Narasimhan were not present at this meeting.
It was a preliminary meeting at which the Board set up a sub committee consisting Of Shri A. R. Bhat and Shri G. N. Acharya to draft a questionnaire for issue to the various journals and organisations concerned, with a view to eliciting factual data and other relevant information required for the fixation of wages for the working journalists.
The sub committee was requested to hear in mind, while framing the questionnaire the need for: (1) obtaining detailed accounts of newspaper establishments; (2) proper evaluation of the nature of and the work of various categories of working journalists; and (3) proper classification of the country into different areas on the basis of certain criteria like population, cost of living, etc.
The questionnaire drafted by the sub committee was to be finalised by the chairman and circulated to all concerned by the end of June, 1956.
The questionnaire was accordingly drawn up and was sent to Universities and Governments, etc., and several other organisations and individuals interested in the inquiry of the Board, and to all newspapers individually.
It was divided into three parts.
Part " A" was intended to be answered by newspapers, news agencies, organisations of employers and of workinly Journalists and any individuals who might wish to do so.
Part " B " was meant to be answered by all newspapers and Part " C " by all news agencies.
At the outset the Board pointed out that except where the question itself indicated a different period or point of time, the reporting period for purposes of parts " B " and " C " of the questionnaire was the financial years (April I to March 31)1952 53, 1953 54, and 1954 55, or in any establishments which followed a different accounting year, a period of three years as near thereto as possible.
It further pointed out that tinder section 11 of the Act the Board had the powers of an Industrial Tribunal constituted under the .
In Part "A" of the questionnaire under the heading " Cost of Living cost of living 55 index for the respective centres were called for and a special question was addressed whether the basic minimum wage, dearness allowance and metropolitan allowance in the table attached to paragraph 546 of the Press Commission was acceptable to the party questioned and, if not, what variations would the: party suggest.
and why.
Comparable employment suggested included (a) Higher secondary school teachers; (b) College and university teachers; (c) Journalists employed as publicity and public relations officers in the information departments of the Central and State Governments; (d) Journalistic employees of the news service division of All India Radio and (e) Research personnel of the economic and social research departments of Central Government ministries like finance, labour and commerce.
Under the heading " Special Circumstances", the only question addressed was question No. 7: " Are there in your region any special conditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the conditions and indicate how they affect the question of wages.
" As regards the principles of wage fixation the party questioned was to categorise the different newspaper establishments and in doing so consider the following factors, among others: (a) Invested capital; (b) Gross revenue; (c) Advertisement revenue; (d) Circulation; (e) Periodicity of publication; (f) The existence of chains, multiple units and combines; and (g) Location.
In part B " which was to be answered by newspapers were included under the heading Accounts : (1)Balance sheets and (2) Trading and profit and loss accounts of the newspapers as in the specimen forms attached thereto for the reporting period.
Questions were also addressed in regard to the revenue of the newspapers inter alia from the press, a process studio, outside work, foundry, etc., and subscriptions as also the expenditure incurred on postage, distribution/sale, commission and rebate to advertisers, etc., and other items.
56 All information which was considered necessary by the Wage Board for the purposes of fixation of the rates of wages was thus sought to be elicited by the questionnaire.
It appears that Shri K. P. Kesava Mellon sent in his resignation on or about June 21, 1956, and by a notification dated July 14, 1956, the Central Government accepted the said resignation and appointed in his place Shri K. M. Cherian, member of the executive committee of the Indian and Eastern Newspapers Association, one of the directors of the Press Trust of India and the Chief Editor, Malayala Manorama, Kottayam, as a member of the Board.
Out of 5,465 newspapers, journals, etc., to whom the questionnaire was sent only 381 answered the same; and out of 502 dailies only 138 answered it.
The Board had an analysis made of those who had replied to the questionnaire and also of their replies thereto in regard to each of the questions contained in the questionnaire.
Further meetings of the Board were held oil August 17, and August 26, 1956, in Bombay.
Tile Chairman informed the members that response from journals, organisations, etc., to whom 'questionnaire was sent was unsatisfactory and it was decided to issue a Press Note requesting the papers and journals to send their replies, particularly to Part " B " of the questionnaire, as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the Act, and if newspapers failed to send their replies, the Board would be compelled to take further steps in the matter.
It was decided that for purposes 57 of taking oral evidence, the country be divided into 5 zones, namely, Trivandrum, Madras, Delhi, Calcutta and Bombay and the Secretary was asked to summon witnesses to the nearest and convenient centre.
It was further decided that one hour should normally be allotted to each newspaper, 3 hours for regional units and 2 hours for smaller units for oral evidence.
The Board also discussed the question as to the number of persons who might ordinarily be called for oral evidence from each newspaper or Organisation.
It thought that one of the important factors Governing the findings of the Board would be the circulation of each newspaper, and as such it was decided that the figures with the Audit Bureau of Circulation Ltd., might be obtained at once.
The Board also decided to ask witnesses, if necessary, to produce books of accounts, income tax assessment orders or any other document which in its opinion was essential.
Meetings of the Board were held at Trivandrum from September 7, to September 10, 1956, in Madras from September 15, to September 20, 1956, in New Delhi from October 19, to October 26, 1956, in Calcutta from November 25, to December 4,1956, and in Bombay from January 4, to January 10, 1957, from January 20, to February 6, 1957, from March 25 to March 31, 1957 and finally from April 22 to April 24, 1957.
Evidence of several journalists and persons connected with the newspaper industry was recorded at the respective places and at its meeting in Bombay from March 25, to March 31, 1957, the Board entered upon its final deliberations.
At this meeting the chairman impressed upon the members the desirability of arriving at unanimous decisions with regard to the fixation of wages, etc.
Members welcomed this suggestion and decided to 58 discuss various issues among themselves in the afternoon and on the following days.
After considerable discussion on March 25, 1957, and March 26, 1957, in which the representatives of the newspapers and of working journalists had joint Sittings, unanimous decisions were arrived at on (i) classification of newspapers, (ii) classification of centres and (iii) classification of employees, except on one point, namely, classification of group, multiple units and chains on the basis of their total gross revenue.
This was agreed to by a majority decision.
The chairman and the representatives of the working journalists voted in favour while the representatives of the employers voted against.
Regarding scales of pay, the chairman suggested at the meeting of March 27, 1957, that pending final settlement of the issue the parties should submit figures of scales based on both assumptions, namely, consolidated wages and basic scales with separate dearness allowance.
At the Board 's meeting on March 28, 1957, the representatives of the employers stated that the term CC rates of pay " did not include scales of pay ; there fore, the Board was not competent to fix scales of working journalists and they submitted a written statement signed by all of them to the chairman in support of their contention.
The representatives of the working journalists argued that the Board was competent to fix scales of pay.
The chairman adjourned the sitting of the Board to study this issue.
A copy of the written statement submitted by the representatives of the employers was given to the representatives of the working journalists and they submitted a written reply the same afternoon contending that the Board was competent to fix scales of pay of various categories of working journalists. ' At its meeting on March 29, 1957, the Board discussed its own competency to fix scales of pay.
The chairman expressed his opinion in writing, whereby he held that the Board was competent to fix scales of pay.
Thereafter, several suggestions were made on this question, but since there was no possibility of any agreement on this issue, the chairman suggested that members should submit their specific scales to him for his study to which the mem bers agreed.
It was also decided that the chairman would have separate discussions with representatives of working journalists in the morning and with representatives of employers in the afternoon of March 30, 1957.
It was also decided that the Board should meet again on March 31, 1957, for further discussions.
No final decision was however arrived at in the meeting of the Board held on March 31, 1957, on scales of pay, allowances, date of operation of the decision, etc.
It was decided that the Board should meet again on April 22, 1957, to take final decisions.
A meeting of the Board was accordingly held from April 22 to 24, 1957, in the office of the Wage Board at Bombay.
It was unanimously agreed that the word "decision" should be used wherever the word " report" occurred.
The question of the nature of the decisions which should be submitted to the Government was then considered.
It was agreed that reasons need not be given for each of the decisions, and that it would be sufficient only to record the decisions.
The members then requested the chairman to study the proposals regarding scales of pay, etc., submitted by, both the parties and to give his own proposals so that they may take a final decision.
Accordingly, the chairman circulated to all the members his proposals regarding pay scales, dearness allowance, location allowance and retainer allowance.
The following were the decisions arrived at by the Board on the various points under consideration and they were unanimous except where otherwise stated.
The same may be set out here so far as they are relevant for the purposes of the inquiry before US.
For the purpose of fixation of wages of working 60 journalists, newspaper, establishments should be grouped under different classes.
Except in the case of weeklies and other periodicals expressly provided for hereinafter, newspaper establishments should be classified on the basis of their gross revenue.
For purposes of classification, revenue from all sources of a newspaper establishment, should be taken for ascertaining gross revenue.
Classification of Newspaper Establishments: Dailies Newspaper Establishments should be classified under the following five classes: Class Gross Revenue " A" over Rs. 25 lakhs " B" over Rs. 12 1/2 to 25 lakhs " C" over Rs. 5 to 12 1/2 lakhs " D" over Rs. 2 1/2 to 5 lakhs " E" Rs. 2 1/2 lakhs and below 5.
It shall be open to the parties to seek re classifi cation of the newspaper establishments on the basis of the average of every three years commencing from the year 1955.
Groups, multiple units and chains should be classified on the basis of the total gross revenue of all the constituent units.
(This was a majority decision, the chairman and the representatives of the working journalists voting for and the representatives of the employers voting against).
61 20.
Working journalists employed in newspaper establishments should be grouped as follows: (a) Full time employees: Group I: Editor Group II: Assistant Editor, Leader Writer, News Editor, Commercial Editor, Sports Editor, Film or Art Editor, Feature Editor, Literary Editor, Special Correspondent, Chief Reporter, Chief Sub Editor and Cartoonist.
Group III: Sub Editors and Reporters of all kind and full time correspondents not included in Group(II); news photographers and other journalists not covered in the groups.
Group IV: Proof Reader (b) Part time employees: Correspondents who are part time employees of a newspaper establishment and whose principal avocation is that of journalism.
An employee should be deemed to be a full time employee if under the conditions of service such employee is not allowed to work for any other newspaper establishments.
23.The wage scales and grades recommended by the chairman were agreed to by a majority decision.
The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against.
Shri That suggested that wage scales should be conditional on a newspaper establishment making profits in any particular year and also that time should be given to the newspaper establishments for bringing the scales into operation.
These suggestions, however, were not acceptable to the majority.
Wages, scales and grades: (as agreed to by the majority) were as under: Working journalists of different groups employed in different classes of newspaper establishments should be paid the following basic wages per mensem.
Dailies.
Class of Group of Starting Scale News Employees Pay papers E IV 90 No Scale III II 150 No Scale I D IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 115115 7 1/2 205 (12 Yrs.) EB 15 295 (6 Yrs.) II 200200 20 400 (10 Yrs.) I C IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 125125 10 245 (12 Yrs.) EB 12J 320 (6 Yrs.) II 225225 20 385 (8 Yrs.) EB 30 445 (2 Yrs.) I 350350 25 550 (8 Yrs.) 40 630 (2 Yrs.) B IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 150150 12J 300 (12 Yrs.) EB 20 420 (6 Yrs.) II 350350 20 510 (8 Yrs.) EB 30 570 (2 Yrs.) I 500500 30 740 (8 YrS.) 40 820 (2 Yrs.) A IV 125125 7 1/2 215 (12 Yrs.) EB 10 275 (6 Yrs.) III 175175 20 415 (12 Yrs.) EB 25 515 (4 Yrs.) II 500500 40 820 (8 Yrs.) EB 50 920 (2 Yrs.) I 10001000 50 1300 (6 Yrs.) 75 1600 (4 Yrs.) Dearness allowance, location allowance and part time employees remuneration were also majority decisions.
The chairman and the representatives of the working 63 journalists voting for and the representatives of the employers voting against.
Other allowances: In view of the paucity of evidence on the subject, the Board decided that the fixation of conveyance and other allowances should be left to collective bargaining between the working journalists and the newspaper establishments concerned.
Fitment of employees: For fitment of the present employees into the new scales, service in a particular grade and category and in the particular newspaper establishment alone should be taken into account.
In no case should the present emoluments of the employees be reduced as a; result of the operation of this decision.
When a newspaper establishment is re classified as per para.
6 supra, the existing pay of the staff should be protected.
But future increments and scales should be those applicable to the class of paper into which it falls.
Date of operation: The Board 's decision should be operative from the date of constitution of the Board (i.e., 2 5 1956) in respect of newspaper eseablishments coming under Class " A ", " B " and " C " and from a date six months from the date of appointment of the Board (i.e., 1 11 1956) in the case of newspaper establishments under Class " D " & " E" (This was also a majority decision.
The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against).
The Government of India should constitute a Wage Board under the Act, to review the effect of the decisions of the Board on the newspaper establishments and the working journalists, after the expiry of 3 years but not later than 5 years from the date of the publication of the decisions of the Board.
These decisions were recorded on April 30, 1957, but the representatives of the employers thought fit to append a minute of dissent and the chairman also put on record a note on the same day explaining the 64 reasons for the decisions thus recorded.
These documents are of vital importance in the determination of the issues before us.
In the minute of dissent recorded by the representatives of the employers they started with an expression of regret that the conditions in the newspaper industry did not Permit them to accept the majority view.
They pointed out that: (a) The newspaper industry was a class by itself.
The selling price of its product was ordinarily below its cost of production.
Further, the cost of production specially that of newsprint, went on varying and the frequent rises in newsprint price made it difficult to plan and undertake any long term commitment of an increasing expenditure.
(b) The income of the newspaper industry was principally derived from two main sources: sales of copies and advertisement.
While sales depended on public acceptance, income from advertisement depended upon circulation, prestige and purchasing power of readers.
All those factors made publishing of newspapers a hazardous undertaking and the hazard continued throughout it , existence with the result that it was obligatory that the rates of wages or scales ,should be fixed at the minimum level, leaving it to the employees to share the prosperity of the units through bonuses.
(c) It was not ordinarily easy for newspapers to increase the selling price and it had been the experience of some established newspapers that such a course, when adopted, had invariably brought about a reduction in circulation.
The fall in circulation had in turn an adverse effect on the advertisement revenue.
The sales or advertisement income of a newspaper was not responsive to a progressive increase in expenditure.
65 (d) In any fixation of wages of a section of employees, its effect on other sections had to be taken into consideration.
Editorial employees were one section of a newspaper establishment and any increase in their emoluments would have its inevitable repercussions on the wages of other sections.
The salaries of working Journalists would roughly be one fifth of the total wage bill.
The factory staff had a great bargaining power and as such any increase in the salaries and introduction of scales in the editorial department would have to be followed by an increase in the wages and introduction of time scales in the factory side.
(e) It was the advertisement revenue that principally decided the capacity to pay of a newspaper industry.
This meant that minimum salaries and scales to be fixed on an All India basis would perforce have to be low if the newpapers in language of regions with a low purchasing power such as Kerala and Orissa were not to be handicapped.
It would therefore be fair both to the industry and employees if wages were fixed regionwise.
(f) The proposals, which the majority had made, clearly showed that, according to it the dominating principle of wage fixation wag the need of the worker as conceived by them, irrespective of its effect on the industry.
The Board had not before it sufficient data needed for the proper assessment of the paying capacity of the industry.
The profit and loss statements of the daily newspaper establishments for the year 19.54 55 as submitted to the Board revealed that while 43 of them had shown profits 40 had incurred losses.
condition of the newspaper industry in the country as a whole could not be considered satisfactory.
The proposals embodied in the decision made by the majority were therefore unduly high.
They would immediately throw a huge burden on many papers, a burden which would progressively grow for some 66 years, and would be still bigger when its impact takes place on the wages of employees of its other sections.
All this will in its turn add to the burden of provident fund, gratuity, etc., when the full impact of the burden took place and the wages of the entire newspaper establishments went up, it would throw out of gear the economy of most of the newspapers.
It might be that there may not be many closures immediately, because many of the newspapers would not be in a position to meet the liability of retrenchment compensation, gratuity, etc., resulting from such a step, newspapers would try to meet the liability by borrowing to the extent possible and when their credit was exhausted, they must close down.
So far as new newspaper promotions were concerned, they would be few and far between, with the result that after a few years it would be found that the number of daily newspapers in the country had not increased but had gone down.
(g)As regards chains and groups the criterion for classification adopted by the majority was unfair and unnatural.
The total gross revenue of all the units in a chain or a group gave an unreal picture of its capacity to pay.
(h)Giving of retrospective effect, would help only to aggravate the troubles of the newspaper industry which had been already called upon to devise ways and means of meeting the burden of retrospective gratuity.
(i) As regards the prevalent rates of wages for comparable employments the nature of work of the working journalists in newspaper establishments could not be compared with other avocations or professions and the rates of wages of working journalists should be fixed only in the context of the financial condition of the newspaper industry.
Comparison, could, however, be made within limits, namely with respect to alternative employments available to persons with similar educational qualifications in particular regions or localities.
From that point of view the salaries paid to secondary school teachers, college and university 67 teachers and employees in commercial firms and banks should be taken into consideration, but the majority had rejected this view.
The note of the chairman was meant to explain the reasons of the decisions which he stated he at least had in view and some of which were accepted unanimously and others were accepted by some members and thereby became majority decisions.
At the outset the chairman explained that most of the recommendations of the Press Commission were intended for the betterment of the economic condition of small and medium newspapers, such as price page schedule, telescopic rates for Government advertisements and their fair distribution among newspapers, statutory restrictions on malpractices so as to eliminate cutthroat competition and fixation of news agency tariff, , which still remained to be implemented and there had been no stability in the prices of newsprint which constituted a considerable proportion of the expenditure of a newspaper.
These circumstances had necessitated the fixing of a minimum wage lower than that recommended by the Press Commission.
As regards fixation of the rates of wages, the chairman observed: "In fixing the rates of wages, we have based them on the condition of the newspaper industry as a whole and not on the effect which they will produce on a particular newspaper.
We can only proceed on the average gross income of a newspaper falling under the same class and not on the lowest unit in that class.
Otherwise, there will be no improvement in any unit of the same class, and the status quo might remain.
With the extremely divergent conditions obtaining in both English as well as Indian language newspapers, it is impossible to try to avoid any small or medium newspaper being adversely affected.
When the tone and condition of journalism in India has to be brought on a higher level it is inevitable that in doing so, more or less burden will fall on several newspapers ; I realise that in cases where wages are very low and dearness allowance is also low or even non existent and there are no scales 68 at all, the reaction to our wage schedule will be one of resentment by the proprietors.
Some anomalies may also be pointed out; but it must be remembered that we had no data of all the newspapers before us and where we had, it was in many cases not satisfactory.
Under these circumstances, we cannot satisfy all newspapers as well as journalists.
However, wehave tried to proceed on the basis of accepted principles also keeping in view the recommendations of the Press Commission and not on the editorial expenditure of each newspaper.
I am also of the opinion that by rational management there is great scope for increasing the income of newspapers and we have evidence before us that the future of the Indian language newspapers is bright, having regard to increasing literacy and the growth of political consciousness of the reading public.
When there are wide disparities, there cannot be any adjustment which might satisfy all persons interested.
We hope no newspaper is forced to close down as a result of our decision.
But if there is a good paper and it deserves to exist, we hope the Government and the public will help it to continue.
" The chairman then proceeded to observe: " We do not consider it a matter of regret if our decisions discourage the entry into this industry of persons without the necessary resources required for the payment of a reasonable minimum wage.
While we are anxious to promote and encourage the growth of small newspapers, we also feel strongly that it should not be at the expense of the working journalists.
The same applies, in our view, to newspapers started for political, religious or any other propaganda.
" The reason for grouping all the constituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment was given by the chairman as under: " One of the difficult tasks before us was to fix the wages of Journalists working in newspapers which have recently come to exist in our country.
All the 69 accounts of the constituent units in the same group or chain are merged together with the result that the losses of the weaker units are borne from the high income of prosperous units.
There is considerable disparity in the wages of journalists doing the same kind of work in the various constituent units situated in different centres.
The Press Commission has strongly criticised the methods of such chains and groups and their adverse effects on the employees.
We have decided to group all the constituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment.
We are conscious that as a result of this decision, some of the journalists in the weak units of the same group or chain may get much more than those working in its highest income units.
If however, our principle is good and scientific, the inevitable result of its application should be judged from the stand point of Indian Journalism as a whole and not on the burden it casts on a particular establishment.
It may be added that in our view, the principle on which we have proceeded is one of the main steps to give effect to the views expressed by the The chairman then referred to the points which the representatives of the newspaper employers had urged as to the burden which might be cast as a result of the decisions and expressed himself as under: " I sympathise with their view point and in my opinion, looking to all the circumstances, especially the fact that this is the first attempt to fix rates of wages for journalists, it is probable that some anomalies may result from the implementation of our decisions.
We are, therefore, averse to imposing a wage schedule of all classes of newspapers on a permanent basis.
It is, thus important that the wage rates fixed by us should be open to review and revision in the light of experience gained within a period of 3 to 5 years.
This becomes necessary especially in view of the fact that the data available to us have not been as complete as we would have wished them to be, and also because it is difficult for us at this stage to 70 work out with any degree of precision, the economic and other effects of our decisions on the newspaper industry as a whole.
" The chairman suggested as a palliative the creation by the Government of India immediately of a standsing administrative machinery "which could also combine in itself the functions of implementing and administering our decisions and that of preparing the ground for the review and revision envisaged after 3 to 5 years.
This machinery should collect from all newspaper establishments in the country on systematic basis detailed information and data such as those on employment, wage rates, and earnings, financial condition of papers, figures of circulation, etc., which may be required for the assessment of the effects of our decisions at the time of the review.
The Commissioner of Labour, Madras, issued a circular on May 30, 1957, calling upon the managements of all newspaper establishments in the State to send to him the report of the gross revenue for the three years, i. e., 1952, 1953 and 1954, within a period of one month from the date of the publication of the Board 's decision, i. e., not later than June 10, 1957.
Writ Petition No. 91 of 1957 was thereupon filed on June 13, 1957, by the Express Newspapers (Private) Ltd., against the Union of India & others and this petition was followed up by similar petitions filed on August 9, 1957, by the Press Trust of India Ltd., the Indian National Press (Bombay) Private Ltd., and the Saurashtra Trust, being Petitions Nos.
99, 100, and 101 of 1957 respectively.
The Hindustan Times Ltd., New Delhi filed on August 23, 1957, a similar petition, being Petition No. 103 of 1957, and three more petitions, being Petitions Nos.
116, 117 and 118 of 1957, were filed by the Loksatta Karyalaya, Baroda, Sandesh Ltd. ' Ahmedabad and Jan Satta Karyalaya, Ahmedabad, respectively, on September 18, 1957.
The Express Newspapers (Private) Ltd., the petitioners in Petition No. 91 of 1957, otherwise termed 71 the " Express Group ", are the biggest chain in the newspaper world in India.
They publish (i) Indian Express, an English Daily, from Madras, Bombay, Delhi and Madurai, (ii) Sunday Standard, an English Weekly, from three centres Madras, Bombay and Delhi, (iii) Dinmani, a Tamil Daily from Madras and Madurai, (iv) Dinmani Kadir, a Tamil Weekly from Madras, (v) Lokasatta, a Maratha Daily, and Sunday Lokasatta, a Maratha Weekly, from Bombay, (vi) Screen, an English Weekly from Bombay and (vii) Andhra Prabha, a Telugu Daily and Weekly.
The total number of working journalists employed by them are 331, out of whom there are 123 proof readers, as against 1570 who form the other members of the staff.
The present emoluments of the working journalists in their employ amount to Rs. 9,77,892, whereas if the decision of the Wage Board were given effect to they would go up to Rs. 15,21,282 12 thus increasing the wage bill of the working journalists annually by Rs. 5,43,390 12.
They would also have to pay remuneration to the part time correspondents on the basis of retainer as well as payment for news items on column basis.
That would involve an additional burden of about Rs. 1 lakh a year.
The retrospective operation of the Wage Board 's decision with effect from May 2, 1956, in their case would further involve a payment of Rs. 5,16,337 20.
This would be the extra burden not taking account the liability for past gratuity and the recurring gratuity as awarded under the provisions of the Act and also the increased burden which would have to be borne by reason of the impact of the provisions in regard to reduced hours of working, increase in leave, etc., provided therein.
The Press Trust of India Ltd., the petitioners in Petition No. 99 of 1957, are a non profit making cooperative organization of newspaper proprietors.
They 72 employ 820 employees in all, out of whom 170 are working journalists and 650 do not come within that definition.
The ,increase in their wage bill due to increase in the salary of the working journalists as per the decision of the.
Wage Board would come to Rs. 4,05,600 and they would have to pay by way of arrears by reason of the retrospective operation of the decision another sum of Rs. 4,05,600 to the working journalists.
There would also be an additional financial burden of Rs. 60,000 every year by reason of the recurring increments in the monthly salaries of the working journalists employed by them.
If the benefits of the Wage Board decision were extended to the other members of the staff who are not working journalists within the definition of that term but who have also made similar demands on them, a further annual burden would be imposed on the petitioners which is estimated at Rs. 3,90,000.
If perchance the petitioners not being able to run their concern except at a loss intended to close down the same, the amount which they would have to pay to the working journalists under the pro visions of the Act and the decision of the Wage Board would be Rs. 23,68,500 as against the old scale liability of Rs. 11,62,500 and the other members of the staff who do not fall within the category of working journalists would have to be paid a further sum of Rs. 15,50,000.
The total liability of the petitioners in such an event would amount to Rs. 39,18,000 as against the old liability of Rs. 27,12,500.
The Indian National Press (Bombay) Private Ltd., otherwise known as the Free Press Group, are petitioners in Petition No. 100 of 1957.
They publish (i) Free Press Journal, a morning English Daily (ii) Free Press Bulletin, an evening English Daily (iii) Bharat Jyoti, an English Weekly (iv) Janashakti, a morning Gujarati Daily and (v) Navashakthi, a Marathi Dailyall from Bombay.
They employ 442 employees including part time correspondents out of whom 65 are working journalists and 21 are proof readers and the 73 rest form members of the other staff not falling within the category of working journalists.
The effect of the decision of the Wage Board would be that there would have to be an immediate payment of Rs. 1,73,811 by reason of the retrospective operation of the decision and there will also be an annual 'increase in the wage bill to the same extent, i. e., Rs. 1,73,811.
There will also be a yearly recurring increase to the extent of Rs. 22,470 and also corresponding increase for contribution to the provident fund on account of increase in salary.
Under the provisions of the Act in regard to reduced hours of work, and increase in leave, moreover, there will be an increase in liability to pay Rs. 90,669 and Rs. 29,806 respectively, in the case of working journalists, besides the liability for past gratuity in another sum of Rs. 1,08,534 and recurring annual liability for gratuity in a sum of Rs. 17,995.
If similar benefits would have to be given to the other members of the staff who do not fall within the definition of working journalists the annual burden would be increased by a sum of Rs. 1,80,000.
This would be the position by reason of the petitioners being classified and treated as a chain of newspapers and having been classified as " A " class newspaper establishment on a total computation of the gross revenue of all their units.
If they were not so treated and the component units were classified on their individual gross revenue the result would be that the Free Press Journal, the Free Press Bulletin and the Bharat Jyoti would fall within class " A ", and Navashakti would fall within class " C " and Janashakti would fall within class "D" thus minimising the burden imposed upon them by the impact of the Wage Board decision.
The Saurashtra Trust, the petitioners in Petition No. 101 of 1957, are another chain of newspapers and they publish (i) Janmabhoomi, a Gujrati Daily from Bombay, (ii) Janmabhoomi and Pravasi, a Gujrati Weekly from Bombay, (iii) Lokmanya, a Marathi Daily from Bombay, (iv) Vyapar, a Gujrati Weekly commercial paper from Bombay, (v) Fulchhab, a Gujrati Daily from Rajkot, (vi) Pratap, a Gujrati 10 74 Daily from Surat, (vii) Cuttccha Mitra, a Gujrati Daily from Bhuj (Cutch) and, (viii) Nav Bharat, a Gujrati Daily from Baroda.
The effect of the Wage Board decision on them would be to impose on them a burden of Rs. 1,59,528 by reason of the retrospective operation of the decision and an annual increase in the wage bill of Rs. 1,59,528 for the first year and an annual recur ring increase of Rs. 22,000.
The operation of sections 6 and 7 of the Act in regard to reduced hours of work and provision for increased leave would impose an additional burden of Rs. 42,000 per year.
The liability for pastgratuity would be Rs. 93,376 and the recurring annual increase in gratuity would be Rs. 11,000.
The total cost of closing down the concern, if perchance 75 the petitioners have to so close down owing to their inability to carry on the business except at a loss, is worked out at Rs. 6,13,921 for the working journalists as against the old basis of Rs. 1,00,890.
The figure for the rest of the staff who are not working journalists is computed at Rs. 3,08,112 with the result that the total cost of closing down on the new basis under the provisions of the Act and the decision of the Wage Board would be Rs. 9,22,033 as against what otherwise would have been a sum of Rs. 4,09,002.
The Hindustan Times Ltd., New Delhi, the petitioners in Petition No. 103 of 1957, otherwise called "the Hindustan Times Group", publish (i) Hindustan Times, an English (morning) Daily, (ii) Hindustan Times (Evening News) an English (evening) Daily, (iii) Overseas Hindustan Times, an English Weekly, (iv) Hindustan, a Hindi Daily, and (v) Saptahik Hindustan, a Hindi Weekly all from Delhi.
They employ a total number of 695 employees out of whom 79 are working journalists, 14 are proof readers and the rest, viz., 602 are other members of the staff.
The wages paid to the working journalists absorb about one third of the total wage bill as against 602 other members of the staff whose wage bill constitutes the remaining two thirds.
If the decision of the Wage Board is given effect to the petitioners would be subjected to the following additional liabilities in respect of working journalists alone : (i) Increase in the annual wage bill Rs. 2,16,000 (Approx.) (ii) Arrears of payments from May 2, 1956, to April 30,1957, Rs. 1,89,000 (iii) Past liability in respect of gratuity as on March 31, 1957, Rs. 2,65,000 (iv) Recurring annual liability of gratuity Rs. 28,000.
The total liability thus comes to Rs. 6,98,000.
The above figures do not include increased liability on account of the petitioners ' contribution towards provident fund, leave rules and payment to part time correspondents.
There would also be a further recurring increase in the wage bill by reason of the increments which would have to be given to the various categories of working journalists on the scales of wages prescribed by the Wage Board.
If other members of the staff (who are not working journalists") were to be considered for 76 increase in their emoluments, etc.
, there will be a further burden on the petitioners computed as under: (a)Increase in the annual wage bill, Rs. 5,02,000 (Approx.), (b) arrears of payments from May 2, 1956, to April 30, 1957, Rs. 4,51,000 (Approx.), (c) Past liability in respect of gratuity as on March 31, 1957, Rs. 5,50,000 (Approx.), (d) Recurring annual liability for gratuity Rs. 60,000 (Approx.).
The total comes to Rs. 15,63,000.
They employ 15 working journalists.
The annual wage bill of working journalists would have to be increased by reason of the decision of the Wage Board by Rs. 10,800; the burden of payment of retrospective liability being Rs. 9,600.
Moreover, there will be a recurring annual burden of Rs. 6,340 inclusive of the expenditure involved by reason of the provisions as to (i) Notice pay, (ii) Gratuity, (iii) Retrenchment compensation and (iv) Extra burden of reduced hours of work and increased leave.
The Sandesh Ltd., the petitioners in Petition No. 117 of 1957, otherwise styled, the Sandesh Group, Ahmeda bad, publish (i) Sandesh, a morning Gujarati Daily, (ii) Sevak, an evening Gujarati Daily, (iii) Bal Sandesh, a Gujarati Weekly, and (iv) Aram, and (v) Sat Sandesh, Gujarati Monthlies all from Ahmedabad.
They employ a total staff of 205 employees out of whom there are 11 working journalists, 7 proof readers and the rest 187 constitute the other members of the staff.
The increase in the wage bill of the working journalists under the provisions of the Act would be Rs. 24,807 per year besides a similar liability for Rs. 24,807 by reason of the retrospective operation of the decision.
There will be an increase in expenditure to the tune of Rs. 30,900 by reason of the reduced working hours and increase in leave and holidays, a liability of Rs. 31, 597 for past gratuity and Rs. 24,807 every year for recurring gratuity as also Rs. 1,530 for recurring increase in wages of the working journalists.
The financial burden in the case of proof readers who 77 are included in the definition of working journalists tinder the terms of the Act would be Rs. 5,724 per year.
If similar benefits were to be given to the other members of the staff who are not working journalists the annual increase in the burden will be Rs. 1,89,816.
The total costs of closing down if such an eventuality ' were contemplated would be Rs. 1,08,997 for the working journalists only as against a liability of Rs. 22,755 on the old basis.
The other members of the staff would have to be paid Rs. 1,46,351 and the total cost of closing down the whole concern would thus conic to Rs. 2,55,349 under the new dispensation as against Rs. 1,69,106 as of old.
The Jansatta Karyalaya, Ahmedabad, petitioners in Petition No. 118 of 1957 bring out (i) Jansatta, a Gujarati Daily and (ii) Chandni a Gujarati Monthly from Ahmedabad.
The increase in the wage bill of the working journalists would come to Rs. 29,808.
The liability for past gratuity would be Rs. 6,624 and the recurring annual gratuity would be Rs. 2,303 and the annual recurring increase in wages would come to Rs. 2,280.
The financial burden in case of proof readers would be Rs. 6,480 per year as per the decision of the Wage Board.
If similar benefits had to be given to the other members of the staff who are non working journalists the annual burden will increase by Rs. 48,720.
The total cost of closing down, if such a contingency ever arose, would come to Rs. 1,00,798 under the provisions of the Act and the Wage Board decision as against Rs. 45,206 on the old basis.
All these petitions filed by the several petitioners as above followed a common pattern.
After succinctly reciting the history of the events narrated above which led to the enactment of the impugned Act and the decision of the Wage Board, they challenged the vires of the Act and the decision of the Wage Board.
The vires of the Act was challenged on the ground that the provisions thereof were violative of the fundamental rights guaranteed by the Constitution under article 19(1)(a), 78 article 19(1)(g), and article 14 ; but in the course of the argu ments before us another Article, viz., article 32 was also added as having been infringed by the Act.
The decision of the Wage Board was challenged on various grounds which were in pari materia with the objections that had been urged by the representatives of the employers in the Wage Board in their minute of dissent above referred to.
It was also contended that the implementation of the decision would be beyond the capacity of the petitioners and would result in their titter collapse.
The reply made by the respondents was that none of the fundamental rights guaranteed under article 19(1)(a), article 19(1)(g), article 14 and/or article 32 were infringed by the impugned Act, that the functions of the Wage Board were not judicial or quasijudicial in character, that the fixation of the rates of wages was a legislative act and not a judicial one, that the decision of the Wage Board bad been arrived at after taking into consideration all the criteria for fixation of wages under section 9(1) of the Act and the material as well as the evidence led before it, that a considerable portion of the decisions recorded by the Wage Board were unanimous, that the Wage Board had the power and authority also to fix the scales of wages and to give retrospective operation to its decision, and that the financial position of the petitioners was not such as to lead to their collapse as a result of the impact of the provisions of the impugned Act and the decision of the Wage Board.
The petitioners in Petitions Nos. 91 of ' 1957, 99 of 1957, 100 of 1957, 101 of 1957 and 103 of 1957 also filed petitions for special leave to appeal against the decision of the Wage Board being Petitions Nos. 323, 346, 347, 348 and 359 of 1957 respectively and this Court granted the special leave in all these petitions under article 136 of the Constitution subject to the question of the maintainability of the appeals being open to be urged at the hearing.
Civil Appeals arising out of these special leave petitions were ordered to be placed along with the Writ Petitions aforesaid for hearing and final disposal and Civil Appeals Nos.
699 of 1957, 700 of 1957, 701 of 1957, 702 of 1957 and 703 of 1957 79 arising therefrom thus came up for hearing and final disposal before us along with the Writ Petitions under article 32 mentioned above.
We took up the hearing of the Writ Petitions first as they were more comprehensive in scope than the Civil Appeals filed by the respective parties and heard counsel at considerable length on the questions arising for our determination therein.
Before we discuss the vires of the impugned Act and the decision of the Wage Board, it will be appropriate at this juncture to clear the ground by considering the principles of wage fixation and the machinery employed for the purpose in various countries.
The concept of the living wage: "The concept of the living wage which has influenced the fixation of wages, statutorily or otherwise, in all economically advanced countries is an old and well established one, but most of the current definitions are of recent origin.
The most expressive definition of the living wage is that of Justice Higgins of the Australian Commonwealth Court of Conciliation in the Harvester case.
He defined the living wage as one appropriate for " the normal needs of the average employee, regarded as a human being living in a civilized community ".
Justice Higgins has, at other places, explained what he meant by this cryptic pronouncement.
The living wage must provide not merely for absolute essentials such as food, shelter and clothing but for " a condition of frugal comfort estimated by current human standards.
" He explained himself further by saying that it was a wage " sufficient to insure the workmen food, shelter, clothing frugal comfort, provision for evil days, etc., as well as regard for the special skill of an artisan if he is one ".
In a subsequent case he observed that " treating marriage as the usual fate of adult men, a wage which does not allow of the matrimonial condition and the maintenance of about five persons in a home would not be treated as a living wage".
According to the South Australian Act of 1912, the living wage means " a sum 80 sufficient for the normal and reasonable needs of the average employee living in a locality where work under consideration is done or is to be done." The Queensland Industrial Conciliation and Arbitration Act provides that the basic wage paid to an adult male employee shall not be less than is " sufficient to maintain a well conducted employee of average health, strength and competence and his wife and a family of three children in a fair and average standard of comfort, having regard to the conditions of living prevailing among employees in the calling in respect of which such basic wage is fixed, and provided that in fixing such basic wage the earnings of the children or wife of such employee shall not be taken into account ".
In a Tentative Budget Inquiry conducted in the United States of America in 1919 the Commissioner of the Bureau of Labour Statistics analysed the budgets with reference to three concepts, viz., (i) the pauper and poverty level, (ii) the minimum of subsistence level, and, (iii) the minimum of health and comfort level,and adopted the last for the determination of the living wage.
The Royal Commission on the Basic Wage for the Commonwealth of Australia approved of this course and proceeded through norms and budget enquiries to ascertain what the minimum of health and comfort level should be.
The commission quoted with approval the description of the minimum of health and comfort level in the following terms: " This represents a slightly higher level than that of subsistence, providing not only for the material needs of food, shelter, and body covering but also for certain comforts, such as clothing sufficient for bodily comfort, and to maintain the wearer 's instinct of selfrespect and decency, some insurance against the more important misfortunes death, disability and fire good education for the children, some amusement, and some expenditure for self development.
" Writing practically in the same language, the United Provinces Labour Enquiry Committee classified level of living standard in four categories, viz., (i) the poverty level,81 (ii) the minimum subsistence level, (iii)the subsistence plus level and (iv) the comfort level, and chose the subsistence plus level as the basis of what it called the "minimum living wage".
Any definition of a standard of living is necessarily descriptive rather than logical.
Any minimum, after all, is arbitrary and relative.
No completely objective and absolute meaning can be attached to a term like the living wage standard " and it has necessarily to be judged in the light of the circumstances of the particular time and country.
" The Committee then proceeded through the use of norms and standard budgets to lay down what the basic wage should be, so that it might approximate to the living, wage standard " in the light of the circumstances of the particular time and country.
" The Minimum Wage Fixing Machinery published by the 1. L. O. has summarised these views as follows: " In different countries estimates have been made of the amount of a living wage, but the estimates vary according to the point of view of the investigator.
Estimates may be classified into at least three groups: (1) the amount necessary for mere subsistence, (2) the amount necessary for health and decency,and (3) the amount necessary to provide a standard of comfort.
" It will be seen from this summary of the concepts of the living wage held in various parts of the world that there is general argument that the living wage should enable the male earlier to provide for himself and his family not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for the children, protection against ill health, 11 82 requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age. " (1) Article 43 of our Constitution has also adopted as one of the Directive Principles of State Policy that: The State shall endeavour to secure, by suitable legislation or economic Organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. . . " This is the ideal to which our social welfare State has to approximate in an attempt to ameliorate the living conditions of the workers.
The concept of the minimum wage: " The International Convention of 1928 prescribes the setting up of minimum wage fixing machinery in industries in which " no arrangements exist for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low". . " As a rule, though the living wage is the target, it has to be tempered, even in advanced countries, by other considerations, particularly the general level of wages in other industries and the capacity of industry to pay.
This view has been accepted by the Bombay Textile Labour Inquiry Committee which says that " the living wage basis affords an absolute external standard for the determination of the minimum " and that " where a living wage criterion has been used in the giving of ail award or the fixing of a wage, the decision has always been tempered by other considerations of a practical character." " In India, however, the level of the national income is so low at present that it is generally accepted that the country cannot afford to prescribe by law a minimum wage which would correspond to the concept of the living wage as described in the preceding paragraphs.
(1) Report of the Committee on Fair Wagss (1947 to 1949), pp 5 7,paras.
83 Provincial Governments consider that the minimum wage can at present be only a bare subsistence wage.
In fact, even one important All India Organisation of employees has suggested that " a minimum wage is that wage which is sufficient to cover the bare physical needs of a worker and his family." Many others, '; however. . consider that a minimum wage should also provide for some other essential requirements such as a minimum of education, medical facilities and other amenities.
For this purpose, the minimum wage must also provide for some measure of education, medical requirements, and amenities.
This is the concept of the " minimum wage " adopted by the Committee on Fair Wages.
There are however variations of that concept and a distinction has been drawn, for instance, in Australian industrial terminology between the basic wage and the minimum wage. " The basic wage there approximates to a bare minimum subsistence wage and no normal adult male covered by an award is permitted to work a full standard hours week at less than the assessed basic wage rate.
The basic wage is expressed as the minimum at which normal adult male unskilled workers may legally be employed, differing from the amounts fixed as legal minima for skilled and semi skilled workers, piece workers and casual workers respectively. . . . . . .
The minimum wage is the lowest rate at which members of a specified grade of workers may legally be employed. " (2) There is also a distinction between a bare subsistence or minimum wage and a statutory minimum wage.
The former is a wage which would be sufficient to cover the bare physical needs of a worker and his family, that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to (i) Report of the Committee on Fair Wages, PP.
7 9, paras, 8 10.
(2) O.D.R. Feenander Industrial Regulation in Australia (1947), Ch.
XVII, P. 155.
84 pay.
If an industry is unable to pay to its workmen at least a bare minimum wage it has no right to exist.
As was observed by us in Messrs. Crown Aluminium Works vs Their Workmen (1): " It is quite likely that in underdeveloped countries, where unemployment prevails on a very arge scale, unorganised labour may be available on starvation wages, but the employment of labour on Starvation wages cannot be encouraged or favored in a modern democratic welfare state.
If an employer cannot maintain his enterprise without cutting down the wages of his employees below even a bar(, subsistence or minimum wage, he would have no right to conduct his enterprise on such terms.
" The statutory minimum wage however is the minimum which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as contemplated above.
also the connotation of " minimum rate of wages " in section 4 of the (XI of 1948)).
tasks in other trades which are of equal difficulty and disagreeableness, which require equally rare natural abilities and an equally expensive training.
A wage rate, in his opinion, is "fair in the narrower sense" when it is equal to the rate current for similar workmen in the same trade and neighborhood and "fair in the wider sense" when it is equal to the predominant rate for similar work throughout the country and in the generality of trades. " " The Indian National Trade Union Congress. (1) ; 85 agreements, arbitrators, and adjudicators could at best be treated, like the minimum wage, as the starting point and that wherever the capacity of an industry to pay a higher wage is established, such a higher wage should be deemed to be the fair wage.
The minimum a wage should have no regard to the capacity of an industry to pay and should be based solely on the requirements of the worker and his family.
Several employers while they are inclined to the view that fair wages would, in the initial stages, be closely related to current wages, are prepared to agree that the prevailing rates could suitably be enhanced according to the capacity of an industry to pay and that the fair" age would in time progressively approach the living wage.
It is necessary to quote one other opinion, viz., that of the Government of Bombay, which has had considerable experience in the matter of wage regulation.
The opinion of that Government is as follows: " Nothing short of a living wage can be a fair wage if under competitive conditions an industry can be shown to be capable of paying a full living wage.
The minimum wage standards set up the irreducible level, the lowest limit or the floor below which no workers shall be paid. .
A fair wage is settled above the minimum wage and goes through the process of approximating towards a living wage.
" While the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally set by what may broadly be called the capacity of industry to pay.
This will depend not only on the present economic position of the industry but on its future prospects.
Between these two limits the actual ", ages will depend on a consideration of the following factors and in the light of the comments given below: (i) the productivity of labour; (ii) the prevailing rates of wages in the same or 86 similar occupations in the same or neighbouring localities; (iii) the level of the national income and its distribution ;and (iv) the place of the industry in the economy of the country. . . (1).
It will be noticed that the " fair wage " is thus a mean between the living wage and the minimum wage and even the minimum wage contemplated above is something more than the bare minimum or subsistence wage which would be sufficient to cover the bare physical needs of the worker and his family, a wage which would provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities.
This concept of minimum wage is in harmony with the advance of thought in all civilised countries and approximates to the statutory minimum wage which the State should strive to achieve having regard to the Directive Principle of State Policy mentioned above.
The enactment of the , affords an illustration of an attempt to provide a statutory minimum.
It was an Act to provide for fixing minimum rates of wages in certain employments and the appropriate Government was thereby empowered to fix different minimum rates of wages for (i) different scheduled employments; (ii) different classes of work in the same scheduled employment; (iii) adult ,, adolescents, children and apprentices; and (iv) different localities; and (v) such minimum rates of wages could be fixed by the hour, by the day or by any larger period as may be prescribed It will also be noticed that the content of the expressions minimum wage fair wage " and " living wage is not fixed and static.
It varies and is bound to vary from time to time.
With the growth and Development of national economy, living standards Would improve and so would our notions about the respective categories of wages expand and be more progressive.
(1) Report of the Committee on Fair Wages, PP.
4, 9 11, paras, 11 15. 87 It must however be remembered that whereas the bare minimum or subsistence wage would have to be fixed irrespective of the capacity of the industry to pay, the minimum wagg thus contemplated postulates the capacity of the industry to pay and no fixation of wages which ignores this essential factor of the capacity of the industry to pav could ever be supported.
The rates of wages and scales of wages are two different expressions with two different connotations.
" Similar definition of " wages " is to be found in the , also.
They would therefore include all payments made from time to time to a workman during the course of his employment as such and not merely the starting amount of wages at the beginning of his employment.
The dictionary meaning of the term in the Concise Oxford ]Dictionary is also the same, viz., " Amount paid periodically, especially by the day or week or month, for time during which workman or servant is at employer 's disposal ".
The use of the word " rate " in the expression " rates of wages" has not the effect of limiting the connotation of the term.
"Rate" is described in the Concise Oxford Dictionary as " a statement of numerial proportion prevailing or to prevail between two sets of things either or both of which may be unspecified amount, etc., mentioned in one case for application to all similar ones, standard or way of reckoning (measure of) value, etc." In Chambers ' Twentieth Century Dictionary its meaning is given as: estimated amount or value (Shakespeare), and also " amount 88 determined according to a rule or basis; a standard; a class or rank; manner or mode". "Rates of wages" therefore mean the manner, mode or standard of the payments of remuneration for work done whether at the start or in the subsequent stages.
Rates of wages would thus include the scales of wages and there is no antithesis between the, two expressions, the expression being applicable both to the initial as well as subsequent amounts of wages.
It is true that in references made to Industrial Tribunals fixing of scales of pay has been specifically men tioned, e. g., in the Industrial dispute between certain banking companies and their workers.
But that is not sufficient to exclude the " scales of wages " from being comprised within the larger connotation of the expression "rates of wages " which is capable of including the scales of wages also within its ambit.
Even without the specific mention of the scales of wages it would be open to fix the same in an inquiry directed towards the fixation of the rates of wages.
It is also true that Industrial Tribunals have laid down that the increments of wages or scales of remuneration could only be fixed having due regard to the capacity of the industry to pay.
In the case of the Britannia Building & Iron Co. Ltd.(1): " As time scales increase the wage bill year after year which is reflected in the cost of production, such Scales should not, in our opinion, be forced upon the employer of industrial labour unless it is established that the employer has the present capacity to pay and its financial capacity can be counted upon in future.
Thus, both financial ability and stability are requisite conditions.
" Similar observations were made in the case of the Union Drug Co. Ltd.(1): " For before incremental scales can be imposed by adjudication, it is essential to see whether employer would be able to bear its burden.
The financial condition of the Company must be such as to lead to the conclusion that it would be able to pay the increments year by year for an appreciable number of (1) (1954] , 654(2) , 767.
89 years, for wage scales when settled are intended to be long term schemes.
" This consideration however of the capacity of the industry to pay does not militate against the construction adopted above that rates of wages do comprise within their scope the scales of wages also and it therefore follows that the fixation of rates of wages would also include the fixation of scales of wages.
As a matter of fact, the provisions in regard to the statutory minimum wages in Queensland, Western Australia, and Tasmania prescribe scales of wages which are graduated according to age and experience.
The capacity of the industry to pay being thus one of the essential ingredients in the fixation of wages, it is relevant to consider the different methods of measuring such capacity.
The capacity of the industry to pay: The capacity of industry to pay can mean one of three things, viz : (i)the capacity of a particular unit (marginal, representative or average) to pay, (ii)the capacity of a particular industry as a whole to pay or (iii)the capacity of all industries in the country to pay. " Ideas on this subject have varied from country to country.
In New Zealand and Australia, the capacity to pay is calculated with reference to all industries in the country and no special concessions are shown to depressed industries.
In Australia the Arbitration Court considered that " in view of the absence of clear means of measuring the general wage paying capacity of total industry, the actual wage upon which well situated labourers were at the time maintaining the average family unit could justifiably be taken as the criterion of what industry could probably pay to all labourers ".
This is at best a secondary definition of capacity, for it could only serve to show that certain industries or units could afford to pay as much as certain others.
" The Bombay Textile Labour Inquiry Committee 12 90 came to the conclusion that it was not possible to define the term "capacity to pay" in a precise manner and observed as follows: "The capacity to pay a wage cannot obviously be determined merely by the value of production.
The determination of each of a large number of charges involves difficulties, both theoretical and practical.
Interest charges, remuneration to salaried staffs and managing agents, sales commissions, profits, all these cannot for any large organised industry be taken as pre determined in a fixed manner.
Neither is it to be expected that representatives of Labour would accept without challenge the current levels of expenditure on these items apart from the consideration whether the industry has been reasonably wellmanaged or not." " That Committee was, however, of the opinion that capacity should not be measured in terms of the individual establishment and that " the main criterion should be the profit making capacity of the industry in the whole province. . . . . . . . " In determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all industries in the country.
The relevant criterion should be the capacity of a particular industry in a specified region and, as far as possible, the same wages should be prescribed for all units of that industry in that region.
It will obviously not be possible for the wage fixing board to measure the capacity of each of the units of an industry in a region and the only practicable method is to take a fair cross section of that industry.
"(1) It is clear therefore that the capacity of an industry to pay should be gauged on an industry cum region basis after taking a fair cross section of that industry.
In a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay classwise.
(1) Report of the Committee on Fair Wages, pp. 13 15, paras.
21& 23.
91 As regards the measure of the capacity again there are two points of view in regard to the same: " One view is that the wage fixing machinery should, in determining the capacity of industry to pay, have regard to (i) a fair return on capital and remuneration to management; and (ii)a fair allocation to reserves and depreciation so as to keep the industry in a healthy condition.
The other view is that the fair wage must be paid at any cost and that industry must go on paying such wage as long as it does not encroach on capital to pay that wage. .
The objective is not merely to determine wages which are fair in the abstract, but to see that employment at existing levels is not only maintained but, if possible, increased.
From this point of view, it will be clear that the level of wages should enable the industry to maintain production with efficiency.
The capacity of industry to pay should, therefore, be assessed in the light of this very important consideration.
The wages board should also be charged with the duty of seeing that fair wages so fixed for any particular industry are not very much out of line with wages in other industries in that region.
Wide disparities would inevitably lead to movement of labour, and consequent industrial unrest not only in the industry concerned but in other industries." (1) The main consideration which is to be borne in mind therefore is that the industry should be able to maintain production with efficiency and the fixation of rates,of wages should be such that there are no movements from one industry to another owing to wide disparities and employment at existing levels is not only maintained, but if possible, increased.
Different tests have been suggested for measuring the capacity of the industry to pay: viz: (1) The selling price of the product; (2) The volume of the output; (3) the profit and loss in the business; (1) Report of the Committee on Fair Wages, p. 14, para.
92 (4) the rates which have been agreed to by a, large majority of the employers; (5) the amount of unemployment brought about or likely to be brought about by the imposition of the increased wage, etc.
They are however not quite satisfactory.
The real measure of the capacity of the industry to pay has been thus laid down in " Wage. , & the State " by E.M. Burns at p. 387: " It would be necessary to inquire inter alia into the elasticity of demand for the product, for on this depends the extent to which employers could transfer the burden of the increased wage to consumers.
It would also be necessary to inquire how far the enforced payment of a higher wage would lead employers to tighten up Organisation and so pay the higher wage without difficulty.
Again unless what the trade can bear be held to imply that in no circumstances should the existing rate of profit be reduced, there is no reason why attempts should not be made to discover how far it is possible to force employers to bear the burden of an increased rate without driving them out of business.
This would involve an investigation into the elasticity of supply of capital and organization ability in that particular trade, and thus an inquiry into the rate of profits in other industries, the ease with which transferences might be made, the possibility of similar wage regulation extending to other trades, and the probability of the export of capital and organising ability etc.
" The principles which emerge from the above discussion are: (1) that in the fixation of rates of wages which 93 include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity; (2) that the capacity of the industry to pay is to be considered on an industry cum region basis after taking a fair cross section of the industry; and (3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the Organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business.
The machinery for fixations of wages: The fixation of wages may form the subject matter of reference to industrial tribunals or similar machinery under the Labour Relations Law.
But this machinery is designed for the prevention and settlement of industrial disputes which have either arisen or are apprehended, disputes relating to wages being one of such disputes.
The ensuring of an adequate wage is however a distinctive objective and it requires the setting up of some kind of wage fixing board, whether they be trade boards or general boards.
It is seldom that legislative enactments themselves fix the rates of wages, though a few such instances are known.
This method of regulation of wages has now become obsolete in view of its inflexibility. " (1) " The Constitution of Boards falls naturally into two main groups.
P. 26, para.
94 general and employers in general being represented.
This group includes among others the Industrial Welfare Commission of Texas, consisting of the Commissioner of Labour, the representative of employers of labour on the Industrial Accidents Board and the State Superintendent of Public Instruction; the Minimum Wage Board of Manitoba, composed of two representatives of employers, and two of workers (one of each to be a woman) and one disinterested person; and the South Australian Board of Industry, consist ing of a President and four Commissioners, two of whom are to be nominated by the South Australian Employers ' Federation and two by the United Trades and Labour Council of the State.
On the other hand are those Boards representative of one trade only or of part of a trade, or of a group of allied trades.
An attempt is made to obtain a body of specialists and the membership of the Board reflects this intention.
It will contain an equal number of representatives of employers and workers, together with an impartial chairman, and in some cases members of the public as well.
Of this type are the British Trade Boards; the South Australian, Victorian and Tasmanian Wages Boards; and the Advisory or Wages Boards set up by many of the Central Commissioners in the United States and Canada. " (1) The following is a brief description of the composition and working of wages boards in the United Kingdom: " In the United Kingdom where trade boards, and not general boards, have been set up, the Minister of Labour appoints a board if lie is satisfied that no adequate machinery exists in a particular trade or industry for effectively regulating the waves and that it is necessary to provide such machinery.
The trade board is a fairly large body consisting of an equal number of representatives of employers and workers with a few independent members including the Chairman.
95 are appointed on the recommendation of the associations concerned.
The trade board publishes a notice announcing its tentative proposals for the fixation or revision of a wage rate and invites objections or comments.
After a two months ' notice the board takes a final decision and submits a report to the Minister who must confirm the rate unless, for any special reasons, he returns the recommendations to the board for further consideration.
" (1) The Wage Council Act, 1945 (8 & 9 Geo.
VI, ch. 17) provides for the establishment of Wage Councils.
The Minister of Labour and National Service has the power to make a wages council order after considering objections made with respect to the draft order on behalf of any person appearing to him to be affected.
The Wage Council makes such investigation as it thinks fit and publishes notice of the wage regulation proposals and parties affected are entitled to make written representations with respect to these proposals which representations the Wage Council considers.
The Wage Council can make such further enquiries as it considers necessary and thereafter submit the proposals to the Minister either without amendment or with such amendments as it thinks fit in regard to the same.
The Minister considers these wage regulations proposals and makes an order giving effect to the proposals from such date as may be specified in the order.
Remuneration fixed by the wage regulation orders is called statutory minimum remuneration.
There are also similar provisions under the Agricultural Wage Regulation Act, 1924 (14 & 15 Geo.
V, ch. 37) in regard to the regulation of wages by Agricultural Wages Committees and the Agricultural Wages Board.
In Canada and Syria a board consists of generally 5 members, but in China the size of the board varies from 9 to 15.
In all these countries employers and workers obtain equal representation.
In Canada the boards are required to enquire into the conditions of work and wages.
25 26, para.
96 the recommendations have to be submitted to the Lieutenant Governor who issues orders. " In the United States of America some state laws prescribe that the representatives of employers and workers should be elected, but in the majority of States the administrative authorities are authorised to make direct appointments.
The boards so set up are empowered to make enquiries, to call for records, to summon witnesses and to make recommendations regarding minimum wages.
Some of the American laws lay down a time limit for the submission of proposals.
The administrative authority may accept or reject a report and refer it back for reconsideration, or form a new board for considering the matter afresh.
Some of the laws provide that if the report is not accepted, the matter must be submitted again to the same wages board or a new wages board.
" (1) The whole procedure for the determination of wages in the United States of America is described in two decisions of the Supreme Court: (i) Interstate Commerce Com.
vs Louisville & M. R. (2) and (ii) Opp.
Cotton Mills Inc. vs Administration (3).
The Fair Labour Standards Act of 1938 in the U.S.A. provides for convening by the Administrator of industry committees for each such industry which from time to time recommend the minimum rate or rates of wages to be paid by the employers.
The committee Recommends to the administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in the industry.
In Australia, also there are provisions in various states for the appointment of wage boards the details of which we need not go into.
We may only refer to the wage board system in Victoria which was established (1) Report of the Committee on Fair Wages, p. 26, para.
(2) ; ; (3) (1940) 312 U S 126; ; 97 in 1896 as a means of directly regulating wages and working conditions in industries subject to " sweating ", and was not intended to control industrial relations as such.
" Under the Factories and Shops Act, 1924, wage boards are set up for the various industries with a ' court of Industrial Appeals to decide appeals from a determination of a wage board.
Industries for which there is no special wage board are regulated by the General Wages Board, which consists of two employers ' representatives nominated by the Victorian Chamber of Manufacturers, two employees ' representatives nominated by the Melbourne Trade Hall Council, and a chairman, agreed upon by these four members or nominated by the minister for labour.
"(1) It may be noted that in the majority of cases these wage boards are constituted of equal number of representatives of employers and employees and one or more independent persons, one of whom is appointed the chairman.
The position in India has been thus summarised: " The history of wage fixation in India is a very recent one.
There was practically no effective machinery until the last war for the settlement of industrial disputes or the fixation of wages.
The Act had limited application and the Court was not charged with the responsibilities of fixing and regulating wages.
During the war State intervention in the settlement of industrial dis putes became necessary, and numerous adjudicators were appointed to adjudicate on trade disputes under the Defence of India Rules.
The , is the first effective measure of All India applicability for the settlement of industrial disputes.
Under this Act various Tribunals have passed awards regulating wages in a number of important industries.
" The first enactment specifically to regulate wages in this country is the .
(1) Kenneth F. Walker, "Industrial Relations in Australia".
13 98 This Act is limited in its operation to the so called sweated industries in which labour is practically unorganised and working conditions are far worse than in organised industry.
Under that Act the appropriate Government has either to appoint a Committee to hold enquiries and to advise it in regard to the fixation of minimum rates of wages or, if it thinks that it has enough material on hand, to publish its proposals for the fixation of wages in the official gazette and to invite objections.
The appropriate Government finally fixes the minimum rates of wages on receipt of the recommendations of the Committee or of objections from the public.
There is no provision for any appeal.
There is an advisory board in each province to co ordinate the work of the various committees.
There is also a Central Advisory Board to co ordinate the work of provincial boards.
Complaints of non payment of the minimum rates of wages fixed by Government may be taken to claims authorities.
Breaches of the Act are punishable by criminal courts.
" (1) It is worthy of note that these committee, subcommittees, advisory board and central advisory board are to consist of persons to be nominated by the Central Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons not exceeding one third of its total number of members; one of such independent persons shall be appointed the chairman by the appropriate Government. " Under a recent amendment to the Bombay Industrial Relations Act, 1946, wage boards can be set up in the Province of Bombay either separately for each industry or for a group of industries.
The wage board is to consist of an equal number of representatives of employers and employees and some independent persons including the Chairman, all of whom are nominated by the Government.
51, 52.
99 pay.
When a matter has been referred to a wages board, no proceedings may be commenced or continued before a conciliator, conciliation board, labour court or industrial court.
The wages boards are authorised to form committees for local areas for the purpose of making enquiries.
It is obligatory on" Government to declare the decisions of the wages boards binding, but where Government feel that it will be inexpedient on public grounds to give effect to the whole or any part of the decision, the matter has to be placed before the Provincial Legislature, the decision of which will be binding.
There is provision for the filing of appeals from the decisions of the wages boards to the Industrial Court.
" (1) Those wage boards moreover are under the superintendence of the Industrial Court.
We may also notice here Recommendation 30, being the recommendation concerning the application of Minimum Wage Fixing Machinery made by the International Labour Office, 1949 (2): (1) The minimum wage fixing machinery whatever form it may take (for instance, trade board for individual trades, tribunals), should operate by way of investigation into the relevant conditions in the trade or part of trade concerned and consultation with the interests primarily and principally affected, that is to say, the employers and workers in the trade or part of trade, whose views on all matters relating to the fixing of the minimum rate of wages should in any case be solicited and be given full and equal consideration. " (2) (a) To secure greater authority for the rates that may be fixed, it should be the general policy that the employers and workers concerned through representatives equal in number or having equal voting strength, should jointly take a direct part in the deliberations and decisions of the wage fixing body; in any case, where representation is accorded to one side, the other side should be represented on the same footing.
The wage fixing body should also include one or more independent persons whose votes can ensure (1) Report of the Committee on Fair Wages, P. 27, para.
Such independent persons should, as far as possible, be selected in agreement with or after consultation with the employers ' and workers ' representatives on the wage fixing body.
(b)In order to ensure that the employers ' and workers ' representatives shall be persons having the confidence of those whose interests they respectively represent, the employers and workers concerned should be given a voice as far as is practicable in the circumstances in the selection of their representatives, and if any organisations of the employers and workers exist these should in any case be invited to submit names of persons recommended by them for appointment on the wage fixing body.
(c)The independent person or persons mentioned in paragraph (a) should be selected from among men or women recognised as possessing the necessary qualifications for their duties and as being dissociated from any interest in the trade or part of trade concerned which might be calculated to put their impartiality in question.
" The following appraisement of the system of establishing trader boards by the committee on fair wages may be noted in this context: " A trade board has the advantage of expert knowledge of the special problems of the trade for which it has been set up and is, therefore, in a position to evolve a scheme of wages suited to the conditions obtaining in the trade.
The system, however, suffers from the limitation that there is no one authority to co ordinate the activities of the various boards with the result that wide disparities may arise between the scales sanctioned for similar industries.
The Bombay Textile Labour Inquiry Committee have stated in their report that the trade board system is the best suited to Indian conditions, particularly because the very manner of 101 functioning of trade boards is such that wages are arrived at largely by discussion and conciliation and that it is only in exceptional cases that the deciding votes of the Chairman and of the independent members have to be given." (1) It is clear therefore that a wage board relating to a, particular trade or industry constituted of equal number of representatives of employers and employees, with an independent member or members one of whom is appointed a chairman, is best calculated to arrive at the proper fixation of wages in that industry.
Principles for guidance.
If a wage board is thus appointed it is necessary that the principles for its guidance in wage fixation should also be laid down by the appointing authority.
The following passage from "Minimum Wage An International Survey I.L.O. Geneva, 1939, summarises the position as it obtains in various countries: " As will be clear from the analysis of legislation given earlier in this monograph, the fundamental principle of the Australian system, both in the Commonwealth and in the State sphere, is that of the living wage.
Even in those cases where the law contains no reference to this principle its importance is in practice great. .
As a criterion of wage regulation the principle of the living wage is however no more than a vague and general indication of the purpose of the legislation.
It leaves the broadest possible discretion in practice to the wage fixing tribunals.
In the case of the Commonwealth laws indeed the Court is left completely free to determine the principles on which the basic or living wage is to be assessed.
Under certain of the State laws specific, though limited, directions are given.
Thus in Queensland there is a statutory definition of the family unit on whose requirements the basic wage is to be calculated.
In certain cases the general emphasis on the criterion of the workers ' needs is supplemented by directions to fix wage rates that will be " fair and reasonable " and in doing so to take into account the average standard (1) Report of the Committee on Fair Wages, P. 27, para.
53, 102 of comfort being enjoyed by workers in the same locality or in similar occupations.
Such references, it may be noted, involve at least an indirect allusion to general economic conditions and the capacity of industry to pay, since the standards currently enjoyed are closely related to these factors.
In at least one case (in Queensland) the Court is specifically directed to examine the probable effects of its decisions upon industry and the community in general.
" In the United States of America the Fair Labour Standards Act of 1938 enunciates certain principles for the guidance of the industry committees which are convened by the Administrator under the Act: " The committee shall recommend to the Administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in the industry " and further " in determining whether such classifications should be made in any industry in making such classification, and in determining the minimum wage rates for such classification, no classification shall be made, and no minimum wage rate shall be fixed, solely on a regional basis, but the industry committee and the Admini strator shall consider among other relevant factors the following.
(1) competitive conditions as affected by transportation, living, and production cost; (2) the wages established for work of like or comparable character by collective labour agreements negotiated between employers and employees by representatives of their own choosing; and (3) the wages paid for work of like or comparable character by employers who voluntarily maintain minimum wage standards in the industry.
No classification shall be made under this section on the basis of age or sex.
" The normal rule however is to leave a wide discretion to the tribunals responsible for the fixation of wages inasmuch as they being constituted of equal numbers of representatives of the employers and the 103 employees are best calculated to appreciate the whole position and arrive at correct results.
Procedure to be followed : The procedure to be followed by the wage boards is equally fluid.
The wage councils and the central coordinating committees appointed under the Wages Council Act, 1945, as also the agricultural wages committees and the agricultural boards appointed under the Agricultural Wages Regulation Act, 1924, in the United Kingdom each of them subject, of course, to the regulations which might be made by the minister as to the meetings and procedure of these bodies including quorum, etc., is entitled to regulate its procedure in such manner as it thinks fit.
The wage boards in Australia " are called together informally by the chairman upon request of either party.
, No legal formalities or procedures need be complied with.
Meetings of wage boards are held in the offices of the Department of Labour an officer of the department acting as secretary.
" (1) The wage boards thus constituted are left to regulate their procedure in such manner as they think fit and it is not necessary that any regulation should be made in regard to the procedure to be adopted by them in the conduct of the enquiry before them.
There are, however, a number of safeguards which have been provided in order to protect the interests of the parties concerned.
The wages councils established by the Minister of Labour and National Services in the United Kingdom are so established after considering objections from persons appearing to be affected thereby and wage regulation orders are also recommended by these councils after considering the written representations in regard to their proposals which are duly published in the manner prescribed.
These recommendations are again in their turn considered by the minister and it is only after the minister is satisfied that these wage regulation orders are promulgated, the minister having the power in proper cases to send the same back for reconsideration by the wage (1) Kenneth F. Walker " Industrial Relations in Australia ", P. 24.
104 councils.
The reports of the industry committees convened by the administrator in the United States of America are subject to scrutiny by the administrator who gives notice to all interested persons and gives them an opportunity of being heard in regard to the same.
it is only after this is done that he approves and carries into effect the recommendations in these reports on his being fully satisfied that they are proper and if he disapproves of these recommendations he again refers the matter to such committees for further considerations and recommendations.
The orders of the administrator are again subject to review in the Circuit Court of Appeals in the United States and further revision in the U. section Supreme Court upon certiorari or certification.
As regards the determinations of the special boards in some of the States of the Commonwealth of Australia appeals lie against the same to the court of industrial appeals and they are also challengeable before the High Court.
Such safeguards are also provided in our .
Here the work of the committees, sub committees and advisory committees is coordinated by advisory boards and the work of the advisory boards is coordinated by the central advisory board which advises the Central Government in the matter of the fixing of the minimum rates of wages and other matters under the Act and it is after the receipt of such advice from the Central advisory board by the appro priate Government that the latter takes action in the matter of fixation or revision of minimum rates of wages.
Where, however, the appropriate Government propose to fix the minimum rates of wages without reference to the various committees, or sub committees, it publishes its proposals by notification in the Official Gazette for the information of persons likely to be affected thereby and fixes the minimum rates of wages only after considering the representations received by it from the interested parties.
105 The wage boards appointed by the amended Bombay Industrial Relations Act, 1946, are subject to the appellate jurisdiction as well as supervisory jurisdiction of the industrial courts in the State and parties affected by their decisions are entitled to file appeals against the same in the industrial courts.
If these safeguards are provided against the determinations of the wage boards, it will be really immaterial what procedure they adopt in the course of the proceedings before them.
Charactero the functions performed: There is considerable divergence of opinion in regard to the character of the functions performed by these wage boards and a controversy has arisen as to whether the functions performed by them are administrative, judicial or quasi judicial or legislative in character.
The question assumes importance on two grounds: viz., (i) whether the decisions of the wage boards are open to judicial review and (ii) whether the principle of audi alteram partem applies to the proceedings before the wage boards.
If the functions performed by them were administrative or legislative in character they would not be subject to judicial review and not only would the not be amenable to the writs of certiorari or prohibition under articles 32 and 226 of the ' Constitution, they would also not be amenable to the exercise of special leave jurisdiction under article 136.
Their decisions moreover would not be vulnerable on the ground that the principle of audi alteram partem, i. e., no man shall be condemned unheard, was not followed in the course of the proceedings before them I4 106 and the procedure adopted by them was contrary to the principles of natural justice.
It is well settled that writs of certiorari and prohibition will lie only in respect of judicial or quasijudicial acts: " the orders of certiorari and prohibition will lie to bodies and persons other than courts stricto sensu.
Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the controlling jurisdiction of the High Court of justice, exercised by means of these orders." (1).
The principle of audi alteram partem also applies only to judicial or quasi judicial proceedings: As was observed by the Judicial Committee of the Privy Council in Patterson vs District Commissioner of Accra (2): "On this part of the case, counsel suggested that the provisions of section 9 were in the nature of a " mass punishment " of the inhabitants of the proclaimed district and he relied on the well known passage from the judgment of the court in Bonaker vs Evans (3), " no proposition can be more clearly established than that a man cannot incur the loss of liberty or property for an offence by a judicial proceeding until he has had a fair opportunity of answering the charge against him, unless indeed the legislature has expressly or impliedly given an authority to act, without that necessary preliminary.
This is laid down in there a number of cases are mentioned] and many other cases, concluding with that of Capel vs Child (4) in which Bayley B. says he knows of no case in which you are to have a judicial proceeding, by which a man is to be deprived of any part of his property, without his having an opportunity of being heard. .
Their Lordships have already indicated that, in their view, the section does not contemplate any judicial proceeding, and thus a decision against the appellant does not infringe the principles stated in Bonaker vs Evans." (3) (1) Halsbury 's Laws of England, 3rd Edn., Vol. 11, at p. 55,para. 114.
(2)[1948] A.C. 341.
(4) (1832) 2 C. (3) 16 Q.B. 162, 171.J. 558.
107 The distinction between a legislative and a judicial function is thus brought out in Cooley 's Constitutional Limitations, 8th Edn., Vol. 1, ch.
V under the caption of " the powers which the legislative department may exercise ", at p. 185: " On general principles, therefore, those inquiries, deliberations, orders, and decrees, which are peculiar to such a department, must in their nature be judicial acts.
The former decide upon the legality of claims and conduct, and the latter make rules upon which, in connection with the constitution, those decisions should be founded.
It is the province of judges to determine what is the law upon; existing cases.
In fine, the law is applied by one, and made by the other.
But to do the last to pass new rules for the regulation of new controversies is in its nature a legislative act; and if these rules interfere with the past, or the present, find do not look wholly to the future, they violate the definition of a law as " a rule of civil conduct " because no rule of conduct can with consistency operate upon what occurred before the rule itself was promulgated.
" It is the province of judicial power, also to decide private disputes between or concerning persons; but of legislative power to regulate public concerns, and to make laws for the benefit and welfare of the State.
Nor does the passage of private statutes, when ' lawful, are enacted on petition, or by the consent of all concerned; or else they forbear to interfere with past translations and vested rights.
" The following classic passage from the opinion of Holmes, J., in Prentis vs Atlantic Coast Line Co. Ltd., (1), is very apposite in this context: " A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist.
That is its purpose and end.
Legislation, on the other hand (1) ; , 226 227 ; 53 L. Ed. 15o, 158, 159.108 looks, to the future and changes existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power.
That question depends not upon the character of the body, but upon the character of the proceedings.
The nature of the final act determines the nature of the previous enquiry." (See also Mitchell Coal & Coke Co. vs Pennsylvania R. Co. (1) and Louisville & Nashville Railroad Company vs Green Garrett (2) A practical difficulty however arises in thus characterising the functions as legislative or judicial because the functions performed by administrative agencies do not fall within watertight compartments.
Stason and Cooper in their treatises on " Cases and other materials on Administrative Tribunals" point out: One of the great difficulties of properly classifying a particular function of ail administrative agency is that frequently and, indeed; typically a single function has three aspects.
It is partly legislative, partly judicial and partly administrative.
Consider, for example, the function of rate making.
It has sometimes been characterised as legislative, sometimes as judicial.
In some aspects, actually, it involves merely executive or administrative powers.
For example, where the Interstate Commerce Commission fixes a tariff of charges for any railroad, its function is viewed as legislative.
But where the question for decision is whether a shipment of a mixture of coffee and chicory should be charged the rate established for coffee or the lower rate established for chicory, the question is more nearly judicial.
On the other hand, where the problem is merely the calculation of the total freight charges due for a particular shipment, the determination can fairly be described as an administrative act." (1) ; ; 571.
Ed. 1472, 1482.
(2) ; ; , 239.
109 This difficulty is solved by the Court considering I in a proper case whether the administrative agency performs a predominantly legislative or judicial or administrative function and determining its character accordingly.
(Vide: Village of Saratoga Springs vs Saratoga Gas, Electric Light & Power Co. (1), and People ex rel.
Central Park, North ((., East River R. Co.
Willcox (2).
Robson 's Justice and Administrative Law, 3rd Edn.
, states at p. 608 (foot note): " An example of a subordinate body of this type is a Wage Council, which is not an administrative tribunal but a subordinate legislative authority.
" Griffith 's Principles of Administrative Lam, contains the following passage at p. 39: " The subordinate legislation which occupies more space than any other subject relates to Wages Councils.
By the Wages Councils Act, 1945, the Minister of Labour and National Service was empowered to establish by order Wages Councils to operate in industries and trades.
Six such orders were made in 1947.
Wages Councils, under the Act, may submit to the Minister detailed "wages regulations proposals" for fixing remuneration and making provisions for holidays.
The Minister then makes orders embodying and giving effect to these proposals.
In 1947, fifty five such orders were made, covering thirty one different trades.
" Barbare Wootton in " Social Foundations of Wage Policy; Modern Methods of Wage Determination makes the following observations at p. 88: " Both arbitration tribunals and courts of inquiry share with one important difference the tripartite structure of statutory wage councils; they are composed of equal numbers of representatives of employers and of workers under an independent chairman together with (in some cases) additional independent members.
(2) (1909) 194 New York 383.
110 representative members of the latter are chosen from within the industry concerned, whereas employers and workers on arbitration tribunal come from outside the industry whose disputes they have to resolve; if in any case technical knowledge of a particular industry is required, this is normally supplied by the help of assessors who take no part in the final award.
This difference between the constitution of wage boards and that of arbitration tribunals clearly implies a corresponding distinction between the legislative function of the former and the judicial function of the latter.
The wages board drafts laws for its own industry, whereas the arbitration court gives judgment on matters submitted by others.
The choice of industrial arbitrators unconnected with the industries the merits of whose claims they must pledge, is evidently intended as a guarantee that they, like other judges, will be free from bias arising from personal interest ".
The High Court of the Commonwealth of Australia has taken a similar view in Australian Boot Trade Employees Federation vs Whybrow & Co. (1), in discussing an award made by the wages board empowered by a State statute to fix minimum rates of wages.
The test applied for determining the character of that function may be stated in the words of Issacs J. at p. 318: " If the dispute is as to the relative rights of parties as they rest on past or present circumstances, the award is in the nature of a judgment, which might have been the decree of an ordinary judicial tribunal acting Linder the ordinary judicial power.
There the law applicable to the case must be observed.
If, however, the dispute is as to what shall in the future be the mutual rights and responsibilities of the partiesin other words, if no present rights 'are asserted or denied, but a future rule of conduct is to be prescribed, thus creating new rights and obligations, with sanctions for non conformity then the determination that so prescribes, call it an award, or arbitration, determination, or decision or what you will, is essentially of a legislative character, and limited only by the law which authorises it.
If, again, there are neither present (1)(1910) ; , 318.
111 rights asserted, nor a future rule of conduct prescribed, but merely a fact ascertained necessary for the practical effectuation of admitted rights, the proceeding, though called an arbitration, is rather in the nature of an appraisement or ministerial act.
" As against this trend of opinion it has been urged that the decisions of the Wage Councils in the shape of wage regulation proposals submitted to the minister in Great Britain under the Wage Councils Act derive their sanction from the orders made by the minister giving effect to these proposals; but for such orders of the minister they would merely remain the determinations of the Wage Councils and would not acquire any legislative character.
In regard to the determinations of the wage boards empowered by the statutes to fix the minimum rates of wages in the Commonwealth of Australia also it is pointed out that under the provisions of the Factories and Shops Act, 1905, of Victoria "Every determination of any Special Board shall unless and until so quashed. . have the like force, validity and effect as if such determination had been enacted in this Act. . . thus investing the deter mination of the boards with the characteristics of a legislative act.
Reference is made to the provisions of the Fair Labour Standards Act of 1938 in the United States of America, where the wages orders ultimately approved by the Administrator are subject to judicial review in the Circui Courts of Appeals or in the United States courts of appeals of the particular ]District and also subject to further review by the Supreme Court of the United States of America on certification.
The , in our country also provides for the committees, sub committees, advisory sub committees, advisory boards and central advisory boards for fixing minimum rates of wages and the recommendations of these committees are forwarded to the appropriate Government who by notification in the official gazette fix minimum rates of wages in respect of each scheduled employment.
The notification is a token of the approval by the appropriate Government 112 of these recommendations of the Committees and invests them with legal sanction.
The recent amendment of the Bombay Industrial Relations Act, 1946, empowers the State Government by notification in the official Gazette to constitute for one or more industries a wage board for the State and enjoins these wage boards to follow the same procedure as the Industrial Court in respect of arbitration proceedings before it and appeals from the decisions of these wage boards lie to the Industrial Courts which has powers of superintendence and control over these wage boards and it cannot, under the circumstances be urged that these wage boards perform any legislative functions.
These are the two opposite points of view which have been pressed before us and it is impossible to state that the functions performed by the wage boards are necessarily of a legislative character.
If that were the only ' consideration the dictum of Justice Holmes cited above would apply and the functions performed by these wage boards would be invested with a legislative character.
This is however not all, and regard must be had to the provisions of the statutes constituting the wage boards.
If on a scrutiny of the provisions in regard thereto one can come to the conclusion that they are appointed only with a view to determine the relations between the employers and the employees in the future in regard to the wages payable to the employees there would be justification for holding that they were performing legislative functions.
If, however, on a consideration of all the relevant provisions of the statutes bringing the wage boards into existence, it appears that the powers and procedure exercised by them are assimilated to those of Industrial Tribunals or their adjudications are subject to judicial review at the hands of higher Tribunals exercising judicial or quasi judicial 113 functions, it cannot be predicated that these wage boards are exercising legislative functions.
Whether they exercise these functions or not is thus to be determined by the relevant provisions of the statutes incorporating them and it would be impossible to lay down any universal rule which would help in the ' determination of this question.
Even if on the construction of the relevant provisions of the statute we come to the conclusion that the functions performed by a particular wage board are not of a legislative character, the question still remains whether the functions exercised by them are administrative in character or judicial or quasi judicial in character, because only in the latter event would their decision be amenable to the writ jurisdiction or to the special leave jurisdiction above referred to.
There is no doubt that these wage boards are not exercising purely judicial functions.
They are not courts in the strict sense of the term and the functions which they perform may at best be quasi judicial in character.
The fact that they are administrative agencies set up for the purpose of fixation of wages do not necessarily invest their functions with an administrative character and in spite of their being administrative bodies they can nevertheless be exercising quasi judicial functions if certain conditions are fulfilled.
The position in law has been thus summarised in Halsbury 's Laws of England, 3rd Ed., Vol. 11, at pp.
55 56: " The orders of certiorari and prohibition will lie to bodies and persons other than courts stricto sensu.
Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the controlling jurisdiction of the High Court of Justice, exercised by means of these orders.
It is not necessary that it should be a court; an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of, and are not in accordance 15 114 with the practice of, a court of law.
It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition.
A body may be under a, duty, however, to act judicially (and subject to control by means of these orders) although there is no form of lies inter partes before it; it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous considerations." " Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the course of arriving at that decision.
Thus, if in order to arrive at the decision, the body concerned had to consider proposals and objections and consider evidence, if at some stage of the proceedings leading up to the decision there was something in the nature of a lies before it, then in the course of such consideration and at that stage the body would be under a duty to act judicially.
If, on the other hand, an administrative body in arriving at its decision has before it at no stage any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially." (See also the decision of this Court in Nagendra Nath Bora vs Commissioner of Hills Division and Appeals, Assam (1).
In order therefore to determine whether an administrative body is exercising a quasi judicial function, it would be necessary to examine in the first instance, whether it has to decide on evidence between a proposal and an opposition and secondly, whether it is under a duty to act judicially in the matter of arriving at its decision.
The question whether or not there is a duty to act judicially must be decided (1) ; 115 in each case in the light of the circumstances of the particular case and the construction of the particular statute, with the assistance of the general principles already set out." (Ibid, para. 115).
The decision in R. vs Manchester Legal Aid Committee Ex parte R. A. Brand & Co. Ltd. (1), lays down when an administrative body can be said to have a duty to act judicially: " The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively.
Where the decision is that of a court, then, unless, as in the case, for instance, of justices granting excise licences, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially.
When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the course of arriving at that decision.
Thus, if, in order to arrive at the decision, the body concerned had to consider proposals, and objections and consider evidence, then there is the duty to act judicially in the course of that inquiry.
That, as it seems to us, is the true basis of the decision in Errington vs Minister of Health (2). . . . . . . (See also Rex vs The London Country Council: Ex parte Entertainments Protection Association Ld.
(3). . . " Further, an administrative body in ascertaining facts or law may be under a duty to act judicially not withstanding.that its proceedings have none of the formalities of and are not in accordance with the practice of a court of law." Vide Board of Education vs Rice (4) " More recently it has been held by this Court on ,many occasions that certiorari will lie to quash the decision of rent control tribunals, and this notwith (1) , 428, 429, 430.
(2) (3) , 233 4.
(4) , 182.
116 standing that such a tribunal is entitled to act on its own knowledge and information, without evidence unless submitted, and without a hearing except on notice from a party; see Rex vs Brighton.
and Area Rent Tribunal (1).
" If, on the other hand, an administrative body in arriving at its decision at no stage has before it any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially: Compare Franklin vs Minister of Town and Country Planning." (2).
It is strenuously urged before us by learned counsel for the petitioners that if the functions which the wage boards perform in the matter of fixation of the rates of wages are considered in the light of the principles cited above, it would appear that as between the employers, on the one hand, and the employees, on the other, there is a proposition and opposition.
The employees demand that a particular statutory minimum wage should be fixed and the scales of wages should also be determined in a particular manner.
The employers on their part would maintain that the status quo should continue or that, in any event, much less than the statutory minimum wage demanded by the employees should be fixed and also that the scales of wages should be fixed on a gradation which is much less than or in any event, different from that suggested by the employees.
The employees may say that certain factors which are material in the fixation of wages and which affect the employees should be considered as determinative of the rates of wages while the importance of these factors may be sought to be minimized by the employers who might put forward certain other factors affecting them, in their turn, as determinative of those rates, the importance of which may be sought to be minimized by the employees on the other hand.
All these would create proposition and opposition on both sides with the result that a lis would arise between them.
The determination of these (1) [1950] 2 K.B 410.
(2) ; , 102.
117 points at issue would have to be ' arrived at by the wage boards and the wage boards could only do so after collecting proper data and materials and hearing evidence in that behalf.
If the functions performed by the wage board would thus consist of the determination of the issues as between a proposition and an opposition on data and materials gathered by the board in answers to the questionnaire issued to all parties interested and the evidence led before it, there is no doubt that there would be imported in the proceedings of the wage board a duty to act judicially and the functions performed by the wage board would be quasijudicial in character.
It has been on the other hand urged before us by the learned counsel for the respondents that the very constitution of the wage boards is against the fundamental principle of jurisprudence which postulates that no man should be a judge in his own cause.
It was laid down by the House of Lords in Franklin vs Minister of Town and Country Planning (1) at p. 103: " My Lords, I could wish that the use of the word bias " should be confined to its proper sphere.
Its proper significance, in my opinion, is to denote a departure from the standard of even handed justice which the law requires from those who occupy judicial office, or those who are commonly regarded as holding a quasi judicial office, such as an arbitrator.
The reason for this clearly is, that having to adjudicate as between two or more parties, he must come to his adjudication with an independent mind, without any inclination or bias towards one side or other in the dispute.
" The representatives of the employers and the representatives of the employees who are appointed on the wage board along with an independent chairman and some other members, it is submitted, would necessarily have a bias in favour of those whom they represent and therefore would not be competent to be judges and the wage board thus constituted could hardly be called a judicial body.
There is considerable force in these contentions, but (1) ; ,102.
118 we do not feel called upon to express our final opinion on this question in view of the conclusion which we have hereafter reached in regard to the ultra vires character of the decision of the Wage Board itself.
We are however bound to observe that whatever be the character of the functions performed by the wage boards whether they be legislative or quasi judicial, if proper safeguards are adopted of the nature discussed earlier, e. g., provision for judicial review or the adopting of the procedure as in the case of the recommendations of the wage councils in the United Kingdom, or the reports of the advisory committees which come to be considered by the administrator under the Fair Labour Standards Act of 1938 in the United States of America, no objection could ever be urged against the determinations of the wage boards thus arrived at on the score of the principles of natural justice having been violated.
We now proceed to consider how far the impugned Act violates the fundamental rights of the petitioners.
Re : Article 19 (1) (a).
it has, however, got to be read along with article 19 (2) which lays down certain constitutionally permissible limitations on the exercise of that right. article 19 (2) as substituted by the Constitution (First Amendment) Act, 1951, with retrospective effect reads as under: " Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence.
" If any limitation on the exercise of the fundamental right under article 19 (1) (a) does not fall within the four corners of article 19 (2) it cannot be upheld.
The General Meaning of Freedom: To be free is to have the use of one 's powers of action (i) without restraint or control from outside and (ii) with whatever means or equipment the action requires.
To be free is essentially to be free from something some arbitrary impediment to action, some dominating power or authority.
And so long as it can be taken for granted that the unhindered person has all he needs to act withwhich is usually the case the negative meaning remains the chief element of the conception. " But since freedom is for action, and action is for an end, the positive kernel of freedom lies in the ability to achieve the end; to be free means to be free for some accomplishment.
And this implies command of the means to achieve the end.
Unless the equipment necessary for effective action is at hand, unrestraint may be a mockery of freedom. . .
Unrestraint without equipment is not liberty for any end which demands equipment." (pp.
54 55).
Resulting Conception of Freedom of the Press: " The emerging conception of freedom of the press may be summarised as follows,% As with all freedoms, press freedom means freedom from and freedom for.
A free press is free from compulsions from whatever source, governmental or social, external or internal.
From compulsions, not from pressures; for no press can be free from pressures except in a moribund society empty of contending forces and beliefs.
These pressures, however, if they are persistent and distorting as financial, clerical, popular, institutional pressures may become approach compulsion; and something is then lost from effective 120 freedom which the press and its public must unite to restore.
, " A free press is free for the expression of opinion in all its phases.
It is free for the achievement of those goals of press service on which its own ideals and the requirements of the community combine and which existing techniques make possible.
For these ends it must have full command of technical resources, financial strength, reasonable access to sources of information at home and abroad, and the necessary facilities for bringing information to the national market.
The press must grow to the measure of this market.
There is paucity of authority in India on the nature, scope and extent of this fundamental right to freedom of speech and expression enshrined in article 19 (1) (a) of the Constitution.
The first case which came up for decision before this court was that of Ramesh Thaper vs The State of Madras (1).
It was a case of a ban on the entry and circulation of the appellant 's journal in the State of Madras under the provisions of section 9 (1 A) of the Madras Maintenance of Public Order Act, 1949, and it was observed by Patanjali Sastri J. (as he then was) at p. 597: " There can be no doubt that freedom of speech and expression includes freedom of propagation of ideas, and that freedom is ensured by the freedom of circulation.
" Liberty of circulation is as essential to that freedom as the liberty of publication.
Indeed, without circulation the publication would be of little value.": Ex parte Jackson (2).
See also Lovell V. City of Griffin (3).
Brij Bhushan & Anr.
vs The State, of Delhi (4) was the next case which came up for decision before this Court and it concerned the constitutionality of section 7 (i) (e) of the East Punjab Public Safety Act, 1949.
It was a provision for the imposition of pre censorship on a journal.
Patanjali Sastri J. (as he then was) (1) [1950] S.C.R 594, 597.
(2) (1877)96 U S 727 ; ; (3) (1937) 303 U S 444 ; ; (4) ; , 6o8.
121 who delivered the majority judgment observed at p. 608: " There can be little doubt that the imposition of precensorship on a journal is a restriction on the liberty of the press which is an essential part of the right to freedom of speech and expression declared by article 19 (1) (a).
As pointed out by Blackstone in his Commentaries " the liberty of the Press consists in laying no previous restraint upon publications, and not in freedom from censure for criminal matter when published.
(Blackstone 's Commentaries, Vol.
IV, pp. 151, 152).
" These are the only two decisions of this Court which involve the interpretation of article 19 (1) (a) and they only lay down that the freedom of speech and expression includes freedom of propagation of ideas which freedom is ensured by the freedom of circulation and that the liberty of the press is an essential part of the right to freedom of speech and expression and that liberty of the press consists in allowing no previous restraint upon publication.
There is however, a considerable body of authority to be found in the decisions of the Supreme Court of the United States of America bearing on this concept of the freedom of speech and expression.
vs Bombay Co. 16 122 Ltd. (1) and State of Bombay vs R.M.D. Chamarbaugwala (2).
Grosjean vs American Press Co. (3), was a case where a statute imposed a license tax on the business of publishing advertisements and it was observed at p. 668: " The evils to be prevented were not the censorship of the press merely, but any action of the Government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential to prepare the people for an intelligent exercise, of their rights as citizens." (Vide Cooley 's Constitutional Limitations, 8th Edn., Vol. 11, p. 886).
The statute was there struck down as unconstitutional because in the light of its history and of its present setting it was seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public was entitled in virtue of the constitutional guarantees.
The following passage from the dissenting opinion in The Associated Press vs The National Labour Relations Board (4) is also instructive: " If the freedom of the press does not include the right to adopt and pursue a policy without governmental restriction, it is a misnomer to call it freedom.
" It was also observed there at p. 965: " Due regard for the constitutional guarantee requires that the publisher or agency of the publisher of news shall be free from restraint in respect of employment in the editorial force.
" Schneider vs Irvingtor (5) was concerned with the effect of the Municipal Regulations against littering of (1) [1952] S.C. R. I I 12, I 120.
(2) 4, 918.
(3) ; , 249; go L. Ed. 66o, 668.
(4) 136; ; 963.
(5) (1939) 308 U S 147; ; , 164.
123 streets.
In the course of its decision the Court made the following observations at p. 164: " This court has characterized the freedom of speech and that of the press as fundamental personal rights and liberties.
The phrase is not an empty one and was not lightly used.
It stresses, as do many opinions of this court, the importance of preventing the restriction of enjoyment of these liberties.
" Non interference by the State with this right was emphasized in Thomas vs Collins (1) at p. 448: " But it cannot be the duty, because it is not the right, of the State to protect the public against false doctrine.
The very purpose of the First Amendment is to foreclose public authority from I assuming a guardianship of the public mind through regulating the press, speech, and religion.
In this field every person must be his own watchman for truth, because the forefathers did not trust any Government to separate the true from the false for us. . .
In 93 L. Ed.at p. 1151 is given a summary of the decisions of the Supreme Court of the United States of America on this subject under the heading " The Supreme Court and the right of Free Speech and Press " and it contains at p. 1153 the following passage under the caption " Right in General : Freedom from Censorship and Punishment ": " The freedom of speech and of press are fundamental personal rights & liberties, the exercise of which lies at the foundation of free Government by free men. .
The very purpose of the first Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion; it rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public." The dissenting opinion of Douglas J. in Beauharnais vs Illinois(2) contains the following at p. 943: (1) (1944) 323 U S 516, 545 ; 89 L. Ed 430, 448.(2) , 285; ; , 943.
There is room for regulation of the ways and means of invading privacy.
No such leeway is granted the invasion of the right of free speech guaranteed by the First Amendment.
Until recent years that had been the course and direction of constitutional law.
Yet recently the Court in this and other cases has engraved the right of regulation onto the First Amendment by placing in the hands of the legislative branch the right to regulate " within reasonable limits " the right of free speech.
This to me is an ominous and alarming trend.
The free trade in ideas which the framers of the Constitution visualised disappears.
In its place there is substituted a new orthodoxy an orthodoxy that changes with the whims of the age or the day, an orthodoxy which the majority by solemn judgment proclaims to be essential to the safety, welfare, security, morality, or health of Society.
Free speech in the constitutional sense disappears.
Limits are drawn limits dictated by expediency, political opinion, prejudices or some other desideratum of legislative action.
" It is clear from the above that in the United States of America: (a) the freedom of speech comprehends the freedom of press and the freedom of speech and press are fundamental personal rights of the citizens; (b)the freedom of the press rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public; (c) Such freedom is the foundation of free Government of a free people; (d)the purpose of such a guarantee is to prevent public authorities from assuming the guardianship of the public mind and (e)freedom of press involves freedom of employment or non employment of the necessary means of exercising this right or in other words, freedom from restriction in respect of employment in the editorial force.
This is the concept of the freedom of speech and expression as it obtains in the United States of America 125 and the necessary corollary thereof is that no measure can be enacted which would have the effect of imposing a pre censorship, curtailing the circulation or restricting the choice of employment or unemployment in the editorial force.
Such a measure would certainly tend to infringe the freedom of speech and expression and would therefore be liable to be struck down as unconstitutional.
The press is however, not immune from.
It was observed in Grosjean vs American Press Co. (1): " It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the Government; But this is not an ordinary form of tax but one single in kind with a long history of hostile misuse against the freedom of the press.
The newspapers, magazines and other journals of the country, it is safe to say, have shed and continue to shed, more light on the public and business affairs of the nation than any other instrumentality of publicity; and since informed public opinion is the most patent of all restraints upon misgovernment, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with gave concern.
The tax here involved is bad not because it takes money from the pockets of the appellees.
If that were all, a wholly different question would be presented.
It is bad: Because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guarantees.
A free press stands as one of the great interpreters between the Government and the people.
To allow it to be fettered is to fetter ourselves.
" (1) (1935) 297 U S 233, 249; ; , 668.
126 In The Associated Press vs National Labour Relations Board (1), it was held that the freedom of the press safeguarded by the First Amendment was not abridged by the application in the case of an editor employed by the Associated Press to determine the news value of the items received and to rewrite them for transmission to members of the association throughout the United States who must function without bias and prejudice, of the provisions of the National Labour Relations Act which inhibited an employer from discharging an employee because of union activities.
It was further observed at p. 960: " So it is said that any regulation protective of union activities, or the right collectively to bargain on the part of such employees, is necessarily an invalid invasion of the freedom of the press.
We think that the contention not only has no relevance to the circumstances of the instant case but is an unsound, generalization." Murdock vs Pennsylvania (2), was a case of a license fee for the sale of religious books and Mr. Justice Frankfurter in his dissenting opinion at p. 1311 observed: " A tax upon newspaper publishing is not invalid simply because it falls upon the exercise of a constitutional right.
Such a tax might be invalid if it invidiously singled out newspaper publishing for bearing the burden of taxation or imposed upon them in such ways as to encroach on the essential scope of a free press.
If the Court could justifiably hold that the tax measures in these cases were vulnerable on that ground, I would unreservedly agree.
But the Court has not done so, and indeed could not. " In Oklahoma Press Publishing Co. vs Walling (1), and in Mabee vs White Planis Publishing Co. (4) the Federal Fair Labour Standards Act was held applicable to the press and it was observed in the former case at p. 621: " Here there was no singling out of the press for treatment different from that accorded other business in general.
Rather the Act 's purpose was to place (1) ; ,136; ; , 963.
(2) (1942) 319 U S 105, 136 ; ; , 1311.
(3) ; 194; go L. Ed. 614, 621.
Nothing in the Grosjean case (1), forbids Congress to exempt some publishers because of size from either a tax or a regulation which would be valid if applied to all.
" The Constitution of the United States of America Analysis and Interpretation Prepared by the Legislative Reference Service, Library of Congress, summarises the position thus at p. 792 : " The Supreme Court, citing the fact that the American Revolution " really began when. . . that Government (of England) sent stamps for newspaper duties to the American colonies " has been alert to the possible uses of taxation as a method of suppressing objectionable publications.
With respect to license or privilege taxes, however, they stand on a different footing.
Their privilege is granted by the Constitution and cannot be withheld by either State or Federal Government.
" The application to newspapers of the Anti Trust Laws, the National Labour Relations Act, or the Fair Labour Standards Act, does not abridge the freedom of the press.
" The Laws regulating payment of wages have similarly been held as not abridging the freedom of speech and expression and the following observations in the same publication (at p. 988) in regard to the Minimum Wage Laws are apposite: "MINIMUM WAGE LAWS: The theory that a law prescribing minimum wages for women and children violates due process by impairing freedom of contract was finally discarded in 1937 (West Coast Hotel Co. vs Parrish, ; The current theory of the Court, particularly when labor is the beneficiary of legislation, was recently stated by Justice Douglas for a majority of the Court, in the following terms: " Our recent decisions make plain that we do not sit as a super legislature to weigh the wisdom of legislation nor (1) (1935) 297 'U section 233.
But the state legislatures have constitutional authority to experiment with new techniques; they are entitled to their own standard of the public welfare; they may within extremely broad ,limits control practice; in the business labor field, so long as specific constitutional prohibitions are not violated and so long as conflicts with valid and controlling federal laws are avoided (Day Brite Lighting, Inc. vs Missouri, 342 U. section 421, 423 (1952) ).
" While therefore no such immunity from the general laws can be claimed by the press it would certainly not be legitimate to subject the press to laws which take away or abridge the freedom of speech and expression or which would curtail circulation and thereby narrow the scope of dissemination of information, or fetter its freedom to choose its means of exercising the right or would undermine its independence by driving it to seek Government aid.
Laws which single out the press for laying upon it excessive and prohibitive burdens which would restrict the circulation, impose a penalty on its right to choose the instruments for its exercise or to seek an alternative media, prevent news papers from being started and ultimately drive the press to seek Government aid in order to survive, would therefore be struck down as unconstitutional.
Such laws would not be saved by article 19(2) of the Constitution.
This Court had occasion to consider the scope of article 19(2) in Brij Bhushan & Anr.
vs The State of Delhi (1), where Fazl Ali J. in his dissenting judgment observed at p. 619.
" It must be recognized that freedom of speech and expression is one of the most valuable rights guaranteed to a citizen by the Constitution and should be jealously guarded by the Court.
It must also be recognised that free political discussion is essential for the proper functioning of a democratic government, and the tendency of the modern jurists is to deprecate censorship though they all agree that " liberty of the press " is not to be confused with its " licentiousness (1) [1950) S.C.R. 605, 608.
129 But the Constitution itself has prescribed certain limits and this Court is only called upon to see whether a particular case comes within those limits.
" Unless, therefore, a law enacted by the Legislature comes squarely within the provisions of article 19 (2) it would not be saved and would be struck down as ' unconstitutional on the score of its violating the fundamental right of the petitioners under article 19 (1) (a).
In the present case it is obvious that the only justification for the enactment of the impugned Act is that it imposes reasonable restrictions in the interests of a section of the general public, viz., the working journalists and other persons employed in the newspaper establishments.
It does not fall within any of the categories specified in article 19 (2), viz., " In the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to.
contempt of court, defamation or incitement to an offence.
" Article 19 (2) being thus out of the question the only point that falls to be determined by us is whether the provisions of the impugned Act in any way take away or abridge the petitioners ' fundamental right of freedom of speech and expression.
It was contended before us by the learned Attorney General that it was only legislation directly dealing with the right mentioned in article 19 (1) (a) that was protected by it.
If the legislation was not a direct legislation on the subject " article 19 (1) (a) would have no application, the test being not the effect or result of legislation but its subject matter.
" As the preventive detention order results in the detention of the applicant in a cell it was contended on his behalf that the rights specified in article 19 (1), (a), (b), (c), (d), (e) and (g) have been infringed.
17 130 same argument was urged in respect of the rest of the rights mentioned in sub clauses (b), (c), (d), (e) and (g).
Although this argument is advanced in a case which deals with preventive detention, if correct, it should be applicable in the case of punitive detention also to any one sentenced to a term of imprisonment Linder the relevant section of the Indian Penal Code.
So considered, the argument must clearly be rejected In spite of the saving clauses (2) to (5), permitting abridgement of the rights connected with each of them punitive detention under several sections of the Penal Code, e. g., for theft,, cheating, forgery and even ordinary assault, will be illegal.
Unless such conclusion necessarily follows front the article, it is obvious that such construction should be avoided.
In my opinion, such result is clearly not the outcome of the Constitution.
The article has to be read.
without any pro conceived notions.
So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub clauses.
If there is a legislation directly attempting to control a citizen 's freedom of speech or expression, or his right to assemble peaceably and without arms, etc,, the question whether that legislation is saved by the relevant saving clause of article 19 will arise.
If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of article 19 does not arise.
The true approach is only to consider the directness of the legislation and not what will be the result of the detention otherwise valid, on the mode of the detent 's life.
On that short ground, in my opinion, this argument about the infringement of the rights mentioned in article 19 (1) generally must fail.
Any other construction put on the article, it seems to me, will be unreasonable." This opinion was expressed by Kania C. J. alone, the other learned judges forming the Bench not expressing themselves on this question.
This passage was, however cited, with approval by a Bench of this 131 Court in Ram Singh & Ors.
vs The State of Delhi (1).
It was held by the Full Court in that case that though personal liberty is sufficiently comprehensive to include the freedoms enumerated in article 19 (1) and its deprivation would result in the extinction of these freedoms, the Constitution his treated these constitutional liberties as distinct fundamrntal rights and made separate provisions in articles 19, 21 and 22 ,is to the limitations and conditions subject to which alone they could be taken away or abridged.
(2) of article 19 and may therefore be void, an order of preventive detention cannot be held to be, invalid merely because: " the detention is made with a view to prevent the making of speeches prejudicial to the, maintenance of public order. . . ." This was also a case of detention under the Preventive Detention Act and the detention of the detenu had been ordered with a view to prevent him from making speeches prejudicial to the maintenance of public order.
Public order was not one of the categories mentioned in article 19 (2) as it then stood, and any restriction imposed upon the freedom of speech and expression could nit be justified on that ground, the only relevant ground in that connection then being undermining of the security of the State or its overthrow.
A restriction on the freedom of speech and expression ill the maintenance of public order would therefore not have been justified under article 19 (2) and if the Court had come to the conclusion that there was an infringement of the right of freedom of speech and expression the order could not have been saved under article 19 (2).
The Court however, took the view that the direct object of the order was preventive detention and not the infringement of the right of freedom of speech and expression, which was merely (1)[1951] S.C.R.451, 455. 132 consequential upon the detention of the detenu and therefore upheld the validity of the order.
It was, therefore, urged by the learned Attorney General that the object of the impugned Act was only to regulate certain conditions of service of working journalists and other persons employed in the newspaper establishments and not to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners and that therefore the impugned Act could not come within the prohibition of article 19 (1) (a) read with.
article 13 (2) of the Constitution.
It was contended, on the other hand, on behalf of the petitioners that the Court has got to look at the true nature and character of the legislation and judge its substance and not its form, or in other words, its effect and operation.
It was pointed out that the impugned Act viewed as a whole was one to regulate the employment of the necessary organs of newspaper publications and therefore related to the freedom of the Press and as such came within the prohibition.
Reliance was placed in this behalf on the following passage in Minnesota Ex Rel.
Olson (1): " With respect to these contentions it is enough to say that in passing upon constitutional questions the Court has regard to substance and not to mere matters of form, and that, in accordance with familiar principles, the statute must be tested by its operation and effect." The following observations of Mahajan J. (as he then was) in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co., Ltd. (2) were also relied upon: " In order to decide these issues it is necessary to examine with some strictness the substance of the legislation for the purpose of determining _what it is that the legislature has really done; the Court, when such questions arise, is not overpersuaded by the mere appearance of the legislation.
In relation to Constitutional prohibitions binding a legislature it is clear that the legislature cannot disobey the prohibitions merely (1)(1930) ; , 708; ; , 1363.
(2)[1954] S.C.R. 674, 683. 133 by employing indirect method of achieving exactly the same result.
Therefore, in all such cases the court has to look behind the names, forms and appearances to discover the true character and nature of the legislation.
" The impugned Act is as its long title shows an act to regulate certain conditions of service of working journa lists and other persons employed in newspaper establishments and in the very forefront of the Act, the , is by section 3 made applicable to working journalists with certain modification in connection with the application of section 25F of that Act.
The rest of the provisions contained in ch.
II concerned themselves with the payment of gratuity, hours of work and leave and fixation of wages of the working journalists.
The regulation of the conditions of service is thus the main object which is sought to be achieved by the impugned Act.
Chapter III of the Act applies the provisions of the , and the Employees ' Provident Funds Act, 1952, to all the employees of the newspaper establishments wherein twenty or more newspaper employees are employed and covers working journalists as well as other employees in the employ of the newspaper establishments.
The miscellaneous provisions contained in ch.
IV are designed merely to implement or to carry out the provisions of the main part of.
the Act and they do not make any difference so far as the effect and operation of the Act is concerned.
If this is the true nature of the Act, it is impossible to say that the Act was designed to affect the freedom of speech and expression enjoyed by the petitioners or that was its necessary effect and operation.
It was conceded in the course of the arguments that if a general law in regard to the industrial or labour relations had been applied to the press industry as a whole no exception could have been taken to it.
If the matter had rested with the application of the , to the working journalists or with the application of the , or the Employees ' Provident Fund,% Act, 1952, to them no exception could have been taken to this 134 measure.
It was, however, urged that apart from the application of these general laws to the working journalists, there are provisions enacted in the impugned Act in relation to payment of gratuity, hours of work, leave and fixation of the rates of wages which are absolutely special to the press industry qua the working journalists and they have the effect of singling out the press industry by creating a class of privileged workers with benefits and rights which have not been conferred upon other employees and the provisions contained therein have the effect of laying a direct and preferential burden on the press, have a tendency to curtail the circulation and thereby narrow the scope of dissemination of information, fetter the petitioner 's freedom to choose the means of exercising their right and are likely to undermine the independence of the press by having to seek Government aid.
It is obvious that the enactment of this measure is for the amelioration of the conditions of the workmen in the newspaper industry.
It would not be possible for the State to take up all the industries together and even as a matter of policy it would be expedient to take the industries one by one.
Even in regard to the workmen employed it would be equally expedient to take a class of employees who stand in a separate category by themselves for the purpose of benefiting them in the manner contemplated.
This circumstance by itself would therefore not be indicative of any undue preference or a prejudicial treatment being meted out to that particular industry, the main object being the amelioration of the conditions of those workmen.
It could not also be said that there was any ulterior motive behind the enactment of such a measure because the employers may have to share a greater financial burden than before or that the working of the industry may be rendered more difficult than before.
These are all incidental disadvantages which may manifest themselves in the future working of the industry, but it could not be said that the Legislature in enacting that measure was aiming at these disadvantages when it was trying to ameliorate the 135 conditions of the workmen.
Those employers who are favourably situated, may not feel the strain at all while those of them who are marginally situated may not be able to bear the strain and may in conceivable cases have to disappear 'after closing down their establishments.
That, however, would be a consequence.
which would be extraneous and not within the contemplation of the Legislature.
It could therefore hardly be urged that the possible effect of the impact of these measures in conceivable cases would vitiate the legislation as such.
All the consequences which have been visualized in this behalf by the petitioners, viz., the tendency to curtail circulation and thereby narrow the scope of dissemination of information, fetters on the petitioners ' freedom to choose the means of exercising the right, likelihood of the independence of the press being undermined by having to seek government aid; the imposition of penalty on the petitioners ' right to choose the instruments for exercising the freedom or compelling them to seek alternative media, etc., would be remote and depend upon various factors which may or may not come into play.
Unless these were the direct or inevitable consequences of the measures enacted in the impugned Act, it would not be possible to strike down the legislation as having that effect and operation.
A possible eventuality of this type would not necessarily be the consequence which could be in the contemplation of the Legislature while enacting a measure of this type for the benefit of the workmen concerned.
Even though the impugned Act enacts measures for the benefit of the working journalists who are employed in newspaper establishments, the working journalists are but the vocal organs and the necessary agencies for the exercise of the right of free speech and expression, and any legislation directed towards the amelioration of their conditions of service must necessarily affect the newspaper establishments and have its repercussions on the freedom of Press.
The real difficulty, however, in the way of the petitioners is that whatever be the measures enacted for the benefit of the working journalists neither the intention nor the effect and operation of the impugned Act is to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners.
The gravamen of the complaint of the petitioners against the impugned Act, however, has been the appointment of the Wage Board for fixation of rates of wages for the working journalists and it is contended that apart from creating a class of privileged workers with benefits and rights which were not conferred upon other employees of industrial establishments, the Act has left the fixation of rates of wages to an agency invested with arbitrary and uncanalised powers to impose an indeterminate burden on the wage structure of the press, to impose such employer employee relations as in its discretion it thinks fit and to impose such burden and relation , for such time as it thinks proper.
This contention will be more appropriately dealt with while considering the alleged infringement of the fundamental right enshrined in article 19(1) (g).
Suffice it to say that so far as article 19(1) (a) is concerned this contention also has a remote bearing on the same and need not be discussed here at any particular length.
Re: Article (19(1) (g).
The fundamental right of the petitioners herein is the right to carry on any occupation, trade or business.
This freedom also is hemmed in by limitations which are to be found in article 19(6), which in so far as it is relevant for our purposes enacts: " Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right, conferred by the said sub clause," 137 The contention under this head is thus elaborated on behalf of the petitioners: 1.The impugned Act imposes unreasonable restrictions on the freedom to carry on business: (a) in empowering the fixation of rates of wages on criteria relevant only for fixation of minimum, wages; (b)in empowering fixation of wages, grant of gratuity and compensation without making it incumbent on the Board to consider the major factor of the capacity of the industry to pay; (c)in authorizing the Board to have.
regard to not what is relevant for such fixation but to what the Board deems relevant for the purpose; and (d)in providing for a procedure which does not compel the Board to conform to the rules under the , thus permitting the Board to follow any arbitrary procedure violating the principle of audi alteram partem.
2.The restrictions enumerated above in so far as they affect the destruction of the petitioners ' business exceed the bounds of permissible legislation under article 19(1)(g).
The unreasonableness of the restriction is further sought to be emphasized by pointing out that under section 12 of the impugned Act, the decision of the Board is declared binding on all employers, though the working journalists axe not bound by the same and are entitled, if they are dissatisfied with it, to agitate for further revision by raising industrial disputes between themselves and their employers and having them adjudicated under the .
The test of reasonable restrictions which can be imposed on the fundamental right enshrined in article 19(1)(g) has been laid down by this Court in two decisions: In Chintaman Rao vs The State of Madhya Pradesh(1) Mahajan J. (as he then was) observed at p. 763 : "The phrase "reasonable restriction" connotes that the limitation imposed on a. person in enjoyment (1) ; , 763.
138 of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public.
The word " reasonable " implies intelligent care and deliberation, that is, the choice of a course which reason dictates.
Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19(1)(g), and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality." [cited with approval in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh & Ors.
(1) and in Ch.
Tika Ramji vs State of ' Uttar Pradesh & Ors.
The State of Madras vs V. G. Rao (3) was the next case in which this phrase came to be considered by this Court and Patanjali Sastri C. J. observed at p. 606: " This Court had occasion in Dr. Khare 's case (4) to define the scope of the judicial review under clause (5) of article 19 where the phrase " imposing reasonable restrictions on the exercise of the right " also occurs and four of the five judges participating in the decision expressed the view (the other judge leaving the question open) that both the substantive and the procedural aspects of the impugned restrictive law should be examined from the point of view of reasonableness: that is to say, the Court should consider not only factors such as the duration and the extent of the restrictions but also the circumstances under which and the manner in which their imposition has been authorised.
It is important in this context to bear in mind that the test of reasonableness, where ever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion (1) ; , 811. (3) ; , 606, 607.
(2) ; , 446.
(4) ; 139 of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
" This criterion was approved of in State of West Benqal vs Subodh Gopat Bose & Others (1) where the present Chief Justice further expressed his opinion that the fact of the statute being given retrospective operation may also be properly taken into consideration in determining the reasonableness of the restriction imposed in the interest of the general public [see also a recent decision of this Court in Virendra vs State of Punjab (2)].
The appointment of a wage board for the purposes of fixing rates of wages could not be and was not challenged as such because the constitution of such wage boards has been considered one of the appropriate modes for the fixation of rates of wages.
The , can only apply when an industrial dispute actually arises or is apprehended to arise between the employers and the employees in a particular industrial establishment.
Though under the amendment of that Act by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, (36 of 1956), there is a provision for the appointment of a National Tribunal by the Central Government for the adjudication of industrial disputes which in the opinion of the Central Government involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such dispute (Vide section 7 B) the condition precedent, however, is the existence of an industrial dispute or the appre hension of one.
If the wages for the employees of a particular industry have got to be fixed without such an industrial dispute having arisen or being apprehended to arise, the only proper mode of such fixation would be the appointment of wage boards for the purpose.
They take the place of Industrial Tribunals or National Industrial Tribunals and are generally constituted of equal number of representatives of the employers and the employees in that particular industry along with a quota of independent member or (1) ; , 626.
(2) ; 140 members one of whom is appointed the chairman of the Board.
The main grievance of the petitioners, however, has been that the relevant criteria for the fixation of rates of wages were not laid down in section 9(1) of the Act.
Section 8 empowered the Central Government to constitute a wage board for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act and section 9(1) directed that in fixing such rates of wages the Board &hall have regard to the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstances which to the Board may seem relevant.
These criteria, it was contended, were only relevant for fixing minimum rates of wages, ' though the word " minimum " which had been used in the Bill No. 13 of 1955 as introduced in the Rajya Sabha was deleted when the Act actually came to be passed and it was further contended that the capacity of the Industry to pay which was an essential circumstance to be taken into consideration in the fixation of wages was not set out as one of the circumstances to be taken into consideration by the Board in fixing rates of wages.
It was also contended that the other circumstances which the Board was directed to consider in addition to those specifically enumerated in section 9(1) were such as to the Board may seem relevant thus relegating these circumstances to the subjective determination of the Board with the necessary consequence that no Court or other authority could scrutinize the same objectively.
We do not propose to enter into any elaborate discussion on the question whether it would be competent to us in arriving at a proper construction of the expression " fixing rates of wages " to look into the Statement of Objects and Reasons attached to the Bill No. 13 of 1955 as introduced in the Rajya Sabha or the circumstances under which the word " minimum " came to be deleted from the provisions of the Bill relating to rates of wages and the Wage Board and the fact of such deletion when the Act came to be passed in its present 141 form.
There is a consensus of opinion that these are not aids to the construction of the terms of the Statute which have of course to be given their plain and grammatical meaning [See: Ashvini Kumar Ghosh & Anr.
vs Arabinda Bose & Anr.
(1) and Provat Kumar Kar and others vs William Trevelyan ' Curtiez Parkar It is only when the terms of the statute are ambiguous or vague that resort may be had to them for the purpose of arriving at the true intention of the legislalature.
We have already stated in the earlier part of this judgment that the Act was passed with a view to implement the recommendations of the Press Commission 's Report and we have already seen that the concept of minimum wage, as adopted by the Press Commission was not that of a bare subsistence or minimum wage but what it termed a minimum wage was meant to provide for not merely the bare subsistence of living, but for the efficiency of the worker, making provision also for some measure of education, medical requirements and amenities.
This was the concept of a minimum wage which was sought to be implemented by the legislature and for that purpose the capacity of the industry to pay was an essential circumstance to be taken into consideration and the deletion of the word " minimum ", if at (1) [1953] S.C.R. I. (2) A.I.R. 1950 Cal.
142 all, had the effect of widening the scope of the enquiry before the Wage Board.
if the word " minimum " had been used in relation to the rates of wages and the Wage Board in the impugned Act, the wage Board in its deliberations would have been necessarily confined (to a consideration of that aspect alone.
But, by the deletion of that wordfrom the context the Wage Board was invested with a power to determine the question of the fixation of rates of wages unfettered by any such limitations and to fix the rates of wages in any pro per manner having regard to the circumstances of the case, whether the resultant wages would be a statutory minimum wage or would approximate to a standard of wage, though having regard to the economic conditions of our country at present they could not find it within their power to fix living wages for the working journalists.
The criteria which were specified in section 9(1) of the Act comprised also the prevalent rates of wages for comparable employments.
This criterion had no relation whatever to Minimum wages.
Reference may be made in this connection to a decision of the Industrial Court in the case of Nellimarla Jute Mills (1), where it was held that the comparison with rates of waves in other concerns could be undertaken for determining fair wage and the upper limit of wages but not for determining the minimum or floor level of wages which should depend on the minimum requirements of the workers ' family consisting of three consumption units.
If, therefore, the criterion of the prevalent rates of wages for comparable employments can on a true construction of section 9(1)be considered consistent only with the fixation of rates of wages which are higher than (1) [1053] , 143 the bare subsistence or minimum wage whether they be statutory minimum wage or fair wage or even living wage, it could not be urged that the criteria specified in section 9(1) of the Act were relevant only for fixation of minimum wages.
The capacity of the industry to pay was therefore one of the essential circumstances to be taken into consideration by the Wage Board whether it be for the fixation of rates of wages or the scales of wages which, as we have observed before, were included within the expression " rates of wages ".
This was by no means an unimportant circumstance which could be assigned a minor role.
It was as important as the cost of living, and the prevalent rates of wages for comparable employments and ought to have been specifically mentioned in section 9(1).
The Legislature however, was either influenced in not mentioning it as such by reason of the view taken by the Press Commission in that behalf or thought that the third criterion which was specified in section 9(1), viz., the circumstances relating to the newspaper industry in different regions of the country was capable of including the same.
Even here, there is considerable difficulty in reconciling oneself to this mode of construction.
Even if it were thus capable of being included, the minor role assigned to it along with literacy of the population, the popularity of the newspapers, predilections of the population in the matter of language and other circumstances of the like nature prevailing in the different regions of the country would make it difficult to imagine that this circumstance of the capacity of the industry to pay was really in the mind of the Legislature, particularly when it is remembered that the Press Commission attached no signifi cance to the same.
From that point of view, the criticism of the petitioners would appear to be justified viz., : that it was not made incumbent on the Board to consider the major factor of the capacity of the 144 industry to pay as an essential circumstance in fixing the rates of wages.
It is, however, well recognized that the Courts would lean towards the constitutionality of an enactment and if it is possible to read this circumstance as comprised within the category of circumstances relating to the newspaper industry in different regions of the country, the court should not strike down the provisions as in any manner whatever unreasonable and violative of the fundamental right of the petitioners.
We are therefore of opinion that section 9(1) did not eschew the consideration of this essential circumstance, viz., the capacity of the industry to pay and it was not only open but incumbent upon the Wage Board to consider that essential circumstance in order to arrive at the fixation of the rates of wages of the working journalists.
The last criterion enumerated in section 9(1) of the Act was " any other circumstance which to the Board may seem relevant " and it was urged that this was left merely to the subjective determination of the Board and the Board was at liberty to consider the circumstances, if any, falling within this category in its own absolute discretion which could not be Controlled by any higher authority.
If the matters were left to be objectively determined then it would certainly be enquired into and the existence or otherwise of such circumstances would be properly scrutinized in appro priate proceedings.
The manner in which, however, this criterion was left to be determined by the Board on its subjective satisfaction was calculated to enable the Board to exercise arbitrary powers in regard to the same and that was quite unreasonable in itself.
The case of Thakur Raghubir Singh vs Court of Wards, Ajmer & Ors.
(1), was pointed out as an illustration of such an arbitrary power having been vested in the Court of Wards which could in its own discretion and on its subjective determination assume the superintendence of the property of a landed proprietor who habitually infringed the rights of his tenants.
The provision was there struck down because such subjective (1)[1953] section C. R. 1049,1052.
145 determination which resulted in the superintendence of the property of a citizen being assumed could, not be scrutinized and the propriety thereof investigated by higher authorities.
This argument, however, does not help the petitioners because this criterion is on a par with or ejusdem generis with the other criteria which have been specifically enumerated in the earlier part of the section.
The major and important criteria have been specifically enumerated and if would be impossible for the Legislature exhaustively to enumerate the other circumstances which would be relevant to be considered by the Board in arriving at the fixation of the rates of wages.
In the course of the enquiry the Board might come across other relevant circumstances which would weigh with it in the determination of the rates of wages and it would not be possible for the Legislature to think of them or to enumerate the same as relevant considerations and it was therefore, and rightly in our opinion, left to the Board to determine the relevancy of those circumstances and take them into consideration while fixing the rates of wages.
If the principles which should guide the Board in fixing the rates of wages were laid down with sufficient clarity and particularity and the criteria so far as they were of major importance were specifically enumerated there was nothing wrong in leaving other relevant considerations arising in the course of the enquiry to the subjective satisfaction of the Board.
The Board was, after all, constituted of equal numbers of representatives of employers and the employees and they were best calculated to take into account all the relevant circumstances apart from those which were, specifically enumerated in the section.
It was, however, contended that the procedure to be followed by the Board for fixing the rates of wages was not laid down and it was open to the Board to follow any arbitrary procedure violating the principle of audi alteram partem and as such this also was unreasonable.
Section 20 (2) (d) of the impugned Act gave power to the Central Government to make rules 19 146 inter alia in regard to the procedure to be followed by the Board in fixing rates of wages and section 11 provided that subject to any rules which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , exercises or follows for the purpose of adjudicating an industrial dispute referred to it.
This was, however, an enabling provision which vested in the Board the discretion whether to exercise the same powers and follow the same procedure as an Industrial Tribunal.
It has to be remembered, however, that in the United Kingdom the Wage Councils and the Central Co ordinating Committees under the Wages Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulations Act, 1924, also are empowered to regulate their proceeding in such manner as they think fit.
The Wage Boards in Australia have also no formal procedure prescribed for them, though the Wage Boards which are established under the amended Bombay Industrial Relations Act, 1946, are enjoined to follow the same procedure as an industrial court in respect of industrial proceedings before it.
It would not therefore be legitimate to hold that the procedure to be followed by the wage board for fixing rates of wages must necessarily be prescribed by the statute constituting the same.
It is no doubt contemplated in each of these statutes that rules of procedure may be prescribed; but even though they, may be so prescribed, it is left to the discretion of the wage boards to regulate their procedure in such manner as they think fit, subject of course to the rules thus prescribed.
A wide discretion is thus left with the wage boards to prescribe their own rules of procedure, but it does not therefore follow that they are entitled to follow any arbitrary rules of procedure.
The wage boards are responsible bodies entrusted with the task of gathering data and materials relevant for the 147 determination of the issues arising before them and even though they are not judicial tribunals but administrative agencies they would elicit all relevant information and invite answers to the questionnaire or representations from the parties concerned, hear evidence and arrive at their determination after conforming to the principles of natural justice.
Even though they may perform, quasi judicial functions, the exercise of arbitrary powers by them would not be countenanced by, any court or higher authority.
No doubt certain specific provisions as to payment of gratuity, hours of work and leave are specifically enacted, but when we come to the fixation of rates of wages we find that a wage board has been constituted for the purpose.
The principles to be followed by the Wage Board for fixing rates of wages are also laid down and the decision of the Board is to be published in the same manner as awards of industrial courts,under the .
Then follows section 11 which talks of the powers and procedure of the Board and there also, subject to any rules of procedure which may be prescribed by the Central Government, the Board is empowered to exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the of wages, exercise the same powers and follow the same procedure.
All these 148 circumstances point to the conclusion that even though the Board was not bound to exercise the same powers and follow the same procedure as an industrial tribunal constituted under the , the Board was, in any event, not entitled to 'adopt any arbitrary procedure violating the principles of natural justice.
If on the construction of the relevant sections of the statute the functions which the Wage Board was performing would be tantamount to laying down a law or rule of conduct for the future so that all the employers and the employees in the ' industry not only those who were participating in it in the present but also those who would enter therein in the future would be bound by it, the dictum of Justice Holmes would apply and the functions performed by the wage board could be characterized as legislative in character.
Where, however, as in the present case, the constitution of the Wage Board is considered in the background of the application of the provisions of the to the working journalists and the provisions for the exercise of the same powers and following the same procedure as an industrial tribunal constituted under the , it would be possible to argue that the Wage Board was not exercising legislative functions but was exercising functions which were quasi judicial in character.
In this connection, it was also pointed out that the Legislature itself while enacting the impugned Act did not consider these functions as legislative at all.
The Rules of Procedure and Conduct of Business in Lok Sabha (1957) provide in Rule No. 70 for a Bill involving proposals for the delegation of legislative power shall further be accompanied by a memorandum explaining such proposals and drawing attention to their scope and stating also whether they are of normal or exceptional character.
There is also a committee on subordinate legislation which is established for scrutinizing and reporting to the House; whether the powers to make regulations, rules, sub rules, by laws, etc., conferred by the Constitution or delegated by Parliament are being properly exercised within 'such 149 delegation (vide Rule 317 ibid).
The constitution by the Legislature of the Wages Board in the matter of the fixation of rates of wages was not considered as a piece of delegated legislation in the memorandum regarding delegated legislation appended to the draft Bill No. 13, of 1955 introduced in the Rajya Sabha on September 28, 1955, and the only reference that was made there was to Cl.
19 of the Bill which empowered the Central Government to make rules in respect of certain matters specified therein and it was stated that these were purely procedural matters of a routine character and related inter alia to prescribing hours of work, payment of gratuity, holidays, earned leave or other kinds of leave and the procedure to be followed by the Minimum Wager, Board in fixing minimum wages and the manner in which its decisions may be published.
Clause 19 (3) of the Bill further provided that all rules made under this section shall as soon as practicable after they are made, be laid before both Houses of Parliament.
These clauses were ultimately passed as section 20 of the impugned Act but they were the only piece of delegated legislation contemplated by the Legislature and were covered by the memorandum regarding the same which was appended to the Bill.
The decision of the Wage Board was not to be laid before both the Houses of Parliament which would have been the case if the fixation of rates of wages was a piece of delegated legislation.
It was only to be published by the Central Government after it/ was communicated to it by the Wage Board in such manner as the Central Government thought fit, a provision which was akin to the publication of award,,; of the Industrial Tribunals by the appropriate Government under the provisions of the .
This circumstance also was pointed out as indicative of the intention of the Legislature not to constitute the Wage Board a sub legislative authority.
While recognizing the force of these contentions we may observe that it is not necessary for our purposes to determine the nature and character of the functions performed by the Wage Board here.
It is sufficient to say that the Wage Board was not empowered or 150 authorised to adopt any arbitrary,procedure and flout the principles of, natural justice.
It was next contended that the restrictions imposed on newspaper establishments under the terms of the impugned Act were unreasonable in so far as they would have the effect of destroying the business of the petitioners and would therefore exceed the bounds of permissible legislation under article 19(6).
This power to regulate is not a power to destroy, and limitation is not the, equivalent of confiscation.
" Similar observations of the Judicial Committee of the Privy Council in the Municipal Corporation of the City of Toronto vs Virgo (2) and the Attorney General for Ontario vs Attorney General for the Dominion (3) were also relied upon and particularly the following observations in the former case: " But their Lordships think there is a marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it and indeed a power to regulate and govern seem,,; to imply the continued existence of that which is sought to be, regulated or governed." These observations were considered by this Court in Saghir Ahmed vs State of U. P. & Ors.
(4) and after considering the various cases which Were cited by both sides, this Court observed: " Be that as it may,, although in our opinion the normal use of the word " restrictionseems to be in the sense of I., limitation" and notextraction ", we would on this occasion prefer not toexpress any final (1) ; , 331; ; , 644.(2) , 93 (J C) (4) ; ,724.(3) , 363.
151 opinion on this matter" and the Court ultimately wound up by saving that ,whether the restrictions are reasonable or not would depend to a large extent on the nature of the trade and the conditions prevalent in it." Even if the provisions of the impugned Act would not necessarily have the effect of destroying the business of the petitioners but of crippling it and making it impossible for the petitioners to continue the same except under onerous conditions, they would have the effect of curtailing their circulation and drive them to seek government aid and thereby impose an unreasonable burden on their right to carry on business and would come within the ban of article 19(1) (g) read with article 13(2) of the Constitution.
Several provisions of the impugned Act were referred to in this context.
Section 2(f) of the Act which defines working journalist " so as to include " proofreader was pointed out in this connection and it was urged that even though the Press Commission Report recommended the exclusion of certain class of proof readers from the definition of working journalists the Legislature went a step further and included all proof readers within that definition thereby imposing upon the newspaper establishments an unreasonable burden far in excess of what they were expected to bear.
The provision as to the notice in relation to the retrenchment of working journalist was also extended beyond the limitations specified in section 25F of the , and was extended to six months in the case of an Editor and three months in the case of any other working journalist.
The provision with regard to retrenchment was also made applicable retrospectively to all cases of retrenchment which had occurred between July 14, 1954, and March 12, 1955 ; so also the payment of gratuity was ordered not only in the cases usually provided for but also in cases where a working journalist who had been in continuous service for not less than three years voluntarily resigned from service from a newspaper establishment.
The hours of work prescribed were 144 hours only during any period of four consecutive weeks and they were 152 far less in number than the hours of work recommended by the Press Commission Report.
The fixation of rates of wages was entrusted to the Wage Board which could fix any wages which it thought proper irrespective of the capacity of the industry to pay and might be such as the industry could not bear.
These provisions taken each one by itself may not have the effect of destroying the petitioners ' business altogether or even crippling it in the manner indicated but taken cumulatively along with the provisions contained in sections 14 and 15 of the impugned Act which applied the provisions of the , and, the Employees ' Provident funds Act, 1952, to newspaper establishments would certainly bring about that result and would therefore constitute an unreasonable restriction on the, petitioners ' right to carry on business.
We shall deal with these contentions one by one.
B. Sen Gupta in his " Journalism as a Career " (1955) talks of the position of the proof reader as follows: " The proof reader is another important link in the production of a newspaper.
On him depends, not to a small extent, the reputation of a paper.
He has to be very careful in correcting mistakes and pointing out any error of fact or grammar that has crept into any news item or article through oversight or hurry on the part of the sub editor.
He has not only to correct mistakes but also to see that corrections are carried out ", and the Kemsley Manual of Journalism has the following passage at p. 337: " Having thus seen the proof reader in action, lot us consider in detail what proof reading denotes.
It is primarily the art and practice of finding mistakes in printed matter before publication and of indicating the needed corrections.
It includes the detection of variations between the type and the copy from which it was 153 set, misstatements of facts, figures or dates, errors in grammar, inaccuracies in quotations, and other defects.
Often, too, it happens that, though the proof reader does not feel justified in himself making a correction, he takes other action.
If he thinks there is a mistake but is not sure, he must query the proof so that the editorial staff may decide.
He may spot a libel, or think he has.
In either case it is important that the matter shall be queried and passed back to editorial authority.
" It is obvious from this that proof readers should be men of exceptional knowledge and sound judgment.
They should be conversant with current affairs, familiar with names of public men and quite sure how they should be spelled.
Some specialize in different branches of sport, others in theatre, the cinema, music and so on.
This saves much time in looking up books of reference, though, of course, the books are there." As a matter of fact, the Wage Board in the Schedule to its decision defines "proof reader" as " a person who checks up printed matter or " Proof " with edited copy to ensure strict conformity of the former with the latter.
" If this is the important role played by the proofreaders then no wonder that the Legislature in spite of the recommendations of the Press Commission included them also in the definition of working journalist.
The provisions in regard to notice cannot be said to be per se unreasonable.
249, foot note (e), contains the following statement in regard to the periods of reasonable notice to which persons of various employments have been found entitled: Newspaper editor, from six months (Fox Bourne vs Vernon & Co. Ltd., ; to twelve months (Grundy vs Sun Printing and Publishing Association, (1916) 33 T. L. R. 77, C. A.).
Sub editor of a newspaper, six months (Chamberlain vs Bennett, Foreign correspondent to The Times, six months period (Lowe vs Walter, The Press Commission also recommended that the period of notice for the termination of services should be based on the length of the service rendered and the nature of the appointment.
There could be no hard and fast rule as to what the notice period should be.
The practice upheld by law or by collective bargaining varies from country to country.
In England the practice established by some judicial decisions is that the editor is entitled to a year 's notice and an assistant editor to six months ' notice.
After examining the provisions in regard to notice which are in vogue in England, the Commission also noticed a decision in Bombay (Suit No. 735 of 1951 in the City Civil Court) where the judge concerned held that in the circumstances of the particular case the plaintiff, an assistant editor was entitled to a notice of four months although in normal times, he said, the rule adopted in England of six months should be the correct rule to adopt in India and a longer period of notice was suggested for editors because it was comparatively much more difficult to secure another assignment for a journalist of that seniority and standing in the profession.
The period of six months, in the case of an editor, and three months, in the case of any other working journalists prescribed under section 3(2) of the impugned Act was therefore not open to any serious objection.
The retrospective operation of this provision in regard to the period between July 14, 1954, and March 12, 1955, was designed to meet the few cases of those employees in the editorial staff of the newspaper 155 establishments who had been retrenched by the managements anticipating the implementation of the recommendations of the Press Commission.
There was nothing untoward in that provision also.
When we come however to the provision in regard to the payment of gratuity to working journalists who voluntarily resigned from service from newspaper establishments, we find that this was a provision which was not at all reasonable.
A gratuity is a scheme of retirement, benefit and the conditions for its being awarded have been thus laid down in the Labour Court decisions in this country.
In the case of Ahmedabad Municipal Corporation it was observed at p. 158 : " The fundamental principle in allowing gratuity is that it is a retirement benefit for long services, a provision for old age and the trend of the recent authorities as borne out from various awards as well as the decisions of this Tribunal is in favour of double benefit We are, therefore, of the considered opinion that Provident Fund provides a certain measure of relief only and a portion of that consists of the employees ' wages, that he or his family would ultimately receive, and that this provision in the present day conditions is wholly insufficient relief and two retirement benefits when the finances of the concern permit ought to be allowed.
" (See also Nundydroog Mines Ltd. (2).
These were cases however of gratuity to be allowed to employees on their retirement.
The Labour Court decisions have however awarded gratuity benefits on the resignation of an employee also.
In the case of Cipla Ltd. (3), the Court took into consideration the capacity of the concern and other factors therein referred to and directed gratuity on full scale which included (2) on voluntary retirement or resignation of an employee after 15 years continuous service.
Similar considerations were imported in the case of (1) , 58.
(2) , 267.
(3) , 358.
156 the Indian Oxygen & Acetylene Co., Ltd. where it was observed: " It is now well settled by a series of decisions of the Appellate Tribunal that where an employer company has the financial capacity the workmen would be entitled to the benefit of gratuity in addition to the benefits of the Provident Fund.
In considering the financial capacity of the concern what has to be seen is the general financial stability of the concern.
The factors to be considered before granting a scheme of gratuity are the broad aspects of the financial condition of the concern, its profit earning capacity, the profit earned in the past, its reserves and the possibility of replenishing the reserves, the claim of capital put having regard to the risk involved, in short the financial stability of the concern.
There also the court awarded gratuity under ground No. 2, viz., on retirement or resignation of an employee after 15 years of continuous service and 15 months ' salary or wage.
It will be noticed from the above that even in those cases where gratuity was awarded on the employee 's resignation from service, it was granted only after the completion of 15 years continuous service and not merely on a minimum of 3 years service as in the present case.
1503), there would be no justification for awarding the same when an employee voluntarily resigns and brings about a termination of his service, except in exceptional circumstances.
One such exception is the operation of what is termed " The conscience clause ".
157 Among the benefits which the status of professional journalist may confer (whether it stems from the law or from an agreement) is one of particular importance, since it goes to the very core of the profession.
It concerns freedom of information.
It is intended to safeguard the journalist 's independence, his freedom of thought and his moral rights.
It constitutes what has been called in France the " conscience clause ".
The essence of this clause is that when a journalist 's integrity is seriously threatened, he may break the contract binding him to the newspaper concern, and at the same time receive all the indemnities which are normally payable only if it is the employer who breaks the contract.
In France, accordingly, under the law of 1935, the indemnity for dismissal which, as we have seen, may be quite substantial, is payable even when the contract is broken by a professional journalist, in cases where his action is inspired by " a marked change in the character or policy of the newspaper or periodical, if such change creates for the person employed a situation prejudicial to his honour, his reputation, or in a general way his moral interests.
" This moral right of a journalist is comparable to the moral right of an author or artist, which the law of 1935 was the first to recognize, has since been acknowledged in a number of countries.
It was stated in the collective contract of January 31, 1938, in Poland in this form: " The following are good and sufficient reasons for a journalist to cancel hip, contract without warning; (a) the exertion of pressure by an employer upon a journalist to induce him to perform an immoral action; (b) a fundamental change in the political outlook of the journal, proclaimed by public declaration or otherwise made manifest, if the journalist 's employment would thereafter be contrary to his political opinions or the dictates of his conscience.
In these circumstances he shall be entitled to an indemnity. .
This indemnity is payable in the same manner as was the salary.
" The other exception is where the employee has been in continuous service of the employer for a period of more than 15 years.
Where however an employee voluntarily resigns from service of the employer after a period of only three years, there will be no justification whatever for awarding him a gratuity and any such provision of the type which has been made in section 5(1)(a)(iii) of the Act would certainly be unreasonable.
The provision in regard to the hours of work also cannot be considered unreasonable having regard to the nature and quality of the work to be done by working journalists.
That leaves the considerations of fixation of rates of wages by the Wage Board.
As we have already observed, the Wage Board is constituted of equal numbers of representatives of the newspaper establishments and the working journalists with an independent chairman at its head and principles for the guidance of the Wage Board in the fixation of such rates of wages directing the Wage Board to take into consideration amongst other circumstances the capacity of the industry to pay have also been laid down and it is impossible to say that the provisions in that behalf are in any manner unreasonable.
that the decision of the Wage Board may be arrived at ignoring some of these essential criteria which have been laid down in section 9(1) of the Act or that the procedure followed by the Wage Board may be contrary to the principles of natural justice.
But that would 159 affect the validity of the decision itself and not the constitution of the Wage Board which as we have seen cannot be objected to on this ground.
The further provision contained in section 17 of the Act in regard to the recovery of money due from an employer empowering the State Government or any such authority appointed in that behalf to issue a certificate for that amount to the collector in the same manner as an arrear of land revenue was also impeached by the petitioners on this ground.
We shall have occasion to deal with this provision in connection with the alleged infringement of the fundamental right under article 14 hereafter.
We do not subscribe to the view that such a provision infringes the fundamental right of the petitioners to carry on business under article 19(1)(g).
This attack of the petitioners on the constitutionality of the impugned Act under article 19(1)(g), viz., that it violates the petitioners ' fundamental right to carry on business, therefore, fails except in regard to section 5(1)(a)(iii) thereof which being clearly severable from the rest of the provisions, can be struck down as unconstitutional without invalidating the other parts of the impugned Act.
Re. Article 14.
The question as formulated is that the impugned Act selected the working journalists for favoured treatment by giving them a statutory guarantee of gratuity, hours of work and leave which other persons in similar or comparable employment had not got and in providing for the fixation of their salaries without following the normal procedure envisaged in the .
The following propositions are advanced: 1.
In selecting the Press industry employers from all industrial employers governed by the ordinary law regulating industrial relations under the , and Act I of 1955, the impugned Act subjects the Press industry employers to discriminatory treatment.
160 2.
Such discrimination lies in (a) singling out newspaper employees for differential treatment; (b)saddling them with a new burden in regard to a section of their workers in matters of gratuities, compensation, hours of work and wages; (c)devising a machinery in the form of a Pay Commission for fixing the wages of working journalists; (d)not prescribing the major criterion of capacity to pay to be taken into consideration; (e)allowing the Board in fixing the wages to adopt any arbitrary procedure even violating the principle of audi alteram partem; (f)permitting the Board the discretion to operate the procedure of the for some newspapers and any arbitrary procedure for others; (g) making the decision binding only on the employersand not on the employees, and (h) providing for the recovery of money due from the employers in the same manner as an arrear of land revenue.
3.The classification made by the impugned Act is arbitrary and unreasonable, in so far as it removes the newspaper employers vis a vis working journalists from the general operation of the , and Act I of 1955.
The principle underlying the enactment of article 14 has been the subject matter of various decisions of this Court and it is only necessary to set out the summary thereof given by Das J. (as be then was) in Budhan Choudhry & Others vs The State of Bihar (I). " The provisions of article 14 of the Constitution have come up for discussion before this Court in a number of cases, namely, Chiranjit Lal Chowdhuri vs The Union of India (2), The State of Bombay vs F. N. Balsara (3), The State of West Bengal vs Anwar Ali (1)[1955] I S.C.R. 1045, 1048.
(2) ; (3) ; 161 Sarkar (1), Kathi Raning Rawat vs The State of Saurashtra (2), Lachmandas Kewalram Ahuja vs The State of Bombay (3), Quasim Razvi vs The State of Hyderabad (1), and Habeeb Mohamad vs The State of Hyderabad (5).
It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation.
In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question.
The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like.
What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
It is also well established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure.
" It is in the light of these observations that we shall now proceed to consider whether the impugned Act violates the fundamental right of the petitioners guaranteed under article 14 of the Constitution.
A further passage from the Report may also be quoted in this context: " It is essential to realise in this connection that the work of a journalist demands a high degree of general education and some kind of specialised training.
They thus form an essential adjunct to democracy.
The profession must, therefore, be manned by men of high intellectual and moral qualities.
The journalists are in a sense creative artists and the public rightly or, wrongly, expect from them a general omniscience and a capacity to express opinion on any topic that may arise, under the sun.
Apart from the nature of their work the conditions under which that work is to be performed, are peculiar to this profession.
Journalists have to work at very high pressure and as most of the papers come out in the morning, the journalists are required to work late in the night and round the clock.
The edition must go to press by a particular time and all the news that breaks before that hour has got to find its place in that edition.
Journalism thus becomes a highly specialized job and to handle it adequately a person should be well read, have the ability to size up a situation and to arrive quickly at the correct conclusion, and have the capacity to stand the stress and strain of the work involved.
His work cannot be measured, as in other industries, by the quantity of the output, for the quality of work is an essential element in measuring the capacity of the journalists.
Moreover, insecurity of tenure is a peculiar feature of this profession.
This is not to say that no insecurity exists in other professions but circumstances may arise in connection with profession of journalism which may lead to unemployment in this profession, which would not necessarily have that result in other professions.
Their security depends to some extent on the whims and caprices of the proprietors.
We have come across cages where a change in the ownership of the paper or a, change in the editorial policy of the paper has resulted in a considerable change in the editorial staff.
In the case of other industries a change in the proprietorship does not normally entail a change in the staff.
But as the essential purpose of a newspaper is not only to give news but to educate &.
d guide public opinion, a change in the proprietorship or in the editorial policy of the paper may result 163 and in some cases has resulted in a wholesale change of the staff on the editorial side.
These circumstances, which are peculiar to journalism must be borne in mind in framing any scheme for improvement of the conditions of working journalists." (para. 512).
These were the considerations which weighed with the Press Commission in recommending the working journalists for special treatment as compared with the other employees of newspaper establishments in the matter of amelioration of their conditions of service We may also in this connection refer to the following passage from the Legislation for Press, Film and Radio in the world to day (a series of studies published by UNESCO in 1951) (supra) at p. 403: " Under certain systems, special advantages more extensive than those enjoyed by ordinary employees are conferred upon journalists.
These may be sanctioned by the law itself.
For instance, certain Latin American countries have enacted legislation in favour of journalists which is in some cases very detailed and far reaching and offers special benefits, more particularly in the form of protection against the risk of sickness or disability, dismissal or retirement.
" In France, the law of 29 March, 1935, conferred on journalists substantial advantages which at the time were far in advance of general social legislation.
Thus, for example, this law gives all professional journalists the right to an annual holiday with pay.
One month 's holiday is granted to journalists who have been working for a newspaper or periodical for at least one year, and five weeks to journalists whose contract has been in force for 10 years at least.
Should a contract of indefinite duration be terminated, the journalist is entitled to one or two month 's notice and also to an indemnity for dismissal which may not be less than one month 's salary per year or part of a year of service, at the most recent rate of pay.
However, if the period of service exceeds 15 years, the 164 amount of the indemnity is fixed, as we have seen, by an arbitral committee.
" The working journalists are thus a group by themselves and could be classified as such apart from the other employees of newspaper establishments and if the Legislature embarked upon a legislation for the purpose of ameliorating their conditions of service there was nothing discriminatory about it.
They could be singled out thus for preferential treatment against the other employees of newspaper establishments.
A classification of this type could not come within the ban of article 14.
The only thing which is prohibited under this article is that persons belonging to a particular group or class should not be treated differently as amongst themselves and no such charge could be levelled against this piece of legislation.
If this group of working journalists was specially treated in this manner there is no scope for the objection that group had a special legislation enacted for its benefit or that a special machinery was created, for fixing the rates of its wages different from the machinery employed for other workmen under the .
The payment of retrenchment compensation and gratuities, the regulation of their hours of work and the fixation of the rates of their wages as compared with those of other workmen in the newspaper establishments could also be enacted without any such disability and the machinery for fixing their rates of wages by way of constituting a wage board for the purpose could be similarly devised.
What was contemplated by the provisions of the impugned Act how.
ever, was a general fixation of rates of wages of working journalists which would ameliorate the conditions of their service and the constitution of a wage board for this purpose was one of the established modes of achieving that object.
If, therefore, such a 165 machinery was devised for their benefit, there was nothing objectionable in it and there was no discrimination as between the working journalists and the other employees of newspaper establishments in that behalf.
The capacity of the industry to pay was certainly to be taken into consideration by the Wage Board, as we have already seen before, and the procedure of the Board also was assimilated to that adopted by an industrial tribunal under the , or was, in any event, to be such as would not be against the principle of audi alteram partem or the principles of natural justice.
There was no occasion, if the Wage Board chose to exercise the same powers and follow the same procedure as the Industrial Tribunal under the Industrial Disputes Act, 1947, for it to discriminate between one set of newspaper establishments and others.
If it in fact assumed unto itself the powers of the Industrial Tribunal it would be bound to follow the procedure prescribed under the , and if it were thus to follow the same, no discrimination could ever be made in the manner suggested.
The decision of the Wage Board was no doubt made binding only on the employers and the working journalists were at liberty to agitate the question of increase in their wages by raising an industrial dispute in regard thereto.
Once the rates of wages were fixed by the Wage Board, it would normally follow 'that they would govern the relationship between the employers and the working journalists, but if liberty was reserved to the working journalists for further increase in their wages under the provisions of the there was nothing untoward in that provision and that did not by itself militate against the position that what was done for the benefit of the working journalists was a, measure for the amelioration of their conditions of service as a group by themselves.
There could not be any question of discrimination between the employers on the one hand and the working journalists on the other.
They were two contesting parties ranged on opposite sides and the fact that one of them was treated in a different manner from the other in the 166 matter of the amelioration of the conditions of service of the weaker party would not necessarily vitiate the decision of the Wage Board.
The weaker of the two parties could certainly be treated as a class by itself and the conferment of special benefits in the matter of trying to ameliorate their conditions of service could certainly not be discriminatory.
The provisions contained in section 17 of the Act in regard to the recovery of money due from the employers in the same manner as an arrear of land revenue also was not discriminatory.
In the conflict between the employers and the employees it very often came about that the employers did not implement the measures which had been enacted for the benefit of the employees and the employees were thus hard put to realise and cash those benefits.
Even the , contained a like provision in section 33C thereof (vide the amendment incorporated therein by Act 36 of 1956) which in its turn was a reproduction of the old section 25 1 which had been inserted therein by Act 43 of 1953.
It may be remembered that if the provisions of the , which was a general Act, had been made applicable to the working journalists there would have been no quarrel with the same.
Much less there could be any quarrel with the introduction of section 17 into the impugned Act when the aim and object of such provision was to provide the working journalists who were a group by themselves from amongst employees employed in the newspaper establishments with a remedy for the recovery of the monies due to them in the same manner as the workmen under the .
We do not see anything discriminatory in making such a provision for the recovery of monies due by the employers to these working journalist 'section Similar is the position in regard to the alleged dis crimination between Press industry employers on the one hand and the other industrial employers on the other.
The latter would, certainly be governed by the ordinary law regulating industrial relations under the .
Employers qua the working journalists again would be a class by them 167 selves and if a law was enacted to operate as between them in the manner contemplated by the Act that could not be treated as discriminatory.
If measures have got to be devised for the amelioration of the conditions of working journalists who are employed in the newspaper establishments, the only way in which it could be done was by directing this piece of legislation against the Press Industry employers in general.
Even considering the Act as a measure of social welfare legislation the State could only make a beginning somewhere without embarking on similar legislations in relation to all other industries and if that was done in this case no charge could be levelled against the State that it was discriminating against one industry as compared with the others.
The classification could well be founded on geographical basis or be according to objects or occupations or the like.
The only question for consideration would be whether there was a nexus between the basis of classification and the object of the Act sought to be challenged.
In our opinion, both the conditions of permissible classification were fulfilled in the present case.
The classification was based on an intelligible differentia which distinguished the working journalists from other employees of newspaper establishments and that differentia had a rational relation to the object sought to be achieved, viz., the amelioration of the conditions of service of working journalists.
This attack on the constitutionality of the Act also therefore fails.
Re. Article 32: In regard to the infringement of article 32, the only ground of attack ha, , been that the impugned Act did not provide for the giving of the reasons for its decision by the Wage Board and thus rendered the petitioners ' right to approach the Supreme Court for enforcement of their fundamental right nugatory.
It is contended that the right to apply to the Supreme Court for a writ of certiorari required an order infringing a fundamental right, that such a right was itself a fundamental right and any legislation which attempted to restrict or defeat this right was an infraction of 168 article 32 and was as such void.
It is further contended that a writ of certiorari could effectively be directed only against a speaking order, i. e., an order disclosing reasons, and if a statute enabled the passing of an order that need give no reasons such statute attempted ,to sterilize the powers of this Court from investigating the validity of the order and was therefore violative of article 32.
Learned Counsel for the petitioners has relied upon a decision of the English Court in Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw where Lord Goddard C. J. observed at p. 718: " Similarly anything that is stated in the order which an inferior court has made and which has been brought up into this court can be examined by the court, if it be a speaking order, that is to say, an order which sets out the grounds of the decision.
If the order is merely a statement of conviction that there shall be a fine of 40s.
, or an order of removal or quashing a poor rate, there is an end of it, this court cannot examine further.
If the inferior court tells this court why it had done what it has and makes it part of its order, this court can examine it.
" This decision was affirmed by the Court of Appeal (and the decision of the Court of Appeal is reported in Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw (2) and while doing so Denning L. J. (as he then was) discussed at p. 352, what was it that constituted the record : " What, then, is the record?.
Following these cases I think the record must contain at least the document which initiates the proceedings; the pleadings if any; and the adjudication; but not the evidence, nor the reasons, unless the tribunal chooses to incorporate them.
If the tribunal does state its reasons, and these reasons are wrong in law, certiorari lies to quash the decision.
" This decision only affirmed that certiorari could lie only if an order made by the inferior tribunal was a speaking order.
It did not lay down any duty on the inferior tribunal to set out the reasons for its order but (1) , 718.
(2) ; 169 only pointed out that if no reasons were given it would be impossible for the High Court to interfere by exercising its prerogative jurisdiction in the matter of certiorari.
A more relevant decision on this point is that of this Court in A. K. Gopalaa vs The State of Madras and, Anr.
In that case the provision of law which was impugned amongst others was one which prevented the detenu on pain of prosecution from disclosing to the Court the grounds of his detention communicated to him by the detaining authority.
This provision was struck down as ultra vires and void.
The reason given by Mahajan J. (as he then was) is stated at p. 243: " This Court would be disabled from exercising its functions under article 32 and adjudicating on the point that the grounds given satisfy the requirements of the sub clause if it is not open to it to see the grounds that have been furnished.
It is a guaranteed right of the person detained to have the very grounds which are the basis of the order of detention.
This Court would be entitled to examine the matter and to see whether the grounds furnished are the grounds on the basis of which he has been detained or they contain some other vague or irrelevant material.
The whole purpose of furnishing a detained person with the grounds is to enable him to make a representation refuting these grounds and of proving his innocence.
In order that this Court may be able to safeguard this fundamental right and to grant him relief it is absolutely essential that the detenu is not prohibited under penalty of punishment to disclose the grounds to the Court and no injunction by law can be issued to this Court disabling it from having a look at the grounds.
Section 14 creates a substantive offence if the grounds are disclosed and it also lays a duty on the Court not to permit the disclosure of such grounds.
It virtually amounts to a suspension of a guaranteed right provided by the Constitution inasmuch as it indirectly by a stringent provision makes administration of the law by this Court impossible and at the same (1) ; , 100.
22 170 time it deprives a detained person from obtaining justice from this Court.
In my opinion, therefore, this section when it prohibits the disclosure of the grounds contravenes or abridges the rights given by Part III to a citizen and is ultra vires the powers of Parliament to that extent.
" It is no doubt true that if there was any provision to be found in the impugned Act which prevented the Wage Board from giving reasons for its decision, it might be construed to mean that the order which was thus made by the Wage Board could not be a speaking order and no writ of certiorari could ever be available to the petitioners in that behalf.
It is also true that in that event this Court would be powerless to redress the grievances of the petitioners by issuing a writ in the nature of certiorari and the fundamental right which a citizen has of approaching this Court under article 32 of the Constitution would be rendered nugatory.
The position, however, as it obtains in the present case is that there is no such provision to be found in the impugned Act.
The impugned Act does not say that the Wage Board shall not give any reason for its decision.
It is left to the discretion of the Wage Board whether it should give the reasons for its decision or not.
In the absence of any such prohibition it is impossible for us to hold that the fundamental right conferred upon the petitioners under article 32 was in any manner whatever sought to be infringed.
It may be noted that this point was not at all urged in the petitions which the petitioners had filed in this Court but was taken up only in the course of the arguments by the learned Counsel for the petitioners.
It appears to have been a clear after thought; but we have dealt with the same as it was somewhat strenuously urged before us in the course of the arguments.
Apart from challenging the vires of the Act dealt with above, the petitioners contend that the decision of the Wage Board itself is illegal and void because: (1) Reconstitution of the Board was ultra vires and unauthorised by the Act as it stood at the time, the rules having been published only on July 30, 1956.
(2)The decision by a majority was unwarranted by the Act and since there was no provision in the Act, the Rules providing for the same went beyond the Act and were therefore ultra vires.
(3)The procedure followed by the Board offended the principles of natural justice and was therefore invalid; (4) The decision was invalid, because (a) no reasons were given, (b) nor did it disclose what considerations prevailed with the Board in arriving at its decision; (5) Classification on the basis of gross revenue was illegal and unauthorised by the Act.
(6)Grouping ;into chains or multiple units was unauthorised by the Act.
(7)The Board was not authorised by the Act to fix the salaries of journalists except in relation to a particular industrial establishment and not on an All India basis of all newspapers taken together; (8)The decision was bad as it did not disclose that the capacity to pay of any particular establishment was ever taken into consideration.
(9) The Board had no authority to render a decision which was retrospective in operation.
(10) The Board had no authority to fix scales of pay for a period of 3 years (subject to review by the Govt.by appointing another Wage Board at the end of these 3 years) and (11) The Board was handicapped for want of Cost of Living Index.
172 The position in law is that the decision would be illegal on any of the following three grounds, viz., (A)Because the Act under which it was made was ultra vires; [ See Mohammad Yasin vs Town Area Committee, Jalalabad & anr.
(1) and Himmatlal Harilal Mehta vs State of Madhya Pradesh (2) ].
(B)Because the decision itself infringed the fundamental rights of the petitioners.
[ See Bidi Supply Co.v.
Union of India &
(3) ].
(C) Because the decision was ultra vires the Act.
See Pandit Ram Narain vs State of Uttar Pradesh & ors.
(4) ].
The decision of the Wage Board before us cannot be challenged on the grounds that the impugned Act under which the decision is made is ultra vires or that the decision itself infringes the fundamental rights of the petitioners.
The first ground of attack is based on the circumstance that Shri K. P. Kesava Menon who was originally appointed a member of the Wage Board resigned on or about June 21, 1956, which resignation was accepted by the Central Government by a notification dated July14, 1956, and by the same notification the Central Government appointed in his place Shri K. M. Cherian and thus reconstituted the Wage Board.
There was no provision in the Act for the resignation of any member from his membership or for the filling in of the vacancy which thus arose in the membership of the Board.
A provision in this behalf was incorporated only in the Working Journalists Wage Board Rules, 1956, which were published by a notification in the Gazette of India Part 11 Section 3 on date July 31, 1956.
It was, therefore, contended that such reconstitution of the Board by the appointment of Shri K. M. Cherian in place of Shri K. P. Kesava Menon was unauthorised by the Act as it then stood (1) ; , 578.
(2) ; , 1127.
(3) [1956] S.C.R.267.
(4) ; 173 and the Board which actually published the decision in question was therefore not properly constituted.
It is necessary to remember in this connection that section 8 of the Act empowered the Central Government by notification in the Official Gazette to constitute a Wage Board.
This power of constituting the Wage Board must be construed having regard to section 14 of the , which says that where by any Central Act or Regulation made after the commencement of the Act, any power is conferred then, unless a different intention appears that power may be exercised from time to time as occasion arises.
If this is the true position there was nothing objectionable in the Central Government reconstituting the Board on the resignation of Shri K. P. Kesava Menon being accepted by it.
The Wage Board can in any event be deemed to have been constituted as on that date, viz., July 14, 1956, when all the 5 members within the contemplation of section 8(2) of the Act were in a position to function.
Shri K. P. Kesava Menon had not attended the preliminary meeting of the Board which had been held on May 26, 1956, and the real work of the Wage Board was done after the appointment of Shri K. M. Cherian in his place and stead and it was only after July 14, 1956, that the Wage Board as a whole constituted as it was on that date really functioned as such.
The objection urged by the petitioners in this behalf is too technical to make any substantial difference in regard to the constitution of the Wage Board and its functioning.
Re. 2.
This ground ignores the fact that the Working Journalists Wage Board Rules, 1956, which were published on July 31, 1956, were made by the Central Government in exercise of the power conferred upon it by section 20 of the Act.
That section empowered the Central Government to make rules to carry out the purposes of the Act, in particular to provide for the procedure to be followed by the Board in fixing rates of wages.
Rule 8 provided that every question considered at a meeting of the Board was to be decided by a majority of the votes of the members present and 174 voting.
In the event of equality of votes the Chairman was to have a casting vote. . .
This Rule therefore prescribed that the decision of the Board could be reached by a majority and this was the rule which was followed by the Board in arriving at its decision.
The rule was framed by the Central Government by virtue of the authority vested in it under section 20 of the Act and was a piece of delegated legislation which if the rules were laid before both the Houses of Parliament in accordance with section 20(3) of the Act acquired the force of law.
After the publication of these rules, they became a part of the Act itself and any decision thereafter reached by the Wage Board by a majority as prescribed therein was therefore lawful and could not be impeached in the manner suggested.
This ground has reference to the alleged violation by the Wage Board of the principles of natural justice.
It is urged that the procedure established under the was not in terms prescribed for the Wage Board, the Board having been given under section 11 of the Act the discretion for the purpose of fixing rates of wages to exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , while adjudicating upon an industrial dispute referred to it.
On two distinct occasions, however, the Wage Board definitely expressed itself that it had the powers of an Industrial Tribunal constituted under the ' The first occasion was when the questionnaire was issued by the Wage Board and in the questionnaire it mentioned that it had such powers under section 11 of the Act.
The second occasion arose when a number of newspapers and journals to whom the questionnaire was addressed failed to send their replies to the same and the Wage Board at its meeting held on August 17, 1956, reiterated the position and decided to issue a Press Note requesting the newspapers and journals to send their replies as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the 175 Act and if newspapers failed to send their replies, the Board would be compelled to take further steps in the matter.
This is clearly indicative of the fact that the Wage Board did seek to exercise the powers under the terms of section 11 of the Act.
Even though, the exercise of such powers was discretionary with the Board, the, Board itself assumed these powers and assimilated its ,position to that of an Industrial Tribunal constituted under the .
If, then, it assumed those powers, it only followed that it was also bound to follow the procedure which an Industrial Tribunal so constituted was bound to follow.
It is further urged that in the whole of the questionnaire which was addressed by the Wage Board to the newspaper establishments, there was no concrete proposal which was submitted by the Wage Board to them for their consideration.
The only question which was addressed in this behalf was Question No. 4 in Part "A" which asked the newspaper establishments whether the basic minimum wage, dearness allowance and metropolitan allowance suggested by the Press Commission were acceptable to them and if not, what variations would they suggest and why.
The question as framed would not necessarily focus the attention of the newspaper establishments to any proposal except the one which was the subject matter of that question, viz., the proposal of the Press Commission in that behalf and the newspaper establishments to whom the questionnaire was addressed would certainly not have before them any indication at all as to what was the wage structure which was going to be adopted by the Wage Board.
Even though the Wage Board came to the conclusion, as a result of its having collected the requisite data and gathered sufficient materials, after receiving the answers to the questionnaire and examining the witnesses, that certain wage structure was a proper one in its opinion, it was necessary for the Wage Board to communicate the proposals in that regard to the various newspaper establishments concerned and invite them to make their representations, if any, within a specified period.
It was only after such representations were received from the interested parties 176 that the Wage Board should have finalized its proposals and published its decision.
If this procedure had been adopted the decision of the Wage Board could not have been challenged on the score of its being contrary to the principles of natural justice.
It would have been no doubt more prudent for the Wage Board to have followed the procedure outlined above.
The ground No. 8 is, in our opinion, sufficiently determinative of the question as to the ultra vires character of the Wage Board decision and in view of the 'conclusion reached by us in regard to the same, we refrain from expressing any opinion on this ground of attack urged by the Petitioners.
Re. 4.
This ground is urged because no reasons were given by the Wage Board for its decision.
As a matter of fact, the Wage Board at its meeting dated April 22, 1957, agreed that reasons need not be given for each of the decisions and it was only sufficient to record the same and accordingly it did not give any reasons for the decision which it published.
In the absence of any such reasons, however, it was difficult to divine what considerations, if any, prevailed with the Wage Board in arriving at its decision on the various points involved therein.
It was no doubt not incumbent on the Wage Board to give any reasons for its decision.
The Act made no provision in this behalf and the Board was perfectly within its rights if it chose not to give any reasons for its decision.
Prudence should, however, have dictated that it gave reasons for the decision which it ultimately reached because if it had done so, we would have been spared, the necessity of trying to probe into its mind and find out whether any particular circumstance received due consideration at its hands in arriving at its decision.
The fact that no reasons are thus given, however, would not vitiate the decision in any manner and we may at once say that even though no reasons are given in the form of a regular judgment, we have sufficient indication of the Chairman 's mind in the note which he made on April 30, 1956, which is a contemporaneous record ex plaining the reasons for the decision of the majority.
177 This note of the Chairman is very revealing and throws considerable light on the question whether particular circumstances were at all taken into consideration by the Wage Board before it arrived at its decision.
Re. 5.
This ground concerns the classification of newspaper establishments on the basis of gross revenue.
Such classification was challenged as illegal and unauthorised by the Act.
The Act certainly says nothing about classification and could not be expected to do so.
What the Act authorised it to do was to fix the rates of wages for working journalists having regard to the principles laid down in section 9(1) of the Act.
In fixing the wage structure the Wage Board constituted under the Act was perfectly at liberty if it thought necessary to classify the newspaper establishments in any manner it thought proper provided of course that such classification was not irrational.
If the newspaper establishments all over the country had got to be considered in regard to fixing of rates of wages of working journalists employed therein it was inevitable that some sort of classification should be made having regard to the size and capacity of newspaper establishments.
Various criteria could be adopted for the purpose of such classi fication, viz., circulation of the newspaper, advertisement revenue, gross revenue, capital invested in the business, etc., etc.
Even though the proportion of advertisement revenue to the gross revenue of newspaper establishments may be a relevant consideration for the purpose of classification, we are not, prepared to say that the Wage Board was not justified in adopting this mode of classification on the basis of gross revenue.
It was perfectly within its competence to do so and if it adopted that as the proper basis for classification it cannot be said that the basis which it adopted was radically wrong or was such as to vitiate its decision.
It may be remembered in this connection that the Newspaper Industry Inquiry Committee in U. P. had suggested in its report dated March 31,1949, classification of newspapers in the manner following: "A " Class Papers with (1) a circulation of 10,000 copies or above or (2) an invested capital of rupees 3 lakhs or more : (3) an annual income between rupees one lakhs and 3 lakhs or more: "B " Class Papers with (1) a circulation below 10,000 but above 5,000 copies or (2) an invested capital between rupees one lakh and 3 lakhs or (3)an annual income between rupees one lakh and 3 lakhs; "C " Class Papers with (1)a circulation below 5000 copies or (2) an invested capital below rupees one lakh or (3) an annual income below rupees one lakh.
The classification on the basis of gross revenue was attacked by the petitioners on the ground that in the gross revenue which is earned by the newspaper establishments, advertisement revenue ordinarily forms a large bulk of such revenue and the revenue earned by circulation of newspapers forms more often than not a small part of the same, though in regard to language newspapers the position may be some what different.
The petitioners on the other hand suggested that the profit and loss of the newspaper establishments should be adopted as the proper test and if that were adopted a different 179 picture altogether would be drawn.
The balancesheets and the profit and loss accounts of the several newspaper establishments would require to be considered and it was contended that even if the gross revenue of a particlar newspaper establishment were so large as to justify its inclusion on the basis of gross revenue in Class " A " or Class " B " it might be working at a loss and its classification as such would not be justified.
We have already referred in the earlier part of this judgment to the unsatisfactory nature of the profit and loss test.
Even though the profit and loss accounts and the balance sheets of the several limited companies may have been audited by their auditors and may also have been accepted by the Income tax authorities, they would not afford a satisfactory basis for classification of these newspaper establishments for the reasons already set out above.
As a matter of fact, even before us attempts were made by the respondent, the Indian Federation of Working Journalists to demonstrate that the profit and loss accounts and the balance sheets of several petitioners were manipulated and unreliable.
We are not called upon to decide whether the profit and loss test is one which should be accepted; it is sufficient for our purpose to say that if such a test was not accepted by the Wage Board, the Wage Board was certainly far from wrong in doing so.
Re. 6.
This ground relates to grouping into chains or multiple units and the ground of attack is that such grouping is unauthorised by the Act.
The short answer to this contention is that if such grouping into chains or multiple units was justified having regard to the conditions of the newspaper industry in the country, there was nothing in the Act which militated against such grouping.
The Wage Board was authorised to fix the wage structure for working journalists who were employed in various newspaper establishments all over the country.
If the chains or multiple units existed in the country the newspaper establishments which formed ' such chains 180 or multiple units were well within the purview of the inquiry before the Wage Board and if the Wage Board thus chose to group them together in that manner such grouping by itself could not be open to attack.
The Act could not have expressly authorized the Wage Board to adopt such grouping.
It was up to the Wage Board to consider whether such grouping was justified under the circumstances or not and unless we find something in the Act which prohibits the Wage Board from doing so, we would not deem any such grouping as unauthorised.
The real difficulty, however, in the matter of grouping into chains or multiple units arises in connection with the capacity of the industry to pay, a topic which we shall discuss hereafter while discussing the ground in connection therewith.
Re. 7.
This ground is based on the definition of " newspaper establishment" found in Sec.
2 (d) of the Act.
" Newspaper establishment" is there defined as " an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more newspapers or for conducting any news agency or syndicate.
" So, the contention put forward is that " an establishment " can only mean " an establishment " and not a group of them, even though such an individual establishment may produce or publish one or more newspapers.
The definition may comprise within its scope chains or multiple units, but even so, the establishment should be one individual establishment producing or publishing a chain of newspapers or multiple units of newspapers.
If such chains or multiple units were, though belonging to some person or body of persons whether incorporated or not, produced or published by separate newspaper establishments, common control would not render.
the constitution of several newspaper establishments as one establishment for the purpose of this definition, they would none the less be separate newspaper establishments though under common control.
Reliance was placed in support of this contention on a decision of the Calcutta High Court in Pravat Kumar 181 vs W. T. C. Parker (1), where the expression which came up for construction before the Court was " employed in an industrial establishment " and it was observed that: " Employed in an industrial establishment " must mean employed in some particular place, that place being the place used for manufacture or an activity amounting to industry, as that term is used in the Act.
" A similar interpretation was put on the expression industrial establishment " by the Madras High Court in section R. V. Service Ltd. vs State of Madras (2), where it was observed at p. 12: " They referred only to a dispute between the workers and the management of one industrial establishment, the Kumbakonam branch of the section R. V. section Ltd. I find it a little difficult to accept the contention of the learned counsel for the Madras Union, that the Kumbakonam branch of the section R. 'V. section Ltd., is not an industrial establishment as that expression has been used in the several sections of the Act. . . . . .
I need refer only to section 3 of the Act to negative the contention of the learned counsel for the Madras Union, the section R. V. section Ltd., with all its branches should betaken as one industrial establishment.
" These decisions lend support to the contention that a newspaper establishment like an industrial establishment should be located in one place, even though it may be carrying on its activities of production or publication of more newspapers than one.
If these activities are carried on in different places, e. g., in different towns or cities of different States, the newspaper establishments producing or publishing such newspapers cannot be treated as one individual establishment but should be treated as separate newspaper establishments for the purpose of working out the relations between themselves and their employees.
There would be no justification for including these different newspaper establishments into.
one chain or multiple unit and treating them, as if they were one (1) A. I. R. , 118, para.
(2) A. I. R. , 122.
182 newspaper establishment.
Here again, the petitioners are faced with this difficulty that there is nothing in the Act to prohibit such a grouping.
If a classification on the basis of gross revenue could be legitimately adopted by the Wage Board then the grouping into chains or multiple units could also be made by it.
There is nothing in the Act to prohibit the treating of several newspaper establishments producing or publishing one or more newspapers though in different parts of the country as one newspaper establishment for the purpose of fixing the rates of wages.
It would not be illegitimate to expect the same standard of employment and conditions of service in several newspaper establishments under the control of any person or body of persons, whether incorporated or not; for an employer to think of employing one set of persons on higher scales of wages and another set of workers on lower scales of wages would by itself be iniquitous, though it would be quite legitimate to expect the difference in scales having regard to the quality of the work required to be done, the conditions of labour in different regions of the country, the standard of living in those regions and other cognate factors.
All these considerations would necessarily have to be borne in mind by the Wage Board in arriving at its decision in regard to the wage structure though the relative importance to be attached to one circumstance or the other may vary in accordance with the conditions in different areas or regions where the newspaper establishments are located.
Re. 8.
We now come to the most important ground, viz., that the decision of the Wage Board has not taken into consideration the capacity to pay of any particular newspaper establishment.
As we have already seen, the fixings: of rates of wages by the Wage Board did not prescribe whether the wages which were to be fixed were minimum wages, fair wages, or living, wages and it was left to the discretion of the Wage Board to determine the same.
The principles for its guidance were, However, laid down and they prescribed the circumstances which were to be taken into consideration before 183 such determination was made by the Wage Board.
One of the essential considerations was the capacity of the industry to pay and that was comprised within the category " the circumstances relating to newspaper industry in different regions of the country ".
It remains to consider, however, whether the Wage Board really understood this category in that sense and in fact applied its mind to it.
At its preliminary meeting held on May 26, 1956, the Board set up a SubCommittee to draft a questionnaire to be issued to the various journals and organisations concerned, with a view to eliciting factual data and other relevant information required for the fixation of wages.
The Sub committee was requested to bear in mind the need inter alia for 'proper classification of the country into different areas on the basis of certain criteria like population, cost of living, etc.
This was the only reference to this requirement of section 9(1) and there was no reference herein to the capacity of the industry to pay which we have held was comprised therein.
The only question in the questionnaire as finally framed which had any reference to this criterion was Question No. 7 in Part " A " under the heading " Special Circumstances " and that question was: " Are there in your regions any special conditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the conditions and indicate how they affect the question of wages.
The Wage Board no doubt asked for detailed accounts of newspaper establishments and also required information which would help it in the proper evaluation of the nature and quality of work of various categories of working journalists, but the capacity of the industry to pay which was one of the essential considerations was nowhere prominently brought in issue and no information on that point was sought from the various newspaper establishments to whom the questionnaire was going to be addressed.
The answers to Question No. 7 as summarized by the Wage Board no doubt referred in some cases to the capacity 184 of the industry to pay but that was brought in by the newspaper establishments themselves who answered the question in an incidental manner and could not be said to be prominent in the minds of the parties concerned.
It is pertinent to observe that even before the Press Commission the figures had disclosed that out of 127 newspapers 68 had been running into loss and 59 with profits and there was an overall profit of about 1% on a capital investment of seven crores.
The profit and loss accounts and the balance sheets of the various companies owning or controlling newspaper establishments were also submitted before the Wage Board but they had so far as they went a very sorry tale to tell.
The profit and loss statements for the year 1954 55 revealed that while 43 of them showed profits 40 had incurred losses.
Though no scientific conclusion could be drawn from this statement it showed beyond doubt that the condition of the newspaper industry as a whole could not be considered satisfactory.
Under these circumstances, it was all the more incumbent upon the Wage Board even though it discounted these profit and loss statements as not necessarily reflecting the true financial position of these newspaper establishments, to consider the question of the capacity of the industry to pay with greater vigilance.
There was again another difficulty which faced the Wage Board in that behalf and it was that out of 5,705 newspapers to whom the questionnaire was addressed only 312 or at best 325 had responded and the Wage Board was in the dark as to what was the position in regard to other newspaper establishments.
As a matter of fact, the chairman in his note dated April 30, 1957, himself pointed out that the Wage Board had no data before it of all the newspapers and where it had, that was in many cases not satisfactory.
This aspect was again emphasized by him in his note when he reiterated that the data available to the Wage Board had not been as complete as it would have wished them to be and therefore recommended in the end the establishment of a standing administrative machinery which would collect from all newspaper 185 establishments in the country on a systematic basis detailed information and data such as those on employment, wage rates and earnings, financial condition of papers, figures of circulation, etc., which may be required for the assessment of the effects of the decision of the Wage Board at the time of the review.
The Wage Board, in fact, groped in the dark in the absence of sufficient data and information which would enable it to come to a proper conclusion in regard to the wage structure which it was to determine.
In the absence of such data and materials the Board was not in a position to work out what would be the impact of its proposals on the capacity of the industry to pay as a whole or even region wise and the chairman in his note stated that it was difficult for the Board at that stage to work out with any degree of precision, the economic and other effects of its decision on the newspaper industry as a whole.
Even with regard to the impact of these proposals on individual newspaper establishments the chairman stated that the future of the Indian language newspapers was bright, having regard to increasing literacy and the growth of political con sciousness of the reading public, and by rational management there was great scope for increasing the income of newspapers and even though there was no possibility of any adjustment which might satisfy all persons interested, it was hoped that no newspaper would be forced to close down as a result of its decision; but that if there was a good paper and it deserved to exist, the Government and the public would help it to continue.
This was again a note of optimism which does not appear to have been justified by any evidence on the record.
Even though, the Wage Board classified the newspaper establishments into 5 classes from " A " to " E " on the basis of their gross revenue the proportion of the advertisement revenue to the gross revenue does not appear to have been taken into consideration nor was the essential difference which subsisted between the circulation and the paying capacity of the language newspapers as compared with newspapers in the 24 186 English language taken into account.
If this had been done, the basis of gross revenue which the Wage Board adopted would have been modified in several respects.
The grouping of the newspapers into chains or multiple units implied that the weaker units in those groups were to be treated as on a par with the stronger units and it was stated that the loss in the weaker units would be more than compensated by the profits in the more prosperous units.
The impact of these proposals on groups of newspapers was only defended on principle without taking into consideration the result which they would have on the working of the weaker units.
Here also the Chairman expressed the opinion that the Board was conscious that as a result of its decision, some of the journalists in the weaker units of the same group or chain may get much more than those working in its highest income units.
He however stated that if the principle was good and scientific, the inevitable result of its application should be judged from the stand point of Indian Journalism as a whole and not the burden it casts on a particular establishment.
It is clear therefore, that this principle which found favour with the Wage Board was sought to be worked out without taking into consideration the burden which it would impose upon the weaker units of a particular newspaper establishment.
The representatives of the employers objected to the fixation of scales of wages on the plea that fixation of rates of wages did not include the fixation of scales of wages.
This contention was negatived by the representatives of the employees as also by the Chairman and the Wage Board by its majority decision accepted the position that it could, while fixing the rates of wages also fix the scales of wages.
The Press Commission itself had merely suggested a basic minimum wage for the consideration of the parties concerned but had suggested that so far as the scales of wages were concerned they were to be settled by collective bargaining or by adjudication.
Even though the Wage Board took upon itself the burden of fixing scales of wages as really comprised within the terms of their reference, it was incumbent upon it to consider what the impact of 187 the scales of wages fixed by it would be on the capacity of the industry to pay.
There is nothing on the record to suggest that both as regards the rates of wages and the scales of wages which it determined the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region wise.
There is, however, a further difficulty in upholding the decision of the Wage Board in this behalf and it is this that even as regards the fixation of the rates of wages of working journalists the Wage Board does not seem to have taken into account the other provisions of the Act which conferred upon the working journalists the benefits of retrenchment compensation, payment of gratuity, hours of work and leave.
These provisions were bound to have their impact on the paying capacity of the newspaper establishments and if these had been borne in mind by the Wage Board it is highly likely that the rates of wages including the scales of wages as finally determined might have been on a lesser scale than what one finds in its decision.
This difficulty becomes all the more formidable when one considers that the working journalists only constituted at best one fifth of the total staff employed in the various establishments.
The rest of the 80% comprised persons who may otherwise be described as factory workers who would be able to ameliorate their conditions of service by having resort to the machinery under the .
If the conditions of service of the working journalists were to be improved by the Wage Board the other employees of newspaper establishments were bound to be restive add they would certainly, at the very earliest opportunity raise industrial disputes with a view to the betterment of their conditions of service.
Even though the Industrial Courts established under the , might not give them relief commensurate with the relief which the Wage Board gave to the working journalists, there was bound to be an improvement, in their conditions of service which the Industrial Court would certainly determine having regard to the benefits which the working journalists 188 enjoyed and this would indeed impose an additional financial burden on the newspaper establishments which would substantially affect their capacity to pay.
This consideration also was necessarily to be borne in mind by the Wage Board in arriving at its final decision and one (foes not find anything on the record which shows that it was actually taken into consideration by the Wage Board.
The retrospective operation of the.
decision of the Wage Board was also calculated to impose a financial burden on the newspaper establishments.
Even though this may be a minor consideration as compared with the other considerations above referred to, it was none the less a circumstance which the Wage Board ought to have considered in arriving at its decision in regard to the fixing of rates of wages.
The financial burden which was imposed by the decision of the Wage Board was very vividly depicted in the statements furnished to us on behalf of the petitioners in the course of the hearing before us.
These statements showed that the wage bill of these newspaper establishments was going to be considerably increased, that the retrospective operation of the decision was going to knock off a considerable sum from their reserves and that the burden imposed upon the newspaper establishments by the joint impact of the provisions of the Act in regard.
to retrenchment compensation, payment of gratuity, hours of work and leave as well as the decision of the Wage Board in regard to the fixing of rates of wages and the scales of wages would be such as would cripple the resources of the newspaper establishments, if not necessarily lead to their complete extinction.
These figures have been given by us in the earlier 189 part of our judgment and we need not repeat the same.
The conclusion, however, is inescapable that the decision of the Wage Board imposed a very heavy financial burden on the newspaper establishments, which burden was augmented by the classification on the basis of gross revenue, fixation of scales of wages, provisions as, regards the hours of work and leave, grouping of newspapers into chains or multiple units and retrospective operation given to the decision of the Wage Board as therein mentioned.
If these proposals had been circulated, before being finalized, by the Wage Board to the various newspaper establishments so that these newspaper establishments could, if they so desired, submit their opinions thereupon and their representations, if any, in regard to the same to the Wage Board for its consideration and if the Wage Board had after receiving such opinions and representations from the newspaper establishments concerned finalised it decision, this attack on the ground of the Wage Board not having taken into consideration the capacity of the industry to pay as a whole or region wise would have lost much of its force.
The Wage Board, however, did nothing of the type.
Proposals were exchanged between the representatives of the employers and the representatives of the employees.
The discussion that the chairman had with each set of representatives did not bear any fruit and the chairman himself by way of mediation, as it were, submitted to them his own proposals presumably having regard to the different points of view which had been expressed by both these parties.
The decision in regard to the scales of wages, was, as we have seen before, a majority decision which was not endorsed by the representatives of the employers.
The proposals of the chairman also were not acceptable to the representatives of the employers but the representatives of the employees accepted them and they thus became the majority decision of the Wage Board.
The ultimate decision of the chairman on those points does not appear to have been the result of any consideration of the capacity of the industry to pay as a whole or region wise but reflects a compromise 190 which he brought about between the diverse views but which also was generally accepted only by the representatives of the employees and not the representatives of the employers.
We are supported in this conclusion by the observations of the chairman himself in the note which he made simultaneously with the publication of the decision on April 30, 1957, that it was difficult for the Wage Board at that stage to work out with any degree of precision, the economic and other effects of the decision on the newspaper industry as a whole.
An attempt was made on behalf of the respondents in the course of the hearing before us to shew that by the conversion of the currency into naye pyse and the newspapers charging to the public higher price by reason of such conversion, the income of several newspapers had appreciably increased.
These figures were, however, controverter on behalf of the petitioners and it was pointed out that whatever increase in the revenue was brought about by reason of this conversion of price into naye pyse was more than offset by the fall in circulation, ever rising price of newsprint and the higher commission, etc., which was payable by the newspaper establishments to their commission agents.
The figures as worked out need not be described here in detail; but we are satisfied that the conversion of the price into naye pyse had certainly not the effect which was urged and did not add to the paying capacity of the newspaper establishments.
The very fact that the Wage Board thought it necessary to express a pious hope that if there is a good paper and it deserves to exist, the Government and the public will help it to continue, and also desired the interests which it felt had been hit hard by its decision not to pass judgment in haste, but to watch, the effects of its decision in actual working with patience for a period of 3 to 5 years, shows that, the Wage Board was not sure of its own ground and was publishing its decision merely by way of an experiment.
The chairman urged upon the Government of India 191 the desirability of creating immediately a standing administrative machinery which could also combine in itself the functions of implementing and administering its decision and that of preparing the ground for the review and revision envisaged after 3 to 5 years.
This was again a, pious hope indulged in by the Wage Board.
It was not incumbent on the Government to fulfill that expectation and there was no knowing whether the Government would ever review or revise the decision of the Wage Board at the expiration of such period.
We have carefully examined all the proceedings of the Wage Board and the different tables and statements prepared by them.
Neither in the proceedings nor in any of the tables do we see satisfactory evidence to show that the capacity of the industry to pay was examined by the Board in fixing the wage structure.
As we have already observed, it was no doubt open to the Board not to attach undue importance to the statements of profit and loss accounts submitted by various newspaper establishments, but, since these statements prima facie show that the trade was not making profit it was all the more necessary for the Board to satisfy itself that the different classes of the newspaper establishments would be able to bear the burden imposed by the wage structure which the Board had decided to fix.
Industrial adjudication is familiar with the method which is usually adopted to determine the capacity of the employer to pay the burden sought to be imposed on him.
If the industry is divided into different classes it may not be necessary to consider the capacity of each individual unit to pay but it would certainly be necessary to consider the capacity of the respective classes to bear the burden imposed on them.
A cross section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what burden the class considered as a whole can bear.
If possible, an attempt can also be made, and is often made, to project the burden of the wage structure into two or three succeeding years and determine how it affects the financial position of the employer.
The whole of the 192 record before the Board including the chairman 's note gives no indication at all that an attempt was made by the Board to consider the capacity of the industry to pay in this manner.
Indeed, the proceedings show that the demands made by the representatives of the employees and the concessions made by the employers ' representatives were taken as rival contentions and the Chairman did his best to arrive at his final decision on the usual basis of give and take.
In adopting this course, all the members of the Board seem to have lost sight of the fact that the essential prerequisite of deciding the wage structure was to consider the capacity of the industry to pay and this, in our opinion, introduces a fatal infirmity in the decision of the Board.
If we had been satisfied that the Board had considered this aspect of the matter, we would naturally have been reluctant to accept any challenge to the validity of the decision on the ground that the capacity to pay had not been properly considered.
After all, in cases of this kind where special Boards are set up to frame wage structures, this Court would normally refuse to constitute itself into a court of appeal on questions of fact; but, in the present case, an essential condition for the fixation of wage structure has been completely ignored and so there is no escape from the conclusion that the Board has contravened the mandatory requirement of section 9 and in consequence its decision is ultra vires the Act itself.
Re. 9.
This ground, viz., that the Board had no authority to render a decision which was retrospective in operation in also untenable.
The Wage Board certainly had the jurisdiction and authority to pronounce a decision which could be retrospective in effect from the date of its appointment and there was no legal flaw in the Wage Board prescribing that its decision should be retrospective in operation in the manner indicated by it.
We have already dealt with it above.
193 Be.
Ground No. 10 talks of the authority of the Wage Board to fix scales of pay for a period of 3 years, subject to review by the Government by appointing another Wage Board at the end of that period.
We are not concerned with such fixation of the period for the ' simple reason that the Board has not in terms done so.
The only authority which it had was to fix the rates of wages and submit its decision in respect thereof to the Government.
Any pious hope expressed that the decision should be subject to review or revision by the Government by appointment of another Wage Board after the lapse of 3 or 5 years was not a part of its decision and we need not pause to consider the effect of such fixation of the period, if any, because it has in fact not been done.
Re. 11.
The last ground talks of the Wage Board being handicapped for want of Cost of Living Index.
This ground also cannot avail the petitioners for the simple reason that the decision of the Wage Board itself referred in Clause 24 thereof to the all India cost of living index number published by the Labour Bureau of the Government of India 0 Base 1944: 100 and fixed the dearness allowance in relation to the same.
These statistics were available to the Wage Board and it cannot be said that the Wage Board was in any manner whatever handicapped in that respect.
On a consideration of all the grounds of attack thus levelled against the validity and the binding nature of the decision of the Wage Board, we have, therefore, come to the conclusion that the said decision cannot be sustained and must be set aside.
The petitions will, therefore, be allowed and the petitioners will be entitled to an order declaring that section 5 (1) (a) (iii) of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, is ultra vires the Constitution of India and that the decision of the Wage Board dated April 30, 1957, is illegal and void.
As regards the costs, in view of the fact that the 25 194 petioners have failed in most of their contentions in regard to the constitutionality of the Act, the fairest, order would be that each party should bear and pay its own costs of these petitions Civil Appeals Nos.699 703 of 1957.
These Civil Appeals are directed against the decision of the Wage Board and seek to set aside the same as destroying the very existence of the newspaper establishments concerned and infringing their fundamental rights.
Special leave under article 136 of the Constitution was granted by this Court in respect of each of them, subject to the question of maintainability of the appeals being open to be urged.
These appeals are also covered by the judgment just delivered by us in Petition No. 91 of 1957 & Ors., and the appellants would be entitled to a declaration in each one of them that the decision of the Wage Board is ultra vires the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, and therefore void and inoperative.
The appellants having substantially succeeded in their respective petitions under article 32 of the Constitution, the question has now become purely academic and we need not spend any time over the same.
| The Petitioner and the respondent father and son respectively referred certain disputes, which arose between them to the Arbitrator, who made the award.
The award, duly signed by the parties and the Arbitrator, contained an endorsement to the effect that the award was agreed to and binding upon both the parties.
The respondent filed an application, which was later converted into special civil suit, for filing of the award, and sought a judgment in terms of the award under section 17 of the .
Consequent upon the filing of the award, notice was issued to the petitioner, who filed objections.
The trial court rejected the objections and passed decree in terms of the award.
The petitioner preferred a first appeal against the aforesaid decree and also filed a revision application, but later withdrew them in pursuance of an agreement reached between the parties on August 14, 1978, reaffirming the appointment of the arbitrator and the award made by him and the trial court judgment became final.
Thereafter, the petitioner filed a suit for setting aside the decree passed by the trial court which was dismissed.
The revision/appeal against the aforesaid decision was withdrawn.
During the execution proceedings, the petitioner filed a civil revision application, which was summarily rejected.
The High Court held 535 that the petitioner was not entitled to challenge the award and the revision before it suffered from res judicata.
Hence the Special Leave Petition to this Court.
The main objection to the award was that there was no written agreement signed by both the parties to refer the disputes to arbitration.
It was also contended that the previous proceedings were without Jurisdiction.
Dismissing the Special Leave Petition, ^ HELD: 1.1 It is clear from the conduct of the parties that there was a proper arbitration agreement in terms of section 2(a) of the .
By signing the award it could be said that the parties had agreed to refer the disputes in writing to the arbitration of the named arbitrator.
This agreement was done twice, firstly by signing an endorsement below the award and secondly, by entering into an agreement in the form of a letter dated 14th August, 1978.
[538E] 1.2 Section 9 of the Civil Procedure Code 1908 provides that the Courts shall, subject to the provisions contained in the Code, have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.
[539B] In the instant case there was no such express or implied provision nor any inability of the Judge concerned.
The Civil Court, therefore, had jurisdiction to take cognizance of the award under sections 14 and 17 f the [538G] The High Court was, therefore, right in dismissing the application of the petitioner.
[539E] Rajah Amir Hassan Khan vs Sheo Baksh Singh, 11 I.A. 237; Seth Hira Lal Patni vs Shri Kali Nath, ; ; Vasudev Dhanjibhai Modi vs Rajabhai Abdul Rehman and others, [1971] 1 SCR 66; M/s. Guru Nanak Foundation vs M/s. Rattan Singh and Sons, ; ; Prasun Roy vs The Calcutta Metropolitan Development Authority and another, A.I.R. 1988 S.C. 205 and Chowdhri Murtaza Hossein vs Mst.
Bibi Bechunnissa, [1876] 3 Indian Appeal 209 at 220, referred to.
|
iminal Appeal No. 98 of 1960.
Appeal by special leave from the judgment and order dated January 20, 1960 of the Punjab High Court in Criminal Appeal No. 683 of 1957.
I. M. Lall and B. N. Kirpal, for the appellant.
B. K. Khanna and R. N. Sachthey, for the respondent.
August 28, 1963.
The Judgment of the Court was delivered by DAS GUPTA J.
Sajjan Singh, son of Chanda Singh, joined the service of the Punjab Government in January 1922 as an Overseer in the Irrigation Department.
He continued as Overseer till July 1944 when he became a Sub divisional Officer in the Department.
From the date till May 1947 he worked as Sub Divisional Officer in that part of Punjab which has now gone to West Pakistan.
From November 30, 1947 to September 26, 1962 he was employed as Sub Divisional Officer of Drauli Sub Division of the Nangal Circle, except for a short break from November 8, 1950 to April 3, 1951, when he was on leave.
The work of excavation for the Nangal Project 632 within the Drauli Sub Division was carried out by several contractors, including Ramdas Chhankanda Ram and M/s. Ramdas Jagdish Ram.
On December 7, 1952, the General Manager, Bhakra Dam, made a complaint in writing to the Superintendent of Police, Hoshiarpur, alleging that Sajjan Singh and some other officials subordinate to him had by illegal and corrupt means and by abusing their position as public servants, dishonestly and fraudulently, obtained illegal gratification from the contractors Ramdas Chhankanda Ram and M/s. Ram Das Jagdish Ram by withholding their payments and putting various obstacles in the smooth execution of the work entrusted to them.
A case under section 45(2) of the Prevention of Corruption Act, 1947 was registered on the basis of this complaint, which was treated as a first information report and after sanction of the Government of Punjab had been obtained for the prosecution of Sajjan Singh under section 5(2) of the Prevention of Corruption Act and section 161/165 of the Indian Penal Code, Sajjan Singh was tried by the Special Judge, Ambala, on a charge under section 5(2) of the Act.
The learned Special judge convicted him under section 5(2) of the Prevention of Corruption Act and sentenced him to rigorous imprisonment for one year and a fine of Rs. 5000/in default of payment of fine, he was directed to undergo rigorous imprisonment for six months.
The conviction and sentence were confirmed by the Punjab High Court, on appeal.
The High Court however rejected the State 's application for enhancement of the sentence.
The present appeal is by Sajjan Singh against his conviction and sentence under section 5(2) of the Prevention of Corruption Act by special leave of this Court.
The prosecution case is that after work had been done by the firm Ramdas Chhankandas for several months, and some 'running ' payments had been received without difficulty, the appellant demanded from Ram Das, one of the partners of the firm, his commission on the cheques issued to the partenrship firm.
It is said that Ram Das at first refused.
But, ultimately when the appellant started unnecessary criticism of the work done by them and even withholding some running payments the partners of the firm decided to pay commission to him as demanded.
The 633 first payment, it is said, was made on March 21, 1949 and further payments were thereafter made from time to time.
The case is that the partnership paid altogether a sum of Rs. 10,500/ in cash as commission to the appellant, besides paying Rs. 2,000/ to him for payment to the Executive Engineer and Rs. 241/12/ made up of small sums paid on different occasions on behalf of the accused.
All these payments made to the appellant were fully entered in the regular Rokar and Khata Bhais of the partnership under a fictitious name of Jhalu Singh, Jamadar, though a few of the later payments were entered in these books in Sajjan Singh 's own name.
In order to allay suspicion some fictitious credit entries were also made in the books.
The prosecution also alleged payment to the appellant of Rs. 1,800/ by another firm M/s. Ram Das Jagdish Ram.
But as that has not been found to be proved it is unnccessary to mention details of the allegations in that connection.
To prove its case against the appellant the prosecution relied on the testimony of three partners of the firm who claimed to have made payments and on various entries in the several books of account of the firm.
The prosecution also tried to prove the guilt of the accused by showing that the pecuniary resources and property that were in the ap pellant 's possession or in the possession of his wife, Dava Kaur, and his son, Bhupinder Singh, on his behalf we are disproportionate to the appellant 's known sources of income.
The learned Special judge mentioned the possession of pecuniary resources and property disproportionate to his known sources of income in the charge framed against the accused.
According to the prosecution the total assets held by the appellant, and his wife, Dava Kaur, and his son Bhupinder Singh on his behalf, on December 7, 1952 amounted to Rs. 1,47,502/12/ , while his total emoulments upto the period of the charge would come to about Rs. 80,000/ .
The main defence of the appellant as regards this allegation of possession of pecuniary resources and property disproportionate to his known sources of income was that the property and pecuniary resources held by his wife and son were not held on his behalf and that what, was in his possession amounted to less than Rs. 50,000/ and can by no means be said to be disproportionate to his known 41 2 section C. India/64.
634 sources of income.
In denying the charge against him the appellant also contended that false evidence had been given by the three partners and false and fictitious books prepared by them in support of their own false testimony.
The learned Special judge rejected the defence contention that the account books on which the prosecution relied had not been kept regularly in the course of business and held the entries therein to be relevant under section 34 of the Indian Evidence Act.
He accepted the defence contention that evidence of the partners who were in the position of accomplices required independent corroboration and also that the account books maintained by themselves would not amount to independent corroboration.
Independent corroboration was however in the opinion of the learned Judge furnished by the fact that some admitted and proved items of payment were interspersed in the entire account books.
The learned judge also accepted the prosecution story as regards the possession of pecuniary resources and property by the appellant 's wife and his son on his behalf and adding these to what was in the appellant 's own possession he found that the total pecuniary resources and property in his possession or in the possession of his wife and son were disproportionate to his known sources of income, and that such possession had not been satisfactorily accounted for.
He concluded that the presumption under section 5(3) of the Prevention of Corruption Act was attracted.
On all these findings he found the appellant guilty of the charge for criminal misconduct in the discharge of his duties and convicted and sentenced him as, stated above.
The two learned judges of the Punjab High Court who heard the appeal differed on the question whether pecuniary resources and property acquired before March 11, 1947, when the Prevention of Corruption Act came into force, could be taken into consideration for the purpose of section 5 (3) of the Act.
In the opinion of Mr. Justice Harbans Singh these could not be taken into consideration .
Taking into consideration the assets acquired by the appellant after January 1948 the learned judges held that these came to just above Rs. 20,000/ and could not be held to be disproportionate to his known sources of income.
The other learned Judge, Mr. Justice 635 Capoor, was of opinion that pecuniary resources and property acquired prior to March 11, 1947 had also to be taken into consideration in applying section 5 (3) of the Prevention of Corruption Act if they were in the possession of the accused or anybody on his behalf, on the date when the complaint was lodged.
He agreed with the Special judge that certain assets possessed by Daya Kaur and Bhupinder Singh were possessed by them on behalf of the appellant and that those possessed by him, or by his wife and son on his behalf were much in excess of his known sources of income, even without making any allowance for his house hold expenses.
Mr. justice Capoor further held that if the pecuniary resources or property acquired during the period April 1, 1947 to June 1, 1950 as suggested on behalf of the appellant were considered such assets held by the appellant or any other person on his behalf were more than double of the known sources of his income without making any allowance whatever for the appellant 's house hold expenses.
In the opinion of the learned judge a presumption under subsection 3 of section 5 of the Act therefore arose that the appellant had committed the offence, as the appellant had not been able to prove to the contrary.
Both the learned judges agreed that the witnesses who gave direct evidence about the payment of illegal gratification could not be relied upon without independent corroboration and that the entries in the books of account did by themselves amount to such corroboration, but that the fact of admitted and proved items being interspersed in the entire account furnished the required corroboration.
In the result, as has been already stated, the learned judges affirmed the conviction and sentence.
In support of the appeal Mr. 1.
M. Lall has attacked the finding that the books of account were kept regularly in the course of business and has contended that the entries therein were not relevant under section 34 of the Indian Evidence Act.
He further contended that even if they be relevant evidence the Special judge as also the High Court while rightly thinking that they by themselves did not amount to independent corroboration, were in error when they thought that the fact of certain admitted entries being interspersed through the books of account furnished the 636 necessary independent corroboration.
Mr. Lall has also argued that the Special Judge as well as Mr. justice Capoor in the High Court were wrong in drawing a presumption under section 5(3) of the Prevention of Corruption Act.
We shall first consider the question whether on the evidence on the record a presumption under section 5(3) of the Prevention of Corruption Act arose.
It is useful to remember that the first sub section of section 5 of the Prevention of Corruption Act mentions in the four clauses a, b, c and d, the acts on the commission of which a public servant is said to have committed an offence of criminal misconduct in the discharge of his duties.
The second subsection prescribes the penalty for that offence.
The third subsection is in these words: "In any trial of an offence punishable under sub section (2) the fact that the accused person or any other person on his behalf is in possession, for which the accused person cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income may be proved, and on such proof the court shall presume, unless the contrary is proved, that the accused person is guilty of criminal.
misconduct in the discharge of his official duty and his conviction therefor shall not be invalid by reason only that it is based solely on such presumption.
" This sub section thus provides an additional mode of proving an offence punishable under sub section 2 for which any accused person is being tried.
This additional mode is by proving the extent of the pecuniary resources or property in the possession of the accused or any other person on his behalf and thereafter showing that this is disproportionate to his known sources of income and that the accused person cannot satisfactorily account for such possession.
If these facts are proved the section makes it obligatory on the Court to presume that the accused person is guilty of criminal misconduct in the discharge of his official duty, unless the contrary, i.e., that he was not so guilty is proved by the accused.
The section goes on to say that the conviction for an offence of criminal misconduct shall not be invalid by reason only that it is based solely on such presumption.
637 This is a deliberate departure from the ordinary principle of criminal jurisprudence, under which the burden of proving the guilt of the accused in criminal proceedings lies all the way on the prosecution.
Under the provision of this subsection the burden on the prosecution to prove the guilt of the accused must be held to be discharged if certain facts as mentioned therein arc proved; and then the burden shifts to the accused and the accused has to prove that in spite of the assets being disproportionate to his known sources of income, he is not guilty of the offence.
There can be no doubt that the language of such a special provision must be strictly construed.
if the words are capable of two constructions, one of which is more favorable to the accused than the other, the Court will be justified in accepting the one which is more favourable to the accused.
There can be no Justification however for adding any words to make the provision of law less stringent than the legislature has made it.
Mr. Lall contends that when the section speaks of the accused being in possession of pecuniary resources or pro perty disproportionate to his known sources of income only pecuniary resources or property acquired after the date of the Act is meant.
To think otherwise, says the learned Counsel, would be to give the Act retrospective operation and for this there is no 'Justification.
We agree with the learned Counsel that the Act has no retrospective operation.
We are unable to agree however that to take into consideration the pecuniary resources or property in the possession of the accused or any other person on his behalf which are acquired before the date of the Act is in any way giving the Act a retrospective operation.
A statute cannot be said to be retrospective "because a part of the requisites for its action is drawn from a time antecedent to its passing".
(Maxwell on interpretation of Statutes, 11th Edition, p. 211; See also State of Maharashtra vs Vishnu Ramchandra(l)).
Notice must be taken in this connection of a suggestion made by the learned Counsel that in effect sub section 3 of section 5 creates a new offence in the discharge of official duty, different from what is defined in the four clauses of section 5(l).
It is said that the act of being in possession of pecuniary resources or pro (1) ; 638 perty disproportionate to known sources of income, if it cannot be satisfactorily accounted for, is said by this sub section to constitute the offence of criminal misconduct in addition to those other acts mentioned in cls.
a, b, c and d of section 5(l) which constitute the offence of criminal mis conduct.
On the basis of this contention the further argu ment is built that if the pecuniary resources or property acquired before the date of the Act is taken into consi deration under sub section 3 what is in fact being done is that a person is being convicted for the acquisition of pecuniary resources or property, though it was not in vio lation of a law in force at the time of the commission of such act of acquisition.
If this argument were correct a conviction of a person under the presumption raised under the section 5(3) in respect of pecuniary resources or property acquired before the Prevention of Corruption Act would be a breach of fundamental rights under article 20(l) of the Constitution and so it would be proper for the Court to construe section 5(3) in a way so as not to include possession of pecuniary resources or property acquired before the Act for the purpose of that subsection.
The basis of the argument that section 5(3) creates a new kind of offence of criminal misconduct by a public servant in the discharge of his official duty is however unsound.
The sub section does nothing of the kind.
It merely prescribes a rule of evidence for the purpose of proving the offence of criminal misconduct as defined in section 5(1) for which an accused person is already under trial.
It was so held by this Court in C.D.S. Swamy vs The State(1) and again in Surajpal Singh vs State of U.p.(2).
It is only when a trial has commenced for criminal misconduct by doing one or more of the acts mentioned in cls.
a, b, c and d of section 5(l) that sub s 3 can come into operation.
When there is such a trial, which necessarily must be in respect of acts committed after the Prevention of Corruption Act came into force, sub section 3 places in the hands of the prosecution a new mode of proving an offence with which an accused has already been charged.
Looking at the words of the section and giving them their plain and natural meaning we find it impossible to say that pecuniary resources and property acquired before (1) ; (2) [1961] 1 2 S.C.R. 971.
639 the date on which the Prevention of Corruption Act came into force should not be taken into account even if in possession of the accused or any other person on his behalf.
To accept the contention that such pecuniary resources or property should not be taken into consideration one has to read into the section the additional words "if acquired after the date of this Act" after the word "property".
For this there is no justification.
It may also be mentioned that if pecuniary resources or property acquired before the date of commencement of the Act were to be left out of account in applying subs.
3 of section 5 it would be proper and reasonable to limit the receipt of income against which the proportion is to be considered also to the period after the Act.
On the face of it this would lead to a curious and anomalous position by no means satisfactory or helpful to the accused himself.
For, the income received during the years previous to the commencement of the Act may have helped in the acquisition of property after the commencement of the Act.
From whatever point we look at the matter it seems to us clear that the pecuniary resources and property in the possession of the accused person or any other person on his behalf have to be taken into consideration for the purpose of sub section 3 of section 5, whether these were acquired before or after the Act came into force.
Mention has next to be made of the learned Counsel 's submission that the section is meaningless.
According to the learned Counsel, every pecuniary resource or property is itself a source of income and therefore it is a contradic tion in terms to say that the pecuniary resources or pro perty can be disproportionate to the known sources of income.
This argument is wholly misconceived.
While it is quite true that pecuniary resources and property are themselves sources of income that does not present any difficulty in understanding a position that at a particular point of time the total pecuniary resources or property can be regarded as assets, and an attempt being made to see whether the known sources of income including, it may be, these very items of property in the past could yield such income as to explain reasonably the emergence of these assets at this point of time.
Lastly it was contented by Mr. Lall that no presump 640 tion under section 5(3) can arise if the prosecution has adduced other evidence in support of its case.
According to the learned Counsel, section 5(3) is at the most an alternative mode of establishing the guilt of the accused which can be availed of only if the usual method of proving his guilt by direct and circumstantial evidence is not used.
For this astonishing proposition we can find no support either in principle or authority.
Mr. Lall sought assistance for his arguments from a decision of the Supreme Court of the United States of America in D. Del Vecchio vs Botvers(1).
What fell to be considered in that case was whether a presumption created by section 20(d) of the Longshoremen 's and Harbor Workers ' Compensation Act that the death of an employee was not suicidal arose where evidence had been adduced by both sides on the question whether the death was suicidal or not.
The Court of Appeal had held that as the evidence on the issue of accident or suicide was in its judgment evenly balanced the presumption under section 20 must tip the scales in favour of accident.
This decision was reversed by the learned Judges of the Supreme Court.
Section 20 which provided for the presumption ran thus: "In any proceedings for the enforcement of a claim for compensation. it shall be presumed, in the absence of substantial evidence to contrary that the injury was not occasioned by the wailful intention of the injured employee to injure or kill himself or another.
" On the very words of the section the presumption against suicide would arise only if substantial evidence had not been adduced to support the theory of suicide.
It was in view of these words that the learned judges observed: .lm15 "The statement in the act that the evidence to overcome the effect of the presumption must be substantial adds nothing to the well understood principle that a finding must be supported by evidence.
Once the employer has carried his burden by offering testimony sufficient to justify a finding of suicide, the presumption falls out of the case.
It never had and cannot acquire the attribute of evidence in the claimant 's favour.
Its only office is to control the result where (1)296 U.S. 280 : 80 L. ed. 229.
641 there is an entire lack of competent evidence.
If the employer alone adduces evidence which tends to support the theory of suicide, the case must be decided upon that evidence.
Where the claimant offers substantial evidence in opposition, as was the case here, the issue must be resolved upon the whole body of proof pro and con.
" The whole decision turns upon the words 'in the absence of substantial evidence".
These or similar words are conspicuous by their absence in sub section
3 of section 5 of the Prevention of Corruption Act, and consequently, Del Vec chio 's Case(1) is of no assistance.
Mr. Lall then drew our attention to an observation of Lord Denning in Bratty vs Attorney General for Northern Ireland(2) where speaking about the presumption that every man has sufficient mental capacity to be responsible for his crimes, the Lord Justice observed that the presumption takes the place of evidence.
Similarly, argues Mr. Lall, the presumption under section 5(3) of the Prevention Corruption Act also merely "takes the place" of evidence.
So, he says, it can arise only if no evidence has been adduced.
We are not prepared to agree however that when the Lord Justice used the words "a presumption takes the place of evidence" he meant that if some evidence had been offered by the prosecution the prosecution could not benefit by the presumption.
We see no warrant for the proposition that where the law provides that in certain circumstances a presumption shall be made against the accused the pro secution is barred from adducing evidence in support of its case if it wants to rely on the presumption.
Turning now to the question whether the facts and circumstances proved in this case raise a presumption under section 5(3), we have to examine first whether certain pecuniary resources or property in possession of Daya Kaur and those in possession of Bhupinder Singh were possessed by them on behalf of the appellant as alleged by the prosecution.
On December 7, 1952, Bhupinder Singh has been proved to have been in possession of: (1) Rs. 28,998/7/3/ in the Punjab National Bank; (2) Rs. 20,000/ in fixed deposit with the Bank of Patiala at Doraha (3) Rs. 5,577/ (1)226 U.S. 280.
(2) [1961] 3 All.
E.R. p. 523 at 535.
642 in the Imperial Bank of India at Moga; (4) Rs. 237/8/3/in the Savings Bank Account in the Bank of Patiala at Doraha; and (5) Half share in a plot of land in Ludhiana of the value Rs. 11,000/ .
Bhupinder Singh has given evidence (as the 11th witness for the defence) and has tried to support his father 's case that none of the properties were held by him on behalf of his father.
Bhupinder Singh has been in military service since 1949 and was at the time when he gave evidence a Captain in the Indian Army.
If the bank deposits mentioned above had been made by him after he joined military service there might have been strong reason for thinking that they were his own money.
That however is not the position.
Out of the sum of Rs. 28,998/ with the Punjab National Bank a part is admittedly interest; the remainder, viz., about Rs. 26,000/ was deposited by Bhupinder Singh in his account long before 1949 when he joined military service.
His explanation as to how he got this money is that Rs. 20,200/ was received by him from Udhe Singh in December 1945 and Rs. 6,000/ was given to him by his grand father Chanda Singh.
Udhe Singh has given evidence in support of the first part of the story and has said that he paid Rs. 20,200/ to Bhupinder Singh in payment of what he owed to Bhupinder Singh 's grandfather Chanda Singh and to his father Sajjan Singh.
When asked why he made the payments to Bhupinder Singh, son of Sajjan Singh instead of to Chanda Singh or to Chanda Sing 's son Surjan Singh, Udhe Singh replied that he did so "because my account was with Sardar Sajjan Singh." Udhe Singh it has to be remembered is a close relation of Sajjan Singh, Sajjan Singh 's father Chanda Singh being Udhe Singh 's mother 's brother.
On a careful consideration of the evidence of these two witnesses, Bhupinder Singh and Udhe Singh and also the registered letter which was produced to show that a pucca receipt was demanded for an alleged payment of Rs. 20,200/ we have come to the conclusion that the Special Judge has rightly disbelieved the story that this sum of Rs. 20,000/ was paid by Udhe Singh to Bhupinder Singh.
It has to be noticed that even if this story of payment was believed that would not improve the appellant 's case.
For, according to Udhe Singh this payment was 643 made by him to Bbupinder Singh on behalf of his father.
In any case, therefore, this amount of Rs. 20,200/ was Sajjan Singh 's money.
As regards the other amount of Rs. 6000/ which formed part of the deposits in the Punjab National Bank and a further sum of Rs. 20,000/in fixed deposit with the Bank of Patiala the defence case as sought to be proved by Bhupinder Singh was that these were received by him from his grand father Chanda Singh.
The learned Special judge disbelieved the story and on a consideration of the reasons given by him we are of opinion that his conclusion is correct.
When it is remembered that Bhupinder Singh was at the relevant dates a student with no independent income or property of his own the reasonable conclusion from the rejection of his story about these amount is, as held by the Special Judge, that these were possessed by him on behalf of his father, Sajjan Singh.
We are also convinced that the Special Judge was right in his conclusion that Rs. 5,577/ in the Imperial Bank of India at Moga, Rs. 237/8/3 in the Savings Bank Account in the Bank of Patiala at Doraha and the half share in a plot of land in Ludhiana of the value of Rs. 11,000/ standing in the name of Bhupinder Singh were held by Bhupinder Singh on behalf of his father, Sajjan Singh.
It has to be mentioned that Mr. Justice Capoor in the High Court agreed with these conclusions, while the other learned judge (Mr. Justice Harbans Singh) did not examine this question at all being wrongly of the opinion that the properties acquired prior to March 11, 1947 should not be taken into consideration.
Thus even if we leave out of account the amount of Rs. 26,500/ standing in the name of appellant 's wife Daya Kaur which according to the prosecution was held by her on behalf of her husband, Sajjan Singh, it must be held to be clearly established that the pecuniary resources or property in possession of Sajjan Singh and his son, Bhupinder Singh, on his behalf amounted to more than Rs. 1,20,000/ .
The question then is: Was this disproportionate to the appellant 's known sources of income? As was held by this Court in Swamy 's Case(1) "the expression 'known sources of income ' must have reference to (1) ; 644 sources known to the prosecution on a thorough investigation of the case" and that it could not be contended that 'known sources of income ' meant sources known to the accused.
In the present case the principal source of income known to the prosecution was what the appellant received as his salary.
The total amount received by the appellant throughout the period of his service has been shown to be slightly less than Rs. 80,000/ .
The appellant claimed to have received considerable amounts as traveling allowance a Overseer and S.D.O. and also as horse and conveyance allowance.
For the period of his service prior to May 1947, the records which would have shown what the accused drew as traveling allowance were not available.
The Special judge found that from May 1947 upto January 1953 the appellant got Rs. 6,504/6/ as traveling allowance.
On that basis he also held that for the period of service as S.D.O. prior to May 1947 he may have got about Rs. 5,000/ at the most.
For the period of his service as Overseer, the learned Special judge held that, the appellant did not get more than Rs. 100/ a year as travelling allowance, including the horse allowance.
No reasonable objection can be taken to the conclusion recorded by the Special Judge as regards the travelling allowance drawn by the appellant for the period of his service as S.D.O.
It was urged however that Rs. 100/ a year ,is travelling allowance is too low an estimate for his services as Overseer.
As the relevant papers are not available it would be proper to make a liberal estimate under this head favourable to the appellant.
Even at the most liberal estimate it appears to us that the total receipts as travelling allowance as Overseer could not have exceeded Rs. 5,000/ .
One cannot also forget that much of what is received as travelling allowance has to be spent by the officer con cerned in travelling expenses itself.
For many officers it 'IS not unlikely that travelling allowance would fall short of these expenses and they would have to meet the deficit from their own pocket.
The total receipt that accrued to the appellant as the savings out of travelling allowance inclusive of horse allowance and conveyance allowance, could not reasonably be held to have exceeded Rs. 10,000/at the most.
Adding these to what he received as salary and also as Nangal Compensatory allowance the total in 645 come received during the years would be about Rs. 93,000/ .
It also appears that income by way of interest was earned by the appellant on his provident fund and also the bank deposits standing in his own name or in the name of his son, Bhupinder Singh.
The income under this head appears to be about Rs. 10,000/ .
The total receipts by the appellant from his known sources of income thus appears to be about Rs. 1,03,000/ .
If nothing out of this had to be spent for maintaining himself and his family during all these years from 1922 to 1952 there might have been ground for saying that the assets in the appellant 's possession, through himself or through his son (Rs. 1,20,000/ ) were not disproportionate to his known sources of income.
One cannot however live on nothing; and however frugally the appellant may have lived it appears to us clear that at least Rs. 100/ per month must have been his average expenses throughout these years taking the years of high prices and low prices together.
These expenses therefore cut a big slice of over Rs. 36,000/ from what he received.
The assets of Rs. 1,20,000/ have therefore to be compared with a net income of Rs. 67,000/ .
They are clearly disproportionate indeed highly disproportionate.
Mr. Lall stressed the fact that the legislature had not chosen to indicate what proportion would be considered disproportionate and he argued on that basis that the Court should take a liberal view of the excess of the assets over the receipts from the known sources of income.
There is some force in this argument.
But taking the most liberal view, we do not think it is possible for any reasonable man to say that assets to the extent of Rs. 1,20,000/ is anything but disproportionate to a net income of Rs. 1,03,000/ out of which at least Rs. 36,000/ must have been spent in living expenses.
The next question is : Has the appellant satisfactorily accounted for these disproportionately high assets? The Speical judge has examined this question carefully and rejected as untrustworthy the appellant 's story of certain receipts from one Kabul Singh, his son Teja Singh, and from his father, Chanda Singh.
These conclusions appear to us to be based on good and sufficient reasons and we can see nothing that would justify us in interfering with these.
646 The prosecution has thus proved facts on which it becomes the duty of the Court to assume that the accused has committed the offence with which he is charged, unless the contrary is proved by him.
Mr. Lall has submitted that if the other evidence on which the prosecution relied to prove its case against the appellant is examined by us, he will be able to satisfy us that evidence is wholly insufficient to prove the guilt of the accused.
It has to be remembered however that the fact assuming it to be a fact in this case that the prosecution has failed to prove by other evidence the guilt of the accused, does not entitle the Court to say that the accused has succeeded in proving that he did not commit the offence.
Our attention was drawn in this connection to this Court 's decision in Surajpal Singh 's Case(1) where this Court set aside the conviction of the appellant Surajpal Singh on the basis of the presumption under section 5(3).
What happened in that case was that though the accused had been charged with having committed the offence of criminal misconduct in the discharge of his duty by doing the acts mentioned in cl.
(c) of sub section 1 of section 5, the Special Judge and the High Court convicted him by invoking the rule of presumption laid down in sub section
3 of section 5, of an offence under cl.
(d) of section 5(l).
This Court held that it was not open to the Courts to do so.
This case is however no authority for the proposition that the courts could not have convicted the accused for an offence under section 5 ( 1) (c) for which he had been charged.
On the contrary it seems to be a clear authority against such a view.
After pointing out that the charge against the appellant was that he has dishonestly and fraudulently misappropriated or otherwise converted for his own use property entrusted to him, this Court observed: "It was not open to the learned Special Judge to have convicted the appellant of that offence by invoking the rule of presumption laid down in sub section (3).
He did not however to do so.
On the contrary he acquit ted the appellant on that charge.
Therefore, learned Counsel has submitted that by calling in aid the rule of presumption in sub section 3 the appellant could not be found guilty of any other type of criminal misconduct (1) ; 647 referred to in cls.
(a), (b) or (d) of sub section
(1) in respect of which there was no charge against the appellant.
We consider that the above argument of learned Counsel for the appellant is correct and must be accepted.
" The appellant 's Counsel is not in a position to submit that there is evidence on the record which would satisfy the Court that the accused has "proved the contrary", that is, that he had not committed the offence with which he was charged.
We have therefore come to the conclusion that the facts proved in this case raise a presumption under section 5(3) of the Prevention of Corruption Act and the appellant 's conviction of the offence with which he was charged must be maintained on the basis of that presumption.
In this view of the matter we do not propose to consider whether the High Court was right in basing its conclusion also on the other evidence adduced in the case to prove the actual payment of illegal gratification by the partners of the firm M/s. Ramdas Chhankanda Ram.
Lastly, Mr. Lall prayed that the sentence be reduced.
The sentence imposed on the appellant is one year 's rigorous imprisonment and a fine of Rs. 5,000/ .
Under section 5(2) the minimum sentence has to be one year 's imprisonment, subject to the proviso that the Court may for special reasons to be recorded in writing, impose a sentence of imprisonment of less than one year.
We are unable to see anything that would justify us in taking action under the proviso.
In the result, the appeal is dismissed.
Appeal dismissed.
| The State Transport Authority issued a notification under the , calling for applications for the grant of two stage carriage permits for the route Madras to Chidambaram.
A large number of applications were received.
The authority granted the first permit to one of the applicants and for the second it decided to call for fresh applications.
The appellant, as also a number of other applicants, appealed to the State Transport Appellate Tribunal.
The Tribunal confirmed the grant of the first permit and as regards the second it allowed the appeal of the appellant and directed that it should be granted to him.
Respondent No. 1 moved the High Court under Art.226 of the Constitution for the issue of a writ of certiorari and the single Judge who heard the matter held that the Appellate Tribunal had overlooked relevant considerations, and allowed irrelevant considerations to prevail and so made the Rule absolute.
A Letters Patent appeal was preferred by the appellant.
The Division Bench affirmed the order of the single Judge on the ground that the Appellate Tribunal had overlooked material considerations in favour of the respondent No. 1 and dismissed the appeal The appellant came to this Court by special leave and it was contended on his behalf that in issuing the writ of certiorari the High Court exceeded its jurisdiction under article 226 of the Constitution.
Held: (per Gajendragadkar, Wanchoo, Shah and Dayal JJ.).
The contention raised on behalf of the appellant was well founded and must prevail.
A writ of certiorari is issued for correcting errors of jurisdiction committed by courts or tribunals, in cases where they exceed their jurisdiction or fail to exercise it or exercise it illegally or improperly, i.e. where an order is passed without hearing the party sought to be affected by it or where the procedure adopted is opposed to principles of natural justice.
The jurisdiction to issue a writ of certiorari is a supervisory one and in exercising it, the court is not entitled to act as a court of appeal.
That necessarily means that the findings of fact arrived at by the inferior court or tribunal arc binding.
65 An error of law apparent on the face of the record can, however, be corrected by a writ of certiorari, but not an error of fact however grave it may appear to be.
A writ of certiorari can also be issued if it is shown that in recording a finding of fact, admissible and material evidence has, not been admitted, or inadmissible evidence affecting the impugned finding has been admitted.
A finding of fact based on no evidence would also be an error of law and as Such amenable to such a writ.
But a finding of fact cannot be challenged in such a proceeding on the ground that the relevant and material evidence was insufficient to sustain the finding.
Adequacy or sufficiency of evidence or an inference of fact to be drawn from the evidence or finding of fact are entirely within the jurisdiction of the Tribunal.
Hari Vishnu Kamath vs Syed Ahmed Ishaque, ; , Nagendra Nath Bora vs The Commissioner of Hills Division and Appeals, Assam, ; and Kaushalya Devi vs Bachittar Singh, A.I.R. 1960 S.C. 1168, relied on.
It is neither possible nor desirable to define or describe all cases of errors which can be said to be errors of law apparent on the face of the record.
Whether or not an error is such an error would depend on the facts and circumstances of each case and the nature and scope of the law misconstrued or contravened.
It was not open to a party on the authority of the decision of this Court in K.M. Shanmugam vs
S.R.V.S. (P) Ltd., to come to the High Court under article 226 to have all questions of fact reconsidered so as to invoke the plea of 'public interest ' under section 47 of the .
K. M. Shamnugam vs S.R.V.S. (P) Ltd., 1 [1964] 1 S.C.R. 809, held inapplicable.
In the present case the controversy centered round the fact whether the respondent No. 1 had a workshop at Chidambaram, one of the two terminii of the route and that the tribunal had failed to duly consider some evidence in that connection.
That argument was an argument related to appreciation of evidence and as such was outside the purview of a proceeding for a writ of certiorari.
The High Court was therefore, in error in issuing the writ of certiorari.
In issuing a writ and in making it absolute, care should be taken to draw the order accurately.
Unless allegations are made against them, the State Transport Authority or the Appellate Tribunal should not be represented through lawyers.
Their position in ordinary cases is just the same as that of courts and other tribunals.
Per Subba Rao J. Where the tribunal ignores or fails to investigate a material circumstance germane to a question of public 1 SCI/64 5 66 interest under section 47 of the Act put forward by a claimant for permit and gives a finding against him, that finding is vitiated by an error of law apparent on the face of the record and is liable to be quashed by a writ of certiorari.
and the Appellate Tribunal failed to consider the specific claim of the respondent 1 as to the existence of his workshop at Chidambaram and was, therefore, right in setting aside their orders.
The High Court could not be said to have exceeded its jurisdiction under article 226 of the Constitution.
This was a clear case where the Tribunal made a finding that was based on no evidence and was contrary to the specific claim made before it.
Since the first respondent had secured the highest number of marks, this claim, if substantiated, would tilt the balance in his favour.
This Court would not interfere in such a matter in the exercise of its extraordinary jurisdiction under article 136 of the Constitution to set aside the High Court 's order.
|
Civil Appeal No. 81 of 1956.
Appeal from the judgment and decree dated September 24,1952, of the Patna High Court in First Appeal from Original Decree No. 2 of 1947, arising out of the judgment and decree dated August,31, 1946, of the Special Subordinate Judge, Chaibassa, in Money Suit No. 3 of 1941.
L.K. Jha, B. K. Saran, section T. Hussain, section K. Jha and K. L. Mehta, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, J. C. Das Gupta and R. C. Prasad, for respondent No. 1. 1960.
April 21.
The Judgment of the Court was delivered by DAS GUPTA, J.
Dhalbhum estate which covers an area of more than 1,000 sq.
miles and lies partly in the District of Midnapur and partly in the District of Singhbhum is rich in minerals.
In 1900 the then Proprietor of this estate Raja Satrughan Deo Dhabal Deo the predecessor in interest of the first respondent Jagdish Deo Dhabal Deo granted permanent lease of the mining rights for certain metals and minerals in this estate to Prince Mohammad Bakhtyar Shah of Tollygunge in the District of 24 Parganas.
Raja Satrughan Deo Dhabal Deo died in 1916.
Before his death, however, the management of the estate had been taken over by 'the Deputy Commissioner of Singhbhum under the Chotanagpur Encumbered Estates Act.
In the course of such management the Manager of the Estate granted on September 1, 1919, to the Official Receiver to the estate of Prince Mohammad Bakhtyar Shah another lease in respect of mining rights in the same area.
The present litigation was commenced by the first respondent with a view to recover rents and royalties on the basis of the second lease from the heirs and representatives of the estate of Prince Mohammad Bakhtyar Shah and also from the present appellant as Receiver to that estate.
As under the terms of the lease the lessor is entitled to the half share of the receipts on account of 79 606 rents and royalties and other incomes in respect of the minerals demised and the exact income could not be known until accounts were furnished by the lessee, the defendant prayed for a decree for accounts from January 1, 1926, and for a decree for the sum found due on such accounts.
As the suit was brought on August 12, 1941, the period prior to August 12,1935, would prima facie be barred by limitation.
According to the plaintiff, limitation was saved by the acknowledgments that had been made from time to time by the then Receiver of the estate.
Two defences were raised by the Receiver who was the only contesting defendant.
The first was that the lessor had dispossessed him from part of the leasehold property and so there ought to be total suspension of rents and royalties.
The second defence was as regards the claim for the period prior to August 12, 1935.
It was pleaded that the letters which are claimed to have acknowledged the liability did not in law amount to acknowledgment of liability and that in any case the alleged ackowledgments being by the Receiver who was an agent of the court and not an agent of the parties the acknowledgments would be of no avail in saving limitation.
Though the written statement itself did not in terms mention the nature of the lessee 's dispossession from the leasehold property the definite case at the trial was that this dispossession was in respect of minerals which had been specifically excluded from the earlier lease of 1900 but according to the defendant included in the later lease.
One of the main questions in the appeal is whether the minerals specifically excluded in cl. 16 of the earlier lease were demised to the lessee by the later lease of 1919.
of the several issues that have been framed we are therefore con cerned now only with the two issues in respect of these two defences.
The first of these is: " Is the defendant entitled to suspension of rents and royalties as claimed " ; the second is: " Is any portion of the plaintiff 's claim barred by limitation? " The Subordinate Judge held on a construction of the lease of 1919 that it did not include minerals specifically excluded by cl. 16 of the earlier lease and as the only 607 case of dispossession from leasehold property was made in respect of these minerals the plea of suspension of rent must fail.
He also negatived the plea of limitation, being of opinion that the Official Receiver was competent to make such acknowledgments and that in fact there were acknowledgments of the plaintiff 's liability within the meaning of section 19 of the Limitation Act.
With regard to the period from 1935 to 1941.
, regarding which no question of limitation arose, the Subordinate Judge gave a decree of rendition of accounts and for payment of such amounts as would be found on accounting by the Commissioner.
On the basis of his finding that there was an acknowledgment of liability to the extent of Rs. 67,459 3 3 as due under the terms of the two leases up to the year 1935 but that there was no material on the record to find out as to what was the amount due up to that year on the basis of that second lease,, he made an order in the following terms: " The defendant is hereby directed to assess and state the amount due under the lease in suit out of the said sum of Rs. 67,459 3 3 on the basis, of the accounts of his office. in respect of the plaintiff 's dues within two months from this date, failing which a commissioner will be appointed to take accounts and ascertain the amount due to the plaintiff, and the defendant shall be liable for the costs of the same.
" Against this decree the contesting defendant, the Receiver appealed to the High Court of Judicature at Patna.
Before the appeal court two points were raised.
The first was that on a proper construction of the 1919 lease it should be found that the minerals specifically excluded in clause 16 of the earlier lease were included in the 1919 lease and consequently, the lessor having granted certain leases to other parties in respect of these minerals in the area the lessee was entitled to suspension of rents.
The other point raised.
was that in law there was no acknowledgment which, could save limitation in respect of the claim prior to, August 12, 1935.
608 Patna High Court who heard the appeal agreed with the conclusions of the Trial Judge.
On the first point they held that the minerals excluded by clause 16 of the 1900 lease were not included in the Second lease and so there was no question of any suspension of rents.
They also held that quite apart from the question of construction of the document, the lessee was not entitled to suspension of rents as in order to justify witholding of the rents, the act of the landlord must be forcible or, at any rate, tortious and that these conditions had not been established in the present case.
On the second question, the learned judges held that the letters on which the plaintiff relied to show acknowledgments by the Receiver did in law amount to acknowledgments and the acknowledgments being by the Receiver who was himself bound to pay the rent due to the superior landlord were good acknowledgments within the meaning of section 19 of the Limitation Act.
Accordingly they dismissed the appeal.
The present appeal has been brought by the con.
testing defendant the Receiver on a certificate given by the High Court under article 133 of the Constitution.
Both the defences raised in the court of appeal have been pressed before us.
The alleged dispossession on the basis of which the first defence of a right to suspension of rent is urged is only in respect of minerals mentioned specifically in clause 16 of the earlier lease of 1900.
It is necessary therefore to decide in the first place whether these minerals mentioned in clause 16 of the earlier lease have been included in the second lease.
If as found by the courts below they have not been so included no question of suspension will arise.
If they have been included, some other questions of law and fact may have to be considered in deciding whether the defendant 's plea of suspension of rent can succeed.
While primarily we have to construe the 1919 lease to find an answer to the question indicated above, it will be necessary for that very purpose to refer to several portions of the earlier lease of 1900.
The very first clause in the operative portion of the 1900 lease is in these words: 609 " That you shall prospect, raise, purify, melt and sell gold, silver, copper, lead, zinc, iron, mercury,, mica, sulphur, copper sulphate, coal, chalk, redearth, etc., mati slate stone and all kinds of precious stones such as diamond, ruby, emerald, topaz, crystals, etc., lying on the surface and subsoil of Ghatsila otherwise called pargana Dhalbhum, mentioned in Schedule excluding the 2 mouzas Narsinghgarh and Ghatsila and the Dibkulis mentioned in Schedule below.
" It will be noticed that this clause does not mention stones, lime stones, ghuting or ballasts.
Clause 6 of the lease however provided that the lessee shall be " competent to take stones, lime stones, ghuting and ballast which may be required for constructing buildings, bungalows and pathways, etc., necessary for the aforesaid mining work free of cost and rent.
" Clause 16 of the lease contains some further provisions as regards these and is in these words : " That by virtue of the aforesaid patta, you shall not be competent to offer any obstruction either to me or to my any authorised person to raise stones (used) for utensils or stones, lime stone and ghuting, etc., for buildings which are not covered by this patta and sell the same to me or to tenants, etc., under me to dig bandh, tank, canal and wells, etc., but the terms of the said patta shall hold good in respect of the underground minerals, etc., lying under the said wells, etc." Two things that are abundantly clear from this document are: (1) that the mining rights were specifically granted in respect of gold, silver, copper lead, zinc, iron, mercury, mica sulphur, copper sulphate, coal, chalk, red earth and certain precious stones such as diamond, ruby, emerald, topaz, crystals, etc., and (2) that stones for utensils or stones, limestones, ghuting, etc., and ballast for buildings were specifically excluded from the lease.
By the later lease of 1919 the lessor gave and the lessee obtained mining rights in respect of certain minerals not granted by the earlier lease.
The question is whether what was granted by the later lease included in addition to things which had not been specifically named in the 610 earlier grant also things which had been specifically excluded there.
The important portion of the operative clause of the later lease is in these words: " In consideration of the rent hereby reserved and of the covenants and conditions hereinafter contained the Manager hereby grants demised unto the Receiver all and singular all metals and minerals of whatsoever kind or description other than those specifically comprised in and granted by the principal lease. . . . . . . rights, privileges and powers comprised in and granted to the said Prince Mohammad Bakhtyar Shah by the said principal lease in all respects as though the same were repeated herein so far as they do not contradict any of the provisions herein contained and are still existing and capable of taking effect.
" The covenant runs thus: Receiver covenants with the Manager that he will at the time and in the manner provided for in the said principal lease pay the rent or royalty reserved hereby and will carry out and comply with all the provisions and conditions comprised in the said principal lease so far as they are applicable to these presents in the same manner as though they had been inserted herein.
" The document contains next an agreement that the Receiver shall be at liberty to grant under leases subject to certain conditions and provisions.
One of the conditions mentioned is " That all such underleases shall be subject to such special terms in regard to specific minerals as may be prescribed from time to time by the Government Rules relating to Mining Leases and shall be subject to the provision of clause 16 of the said principal lease.
" The lease concluded with the words: "Provided always and it is hereby agreed that nothing herein contained shall be deemed to show that the Pottah of the tenth day of January one thousand and nine hundred made between Raja Satrughan Deo Dhabal Deo, son of Gopinath Deo Dhabal Deo, deceased and the Hon 'ble Prince 611 Mohammad Bakhtyar Shah, son of Prince Mohammad Anwar Shah, deceased is not still valid and subsisting.
" In his attempt to establish that by this later lease the lessor granted a lease even of those minerals which had been excluded specifically by clause 16 of the earlier lease, Mr. Jha has arrayed in his aid several well established principles of construction.
The first of these is that the intention of the parties to a document of grant must be ascertained first and foremost from the words used in the disposition clause, understanding the words used in their strict, natural grammatical sense and that once the intention can be clearly understood from the words in the disposition clause thus interpreted it is no business of the courts to examine what the parties may have said in other portions of the document.
Next it is urged that if it does appear that the later clauses of the document purport to restrict or cut down in any way the effect of the earlier clause disposing of property the earlier clause must prevail.
Thirdly it is said that if there be any ambiguity in the disposition clause taken by itself, the benefit of that ambiguity must be given to the grantee, the rule being that all documents of grants must be interpreted strictly as against the grantor.
Lastly it was urged that where the operative portion of the document can be interpreted without the aid of the preamble, the preamble ought not and must not be looked into.
The correctness of these principles is too well established by authorities to justify any detailed discussion.
The task being to ascertain the intention of the parties, the cases have laid down that that intention has to be gathered by the words used by the parties themselves.
In doing so the parties must be presumed to have used the words in their strict grammatical sense.
If and when the parties have first expressed themselves in one way and then go on saying something, which is irreconcilable with what has gone before, the courts have evolved the principle on the theory that what once had been granted cannot next be taken away, that the clear disposition by an earlier clause will not be allowed to be out down by later 612 clause.
Where there is ambiguity it is the duty of the Court to look at all the parts of the document to ascertain what was really intended by the parties.
But even here the rule has to be borne in mind that the document being the grantor 's document it has to be interpreted strictly against him and in favour of the grantee.
Bearing these principles in mind we shall now examine the 1919 lease to perform this task of ascertaining the intention of the parties as to what was being granted by this lease.
The disposition clause as has already been set out is in these words: " The Manager hereby grants demised unto the Receiver all and singular all metals and minerals of whatsoever kind or description other than those specifically comprised in and granted by the principal lease.
" On behalf of the appellant it is argued that if the totality of metals and minerals in the area is denoted by the symbol "X" and what was granted by the earlier lease is denoted by the symbol "Y" the intention of the parties in using the words set out above was that this lease should be in respect of "X" minus "Y".
We are afraid however that this is an over simplification of the problem which we must resist.
While it is true that strict grammatical sense of the words must be given effect to, words and phrases are not used by people always and invariably in the same sense.
As has often been emphasised by eminent judges the intention of persons using certain words cannot be discovered by considering the words in the abstract.
When in this lease the grantor used certain words, what we cannot ignore is that when words set out above were used in the present lease both the parties had present in their minds the fact of the principal lease.
They were not only well aware of the fact of the earlier lease but actually referred to it as the principal lease and repeatedly emphasised the fact that the terms and conditions of the principal lease in so far as not contradicted by the present lease would remain valid and effective.
One of the principal facts of that earlier lease is that while some metals and minerals were specifically granted thereby some were specifically excluded, In interpreting the words of 613 the disposition clause we have to take notice of the fact that no reference is being made to that fact of specific exclusion.
The question that arises for determination is whether by this omission to make a specific reference to the exclusion clause of the previous lease the parties intended that the exclusion clause will have no effect.
The appellant 's argument is that the necessary result of the words " grants demised unto the Receiver all and singular all metals and minerals of whatsoever kind or description other than specifically comprised in and granted by the principal lease" is that the exclusion clause of the earlier lease was itself being excluded.
While there is some scope for that interpretation, if we do not look further, we are unable to agree with the learned Advocate that it is clear and unambiguous that by this reference to the granting clause of the earlier lease and the words used in respect thereof, the exclusion clause of the earlier lease was being necessarily excluded.
There is in our opinion as much scope for arguing that the exclusion clause not being in terms referred to would remain valid and active as there is for the appellant 's argument that the words used show an intention to exclude the exclusion clause itself.
In cases of ambiguity it is necessary and proper that the court whose task is to construe the document should examine the several parts of the document in order to ascertain what was really intended by the parties.
In this much assistance can be derived from the fourth condition of the conditions which were imposed by the lease as regards the grant of sub leases.
This condition provided inter alia that all such under leases to be granted by the lessee shall be subject to the provisions of clause 16 of the principal lease.
In other words, the sub lessees shall not be competent to offer any obstruction to the head lessor or to any other person authorised by him to raise stone for utensils or stones or lime stone and ghuting, etc., for buildings and in selling the same.
Nor will he be competent to offer any obstruction to any person authorised by the lessor in digging bandh, tank, canal and wells, etc.
In terms this is a provision as regards under leases only.
But the question which springs to the mind is: What could be the sense of 80 614 such a term being imposed in respect of under lessees if so long as under leases were not given, the lessee himself would not be bound by the provisions of clause 16 of the principal lease and would be competent to obstruct the head lessor in the several matier is mentioned in clause 16 ? It is in our opinion unthinkable that such a clause as this fourth clause would be included in respect of sub lessees unless it was also the intention of the parties that the lessee himself would be bound by the provisions of cl. 16 of the principal lease.
The view that this must have been the intention is strengthened by the concluding words of this lease which provide in substance that notwithstanding anything in the later lease the principal lease would be valid and subsisting.
Here also there would be no point in saying that the principal lease would be valid and subsisting as regards merely the minerals which had been specifically 'granted by the principal lease.
As regards the principal lease being binding in respect of those minerals, there could be no doubt whatsoever and the concluding clause of the 1919 lease would be unnecessary and meaningless.
As regards the metals and minerals which are excluded by cl. 16 there might however be some scope for argument as to what would prevail.
But for some appre hension in the mind of the grantor perhaps on account of clause 6 that there might be some scope of difference as regards the metals and minerals mentioned in el.
16 of the earlier clause, the inclusion of this clause in the principal lease itself would perhaps be unnecessary.
It was as a safeguard against that uncertainty that the concluding sentence of the later lease uses the words that we find.
It appears to us reasonable therefore to hold that of the two meanings of which the words in the disposition clause are capable, the meaning that the parties intended that the minerals excluded by clause 16 of the principal lease were not covered by the present grant but would remain excluded, should be accepted.
We have so long not referred to the preamble of the document.
The relevant portion of the same which is of some assistance in construing the document before us, occurs where the Manager mentions the 615 consent of the High Court as regards this later lease.
The passage runs thus: " Whereas recently certain disputes have arisen between the Manager as representing the Estate of the said Sri Sri Satrughna Deo Dhabal Deb, and the Receiver as representing the estate of the said Prince Mohammad Bakhtyar Shah now deceased with regard to the construction of the principal lease and the minerals comprised therein, and whereas in order to put an end to all such disputes and differences of opinion and for the purpose of preventing litigation and consequent loss of both the said Estates it has been agreed by and between the parties hereto subject to the consent and approval of the said High Court that the Manager shall grant to the Receiver a lease of all minerals other than those specifically mentioned in the said principal lease.
" In the judgment of the Trial Court there is a statement that the dispute which bad arisen as regards the construction of the principal lease was whether a mineral known as wolfram was included in the lease of 1900 or not.
The correctness of this observation in the Trial Court 's judgment based apparently on statements made at the bar has not been disputed before us.
If that was the dispute then the object of the second lease was obviously to include therein, in respect of the purposes of the granting clause of the first lease even those minerals which had not been included.
That the dispute must have been of the nature, as the Trial Court believes ' appears probable also from the use of the words " other than those specifically mentioned " in the preamble.
The dispute being on the question of what was mentioned and what was not mentioned in the granting clause, the object of granting the second lease was that what had not so long been mentioned in the granting clause would also be included in such grant by a supplementary lease.
The question of what had been excluded was not in the contemplation of the parties at all.
It is significant to note that there was no evidence that before the date of the second lease, any dispute had arisen as regards the operation of the exclusion clause, viz., Clause 16.
A consideration of 616 the preamble therefore further strengthens the conclusion that this later lease did not grant any mineral rights in respect of what had been excluded by the principal lease in its 16th clause.
If we interpret the disposition clause in the second lease in this way, as we think we must, there is no repugnancy between this clause and the later clauses and there is no scope therefore for the applicability of the doctrine relied on by Mr. Jha that if there be two clauses or parts of a deed one repugnant to the other the first part shall be accepted and the latter rejected.
Nor is there any question in the present case of the words being construed strictly against the grantor.
It is only if the meaning is not otherwise clear that the courts would by recourse to that rule give the grantee something which he might not clearly have received.
As however on a proper construction of the document as a whole we reach the conclusion that the intention of the parties has been clearly established to be that the minerals excluded by clause 16 of the principal lease will remain excluded from the later lease also, there is no scope of any benefit accruing to the lessee by reason of the rule that all deeds are to be construed strictly against the grantor and in favour of the grantee.
We have therefore come to the conclusion that the courts below were right in their conclusion that the minerals mentioned in cl.16 of the principal lease were not granted by the later lease also.
The appellant 's plea of suspension of rents based as it is on the allegation that the metals and minerals mentioned in el.
16 of the principal lease were covered by the later lease must therefore fail.
We think it unnecessary to consider in this appeal the question whether if the construction which the appellant wanted to place on the document was correct the plea of suspension of rents would have been available to him and we express no opinion on the correctness or otherwise of the views expressed by the High Court as regards the circumstances in which a plea of suspension of rent can succeed.
There remains for consideration the question of limitation as regards the period of the claim prior to 617 August 12, 1935.
On this point the learned counsel for the appellant has advanced a two fold contention before us.
In the first place he has contended that the alleged acknowledgments were conditional, the condition as stated being that the statements of account enclosed with the letters which are said to constitute the acknowledgments must be accepted as correct.
In support of his argument Mr. Jha drew our attention to the words used in Exhibit 2(1) dated March 7, 1931, which typifies the nature of acknowledgments in the other letters relied on by the plaintiff.
This letter addressed by the Official Receiver to Raja Jagdish Deo Dhabal Deo is in these words: "Sir, I have the honour to send herewith two statements of account showing an aggregate sum of Rs. 4,993 6 1 as royalty due to the Dhalbhum Raj by the above estate from 1st January to 31st December, 1930.
On your accepting the statements as correct a cheque for the said sum of Rs. 4,993 6 1 will be sent to you.
Besides the above, there is lying to the credit of the Dhalbhum Raj the sum of Rs. 31,944 8 3 being the royalty upto the end of December, 1929.
I shall be obliged if you will kindly let me know whether you are prepared to accept the same and on hearing from you I shall be glad to forward to you a cheque in payment thereof." According to Mr. Jha the first statement as regards the sum of Rs. 4,993 6 1 due to the Dhalbhum Raj by the above estate from 1st January to 31st December, 1930, was not a clear and independent statement of the dues but was made subject to the condition that this was accepted as correct.
Similarly he argued that the statement in the next paragraph of the letter as regards the sum of Rs. 31,944 8 3 being the royalty up to the end of December, 1929, was also not a clear and independent statement of what is due but is made subject to the acceptance of the same.
That in our opinion is not a proper reading of what is stated in the letter.
In the very first sentence of the letter the Receiver is saying that a sum of Rs. 4,993 6 1 as shown 618 in the enclosure to the document was according to him due to the Dhalbhum Raj for the year 1930 on account of royalty; to this he was adding a statement in the second sentence that as soon as this statement of dues was accepted as correct a cheque in payment thereof would be sent.
To say that however was not to say that the earlier statement of what is due is subject to the acceptance of the accounts.
The idea in the second sentence clearly was that in case the statement of what was due was not accepted as correct the matter will have to be decided by further discussion before payment will be made.
This second sentence cannot by any stretch of imagination be read as a condition to the statement made in the first sentence.
Similarly the first sentence in the second paragraph of the letter as regards the sum of Rs. 31,944 8 3 being royalty up to the end of December, 1929, is, as we read the letter, made independent of what was stated in the following sentence and was not subject thereto.
The argument that these acknowledgments were conditional acknowledgments has therefore been rightly rejected by the High Court.
The second contention urged by the learned counsel is that in any case an acknowledgment by the Receiver of an estate is not an acknowledgment by an agent of the owners of the estate " duly authorised in this behalf " within the meaning of Explanation II of section 19 of the Limitation Act, and so is not an acknowledgment within the meaning of section 19(1) of the Limitation Act.
According to the learned counsel " duly authorised in this behalf " in Explanation II of section 19 means " duly authorised by the debtor " and does not include duly authorised by law or by an order of the Court.
For this proposition we can find no support either in authority or principle.
Explanation II to section 19 of the Limitation Act in saying " for the purposes of this section 'signed ' means signed either personally or by an agent duly authorised in this behalf " has not limited in any way the manner in which the authority can be given.
The view taken in this matter by a Full Bench of the Bombay High Court in Annapagonda vs Sangadiappa (1) that " duly authorised " would include (1) 619 duly authorised either by the action of the party indebted or by force of law or order of the Court has been followed in other High Courts also (Vide: Rashbehary vs Anand Ram (1); Ramcharan Das V. Gaya Prasad (2) ; Lakshumanan vs Sadayappa (3 ) and Thankamma vs Kunhamma (4) and in our opinion represents the correct state of law.
Mr. Jha has next argued that, in any case, law does not authorise the Receiver of an Estate to make acknowledgments of debt due from the estate.
For this proposition he has relied on a decision of the Bombay High Court in Currimbhai vs Ahmedali (5).
In that case it was held that an acknowledgment by an official assignee will not amount to an acknowledgment by an agent of the debtor.
Though this case does not deal strictly with the case of a Receiver, Mr. Jha has relied on the reasoning therein as supporting his con tention.
Our attention has been drawn by Mr. Sanyal, on behalf of the respondent to the fact that a contrary view has been taken in Lakshmanan Chetty vs Sadayappa Chetty (6).
Mr. Sanyal has argued that in respect of a debt due from the estate the Receiver of the estate fully represents the owners of the estate and that once it is held, as it must be, that the Receiver had authority to pay the debt, Mr. Sanyal argues, it must necessarily be held that acknowledgment of a debt as incidental to the Receiver 's duties in respect of the payment of the debts, is also within his authority.
So, he argues that in every case an acknowledgment by a Receiver is an acknowledgment by a duly authorised agent of the debtor.
The above is a brief indication of the arguments on either side on Mr. Jha 's contention that the Receiver has no authority to acknowledge debts on behalf of the Estate.
It is unnecessary for us however to decide for the purpose of the present appeal the question whether a Receiver is an agent of the owners of the estate of which he is the Receiver for the purposes of an acknowledgment of a debt under section 19 of the Limitation Act.
(1) (2) 30 All. 422 (3) A.I.R. 1919 Mad. 816.
(4) A.I.R. 1919 Mad. 370.
(5) 58 Born.
(6) 35 M.L.J. 571.
620 In the present case the suit is based on the second lease of 1919 which was executed in favour of the then Receiver.
The acknowledgments by which limitation is claimed to have been saved is by a previous Receiver of the Estate through whom the appellant who is the present Receiver has derived his liability to pay the debt.
Section 19 is therefore in terms applicable as the acknowledgements have been signed personally by those previous Receivers and no recourse is needed by the plaintiff to the second part of Explanation 11.
This position was indeed fairly conceded by Mr. Jha who agreed that in view of this it was not necessary for us to decide whether the Receiver of an Estate is by that fact itself an agent of the owners of the estate duly authorised to make acknowledgments under section 19 of the Limitation Act.
There can be no doubt that the acknowledgments on which the plaintiff relies are acknowledgments within the meaning of section 19 of the Limitation Act and save limitation in respect of the period prior to August 12, 1935.
The Courts below were therefore right in rejecting the defendant 's plea of limitation.
As both the contentions raised before us fail, the appeal is dismissed with costs.
Appeal dismissed.
| The assesses firm which was doing business in Bombay was served with a notice on January 21, 1953, by the Income tax Officer under section 11(1) of the Business Profits Tax Act, 1947, in respect of the chargeable accounting period from November 13, 1947, to October 31, 1948, calling upon it to submit its return.
It filed the return under protest stating that the notice was barred under section 14 of the Act as it was served beyond the period of four 989 years.
The question was whether in section 11 of the Act a limitation corresponding to the limitation contained in section 14 must be necessarily read and whether in a case where the profits were not brought to assessment because notice under section 11 was not issued in time, they must be deemed to have escaped assessment and action could only be taken under section 14 within the time specified therein : Held (per section K. Das and Kapur, JJ., Hidayatullah, J., dissenting), (1) that the words " profits escaping assessment " in section 14 of the Business Profits Tax Act, 1947, apply equally to cases where a notice was received by the assessee but `resulted in no assessment, under assessment or excessive relief, and to cases where due to any reason no notice was issued to the assessee and therefore there was no assessment of his income; (2)that sections 11 and 14 Of the Act have to be read together and that a notice under section 11 cannot be issued against an assessee beyond the period of four years indicated in section 14.
Kamal Singh vs Commissioner of Income tax, [1959] Supp. 1 S.C.R. 10 and Mahayajadhiraj Sir Kameshwar Singh vs State Of Bihar, ; , relied on.
Gokuldas Ratanji Mandavia vs Commissioner of Income tax, , distinguished.
Per Hidayatullah, J. Section 11 of the Business Profits Tax Act, 1947, is confined to cases where there has been no prior assessment, while section 14 is applicable to 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.
For the subsequent and re opened assessment there is a limit of four years, but for the assessment for the first time there is no limit.
|
Civil Appeal No. 2183 of 1984.
From the Judgment and Order dated 28.3.1984 of the Kerala High Court in W. P. No. 131 of 1982.
M. K. Ramamurthi, V. J. Francis and N. M. Popli for the Appellants.
G. D. Gupta, Ms. Halida Khatun, Subba Rao, R. N. From the Judgment and Order dated 28.3.1984 of the Kerala High Court in W. P. No. 131 of 1982.
Poddar, Ms. Subhadra, Ms. Alka, B. B. Tawaklcy and Mrs. Urmila Kapur for the Respondents.
The Judgment of the Court Was delivered by DESAI, J.
Chagrined by the failure of the attempt to pressurise junior engineers to boycott the examination and further irritated by the holding of the examination the appellants have knocked at the 883 doors of this Court, putting forth utterly unsustainable contentions.
Appellants are junior engineers in the Telegraph Wing of the Post & Telegraph Department.
The next avenue of promotion for a Junior Engineer is the post of Assistant Engineer.
Promotions were governed by Telegraphic Engineering Service (Class Il) Recruitment Rules, 1966 ( '1966 Rules ' for short ).
By these rules Telegraphic Engineering Service ( Class Il ) was formed.
The Rules were to apply to posts as specified in Clause (I) of the Schedule which specified the post of Assistant Engineer and other equivalent posts having allied designations.
Clause (I) in Appendix I to the 1966 Rules provides that recruitment to the service shall be entirely by promotion on the basis of selection of Junior Engineers through a qualifying departmental examination.
An approved list shall he ' prepared by a duly constituted Departmental Promotion Committee, by selection from amongst the officials who qualifying the departmental examination.
Sub Clause (4) provided that the departmental qualifying examination shall be open to Junior Engineers who fulfill, amongst others, the condition specified therein.
It reads as under: "Those recruited and absorbed in that grade against the vacancies of a year, ordinarily, not less than five years prior to the year of announcement of the said examination.
These rules were in force till superseded by Telegraphic Engineering Service (Group Posts) Recruitment Rules, 1981 ( '1981 Rules ' for short) enacted in exercise of the power conferred by the proviso to Article 309 of the Constitution with effect from May 7, 1981.
The controversy centers round the Note appended to sub clause (4 of Appendix I of 1981 Rules which reads as under: "40 There shall be normally one examination, consisting of two parts called Qualifying cum Competitive Examination for promotion to the Service and shall be held at least once in a calendar year in the manner and in accordance with the syllabus prescribed in Appendix Ill to these rules.
Note: After the commencement of these rules, the first two examinations shall only be competitive for which the eligibility shall be restricted to only those officers who have 884 already qualified in the Departmental Qualifying Examination held before the commencement of these rules.
" Appellants were recruited as Junior Engineers in the year 1973.
ln other words, they belong to 1973 batch.
Their grievance is that they have completed five years of service which conferred on them eligibility to appear at an examination which was to be held under 1966 Rules.
1966 Rules contemplated only one examination styled as Qualifying Departmental Examination.
1981 Rules which superseded 1966 Rules provide for one examination to be held in two parts namely Qualifying Examination and Competitive Examination.
Before one is permitted to take a Competitive Examination he has to clear Qualifying Examination.
In short, if one has not qualified at the Qualifying Examination he can not take the Competitive Examination.
The appellants ' grievance is that from 1973 to 1982 or to be specific after 1978 when they became eligible to take Qualifying Examination no Qualifying Examination was held till May 7, 1981 when 1966 Rules were superseded by 1981 Rules which introduced the concept of Competitive Examination which could alone be taken after in qualifying the Qualifying Examination and for a period of two years as per the Note appended to clause (4) Qualifying Examination was not to be held.
The contention is that this is an invidious manner of denying them the opportunity to take the examination and thereby deny them equality of opportunity in the matter of promotion.
Appellants accordingly filed O.P. No. 5714/81 under article 226 of the Constitution in the High Court of Kerala impugning the constitutionality of the Note appended to clause (4) of Appendix I to 1981 Rule.
A learned Single Judge of the High Court, before whom the petition came up for hearing, held that the policy reflected in the Note appended to clause (4) of Appendix I to 1981 Rules is irrational as it has no reasonable connection with the needs of the office or the object sought to be attained.
A direction was given that the Note shall be applied to the appellants.
By the judgment rendered on March 9, 1982, the learned Judge gave a further direction that the department can either hold the over due qualifying examination of 1980 or it can hold the qualifying cum competitive examination but it must be done forthwith so that the appellant who were petitioners before the High Court may not be altogether 885 excluded from the examination or examinations to be held.
The respondents to the writ petition, the Union of India and others filed Writ Appeal No. 131 of 1982 which came up before a Division Bench of the High Court.
The Division Bench disagreed with the learned Single Judge observing that the Note to Rule 4 is not ultra vires but this was subjects to the further directions given by the Division Bench.
Taking note of the fact that in the meantime, a competitive examination was conducted, a direction was given that the result be published and the candidates who are declared successful in the examination should be appointed to 33 1/3% of the vacancies which arose between May 7, 1981 and May 7, 19 82.A further direction was given that the second competitive examination contemplated in note to clause (4) must be conducted after a qualifying examination as envisaged in 1966 and/or 1981 Rules is conducted within a period of six months from the date of the judgment and all those examinees found declared successful at the qualifying examination be permitted to take the competitive examination which must be held within six months from the date of the result of the earlier examination.
A direction was given that the candidates declared successful at the competitive examination be appointed to 33 1/3% quota of posts in the vacancies that arose between May 7, 1982 and May 7, 1983.
There was some further directions which are hardly material for the present purpose.
The writ appeal was disposed of in these terms.
Original petitioners aggrieved by the decision of Division Bench have filed this appeal by special leave.
By sheer passage of time, this appeal and even the main petition have become infructuous.
Even in service jurisprudence the clock of history, sometimes, cannot be put back and even if it is found that the respondents have committed an error in implementing the statutory rules no relief can be granted.
This is one such case.
Appellants are Junior Engineers of the 1973 batch belonging to the service styled as Telegraphic Engineering Service (Class II) re designated as Telegraphic Engineering Service (Group Posts).
Appellants as Junior Engineers can look forward to become Assistant Engineers by promotion.
Indisputably, the recruitment to the post of Assistant Engineer in the service is by promotion from 886 the cadre of Junior Engineers.
Under the 1966 Rules, Junior Engineers would become eligible for promotion on qualifying at a qualifying examination.
The eligibility criterion for taking the examination was service of five years.
Appellants who are Junior Engineers of 1973 batch became eligible for taking the examination that may be held in 1978 and onwards.
Once in November, 1980 and another in January, 1981, programme of holding qualifying examination, where 1973 recruits could have appeared, was announced but subsequently cancelled and on May 7, 1981, 1966 Rules were superseded by 1981 Rules.
1981 Rules envisaged a qualifying cum competitive examination.
Eligibility criterion for taking competitive examination was successful clearance of qualifying examination.
Therefore, unless a qualifying examination is held one would have no chance to take competitive examination.
For 1973 recruits no qualifying examination is held.
In 1981 Rules by a note appended to clause (4) of Appendix 1, it was provided that the next two examinations under 1981 Rules would only be competitive examination.
The sum total of these developments would certainly come in the way of appeallants who are of 1973 batch from taking competitive examination and unless they qualify at that examination they would not be eligible for promotion to the post of Assistant Engineer.
In 1982 a competitive examination was held.
Junior Engineers who were recruited prior to 1973 and who had qualified at the qualifying examination held in August 1980 could appear at this competitive examination.
As Junior Engineers of 1973 and sub" sequent batches were not admitted to qualifying examination held in 1982 and as no qualifying examination was held in November 1980 and January 1981 and as two examinations under the 1981 Rules were only to be competitive examination, certainly they have been denied an opportunity to take the examination.
Appellants who similarly situated persons tried extra constitutional methods to pressurise the powers that be, from holding the qualifying examination and subsequently from declaring its results.
This Court had to interpose to put down such pressure tactics by a mandatory direction given at an interim stage that the results of the examination already held must be declared.
We are informed that the results have been declared.
887 Mrs. Urmila Kapoor, learned counsel represented one such successful candidate.
Even though the results are declared, the follow up action of promotion and appointment has not been taken.
We propose to give appropriate directions in this matter.
In the backdrop of these facts, can it be said that the appelIants have been victimised or subjected to discriminatory treatment or have been denied equality of opportunity in the matter of pro motion.
Appellants do not question the legality of rules which prescribe a qualifying cum competitive examination for becoming eligible for promotion to the post of Assistant Engineer.
Their grievance is that note 4 appended to clause I introduces discrimination In that Junior Engineers of 1972 and prior batches will alone be able, if they had cleared the qualifying examination, to take the competitive examination which would be held under 1981 Rules and as only the competitive examination was to be held, Junior Engineers of 1973 and subsequent batches, even if they have put in five years of qualifying service, would be denied an opportunity to i take the examination.
The learned Single Judge of the High Court held the note to be ultra vires.
We find it difficult to agree with the view of the learned Single Judge in this behalf.
However the Division Bench has clearly opined that the note is not ultra vires.
Mr. Ramamurthy, learned counsel for the appellants contended that the note inheres the pernicious tendency of denying equality of opportunity in the matter of taking examination because it permits the department to provide a bottleneck coming in the way of Junior Engineers of the 1973 batch from taking the competitive examination by not holding the qualifying examination.
We see nothing wrong in the policy disclosed by the note.
lt was pointed out that by 1982 nearly 7, 000 Junior Engineers had become eligible for taking competitive examination.
There was some dispute about the figure but we are prepared to accept the figure as given by Mr. Ramamurthy, learned counsel that 4, 000 Junior Engineers of pre ` 1973 batch were qualified for taking competitive examination.
Mr. Ramamurthy contended that if the eligibility criterion is five years of service DO artificial road block could be created so as to come in the way of such qualified Junior Engineers from taking the examination.
As an additional string to the bow, it was submitted that if the purpose of holding a competitive examination is to select best all eligible persons must be permitted to take the examination and ll 888 no artificial barrier need to be created.
It was submitted that not holding of the qualifying examination creates such an impermissible road block in the way of Junior Engineers of 1973 and subsequent batches from taking competitive examination.
If by 1982, more than 4, 000 Junior Engineers of pre 1973 batch had become eligible to take the examination and if the accumulated number of vacancies was around 300, it is difficult to accept the submission of Mr. Ramamurthy that everyone who has just put in five years of service must be permitted to take the examination.
It is a known principle of service jurisprudence that even though mini mum eligibility criterion is fixed enabling one to take the examination yet the examination can be confined on a rational basis to recruits upto a certain number of years.
That constitutes recognition of long experience and not permitting some irate junior to score a march.
If by 1982, nearly 4, 000 Junior Engineers of pre 1973 batches had become eligible for taking competitive examination, the department would be perfectly justified in keeping the examination open only to persons who have put in such long service and leaving others to wait for the next examination.
If for taking examination this aspect introduces classification, it is based on rational and intelligible differentia which has a nexus to the object sought to be achieved.
By the note, for a period of two years only pre 1973 Junior Engineers who had cleared qualifying examination were given a chance to take competitive examination.
If this introduces a classification, it is valid.
It caters to a well known situation in service jurisprudence that there must be some ratio of candidates to vacancies.
And it is based on long experience as a rational basis for classification.
Viewed from this angle, we find nothing in the policy underlying the note to rule (4) as being either discriminatory or arbitrary or denying equality of opportunity in the matter of promotion.
It had the desired effect of not having a glutt of Junior Engineers taking examination compared to fewer number of vacancies.
Length and experience were given recognition by the note The promotion can be thus by stages exposing the promotional avenue gradually to persons having longer experience.
This seems to be the policy underlying the note and we see nothing improper or unconstitutional in it.
However the situation has materially changed.
More than 4 years elapsed sine the note has appeared One examination is 889 a ready taken.
Even Junior Engineers of 1973 batch have by now put in more than 12 years of service.
Therefore while upholding the note and consequently rejection the appeal we propose to give the following directions to remove the irritants: (i) Successful candidates of 1982 competitive examination, results of which have been declared pursuant to the directions of this Court, must be given promotion as Assistant Engineer within a period of two months from today.
(ii) The next qualifying examination permitting all those who are eligible under the rules to appear at it must be held latest by July 31, 1985 and the results be declared by September 30, 1985.
(iii) The next competitive examination must be held by December 31, 1985 and the results by declared by February 28, 1986.
(iv) Consequent promotions keeping in view the vacancies available must be given within a period of three months after the result is declared.
This appeal is disposed of in these terms with no order as to costs M. L. A. Appeal dismissed.
| Clause (1) in Appendix I to the Telegraphic Engineering Service (Class II) Recruitment Rules, 1966 (1966 Rules, for short), provided that promotion of a Junior Engineer to the post of Assistant Engineer shall be entirely by promotion on the basis of selection of Junior Engineers through a qualifying departmental examination.
Sub clause (1) provided that the departmental qualifying examination shall be open to Junior Engineers who were recruited and absorbed in that grade against the vacancies of a year, ordinarily not less than five years prior to the year of announcement of the said examination.
Sub clause (4) of Appendix I to the Telegraphic Engineering Service (Group Posts) Recruitment Rules, 1981 (1981 Rules, for short) which superseded the 1966 Rules envisaged a qualifying cum competitive examination for promotion to the post of Assistant Engineers.
and the Note appended to sub cl.
(4) provides that for a period of 2 years after the commencement of the 1981 Rules, the first two examinations shall only be competitive for which the eligibility shall be restricted to only those officers who have already qualified in the Departmental Qualifying Examination held before the commencement of these Rules.
" The appellants/Junior Engineers, who were recruited in the year 1973, challenged in the High Court the constitutionality of the Note appended lo clause (4) of Appendix I to 1981 Rule 5 on the ground that note 4 appended to clause I introduces discrimination in that Junior Engineers Or 1972 and prior batches will alone be able, if they had cleared the qualifying examination, to take the competitive examination which would be held under 1981 Rules and as only the competitive examination was to be held, Junior Engineers of 1973 and subsequent batches, even if they have put in five years of qualifying service, would be denied an opportunity to take the examination, and that this is an invidious manner of denying them the opportunity to take the examination and thereby deny them equality of opportunity in the matter of promotion.
The learned Single Judge held that the Note to clause (4) of Appendix I to the 1981 Rules was ultra vires.
On appeal by the respondent Union of India, the Division Bench of the High Court held that the Note was not ultra Vires.
882 Dismissing the appeal by the appellants, the Court, ^ HELD: (I) By sheer passage of time, this appeal and even the main petition have become infractions.
Even in service jurisprudence the clock of history, sometimes, cannot be put back and even if it is found that the respondents have committed an error in implementing the statutory rules no relief can be granted.
This is one such case.
[885F G] (2) If by 1982, nearly 4,000 Junior Engineers of pre 1973 batches had become eligible for taking competitive examination, the department would be perfectly justified in keeping the examination open only to persons who have put in such long service and leaving others to wait for the next examination.
If for taking examination this aspect introduces classification, it is based on rational and intelligible differentia which has a nexus to the object sought to be achieved.
By the note, for a period of two years only pre 1973 Junior Engineers who had cleared qualifying examination were given a chance to take competitive examination.
If this introduces a classification, it is valid.
It caters to a well known situation in service jurisprudence that there must be some ratio of candidates to vacancies.
And it is based on long experience as a rational basis for classification.
Viewed from this angle, there is nothing in the policy underlying the note to rule (43 as being either discriminatory or arbitrary or denying equality of opportunity in the matter of promotion.
lt had the desired effect of not having glutt of Junior Engineers taking examination compared to fewer number of vacancies.
Length and experience were given recognition by the note.
The promotion can be thus by stages exposing the promotion; l avenue gradually to persons having longer experience.
This seems to be the policy underlying the note and therefore there is nothing improper or unconstitutional in it.
[888D G]
|
Civil Appeal Nos.
44,45, 336, and 337 of 1957.
Appeals by special leave from the decisions dated 29th June, 1956, of the Labour Appellate Tribunal of India, Calcutta in Appeals Nos.
Cal.223, 226, 247 and 250 of 1955.
M. C. Setalvad, Attorney General for India, Dipak Datta Chaudhury and B. N. Ghosh, for the appellants in C. A. No. 44 and respondents in C. A. No. 45.
M. C. Setalvad, Attorney General for India, section N. Mukerji and B. N. Ghosh, for the appellants in C. A. Nos. 336 and respondents in C. A. No. 337.
section K. Acharya, Arun Kumar Dutt, D. L. Sen Gupta and Sukumar Ghosh, for the appellants in C. A. Nos. 45 & 337 and respondents in C. A. Nos. 44 & 336.
October 15.
The Judgment of the Court was delivered by section K. DAS J.
These four appeals by special leave arise out of certain labour disputes between the employer, Messrs. Indian Iron and Steel Company Limited and the Indian Standard Wagon Company Limited, Burnpur, Asansol, (hereinafter compendiously referred to as the Company) on one side and some of their employees on the other.
Messrs. Martin Burn Limited, 12 Mission Row, Calcutta, are the Managing Agents of the Company.
Originally, the case out of which Civil Appeals 44 and 45 have arisen was known as the case of 144 workmen, and the other case out of which Civil Appeals 336 and 337 have arisen was known as the case of 74 workmen.
At present, the 669 number of workmen involved in the four appeals is much smaller.
Civil Appeals 44 and 45 go together as they arise out of the same decision, Civil Appeal 44 being on behalf of the Company in respect now of 104 respondent workmen, and Civil Appeal 45 on behalf of 103 out of the said 104 workmen.
Similarly, Civil Appeals 336 and 337 go together and arise out of a common decision, Civil Appeal 336 being on behalf of the Company in respect of 10 workmen in three groups and Civil Appeal No. 337 on behalf of 31 workmen.
The facts of these two sets of appeals are somewhat different, and it will be conducive to convenience as also to clarity of discussion of the issues involved, if the two sets are dealt with separately.
Civil Appeals 44 and 45.
We take up first Civil Appeals 44 and 45.
With regard to these appeals the relevant facts are these.
In 1947 the Asansol Indian Iron and Steel Workers Union with one Prof.` Abdul Bari as President was recognised by the Company.
On the death of Prof. Bari, one Mr. Michael John became President and the Union continued to be recognised by the Company.
In 1951 the Company was declared a Public Utility Service under the .
It was alleged on behalf of the Company that on September 12, 1951, a procedure was established for an amicable settlement of such disputes as might arise between the Company and its employees.
The procedure was substantially this: in case of a dispute regarding an individual employee, the dispute would be referred first to the Shop in charge and then to a Works Committee, and the Union would discourage an individual approach to the management of the Company; if the Works Committee was able to effect a settlement, it would be final; but if it failed, the Union could take up the case on merits, with the management of the Company.
The above procedure, it is stated, was accepted at a joint meeting of the Works Committee held on November 13, 195 1.
Then we come to 1953.
The case of the company was that on January 18, 1953, certain workers of the, Hot Mills 670 section resorted to an illegal stoppage of work, and on the next day all the three shifts of the Hot Mills section commenced a 'slow down ' strike.
This adversely affected the production of the Company, and it addressed a letter to the Secretary of the Union on January 27, 1953, drawing the attention of the Union to the illegal stoppage of work and 'slow down ' tactics; the letter further stated that if there was no improvement in the attitude of the workers, the Company would be compelled to take such action as it considered necessary to bring about resumption of normal work.
Two days later, the workers of the Hot Mills section submitted certain demands, but not through the Union.
With regard to the demands made by the workers of the Hot Mills section, they were informed that joint petitions, without reference to the Union or the Works Committee, would not be accepted and so long as normal work was not resumed, no consideration could be given to the demands made.
It appears that the Union also informed the Company that the workers concerned had made no representation to the Union, and the Union did not support their activities.
It is obvious that at this stage there was a cleavage between some of the workers of the Hot Mills section and the Union.
The Company then issued certain notices to the workmen advising them of the consequences of their action.
The workers in their turn elected a committee of six men to press their demands; the Company, however, refused to negotiate with this committee.
The impasse continued and in March, 1953, there was a tripartite conference between the Labour Commissioner of the Government of West Bengal, the General Manager of the Company and the President of the Union.
Before this, the Company had issued a notice closing 'B ' and 'C ' shifts of the Hot Mills section.
The tripartite conference came to certain conclusions but failed to restore harmony, and one of the reasons for its failure was that the representatives of the workers of the Hot Mills section were not included therein.
The workers ' committee protested against the closing of two shifts, and the trouble continued till April 8, 1953, when the Company 671 issued a notice to the workmen that unless they voluntarily recorded their willingness to do normal work, they would be considered as no longer employed by the Company from 2 p.m. on April 10, 1953.
It was stated that on April 11, 1953, some 700 workers resorted to an illegal stoppage of work.
The Labour Minister, Government of West Bengal, then visited Asansol, and met the representatives of the workers, and of the Union and the Management.
He made some suggestions, which did not however end the trouble.
Meanwhile, an Action Committee was set up by the workmen.
There was a strike on April 27, 1953.
The Sub Divisional Magistrate, Asansol, promulgated an order under section 144 of the Code of Criminal Procedure and the situation continued to worsen.
Iron and Steel were declared to be essential to the life of the community under the provisions of the West Bengal Security Act, 1950, and leave to all employees was stopped by the Company.
Some 38 workers of different departments were discharged for alleged disobedience of orders, and on August 18,1953, the Action Committee gave a strike notice to the Company, stating that the workmen would resort to strike and abstain from duty from September 11, 1953.
We now come to the crucial date, August 23, 1953.
On this date the Company declared a lock out and issued a notice, which must be set out in full, because a good part of the argument of learned counsel for both parties has centred round this notice : " NOTICE.
Having regard to the continued existence of the go.
slow strike and the unsatisfactory working of the Plant and in consequence of the illegal strike which took place on (1) 18 1 53.
(2) 9 3 53.
(3) 11 4 53 to 20 4 53.
(4) 27 4 53 and 28 4 53.
(5) 15 7 53.
the Management has no option but to declare a lockout of the entire works except the special shifts in the 672 Hot Mills Section of the Sheet Mills with effect from Monday, the 24th August, 1953.
The following Departments will continue to operate: No. 3 Boiler Plant.
No. 2 Power House.
Nos. 1 and 2 Reservoir Pump Houses.
Riverside Pump Station.
Town Water Works.
Town Sub Station.
Coke Ovens.
Workers required in the above Departments will be notified.
The services of all other workers shall be deemed to be discharged with effect from Monday, August 24th, 1953.
Bunpur (Sd.) J. McCraken 23rd August, 1953.
General Manager.
" On September 17, 1953, another notice was issued by the Company lifting the lock out with effect from 6 a.m. on Friday, September 18, 1953.
This notice stated inter alia: "All employees on the Works rolls of the Company on the 23rd August, 1953, and who wish to report for duty, must resume work between 6 a. m. on Friday, the 18th September, 1953, and 10 p.m. on Saturday ' the 19th September, 1953, on their regular shift.
If, however, any worker in the vicinity of the Works is unable to resume duty on account of illness, he should report himself to the Company 's Medical authorities or if unable personally to attend, send written intimation of his sickness to the Company by Saturday, the 19th September, 1953.
In the latter case the Company will make arrangements for his medical examination.
Such worker should resume duty from the date he is declared fit by the Company 's Medical authorities.
Any worker who has left the vicinity of the Works may resume duty on or before Thursday, the 24th September, 1953, provided he produces evidence satisfactory to the Company of his absence.
" On September 23, 1953, the Company issued a third notice, which quoted a request received from the 673 President of the Asansol Iron and Steel Workers ' Union for extension of the time given to the workmen to resume work, and then concluded as follows: "The Company is pleased to accede to this request to the extent of one week 's extension and its notice No. GM/CS 3B/571 dated 17 9 53 may be considered amended accordingly, i.e., the extension will be until Friday, the 2nd October, 1953.
" Of the workmen with whom we are now concerned, 98 workmen reported for duty on October 1, 1953, 4 reported for duty on October 2, 1953, and one on October 9, 1953.
They were not, however, allowed by the Company to resume their duties.
This led to an industrial dispute which the Government of West Bengal referred to the Fifth Industrial Tribunal.
The two issues were (1) whether the Company was justified in keeping the workmen mentioned in three lists A, B & C, out of employment; and (2) whether the said workmen were entitled to employment and any other relief and/or compensation.
The Tribunal held that all the workmen who turned up on or before October 2, 1953, in pursuance of the notices issued by the Company were entitled to be taken back into employment without condition and of the two men who came later, one was ill of typhoid fever and had sufficient reason for reporting himself for duty on October 9, 1953.
On the second issue, the Tribunal said: " Accordingly, I award that these men, barring Shri Satyanarayan, No. 5 of the list C, attached to the order of reference, would get half salary for the entire period from the 2nd October, 1953, up to the date of their actual return to duties after this award.
I allow only half basic pay and no dearness allowance and no other allowance.
" From the decision of the Fifth Industrial Tribunal, two appeals were preferred to the Labour Appellate Tribunal, Calcutta.
The appeal on behalf of the Company was mainly against the order directing that the employees who had turned up on or before October 2, 1953, must be taken back in employment, and the appeal on behalf of the workmen raised the question 674 that full compensation should be given to the work.
, men who were directed to be taken back in employment.
The Labour Appellate Tribunal dismissed both appeals the appeal of the Company on merits, and the appeal of the workmen on the ground that it did not involve any substantial question of law.
Both parties then asked for and obtained special leave from this Court to appeal from the decision of the Labour Appellate Tribunal, Calcutta.
In Civil Appeal No. 44, Mr. M. C. Setalvad, Attorney General, has appeared for the Company and has argued that both the Tribunals below went wrong on principle in construing the notices dated August 23, 1953, and September 17, 1953, respectively.
According to him, the continued illegal stoppages of work, 'slow down ' tactics and strikes indulged in by the workmen despite the advice of their Union, left the Company no alternative but to discharge the workmen, except in some essential departments, with effect from August 24, 1953, and the notice dated August 23, 1953, though it stated that the Company declared a lock out of the entire Works except for some special shifts, really terminated the services of the respondents by discharging them with effect from August 24, 1953.
He has further submitted that the notice dated September 17, 1953, did not revoke the earlier order of discharge, but merely gave the respondents an opportunity of reemployment at the pleasure of the Company on fulfilment of certain conditions.
The learned Attorney General contends that if the notices are so construed, then the Tribunals below are wrong in holding that the respondents are entitled to be taken back in employment as of right.
He has further submitted that the Fifth Industrial Tribunal was wrong in law in holding that there could not be a lock out and discharge at the same time.
In our view, the two notices in question are not capable of bearing the construction which the learned Attorney General has pressed for our acceptance, apart altogether from the question if under the , there can be a simultaneous order of discharge and lock out in respect of the 675 same employees.
The question of construction is really a question of intention to be gathered primarily from the words used in the documents; and if the word .
used are ambiguous, then surrounding circumstances can be looked into for the purpose of construing the notices.
It is worthy of note that the first notice states inter alia that in consequence of the illegal strikes which took place on several previous dates, the Management has no option but to declare a look out of the entire Works except some special shifts with effect from Monday, August 24, 1953; then in the concluding portion the notice states " The services of all other workers shall be deemed to be discharged with effect from Monday, August 24, 1953.
The expression " shall be deemed to be discharged has to be read in the context of the declaration of a lock out; such an expression is neither usually employed nor apt to effectuate an intention to terminate the services of the workmen altogether.
A 'lock out ', according to the definition in the , 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 persons employed by him ".
In this context, the notice when it said that the services of all other workers shall be deemed to. be discharged with effect from the date of the lock out really meant that the Company refused to employ the respondent workmen during the period when the place of employment was closed.
The second notice dated September 17, 1953, places the matter beyond any doubt.
It starts by saying that the "management have reasons to believe that many workers are desirous of resuming work" etc.; then it states that "all employees on the Works rolls of the Company on August 23, 1953, and who wish to report for duty, must resume work between 6 a.m. on Friday, September 18 1953, and 10 p.m. on Saturday, September 19, 1953.
" The expressions used in the second notice clearly show that the intention was not reemployment of discharged workmen, but resumption of work by employees who desired to resume work and whose employment had been stopped on account of the 86 676 look out.
The third notice dated September 23, 1953, which extended the date of joining to October 2, 1953, again said that " a large number of workers might have been prevented from resuming their work for reasons beyond their control " and gave that as the reason for extending the date.
If the three notices referred to above are read together against the background of events which bad happened prior to August 23, 1953, the only reasonable construction is the one adopted by the Tribunals, viz., that the employees whose employment had been refused during the lockout were permitted to resume work without any conditions if they reported for duty by a particular date, and on fulfilment of a condition if they reported for duty after that date.
The learned Attorney General has referred us to some oral and documentary evidence to show that the workmen themselves understood the notice dated August 23, 1953, as a notice of discharge.
He has referred particularly to the letter dated September 2, 1953, written by the Action Committee to the General Manager of the Company in which the notice dated August 23, 1953, was referred to as " an illegal and unconstitutional notice of discharge".
On the other side, Mr. section K. Acharya appearing for the respondent workmen has referred us to the evidence given by some of the Company 's servants, which showed that no formal order of discharge was recorded in the service book of the employees, as required by the rules; nor any notice of one month given for discharging the workmen; but on the contrary the workmen were given continuity of service for the entire period of their absence.
We do not, however, think that when the words used in the notices sufficiently and clearly bring out the intention of the Company, it is necessary to refer to other evidence in the record.
Moreover, this Court does not sit as a regular Court of appeal over Industrial Tribunals, and does not ordinarily subject the evidence given on behalf of the parties to a fresh review and scrutiny, unless it is shown that exceptional or special circumstances exist, or that substantial and grave injustice has been done or that the case 677 in question presents features of sufficient gravity to warrant a review of the decision appealed from.
It is necessary now to consider an alternative argument of the learned Attorney General.
He has contended that assuming that the notices bear the construction which we have put on them, the respondent workmen did not join on or before Saturday, September 19, 1953, the latest day by which they could resume work without any condition; they reported for duty on October 1, 1953, or October 2, 1953, but failed to produce evidence satisfactory to the Company of their absence as required by the notice dated September 17, 1953, and, therefore, they were not entitled to be taken back as of right and without any condition.
It is necessary to state here what happened between November 1953, and April 1954.
It appears that a large number of workmen who reported for duty on October 1, 1953, and October 2, 1953, were subsequently interviewed, and as a result of that interview 144 workmen were not taken back to employment.
What happened at the interview was stated by Shri section K. Kanwar, witness for the Company, who said : " Question: Why these 144 men were not taken ? Answer: These men were interviewed, but they could not give satisfactory explanation for not reporting for duty within the time given.
These men did not comply with the condition laid down in the notice of the 17th September, 1953.
Whatever happened during the interview has been put in writing.
" The writing which embodied the result of the interview was not, however, produced.
The same witness said that some workmen who were also subsequently interviewed were taken back without any explanation of their absence.
The evidence on this point is very Conflicting; one witness said that about 2,000 men came to the main gate of the Company on October 1, 1953, and October 2, 1953, and from October 2, 1953, the instruction of the company was " to take back only those who were not harmful to the running of the factory".
Another witness said that he did not 678 remember if any of the respondent workmen appeared before him on October 1, 1953, or October 2, 1953, and if any of them gave any reasons for their absence.
In view of the conflicting evidence on the point, it is not possible to proceed on the footing that the respondent workmen failed to produce satisfactory evidence of their absence, and that was the reason why they were not taken back by the Company.
The learned Attorney General drew our pointed attention to the evidence of Shri Promotho Nath Mukherji, witness No. 9 for the workmen, who said: "When the lock out was lifted I did not think it proper to join immediately because most people were then outside, secondly, my colleagues and others had not then joined, and.
lastly, my social status in the place combined with the above circumstances restrained me from joining.
" It may be that some of the workmen could have presented themselves earlier than they actually did, But that does not prove that the Company refused to take only those workmen who had failed to produce satisfactory evidence of their absence.
If that was the case of the Company, then it should have produced the writing which embodied the result of the interview or given sufficient evidence to establish that in each case the respondent workmen failed to produce satisfactory evidence of absence.
On the contrary, the Tribunal found that the Company scrutinised the conduct of the workmen to find out how far they were associated with the Action Committee, how far they took part in the meetings, etc., and on that basis, some workmen were taken back and some were not taken back.
It is somewhat late in the day to try to make out a case that each of the respondent workmen in these two appeals failed to produce satisfactory evidence of their absence.
For these reasons, we do not think that the appellant Company in Civil Appeal 44 has made out any case for our interference with the decision appealed from.
There was some argument before us as to the illegal nature of the strike declared by the workmen and also as to the legality of the lock out declared by the Company.
We do not pause to decide those 679 questions, because it is unnecessary to do so in the pre sent appeals.
We must make it clear, however, that our reluctance to pronounce on the conduct of the workmen prior to August 23, 1953, does not signify an approval of that conduct which rightly came in for a good deal of criticism by the Industrial Tribunal.
It has been somewhat faintly suggested that if the notice dated August 23, 1953, terminated the services of the workmen and the second notice, dated September 17, 1953, operated as a conditional revocation of the earlier notice, then there was no consideration for the condition imposed and the Company could change its mind : and ignore the condition.
In the view which we have taken of the three notices, it becomes unnecessary" also to examine this submission.
As to Civil Appeal 45 on behalf of the workmen in which the prayer is for payment of full compensation, it is sufficient to state that no question of principle is involved.
The Fifth Industrial Tribunal refused to give compensation, for the period anterior to October 2, 1953, on the. ground that the workmen themselves tried to coerce the Company by 'slow down ' tactics etc.; for the period after October 2, '1953, the Tribunal allowed half the wage as compensation on the ground that some of the workmen were near Burnpur and might have joined earlier, some claimed to come back to their services as of right without any explanations and none of the workmen had done any actual work for the period.
As we have said, no question of principle is involved and we do not think that the Tribunal has committed any error in the matter of awarding compensation.
Civil Appeals 336 and 337.
We now turn to the other two appeals.
We have stated that the case out of which these two appeals have arisen dealt initially with 74 workmen who had been discharged or suspended by the Company for" one reason or another. ' The question which was referred to the Fifth Industrial Tribunal was whether the discharge and/or suspension of these 74 workmen was justified if not, to what relief these men were entitled.
The Tribunal classified these men in four categories 680 (1)those whose services were terminated in accordance with the Standing Orders of the Company, for absence without permission for 14 consecutive days; (2) those who were dismissed for major misdemeanor; (3) those who were suspended but whose cases could not be disposed of finally; and (4) those who were dismissed for disobedience of orders and other activities in pursuance of a concerted plan of "go slow" strike.
The Tribunal considered the case of each workman under the four categories mentioned above and ordered reinstatement of 25 out of 74 workmen and granted to 24 of the workmen directed to be reinstated compensation equal to half basic pay for the period of forced unemployment.
From the decision of the Fifth Industrial Tribunal two appeals were taken to the Labour Appellate Tribunal, Calcutta, one on behalf of the Company and the other for the workmen.
The Labour Appellate Tribunal dismissed both the appeals.
Hence the two appeals before us by special leave.
In Civil Appeal 336 we are concerned with only 10 workmen, seven of whom fall in the category of those whose services were terminated in accordance with Standing Orders of the Company for absence without permission for 14 consecutive days.
These seven men are (1) Bamapado Mukherji, (2) Chandrasekhar Mukherji, (3) Niaz Hossain, (4) Dhani Ram, (5) Chandrabhan Sing, (6) Raja Sing, and (7) Jai Kishore Sing.
Two others, Samar Sen and Abharani Debi, fall in the category of those who were said to have been dismissed for major misdemeanour.
The tenth workman Himansu Chattoraj falls in a class by himself.
In Civil Appeal 337 on behalf of the workmen there are 31 appellants, nine of whom (except Samar Sen) are those who figure in the Company 's appeal.
The rest are those who were not ordered to be reinstated.
The cases of two of these men Akka Hossain and D. P. Das, have been specially placed before us by Mr. section K. Acharya, on the ground that Akka Hossair, stands on the same footing as Himansu Chattoraj and D. P. Das on the same footing as those whose leave was not granted and who were absent for 14 consecutive days without permission.
681 We now proceed to consider the cases of the 10 workmen in Civil Appeal 336.
Let us first take the seven workmen who were absent without leave for 14 consecutive days.
Standing Order No. 9 of the Company, which is the relevant Standing Order on the subject, is in these terms: " Absenteeism Workers absent without leave will be subject to disciplinary action.
Overstaying leave will be considered as absence without leave.
Any worker who is absent for 14 consecutive days without permission will be automatically discharged.
Also, any worker who is absent for 14 individual days during any period of 12 months is liable to discharge.
" What happened in the case of these men is that on diverse dates between July 5, 1953, and July 10, 1953, they were taken in custody by the police and remained in custody for some time; they applied for leave when in custody but leave was refused.
The Industrial Tribunal took the view that Standing Order No. 9 was not an inflexible rule, and a mere application for leave was sufficient to arrest the operation of the Standing Order.
When the case was before the Appellate Tribunal, Mr. section K. Acharya on behalf of the workmen conceded that he was not in a position to support the view of the Fifth Industrial Tribunal in this respect; he contended, however, that the Industrial Tribunal had in each case considered the justification for absence without leave, and in view of the circumstance that the men were in custody, the Company was not justified in refusing leave.
This contention found favour with the Labour Appellate Tribunal.
The point is now covered by a decision of this Court: Burn and Co., Calcutta vs Their Employees (1).
in that case one Ashimananda Bannerji was arrested tinder the West Bengal Security Act and detained in jail from January 25, 1949, to April '5, 1949.
The Company terminated his services on April 22, 1949, on the ground of continued absence.
The Appellate Tribunal Ordered his reinstatement on the ground that he had been discharged without a charge and without holding (1) ; , 798.
682 an enquiry.
This Court observed: "We are unable to agree with this decision.
The ground of discharge is the continued absence of the employee, and his inability to do work, and it is difficult to see what purpose would be served by a formal charge being delivered to him and what conceivable answer he could give thereto.
The order of the Appellate Tribunal is manifestly erroneous and must be set aside.
" The same principle should apply in the present case.
It is true that the arrested men were not in a position to come to their work, because they had been arrested by the police.
This may be unfortunate for them; but it would be unjust to hold that in such, circumstances the Company must always give leave when an application for leave is made.
If a large number of workmen are arrested by the authorities in charge of law and order by reason of their questionable activities in connection with a labour dispute, as in this case, the work of the Company will be paralysed if the Company is forced to give leave to all of them for a "more or less indefinite period.
Such a principle will not be just; nor will it restore harmony between labour and capital or ensure normal flow of production.
It is immaterial whether the charges on Which the workmen are arrested by the police are ultimately proved or not in a court of law.
The Company must carry on its work and may find it impossible to do so if a large number of Workmen are absent.
Whether in such circumstances leave should be granted or not must be left to the discretion of the employer.
It may be readily accepted that if the workmen are arrested at the instance of the Company for the purpose of victimisation and in order to get rid of them on the ostensible pretext of continued absence, the position will be different.
It will then be a colourable or mala fide exercise of power under the relevant Standing Order; that, however, is not the case here.
We, are of the view that the two Tribunals below have misdirect ed themselves as to the true scope and effect of the "Standing Order in question, and their decision with regard to the seven workmen mentioned above cannot be supported.
683 We now turn to the two persons in the second category Samar Sen and Abharani Debi, remembering what we have already stated as to the exercise of our jurisdiction on an appeal by special leave.
Samar Sen worked as the Manager of the Burnpur hotel, and one of the questions raised was if he was a 'workman ' within the meaning of the relevant provisions of the .
At the relevant time, `workman ' was defined in the Act as follows: " Section 2(s).
" workman " means any person employed (including an apprentice) in any industry to do any skilled or unskilled manual or clerical work for hire or reward and includes, for the purposes of any proceedings under this Act in relation to an industrial dispute, a workman discharged during that dispute, but does not include any person employed in the naval, military or air service of the Government.
" The question is if Samar Sen did any clerical work for hire or his duties were merely supervisory in nature.
Both the Tribunals have referred to the evidence on this point and have concurrently found that Samar Sen was a workman within the meaning of that word as used in the ; they have referred to Samar Sen 's own evidence which showed that he had to write ledgers, file correspondence, enter the cash book, etc.
We see no reason to hold that the finding of the two Tribunals on this point is erroneous.
On merits, the case against Samar Sen was that as a result of a regular and proper enquiry, he was found guilty of unauthorised absence and insubordination, etc., and, therefore, the Company dismissed him.
The argument before us is that the Company having held a regular and proper enquiry in which Samar Sen had an opportunity of meeting the charges against him, it was for the Company to decide whether the charges had been proved and the Industrial Tribunal should not have interfered with the decision of the Company, unless it found that the decision was mala fide or amounted to victimisation.
It is necessary to state here, in the words of the Fifth Industrial Tribunal, its finding about Samar Sen.
The Industrial Tribunal said: 87 684 "Next, I consider the merit of the case.
On the 6th July, 1953, he went on leave.
On the 16th July, he applied for extension of leave for one month (vide exhibit 6).
He got a reply from the Company on the 25th or 26th July, 1953.
But as the Company refused his leave, he jointed on the 1st August, 1953, with a medical certificate of fitness.
So practically he was within 14 days ' admissible grace period for joining one 's duty.
When he was on leave, he was suffering from blood pressure and fever.
The doctor advised him to take rest.
Of course, he should have consulted the Companies ' doctor.
But even if he had not done so, it did not matter as he was then on leave allowed by the Company.
So where was his fault? Yes, his fault was that he was the Secretary of the Action Committee at that time.
The Action Committee to the Companies was like a red rag to the bull.
I find absolutely no reason why this man should be dismissed.
So I set aside the order of dismissal passed against him, and order his reinstatement.
I grant him compensation at half basic pay for the period of his forced unemployment.
" The finding really amounts to this that Samar Sen was victimised as he was the Secretary of the Action Committee; he was really ill and the only fault he committed was that he did not consult the Company 's doctor.
The learned Attorney General has very seriously contested the aforesaid finding of the Tribunal and taken us through the relevant evidence including Samar Sen 's own statements before the Enquiry Committee.
He has pointed out that though Samar Sen was said to be suffering from fever and blood pressure, his statements before the Enquiry Committee showed that he was not taking complete rest as " advised by his doctor but was engaged in doing some " public work." The argument advanced by the learned Attorney General might have been urged acceptably to a Court or Tribunal of first instance; but we are not such a Court or Tribunal, and in the absence of exceptional or special circumstances or of grave injustice, we shall not be justified in interfering with what really is a finding of fact.
685 This brings us to the case of Abharani Debi, where also the same principles apply.
She was a nurse in the Burnpur Hospital and the charge against her was that she had incited and instigated one Karu, a sweeper working in the hospital, not to attend his duties on the morning of September 5, 1953.
An enquiry was held and she was found guilty of the charge.
The Tribunal found that the charge against her was completely baseless, and the enquiry report against her made a mountain of a mole hill.
She made some comments to Karu with regard to a pass which had been issued to Karu, and the comments innocuous in themselves were magnified into a charge of intimidation.
It is significant that before the Labour Appellate Tribunal, the Company did not even argue the case of Abharani.
Undoubtedly, the management of a concern has power to direct its own internal administration and discipline; but the power is not unlimited and when a dispute arises, Industrial Tribunals have been given the power to see whether the termination of service of a workman is justified and to give appropriate relief.
In cases of dismissal on misconduct, the Tribunal does not, however, act as a Court of appeal and substitute its own judgment for that of the management.
It will interfere (i) when there is a want of good faith, (ii) when there is victimisation or unfair labour practice, (iii) when the management has been guilty of a basic error or violation of a principle of natural justice, and (iv) when on the materials the finding is completely baseless or perverse.
In our view, Abharani 's case comes under, clause (iv) above.
Lastly, we come to Himansu Chattoraj.
The Company 's case against him was the following.
It was alleged that since January, 1953, he incited other workmen to resort to 'slow down ' tactics.
On March 28, 1953, he was charged that he took an active part in the ` slow down ' strike in the Hot Mills section, and he initiated such action and instigated others to do the same.
On March 29, 1953, he submitted his explanation.
On March 31, 1953, he was suspended pending enquiries.
On April 3, 1953 and April 4, 1953, some 686 evidence was taken against several workmen including Chattoraj in the course of the enquiry, but the evidence not being of an overwhelming character against Chattoraj, the management postponed its decision pending further enquiry.
In May 1953, the Sub divisional Magistrate promulgated an order under section 144, Criminal Procedure Code, in which Chattoraj was mentioned.
In September, 1953, the dispute was referred to the Fifth Industrial Tribunal, which included the case of Chattoraj there being a suspension order against him.
It was stated that an application under section 33 of the , was made for permission to dismiss Chattoraj for activities subsequent to the charge sheet of March 28, 1953.
The Tribunal instead of dealing with that application made the following observations in its award regarding Himansu Chattoraj: " He was, therefore, charged on the 28th March, 1953, along with others.
There was an enquiry.
But as the evidence against this man was not overwhelming, the management postponed their decision for the time being.
This man, however, continued his activities with the result that the Sub divisional Officer of Asansol promulgated an order under section 144, Cr.
P.C., on the 15th May, 1953, and in which order his name was mentioned.
This workman was again obstructing the loyal workers after the lock out had been lifted.
So in view of the above, the Companies decided to terminate his services.
But it could not take any direct action as his case was referred to the Tribunal.
So the position is that the charge sheet on which this man was sought to be punished was not proved even according to the Companies ' own version.
For his other activities there is no charge sheet.
In such circumstances I do not think that the Companies were entitled to dismiss him.
So regard being had to this aspect of the matter, I order his reinstatement.
But as I am satisfied that.
this man indulged in activities which were prejudicial to the interest of the Companies, I do not allow him any compensation during the period of his forced unemployment consequent upon suspension.
This period 687 of unemployment should be treated as leave without pay.
He must be reinstated as soon as the award becomes operative." The Appellate Tribunal dealt with the case of this man very summarily by saying that his reinstatement was not open to any objection.
Before us, it has been argued that the decision that Himansu Chattoraj should be reinstated is vitiated by a basic error.
The only formal order against him was the order of suspension, which was certainly a valid order.
The Industrial Tribunal found that Chattoraj indulged in activities prejudicial to the Company and it is now recognised that deliberate 'slow down ' tactics and an incitement to other workmen to adopt such tactics both amount to misconduct.
The lower Tribunal was apparently satisfied that Chattoraj was guilty of such misconduct; yet it held that the charge sheet on which Chattoraj was suspended had not been proved.
If the order of suspension was the only subject if reference, so far as Chattoraj was concerned, the Tribunal could not order his reinstatement till the enquiry was completed.
If, on the contrary, the Tribunal proceeded on the footing that the company had decided to terminate the services of Chattoraj on the ground of his prejudicial and subversive activities then on being satisfied that Chattoraj was guilty of such activities the proper order would have been to give the Company permission to dismiss Chattoraj.
In either view, the order of his reinstatement is unjustified.
Only a few words are necessary to dispose of Civil Appeal 337.
The Tribunal had considered the case of each workman under the four categories mentioned previously and had refused reinstatement to those against whom it found that the Company had good reasons for dismissal.
Mr. Acharya has not been able to satisfy us that the Tribunals below committed any error with regard to the appellants of this appeal.
He has pressed the case of two persons Akka Hossain and D. P. Das.
Against Akka Hossain there was a charge for slow down tactics; later he was charged with assaulting the Company 's driver.
Though he was acquitted in a criminal proceeding, the Tribunal 688 found that the decision of the Company to terminate his services was justified.
D. P. Das absented himself from duty from July 5, 1953, and was absent without leave for more than 14 days.
His case was fully considered by the Tribunal, which found that his services were rightly terminated under the Standing Orders of the Company.
The result of the foregoing discussion is this: Civil Appeal 44, Civil Appeal 45 and Civil Appeal 337 are without merit and must be dismissed.
Civil Appeal 336 succeeds in part, and the decision of the Tribunals below is set aside in respect of the following eight men, only (1) Bamapada Mukherji (2) Chandrasekhar Mukherji, (3) Niaz Hossain, (4)Dhani Ram, (5) Chandrabhan Sing, (6) Raja Sing, (7) Jai Kishore Sing, and (8) Himansu Chattoraj.
In all other respects, the decision appealed from will stand.
In the peculiar circumstances of this case, the parties will bear their own costs here.
Appeal No. 336 partly allowed.
Others dismissed.
| The landlord respondent filed a suit against the appel lant tenant for contravention of Section 13(1)(a) of West Bengal Premises Act, 1956 for sub letting without his writ ten consent by parting with the possession of two rooms out of the four rooms of the premises in question to the sub tenant who had established a tailoring business therein.
The trial court held that there was evidence of a sewing machine being used, that the sub tenant was occupying the suit premises for tailoring business, and that it was for the tenant to establish that the sub tenant had not been induct ed as a sub tenant and that he had given shelter to a help less man.
In the absence of the evidence of the sub tenant, the trial court drew the inference that there was sub tenan cy.
The first appellate court upheld the finding of the trial court, and the High Court, in appeal, did not inter fere with the findings of the courts below.
In the appeal before this Court, it was contended that the question of sub tenancy in a situation like the present case is an inference to be drawn from a certain conduct, and that the question was whether the sub tenant was in exclu sive possession of the part of the premises or whether the tenant had retained no control or that part of the premises.
681 Allowing the appeal, this Court, HELD: 1.
In order to prove tenancy or sub tenancy, two ingredients had to be established, firstly, the tenant must have exclusive right of possession or interest in the prem ises or part of the premises in question and secondly, that right must be in lieu of payment of some compensation or rent.
[684G] 2.1 In view of the provisions of Rent Act, services cannot be consideration for sub lease.
[686B] 2.2 Services in lieu of the right of occupation would not amount to receipt of rent under the Rent Act to create sub tenancy.
Work performed by sub tenants and the wages paid by doing certain kind of services may be in lieu of rent as in the case of Agricultural Tenancies.
But in urban area in civilised time that cannot be so.
The Rent Act, 1956 cannot be fitted into a position where the services can be rendered in exchange of the right of occupation.
[687D, E] 3.
In the second appeal, no court should interfere with the concurrent findings of fact.
[684F] Normally, this court is too reluctant to interfere with the concurrent findings of fact.
But if the essential ingre dients necessary for finding of a fact have not in fact been found by the courts below then this court is bound to exam ine the question where injustice or wrong is done.
That jurisdiction has to be exercised sparingly but, that cannot mean that injustice must be perpetuated because it has been done two or three times in a case.
The burden of showing that a concurrent decision of two or more courts or tribu nals is manifestly unjust lies on the appellant but once that burden is discharged, it is not only the right but the duty of the Supreme Court to remedy the injustice.
[687F, 688A] In the instant case, as there is no finding of exclusive possession nor of any payment of money in exchange of the user of the part of the premises the finding of subletting cannot in law be upheld.
As the sewing machine in question was used as a part of the apparatus of the appellant in the facts of this case it could not be said to have been used separately or independently and cannot constitute a change of user as defined in Section 13(1)(h) of the Rent Act.
[688B C] [Justice of the case demands increase of rent.
The appellant has been in occupation since 1972 at a monthly rent of Rs.250.
By present 682 standards, this is wholly inadequate.
The appellant shall pay at least Rs.350 per month from 1st August, 87.
If the standard rent is more, then the respondent will be at liber ty to apply for increasing the rent.
[688D] Smt.
Krishnawati vs Shri Hans Raj, ; ; Associated Hotels of India Ltd. Delhi vs S.B. Sardar Ranjit Singh, ; ; Sachindra Nath Shah vs Santosh Kumar Bhattacharya, A.I.R. 1987 SC 409; Barnes & Another vs Barratt and another, and M/s Variety Emporium vs V.R.M. Mohd. Ibrahim Naina, A.I.R. 1985, SC.
207, referred to.
|
Appeals Nos.
90 andand 91 of 1965.
Appeals by special leave from the judgment and order dated September 4, 1963 of the Madras High Court in Tax Cases Nos. 120 and 121 of 1963.
80 A. Ranganandhan Chetty and A. V. Rangam, for the appel lant.
T. A. Ramachandran and O. C. Mathur for the respondent.
The Judgment of the Court was delivered by Subba Rao, J.
These appeals, by special leave, raise the question of the true construction of the provisions of r. 5(1) (i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, hereinafter referred to as the Rules.
The facts are not in dispute and they may be briefly stated.
The respondent, Messrs Swastik Tobacco Factory, is a dealer in tobacco.
It purchased raw tobacco; by processing it in a prescribed manner, converted it into chewing tobacco and sold it as such in small paper packets.
The said process has been described by a Division Bench of the Madras High Court in Bell Mark Tobacco Co. vs Government of Madras(1) thus : "Taking, however, the cumulative effect of the various processes to which the assessee subjected the tobacco before he sold it is clear that what was eventually sold by the assessee was a manufactured product, manufactured from the tobacco that the assesses had purchased.
Soaking in jaggery water is not the only process to be considered.
The addition of flavouring essences and shredding of the tobacco should establish that what the assesses sold was a product substantially different from what he had purchased." for the purpose of these appeals, it was not disputed that the respondent purchased raw tobacco, converted it by a manufacturing process into chewing tobacco and sold it in small paper packets.
The respondent paid excise duty in respect of the raw tobacco purchased by it.
For the assessment years 1955 56 and 1956 57, the Assistant cum Deputy Commercial Tax Officer assessed the respondent to sales tax on the turnover of Rs. 10,67,923 10 9 and Rs. 7,71,661 11 0 respectively.
The respondent, claimed that the excise duty paid by it to the Central ' Government in respect of the raw tobacco should be deducted from the turnover ascertained by the said Officer.
But his conten tion was rejected.
On appeal, the order of the said Officer was confirmed by the Appellate Assistant Commissioner of Commercial Taxes.
On a further appeal to the Sales Tax Appellate Tribunal, the assessee, in addition to the question of deduction, raised (1) (1961) 12 S.T.C. 126,132.
81 an additional ground that the entire turnover of the sales on chewing tobacco was not liable to be assessed.
The Tribunal set aside the order of the Appellate Assistant Commissioner.
The State carried the matter in two revisions to the High Court of Madras.
A Division Bench of the said High Court agreed with the view expressed by the Tribunal and dismissed the revisions.
Hence the present appeals.
Mr. A. V. Rangam, learned counsel for the State, argued that the raw tobacco was converted by a manufacturing process into, chewing tobacco, a different commodity and that, therefore, under r. 5(1) of the Rules, as excise duty was paid only in respect of the raw tobacco and not chewing tobacco, the said duty was not deductible from the turnover of the assessee.
He did not contest the correctness of the decision of the High Court on the question of the taxability of the chewing tobacco under section 5(vii) of the Act.
Mr. T. A. Ramachandran, learned counsel for the respondent, contended that the said rule was couched in a comprehensive language so as to take in excise duty paid on raw tobacco converted by a manufacturing process into chewing tobacco.
The relevant rule reads thus : "Rule 5.
(1) The tax or taxes under section 3 or 5 or 5A or the notification or notifications under section 6(1) shall be levied on the net turnover of the dealers.
In determining the net turnover the amounts specified in the following clauses shall, subject to the condition specified therein, be deducted from the gross turnover of a dealer : (i) the excise duty, if any, paid by the dealer to the Central Government in respect of the goods sold by him; Both the advocates argued, on the basis of the factual position,.
that packets of chewing tobacco were goods different from tobacco from which the said goods were manufactured.
While the learned counsel for the State laid emphasis on the words "goods sold by him", the learned counsel for the respondent relied upon the expression "in respect of" preceding the said words.
If, instead of the expression "in respect of ', the word "on" were there, the intention of the rule would be manifest and the answer to the question raised would be obvious.
The excise duty paid by the respondent was only on the raw tobacco and not on the goods ' sold by it and, therefore, the said duty was not deductible thereunder.
So far there is no dispute.
But it was said that the 82 expression "in respect of" made all the difference.
The words "in respect of", it was said, meant "attributable" and, therefore, the argument proceeded, the excise duty paid on the tobacco, though it was not paid on the goods sold by the respondent, was attributable to the said goods sold.
The object of the concession is presumably to avoid payment of tax on tax in respect of the same goods.
If excise duty was paid by a dealer on certain goods, it would be deducted from the gross turnover of the dealer in regard to the said goods, as otherwise, in effect, sales tax would have to be paid on the amount paid towards excise duty.
This concession could have no relevance if the goods subjected to excise duty were different from the goods sold.
Raw tobacco, when converted by a process of manufacture into chewing tobacco, be comes a different marketable product.
There will be no comparison between the raw tobacco and the chewing tobacco in the matter of demand or even price.
Duty on raw tobacco may have some effect on the cost of the manu factured product, but it cannot possibly be said that the said duty is paid in respect of the manufactured product.
Rule 5(1)(i) of the Rules, therefore, permits deduction from the gross turnover of the dealer only the excise duty paid by him in respect of the same goods sold by him.
Learned counsel for the :respondent cited some English deci sions in support of his contention that the expression "in respect of the goods" was very wide and that it took in the raw material out of which the goods were made.
The House of Lords in Inland Revenue Commissioners vs Courts & Co.(1), in the context of payment of estate duty, con strued the words "in respect of" in section 5(2) of the Finance Act, 1894 (57 & 58 Vict.
c. 30) and observed that the phrase denoted some imprecise kind of nexus between the property and the estate duty.
The House of Lords in Asher vs Seaford Court Estates Ltd. (2) in construing the provisions of section 2, sub section
(3) of Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 (10 & 11 Geo. 5, c. 17), held that the expression "in respect of ' must be read as equivalent to "attributable".
The Privy Council in Bicber, Ltd. vs Commissioners of Income tax(1) observed that the said words could mean more than "consisting of" or "namely".
It is not necessary to refer to other decisions.
It may be accepted that the said expression received a wide interpretation, (1) , 732.
(3) (2) 83 having regard to the object of the provisions and the setting in which the said words appeared.
On the other hand, Indian tax laws use the expression "in respect of" as synonymous with the expression "on" : see article 288 of the Constitution of India; section 3 of the Indian Income tax Act, 1922; sections 3(2) and 3(5), Second Proviso, of the Madras General Sales Tax Act, 1939; section 3(1A) of the Central Excise and Salt Act, 1944; and sections 9 of the Kerala Sales Tax Act.
We should not be understood to have construed the said provisions, but only have referred to their to state the legislative practice.
Consistent with the said practice, r. 5(1)(i) of the Rules uses the same expression.
When the said rule says "excise duty paid in respect of the goods", the excise duty referred to is the excise duty paid under section 3(1), read with the Schedule, of the (1 of 1944).
Under the, said section, read with the Schedule, excise duty is levied on the goods described in the Schedule.
Therefore, when r. 5(1)(i) of the Rules refers to the duty paid in respect of the goods to the Central Government, it necessarily refers to the duty paid on the goods mentioned in the Schedule.
As the duty exempted from the gross turnover is the duty so paid under the Central Act, read with the Schedule, the expression "in respect of" in the context can only mean excise duty paid on goods.
In our view, the expression "in respect of the goods" in r. 5(1)(i) of the Rules means only "on the goods".
Even if the word "attributable" is substituted for the words "in respect of", the result win not be different, for the duty paid shall be attributable to the goods.
If it was paid on the raw material it can be attributable only to the raw material and not to the goods.
We, therefore, hold that only excise duty paid on the goods sold by the assessee is deductible from the gross turnover under r. 5(1)(i) of the Rules.
We cannot, therefore, agree with the construction of r. 5(1)(i) of the Rules accepted by the High Court.
No other question was raised before us.
In the result, we modify the order of the High Court accordingly.
In the circumstances, we direct the parties to bear their respective costs.
Order modified.
| The respondent was employed in the Southern Railway as Train Examiner in the scale of Rs. 100 5 125 6 185.
He was promoted to officiate in the next higher scale of Rs. 150 225.
Subsequently he was reverted to the lower scale, and his departmental representations and appeals having failed, he filed a writ petition under article 226 of the Constitution.
The High Court held that the reversion of the respondent amounted to a reduction in rank because he was reverted from the higher post to the lower post notwithstanding the fact that his juniors were still retained in the higher posts.
As this reduction of rank was in violation of article 311(2) the High Court granted the writ prayed for.
The Divisional Personnel Officer, Southern Railway appealed to this Court by special leave.
It was contended on behalf of the appellant that the High Court had misunderstood the ratio of the judgment of this Court in Vaikunthe 's case and that the respondent had not suffered any reduction in rank within the meaning of article 311(2).
HELD : (i) The reversion of a Government servant from an officiating post to his substantive post, while his junior is officiating in higher post, does not, by itself, constitute a reduction in rank within the meaning of article 311(2) of the Constitution.
[110 D] (ii) An important aspect of the decision in Vaikunthe 's case was lost sight of by the High Court.
The real ground on which Vaikunthe 's reversion to his original post of mamlatdar was held to be a violation of his constitutional guarantee was that his chances of promotion were irrevocably barred for a period of three years.
There was no such bar on promotion in the present case.
[114 E] Madhav Laxman Vaikunthe vs State of Mysore, [1962] 1 S.C.R. 886, distinguished.
(iii) The respondent 's complaint was that he had lost his seniority by reason of the retention of his juniors in the officiating higher post.
But his rank in the substantive post i.e. in the lower grade, was in no way affected by this.
In the substantive grade the respondent retained his rank and was not visited with any penal consequences.
The respondent had no right to the post to which he was provisionally promoted.
His reversion in these circumstances did not amount to reduction in rank.
[118 G 119 A] 107 Parshotam Lal Dhingra vs Union of India, ; , State of Bombay vs F. A. Abraham, [1962] Supp. 2 S.C.R. 92 and The High Court, Calcutta vs Amal Kumar Roy, ; , 'relied on.
P. C. Wadhwa vs Union of India, , distinguished.
M. A. Waheed vs State of Madhya Pradesh, [1954] Nag.
L. J. 305, referred to.
|
Civil Appeal No. 2113 of 1972.
Appeal by Special Leave from the Judgment and Order dated 10 2 1972 of the Madhya Pradesh High Court in Second Appeal No. 310 of 1960.
Shiv Dayal and J. section Sinha for the Appellant.
M. C. Bhandare, Mrs. Urmila Kapoor and Shobha Dixit for the Respondent.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal of one of the plaintiffs, by special leave, is directed against the judgment of the Madhya Pradesh High Court dated February 10, 1972, by which the suit for possession of the lands, which the plaintiffs had mortgaged, has been dismissed even though the trial court 's decree for redemption has been maintained.
As the matter has come up to this Court for the second time, at the instance of the plaintiffs it is not necessary to state all the facts for they have been mentioned in this Court 's earlier decision is Meharbansingh and others vs Nareshsingh and others.(1) It will be sufficient to refer to those facts which bear on the present controversy.
The suit lands belonged to Samle Singh, father of appellant Meharban Singh, and Jomdar Singh who executed a registered deed of mortgage in favour of Munshi Singh on May 20, 1939, for Rs. 2242/14/ .
It is not disputed before us that it was a usufructuary mortgage of land within the area of the former Gwalior State.
The mortgagors gave a notice to the mortgagee on May 15, 1943, for redemption of the lands but he refused to accept.
The mortgagors filed the suit for redemption on June 15, 1943.
As some other persons were alleged to be in possession of the suit lands, they were also impleaded 793 as defendants.
The Madhya Bharat Zamindari Abolition Act, 1951 (Samvat 2008), hereinafter referred to as the Act, came into force on October 2, 1951, and leave was granted to the plaintiffs to amend the plaint suitably.
The trial court decreed the suit on October 10, 1958, but disallowed the relief for the grant of mesne profits.
Three appeals were preferred against that judgment and decree of the trial court.
The appellate court dismissed the appeals of the defendants.
It held that the suit lands were the khud kasht lands of the mortgagors, and allowed the appeal of the plaintiffs for mesne profits from the date of the deposit of the mortgage money.
The defendants went in second appeal to the High Court; and the plaintiffs also preferred an appeal for refusal of mesne profits from the date of the cause of action.
The High Court partly allowed the defendants ' appeal by its judgment dated September 27, 1962.
It relied on this Court 's decision in Haji Sk.
Subhan vs Madhorao(1) and held that the plaintiffs were not entitled to possession.
It dismissed the appeal of plaintiff Meharbansingh.
He applied to this Court for special leave, and that led to this Court 's decision in Meherbansingh 's case (Supra) mentioned above.
This Court allowed the appeal and, after considering the relevant provisions of the Act, remitted the case to the High Court for fresh decision after notice to the state on the point whether the suit land were Khud kasht of the plaintiffs and they were entitled to remain in possession under section 4 of the Act.
The State was therefore allowed to be impleaded as a party and to file a written statement.
Certain additional issues were framed by the High Court and the case was remitted to the trial court for its findings.
When it came to the High Court again, with those findings it once again took the view that the plaintiffs were not entitled to possession of the suit lands although they were entitled to a decree for redemption.
It is against that judgment of the High Court dated February 10, 1973, that plaintiffs Meherbansingh has come up to this Court by way of the present appeal.
The facts of this case are thus quite simple, and its fate depends upon the answer to the question whether the plaintiffs were entitled to possession of the suit lands under sub section (2) of section 4 of the Act.
The Act made provision for the abolition and acquisition of the rights of proprietors in villages, "muhals", "chaks" or blocks settled on the zamindari system.
If therefore a person was a "proprietor" within the meaning of clause (a) of section 2, all his proprietary rights vested in the State free of all encumbrances by virtue of sub section (1) of section 3 of the Act from the date specified for the 794 purpose in the notification issued by the State Government.
It is not disputed that the specified date for purposes of the present case was October 2, 1951.
The consequences of the vesting of an estate under section 3 have been stated in section 4.
We are not concerned with sub section (3) of that section, and it will be sufficient to refer to clauses (a) and (f) of sub section (1) and sub section (2) of Section 4.
Clause (a) of sub section (1) of section 4 provides that save as otherwise provided in the Act, the following consequences shall ensue notwithstanding anything contained in any contract, grant or document or in any other law for the time being in force, "(a) all rights, title and interest of the proprietor in such area, including land (cultivable, barren or Bir), forest, trees, fisheries, wells (other than private wells), tanks, ponds, water channels, ferries, pathways, village sites, hats, and bazars and mela grounds and in all sub soil, including rights, if any, in mines and minerals, whether being worked or not, shall cease and be vested in the State free from all encumbrances;" This provision therefore had the effect of terminating the proprietary rights of a proprietor in his estate and in vesting them in the State free from all encumbrances.
The legislature has taken care to deal with the fate of mortgages, in clause (f) of sub section (1) of section 4, which reads as follows, "(f) every mortgage with possession existing on the property so vesting or part thereof on the date immediately preceding the date of vesting shall, to the extent of the amount secured on such property or part thereof be deemed without prejudice to the rights of the State under section 3, to have been substituted by a simple mortgage." So a mortgage with possession, which existed on the date immediately preceding the date of vesting of the property, was deemed to have been substituted by a simple mortgage.
That was to be so without prejudice to the rights of the State under section 3.
A mortgagee who was in possession of lands under a deed of mortgage, e.g. a usufructuary mortgagee, this lost possession of the lands by operation of the law, and his mortgage became nothing more than a simple mortgage from the date of the vesting of the lands in the State.
In other words, he lost possession of the lands which were once mortgaged with him with possession, and was left only with the normal right of a simple mortgagee to realise the mortgage money.
795 While that was the fate of the mortgagee under the Act, the fate of the mortgagor, who was once the proprietor of the lands, was even worse, for he lost his proprietary rights in the lands because of their vesting in the State under section 3 as aforesaid and had, nonetheless, to fulfil his obligation as a mortgagor to the extent of the amount secured under the mortgage.
It appears that the legislature therefore thought of alleviating the lot of those of such proprietors whose cases fell under sub section (2) of section 4 of the Act.
The subsection reads as follows, "(2) Notwithstanding anything contained in sub section (1), the proprietor shall continue to remain in possession of his khud kasht land, so recorded in the annual village papers before the date of vesting." So only those proprietors were permitted to continue to remain in possession of their lands who had khud kasht lands and the lands were recorded as khud kasht in the annual village papers before the date of vesting.
The expression khud kasht has been defined in clause (c) of section 2 of the Act to means inter alia, land cultivated by the zamindar himself or through employees or hired labourers.
Clause (c) of section 2 of the Act states that words and expressions used in the Act, but not defined in it, shall have the same meaning as assigned to them in Qanoon Mal, Gwalior State, Samvat 1983.
The expression "zamindar" has been defined in clause (13) of section 2 of the Qanoon Mal to mean a person who has the rights mentioned in it.
It is not disputed before us that the plaintiffs were zamindars under that definition, and were proprietors of their lands.
It is also not disputed before us that if a person was a zamindar and cultivated the land himself or through employees or hired labourers, that would be his khud kasht cultivation within the meaning of clause (c) of section 2 of the Act.
It would follow that if, in a given case, it was shown that a proprietor had khud kasht land which was so recorded in the annual village papers before the date of vesting of the lands in the State, he was entitled to continue to remain in possession of those lands.
This concession to the proprietor was by way of a rider to the rigorous provisions of section 3 of the Act regarding the vesting of his estate in the State, and if a proprietor was able to establish that he was entitled to its benefit, there could be no reason why it should not be allowed to him.
It may be that the provision for the vesting of the estate in the State under section 3 and, in particular, that relating to the loss of possession of the mortgagee under clause (f) of section 4, operated harshly on a mortgagee with possession, and he had to content himself with the other provisions in the Act for the satisfaction of the debt owed to him by the 796 proprietor, but the law allowed him nothing more after the date of the vesting of the estate in the State.
The lot of the mortgagor proprietor was in fact far worse, for while the Act divested him of the proprietary interest in the lands held by him and vested those rights in the State, it held him liable as if his mortgage was a simple mortgage and left him only with the remedy of claiming compensation, which was itself overridden with his liability to his creditors.
In the plight in which he was placed by the land reforms legislation which was the subject matter of the Act, it was quite reasonable for the legislature to allow him, notwithstanding anything contained in sub section (1) of section 4 which enumerates consequences of the vesting of the estate in the State, the benefit of what sub section (2) of that section provided, and that also on his satisfying the rigorous conditions of the sub section mentioned above.
Reference in this connection may also be made to section 37 of the Act, sub section (1) of which provides that every proprietor who is divested of his proprietary rights shall be "a pacca tenant of the khud kasht land in his possession and the land revenue payable by him shall be determined at the rates fixed by the current settlement for the same kind of land.
" In fact, when this Court examined the matter on the earlier occasion, it took notice of the above provisions of the Act and observed as follows, "The proprietor however, notwithstanding other consequences of the vesting in a State, is entitled to continue to remain in possession of his khud kasht land which is so recorded in the annual village papers before the date of vesting.
Now it was clearly open to the plaintiffs to show that the land in question was khud kasht and, therefore, in accordance with section 4 they were entitled to remain in possession thereof.
" In other words, this Court took the view that while the mortgagors (appellants) fulfilled the other requirements of the law, their claim to possession of the khud kasht lands under sub section (2) of section 4 of the Act had to be decided on the basis of the facts, and it was open to them to show that the lands were khud kasht and they were entitled to remain in possession in terms of sub section (2) of section 4.
That was the purpose why the case was remanded to the High Court and an opportunity was given to the State to appear and contest the claim of the plaintiffs on that basis.
As has been stated, the case went back to the High Court which in its turn, impleaded the State as a party to the suit, permitted it to file a written statement, added certain issues and sent the case to 797 the trial court for submitting its findings after giving the parties an opportunity to adduce further evidence.
And when it went back to the High Court with the findings of the trial court, the High Court stated as follows in its judgment under appeal, "After impleading the State as a party, the following issue, inter alia was remitted to the lower court for recording a finding after giving both the parties an opportunity to adduce evidence: "Whether the land in suit was recorded as khud kasht immediately before the date of vesting.
" The parties filed certain documents but did not adduce any oral evidence on the point.
The trial court has answered the issue in the affirmative.
It was not disputed before me that the land was recorded as Khud kasht in the names of the plaintiffs at the time of vesting,. " There can be no doubt, therefore, that the trial court recorded the finding, on the basis of the evidence before it, that the suit lands were recorded as the khud kasht lands of the plaintiffs before the date of the vesting of the estate.
That was in fact not disputed in the High Court.
All that the High Court had then to do was to decide whether the appellant was entitled to the benefit of sub section (2) of section 4 of the Act, for that was the clear direction of this Court in the earlier judgment.
It is not disputed before us that the plaintiffs were the proprietors of the suit lands, and it cannot be disputed that as they mortgaged them with possession with defendant Munshi Singh, they were themselves in possession upto the date of the mortgage, and as it has been found as a fact that the lands were recorded as khud kasht lands of the mortgagors in the annual village papers before the date of vesting, they were clearly entitled to a decree for possession in terms of sub section (2) of section 4 and there was no occasion for the High Court to examine the consequence of their losing the possession of the lands after the mortgage.
It has to be appreciated that possession is always lost by the mortgagor in the case of a mortgage with possession.
But when clause (f) of sub section (1) of section 4 gave the mortgagor the benefit of sub section (2) of that section to claim the right to remain in possession of his khud kasht land which was in his possession upto the date of mortgage, if the strict requirement of sub section (2) was shown to exist, there could be no reason why it should be denied to the plaintiffs.
It may be mentioned in this connection that when the case came up in first appeal before the Second Additional District Judge of Bhind, 798 he examined the statements of Himachal Singh DW 1, Ram Krishan DW 2 and Hanumant Singh DW 3.
Himachal Singh was a cousin of mortgagee Munshi Singh, Ram Krishan DW 2 was a nephew of Munshi Singh and Hanumant Singh DW 3 was himself a defendant.
On a consideration of their statements, the court of first appeal reached the conclusion that the mortgagors were themselves cultivating the land and thereafter the mortgagee got it cultivated through his relatives.
But even if it were assumed that the mortgagee really inducted tenants in the lands during the period of the mortgage, their tenure was bound to end on the redemption of the mortgage according to the ordinary law of redemption unless, of course, they could lay claim to protection under any other law.
Reference in this connection may be made to the decision of this Court in Mahabir Gope and others vs Harbans Narain Singh and others(1) where the law has been laid down as follows, "The general rule is that a person cannot by transfer or otherwise confer a better title on another than he himself has.
A mortgagee cannot, therefore, create an interest in the mortgaged property which will inure beyond the termination of his interest as mortgagee.
Further, the mortgagee, who takes possession of the mortgaged property, must manage it as a person of ordinary prudence would manage it if it were his own; and he must not commit any act which is destructive or permanently injurious to the property; see section 76, sub clauses (a) & (e) of the Transfer of Property Act.
It follows that he may grant leases not extending beyond the period of the mortgage; any leases granted by him must come to an end at redemption.
" Care was taken to state further in that case that if during the permissible settlement by a mortgagee in possession with a tenant in the course of prudent management, any right sprang up in the tenant by conferral or creation by statute, that would be a "different matter altogether", for that would then be an "exception to the general rule." The decision in Mahabir Gope 's case (Supra) was applied or was followed in Harihar Prasad Singh and another vs Mst.
of Munshi Nath Prasad and others(2) where it was held as follows, "As the mortgagees are neither proprietors nor tenure holders as defined in the Act, the tenants holding under 799 them could not claim to be raiyats as defined in sections 5(2) and 5(3), and no occupancy rights could therefore be acquired by them under section 21 of the Act.
" That decision was again followed in Asa Ram and another vs Mst.
Ram Kali and another(1) also, and was held as follows, "But where there is no such prohibition, the only consequence is that the parties will be thrown back on their rights under the Transfer of Property Act, and the lessees must still establish that the lease is blinding on the mortgagors under s.76(a) of that Act.
" Reference may also be made to Prabhu vs Ramdev and others(2) where again reference was made to the decision in Mahabir Gope (supra) and the legal position was reiterated as follows, "Having made these observations, however, this Court has taken the precaution to point out that even in regard to tenants inducted into the land by a mortgagee cases may arise where the said tenants may acquire rights of special character by virtue of statutory provisions which may, in the meanwhile, come into operation.
A permissible settlement by a mortgagee in possession with a tenant in the course of prudent management and the springing up of rights in the tenant conferred or created by statute based on the nature of the land and possession for the requisite period, it was observed, was a different matter altogether.
Such a case is clearly an exception to the general rule prescribed by the Transfer of Property Act.
It will thus be seen that while dealing with the normal position under the Transfer of Property Act, this Court specifically pointed out that the rights of the tenants inducted by the mortgagee may conceivably be improved by virtue of statutory provisions which may meanwhile come into operation.
That is precisely what has happened in the present case.
During the continuance of the mortgage section 15 of the Act came into operation and that made the respondents Khatadars who are entitled to claim the benefit of section 161 of the Act.
" It is therefore well settled that the normal law of mortgage would apply and tenants inducted by the mortgagee would go out of the lands on redemption of the mortgage, if, in the meanwhile, law has 800 not been shown to intervene for their protection.
As, in the instant case, the law expressly gave the benefit of sub section (2) of section 4 to a proprietor like the appellant, the tenants inducted by the mortgagee will have no statutory right of possession.
A vain attempt was made to invoke section 41 of the Act for the protection of the tenancy rights of the mortgagees, but their learned Counsel was unable to show how they could claim the benefit of that section in face of the clear provision of sub section (2) of section 4 of the Act.
In fact all that Mr. Bhandare was able to contend on behalf of the respondents was that their case was covered by this Court 's decision in Haji Sk.
Subhan 's case (supra).
That decision formed the basis of the earlier decision of the High Court dated September 27, 1962, but this Court clearly pointed out in its earlier decision that the High Court was "in error in allowing the appeal before it and in dismissing the plaintiff appellants ' suit for possession on the authority of this Court 's decision in the case of Haji Sk.
Subhan" (supra).
It is therefore not necessary for us to say, once again, why that decision cannot govern the present dispute.
In the result, we allow the appeal and restore the decree of the court of first appeal with costs.
P.B.R. Appeal allowed.
| Clause (e) of the proviso to section 14(1) of the Delhi Rent Control Act provides that a landlord can evict a tenant of premises let for residential purposes on the ground that the same were required by him bona fide for occupation as a residence for himself and that he has no other reasonably suitable residential accommodation.
An appeal from the order of the Controller lies to the tribunal and a further appeal to the High Court.
In September, 1975, the Government of India took a decision that Government employees owning houses in Delhi shall be required to vacate accommodation allotted to them by the Government within a period of three months from 1st October, 1975.
To avoid procedural delays in the matter of eviction of tenants from houses let out by Government servants who were required to shift to their own houses, Chapter III A was introduced by an Amending Act.
Section 14A which was added in Chapter III provided a right to a person in occupation of any residential premises allotted to him by the Central Government to recover immediate possession of the premises let out by him in case he was required by the Government to vacate the residential premises allotted to him.
The non obstante clause contained in section 25A provides that "the provisions of this Chapter or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained elsewhere in this Act or any other law for the time being in force.
" Section 25B(8) provides that when "an order for the recovery of possession of any premises" has been made by the Controller on an application covered by section 25B no appeal or second appeal shall lie therefrom.
The respondent 's application under clause (e) of the proviso to section 14(1) of the Act was rejected by the Rent Controller on the ground that it was not legally permissible for her to obtain possession of the premises under the section because she had sought eviction only in respect of a part of the premises.
In the respondent 's revision petition before the High Court the tenant contended that the petition was incompetent because in view of the provisions of section 25b(8) the only remedy available to the respondent was by way of appeal under section 38.
Rejecting this contention the High Court held that a, petition for revision as envisaged by section 25B(8) lay against the order accepting or rejecting an eviction application and against such an order alone.
Dismissing the tenant 's appeal.
^ HELD: The remedy of the land lady against the order of the Controller in the present case was by way of revision (and revision only) of that order by the High Court under the proviso to section 25B(8), even though it was 747 an order not directing but by refusing recovery of possession of the premises in dispute.
[756 G H] The non obstante clause in section 25A provides that whenever there is a conflict between the provisions of Chapter IIIA and those of the rest of the Act or of any other law in force the former shall prevail.
If an application is made under clause (e) of the proviso to section 14(1) it has to be dealt with in accordance with the procedure specified in section 25B and not under the provisions contained in Chapters other than Chapter IIIA.
Therefore, the procedure laid down in section 25A read with section 25B(1) envisages a shortcut to the conclusion of the proceedings before the Controller.
Section 25B(8) further provides that when an order for the recovery of possession of any premises has been made no appeal under section 38 or second appeal under section 39 shall lie.
The combined effect of section 25A and section 25B(1) and (10) is that in whatever respect section 25B makes a departure from the procedure prescribed in other chapters of the Act, the provisions of Chapter IIIA shall prevail.
[753 B D; 754 D] The expression "order for the recovery of possession of any premises" has to be construed, in the context in which it appears, as an order deciding an application for the recovery of possession of any premises; because, firstly, if an order in favour of the landlord alone was meant to be covered by sub section (8) an order refusing such relief would be liable to be called in question by way of an appeal or second appeal under section 38 so that there would be two procedures for the end product of the Controller 's proceedings being called in question, one when the same is in favour of the landlord and another when it goes against him, which would obviously entail discrimination and make the sub section invalid.
But if a provision can be construed in a manner which upholds its legal or constitutional validity it should, if possible, be so construed rather than the other way round.
[755 B E] All that sub section (10) of section 25B states is that the procedure for the disposal of an application for eviction covered by sub section (1) shall be the same as the procedure for disposal of other applications by Controllers except as provided in Chapter IIIA.
Sub section (8) expressly takes away the right of appeal or second appeal while providing the remedy of revision instead.
[747 E F] Section 14(7) does not require that an order for the recovery of possession of any premises should contain a direction that the landlord would not be entitled to obtain possession of the premises in dispute before the expiry of a period of six months from the date of the order.
The sub section itself declares that such an order would not be executable before a certain period has expired.
The declaration is part of the law of the land and would be operative as such so that the landlady would not be entitled to execute the order before the expiry of six months from the date thereof notwithstanding the fact that the terms of sub section (7) have not been made part of the order.
[757 C D] Devi Singh vs Chaman Lal (1977) Rajdhani Law Reporter 566; R. K. Parikh vs Uma Verma I.L.R. (1978) II Delhi 78; Bhagwati Pershad vs Om Perkhash (1979) Rajdhani Law Reporter 26; Mahavir Singh vs Kamal Narain (1979) Rajdhani Law Reporter 159 approved.
|
minal Appeal No. 65 of 1954.
Appeal by special leave from the judgment and order dated the 2nd January 1953 of the Judicial Commissioner 's Court at Ajmer in Criminal Appeal No. 3 of 1952 arising out of the judgment and order dated the 4th January, 1952 of the Court of Sessions Judge at Ajmer in Criminal Appeal No. 300 of 1951.
B.P. Berry and B. P. Maheshwari, for the appellant.
C. K. Daphtar Solicitor General of India (Porus A. Mehta and P. G. Gokhale, with him) for the respondent.
March 12.
The Judgment of the Court was delivered by BOSE J.
The appellant, S.N. Mehra, a Camp Clerk 201 Ajmer, has been convicted of offences under section 420 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act, 1947 (Act II of 1947).
He was sentenced to two years ' rigorous imprisonment and a fine of Rs. 100 on each count.
The substantive sentences are concurrent.
The substance of the offences for which he was convicted lay in obtaining sums to talling Rs. 23 12 0 from Government as T.A. for two journeys, one from Ajmer to Abu Road and the other from Ajmer to Reengus.
The money represents the second class railway fare for these journeys.
The allegation against him is that either he did not travel at all between those places on the relevant dates, or, if he did, that he did not pay the fare.
He appealed to the Sessions Judge at Ajmer and was acquitted.
The State filed an appeal against the acquittal to the Judicial Commissioner of Ajmer ' The learned Judicial Commissioner accepted the appeal and remanded the case for retrial before a Special Judge because, by reason of certain amendments in the law, only a Special Judge could try an offence under section 5(2) of the Prevention of Corruption Act at the date of the remand.
The appeal here raises certain questions about sanction which we do not intend to discuss because, in our opinion, the evidence adduced does not justify a retrial as no conviction for those two offences could be based on it.
It was first alleged that the appellant did not travel at all on the relevant dates and that the burden of proving that he did was on him.
We do not think this issue arises because the charge assumes that he did travel and there is no evidence before us to justify even a prima facie inference that he did not.
The charge runs "That you, on or about etc . cheated the Government by dishonestly inducing the Government to pay you Rs. 62 9 0 on account of T.A. for the journeys performed on the above mentioned days. . " 202 There is no suggestion that the journeys were not performed and only purported to be; and it would be unfair to permit the State to go back on what it said in the charge at this stage, especially after the appellant has entered on his defence and virtually admitted that he did travel on those dates; in any case, he has not denied the fact and that would naturally operate to his disadvantage if the prosecution were to be allowed to change its position in this way.
We must therefore accept the fact that he did travel as alleged on the relevant dates, and the only question that remains is whether he paid the second class fares which he later claimed, and obtained, from Government as T.A. for those journeys.
The only proof that is adduced in support of the allegation that he did not is that no second class tickets were issued at Ajmer on the relevant dates either for Abu Road or for Reengus.
This is proved by the Booking Clerk Ram Dayal, P.W. 4.
But the same witness proves that tickets are not always issued and that passengers can pay the fare on the train; also, if the second class is fully booked no further tickets are issued till the arrival of the train.
In that case, passengers sometimes buy a third class or an inter class ticket and then pay the difference to the conductor or guard of the train if they are able to find second class accommodation when the train arrives.
There is no proof that one or other of these courses was not followed on the dates with which we are concerned.
The railway registers and books would show whether or not any such payments were made on those dates and the State could have proved the absence of such payments as easily as it was able to prove, from the same sort of material, that no second class tickets were issued.
Instead of doing that, the State contented itself with saying that no second class tickets were issued and, then relying on Illustration (b) to section 106 of the Evidence Act, it contended that the burden of proving that the accused did pay the second class fares was on him.
Illustration (b) runs thus: "A is charged with travelling on a railway with 203 out a ticket.
The burden of proving that he had a ticket is on him".
But this is only an illustration and must be read subject to the section itself and cannot travel beyond it.
The section runs "When any fact is especially within the knowledge of any person, the burden of proving that fact is on him".
The stress, in our opinion, is on the word "especially".
Section 106 is an exception to section 101.
Section 101 lays down the general rule about the burden of proof.
"Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist".
Illustration (a) says "A desires a Court to give judgment that B shall be punished for a crime which A says B has committed.
A must prove that B has committed the crime".
This lays down the general rule that in a criminal case the burden of proof is on the prosecution and section 106 is certainly not intended to relieve it of that duty.
On the contrary, it is designed to meet certain exceptional cases in which it would be impossible, or at any rate disproportionately difficult, for the prosecution to establish facts which are "especially" within the knowledge of the accused and which he could prove without difficulty or inconvenience.
The word "especially" stresses that.
It means facts that are preeminently or exceptionally within his knowledge.
If the section were to be interpreted otherwise, it would lead to the very startling conclusion that in a murder case the burden lies on the accused to prove that he did not commit the murder because who could know better than he whether he did or did not.
It is evident that cannot be the intention and the Privy Council has twice refused to construe this section, as reproduced in certain other Acts outside India, to mean that the 204 burden lies on an accused person to show that be did not commit the crime for which he is tried.
These cases are Attygalle vs Emperor(1) and Seneviratne vs R. (2).
Illustration (b) to section 106 has obvious reference to a very special type of case, namely to offences under sections 112 and 113 of the Indian Railways Act for travelling or attempting to travel without a pass or ticket or with an insufficient pass, etc.
Now if a passenger is seen in a railway carriage, or at the ticket barrier, and is unable to produce a ticket or explain his presence, it would obviously be impossible in most cases for the railway to prove, or even with due diligence to find out, where he came from and where he is going and whether or not be purchased a ticket.
On the other band, it would be comparatively simple for the passenger either to produce his pass or ticket or, in the case of loss or of some other valid explanation, to set it out; and so far as proof is concerned, it would be easier for him to prove the substance of his explanation than for the State to establish its falsity.
We recognise that an illustration does not exhaust the full content of the section which it illustrates but equally it can neither curtail nor expand its ambit; and if knowledge of certain facts is as much available to the prosecution, should it choose to exercise due diligence, as to the accused, the facts cannot be said to be "especially" within the knowledge of the accused.
This is a section which must be considered in a commonsense way; and the balance of convenience and the disproportion of the labour that would be involved in finding out and proving certain facts balanced against the triviality of the issue at stake and the ease with which the accused could prove them, are all matters that must be taken into consideration.
The section cannot be used to undermine the well established rule of law that, save in a very exceptional class of case, the burden is on the prosecution and never shifts.
Now what is the position here? These journeys (1) A.I.R. 1936 P.C. 169.
(2) , 49. 205 were performed on 8 9 1948 and 15 9 1948.
The prosecution was launched on 19 4 1950 and the appellant was called upon to answer the charge on 9 3 1951; and now that the case has been remanded we are in the year 1956.
The appellant, very naturally, said on 27 4 1951, two and a half years after the alleged offences: "It is humanly impossible to give accurate explanations for the journeys in question after such a lapse of time".
And what of the prosecution? They have their registers and books, both of the railway and of the department in which the appellant works.
They are in a position to know and prove his official movements on the relevant dates.
They are in a position to show that no vouchers or receipts were issued for a second class journey by the guard or conductor of the trains on those days.
This information was as much within their "especial" knowledge as in that of the appellant; indeed it is difficult to see how with all the relevant books and other material in the possession of the authorities, these facts can be said to be within the "especial" knowledge of the appellant after such a lapse of time however much it may once have been there.
It would, we feel, be wrong to allow these proceedings to continue any longer.
The appellant has been put upon his trial, the prosecution has had full and ample opportunity to prove its case and it can certainly not complain of want of time to search for and prepare its material.
No conviction could validly rest on the material so far produced and it would savour of harassment to allow the continuance of such a trial without the slightest indication that there is additional evidence available which could not have been discovered and produced with the exercise of diligence at the earlier stages.
We set aside the order of the Judicial Commissioner and restore the order of the Sessions Judge acquitting the appellant on both counts of the charge framed against him.
| The appellant was put up for trial under section 420 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act of 1947 for obtaining a total sum of Rs. 23 12 0 from the Government as T.A., being second class railway fares for two journeys, one from Ajmer to Abu Road and the other from Ajmer to Reengus, without having actually paid the said fares.
The prosecution proved from the railway books and registers that no such second class tickets were issued at Ajmer on the relevant dates and the same witness who proved this also proved that tickets were not always issued and the passengers could pay the fare in the train and if the second class was fully booked, no further tickets were issued till the train arrived,in which case passengers sometimes bought third class or inter class tickets and thereafter paid the difference to the guard of the train, if they could find second class accommodation on the arrival of the train.
There was no proof that one or other of those courses were not followed by the appellant and the prosecution instead of proving the absence of any such payments, in the same way as it had proved the non issue of second class tickets, relied on Illustration (b) to section 106 of the Evidence Act and contended that it was for the appellant to prove that he had actually paid the second class fares.
200 Held, that Illustration (b) to section 106 of the Evidence Act had no application, the evidence adduced by the prosecution did not warrant a conviction and the accused should, having regard to the long lapse of time, be acquitted.
That section 106 of the Evidence Act does not abrogate the well established rule of criminal law that except in very exceptional classes of cases the burden that lies on the prosecution to prove its case never shifts and s, 106 is not intended to relieve the prosecution of that burden. ' On the contrary, it seeks to meet certain exceptional cases where it is impossible, or disproportionately difficult, for the prosecution to establish facts which are especially within the knowledge of the accused and which can be proved by him without difficulty or inconvenience.
But when knowledge of such facts is equally available to the prosecution if it chooses to exercise due diligence, they cannot be said to be especially within the knowledge of the accused and the section cannot apply.
Attygalle vs Emperor, (A.I.R. and Seneviratne vs
B., ([1936] 3 All E.R. 36), referred to.
That illustrations to a section do not exhaust its full content even as they cannot curtail or expand its ambit, and in applying section 106 the balance of convenience, the comparative labour involved in finding out and proving the facts and the ease with which the accused can prove them must be taken into consideration.
That cases coming under sections 112 and 113 of the Indian Railways Act to which Illustration (b) to section
106 has obvious application stand on a different footing.
|
54 of 1953.
Petition under Article 32 of the Constitution for a writ in the nature of habeas corpus.
Jai Gopal Sethi and Veda Vyas (section K. Kapur, A. K. Datt, A. N. Chona, B. Pathnaik and A. AT.
Sinha, with them) for the petitioners.
C.K. Daphtary, Solicitor General for India (Porus A.Mehta, with him) for the respondents.
March 12.
PATANJALI SASTRI C. J.
This is a petition for a writ of habeas corpus filed by one ham Narayan Singh on behalf of four gentlemen, namely, Dr. section P. Mukerjee, Shri N. C. Chatterjee, Pandit Nandial Sharma and Pandit Guru Dutt Vaid, who are the real petitioners in the case.
These persons were 653 arrested on the evening of the 6th March, 1953, and they are now being prosecuted for alleged defiance of an order prohibiting meetings and processions in the area in question, an offence punishable under section 188 of the Indian Penal Code.
Their detention is sought to be justified on the basis of two remand orders, the one alleged to have been passed by Mr. Dhillon, Additional District Magistrate, Delhi, at about 8 p. m. on the 6th March, 1953, and the other alleged to have been passed by the trying Magistrate at about 3 p. m. on the 9th March while adjourning the case on the representation made before him that a habeas "pus petition was being moved in this Court.
Various questions of law and fact have been argued before us by Mr. Sethi on behalf of the petitioner, but we consider it unnecessary to enter upon a discussion of those questions, as it is now conceded that the first order of remand dated the 6th March even assuming it was a valid one expired on the 9th March and is no longer in force.
As regards the order of remand alleged to have been made by the trying Magistrate on the 9th March, the position is as follows: The trying Magistrate was obviously proceeding at that stage under section 344 of the Criminal Procedure Code, which requires him, if he chooses to adjourn the case pending before him, " to remand by warrant the accused if in custody," and it goes on to provide: Every order made under this section by a court other than a High Court shall be in writing signed by the presiding Judge or Magistrate.
The order of the Magistrate under this section was produced before us in compliance with an order of this Court made on the 10th March, which directed the production in this Court as early as possible of the records before the Additional District Magistrate and the trying Magistrate together with the remand papers for inspection by Counsel for the petitioner.
The order produced merely directs the adjournment of the case till the 11th March and contains no direction for, remanding the accused to custody till that date.
Last 85 654 evening, four slips of paper were handed to the Registrar of this Court at 5 20 p. m.
On one side they purport to be warrants of detention dated 6th March and addressed to the Superintendent of Jail, Delhi, directing the accused to be kept in judicial lock up and to be produced in court on the 9th March 1953.
These warrants contain on their back the following endorsements: Remanded to judicial till 11th March, 1953" In a question of habeas corpus, when the lawfulness or otherwise of the custody of the persons concerned is in question, it is obvious that these documents, if genuine would be of vital importance, but they were not produced, notwithstanding the clear direction contained in our order of the 10th March.
The court records produced before us do not contain any order of remand made on the 9th March.
As we have already observed, we have the order of the trying Magistrate merely adjourning the case to the 11th.
The Solicitor General appearing on behalf of the Government explains that these slips of paper,which would be of crucial importance to the case, were with a police officer who was present in court yesterday, but after the Court rose in the evening the latter thought that their production might be of some importance and therefore they were filed before the Registrar at 5 20 p. m.
We cannot take notice of documents produced in such circumstances, and we are not satisfied that there was any order of remand committing the accused to further custody till the 11th March.
It has been held by this Court that in habeas corpus proceedings, the Court is to have regard to the legality or otherwise of the detention at the time of the return and not with reference to the institution of the proceedings.
The material date on the facts of this case is the 10th March, when the affidavit on behalf of the Government was filed justifying the detention as a lawful one.
But the position, as we have stated, is that on that date there was no order remanding the four persons to custody.
This Court has often reiterated before that those who 655 feel called upon to deprive other persons of their personal liberty in the discharge of what they conceive to be their duty, must strictly and scrupulously observe the forms and rules of the law.
That has not been done in this case.
The petitioners now before us are therefore entitled to be released, and they are set at liberty forthwith.
Petition allowed.
| The appellants held the Paikpara estate as proprietors.
They had purchased the properties in question comprising raiyati lands with certain buildings thereon from the raiyat.
Thus the proprietors became occupancy raiyat8 under the tenure holders or sub proprietors.
By virtue of a notification issued under section 3 of the Orissa Estates Abolition Act, 1951, the Paikpara estate vested in the State of Orissa.
But the interest of tenure holders and sub proprietors within the estate had not been taken over under the provisions of the Act: 553 The said buildings on the lands of the occupancy holdings were used as Katcheri houses by the proprietors for the administration of their estates.
The state officials took possession of these buildings situated on the raiyati land.
The appellants made an application to the collector, Puri, for vacant possession of the lands and the buildings.
The Collector did not concede the demand and held that the occupancy holding was situated within the tenure held under the proprietors and lay within the geographical limits of the estate which had vested in the Government.
The High Court dismissed the writ petition of the appellant under article 226 on the ground that the question raised was practically concluded by the Supreme Court in K. C. Gajapati Narayan vs Deo State of Orissa.
The appellants came up in appeal on a certificate granted by the High Court.
Held, that the appellants ' raiyati interests in the lands and in the buildings standing on those lands had not been affected by the abolition of their interests as proprietors, and the State Authorities had illegally taken possession of them.
Held, further, that the Orissa Estates abolition Act,1951, was intended to abolish all proprietors,sub proprietors, tenureholders, with a variety of names, but did not touch the interest of the raiyat.
Hence though these lands with buildings was situate geographicaiy within the ambit of the appellant 's estate, they were not part of the estate.
The appellant held those properties with the buildings not as proprietors as such, but as raiyats.
Held, also, that the conclusion drawn by the High Court from the decision in K. C. Gajapati Narayan Deo vs The State of Orissa is not well founded.
The observation of this Court on which it drew its conclusion had reference to the definition of 'home stead ' in cl.
(1) of section 2 of the Act.
This court while dealing with the constitutionality of the Act, in the above case, was not concerned with raiyati lands.
Its observations had reference only to such buildings as stood upon the proprietor 's private land, which were in his possession as proprietor or as tenure holder.
K. C. Gajapati Narayan Deo vs The State of Orissa; , , not applicable.
|
Civil Appeal Nos. 12 and 865 1978.
From the Judgment and order dated 19 12 77 of the Kerala High Court in Eloction Petition No. 16 of 1977.
F. section Nariman, section Narayanan Poti, J. B. Dadachanji and K. J. John for the Appellant, (In CA 12 and Respondent in C.A. 865/ 78) .
Y. section Chitale and N. Sudhakaran for the Respondent (In C.A. 12 and Appellant in C.A. 865/78).
The Judgment of the Court was delivered by FAZAL ALI, J.
This election appeal is directed against the order of the High Court of Kerala dated 19th December, 1977 by which the election of the appellant Haji C. H. Mohammad Koya has been set aside and he has been disqualified from taking part in the elections for a period of six years under the provisions of the Representation of the People Act, 1951 (hereinafter called the Act).
For the purpose of brevity we shall refer to the respondent petitioner as the Petitioner and Haji C. H. Mohammad Koya as the appellant.
668 In the general election held to the Legislative Assembly of Kerala on 20th March, 1977 the petitioner and the appellant were the contesting candidates from No. 34 Malappuram Constituency.
The counting of votes took place on the 20th March, 1977 and The appellant was declared elected on the same date.
The total votes polled were 56,276.
The appellant secured 39,362 votes and thus defeated the petitioner by a margin of 20,000 votes.
Aggrieved by the election results, the petitioner filed an election petition in the High Court alleging that the appellant had committed various corrupt practice falling within the ambit of sections 123(3), (3A) and (4) of the Act.
It was mainly alleged that before the elections, the appellant was the Chief Editor of a Malayalam daily paper called Chandrika which was the official organ of the Muslim League.
It is further alleged by the petitioner that the appellant held shares worth Rs 3 lakhs in the Printing and Publishing Company which published Chandrika.
This paper, according to the petitioner, contains several articles, extracts of speeches and cartoons which tended to ask the Muslims to vote for the appellant on religious and communal grounds and also promoted ill will and hatred between two classes of citizens, namely, the Janasangh and the Muslim League.
It appears, however, that at the hearing the petitioner confined is case only to the corrupt practices alleged by him under section 123(3A) of the Act In this connection, the learned Judge of the High Court observed as follows: "Though in the petition sub sections 3.
3A and 4 of section 123 of the Act are specifically referred to, from the evidence tendered in the case it would appear that applicability of sub section 3A of section l 23 alone falls for the decision".
The petition was contested by the appellant who filed a counter affidavit denying the assertions and averments made by the petitioner and took the stand that he made no speech which offended section 123 (3A) of the Act nor was he aware of any of the offending articles or cartoons published in Chandrika prior to the elections.
The also denied that he was an Editor of Chandrika, but admitted that he was the Chief Editor and that too only in name.
Being an important and an influential person he was able to collect lot of more for Chandrika from the Gulf States and that is why he was assigned an important role in Chandrika as Chief Editor for the purpose of deciding the larger policies of the paper.
The appellant further denied that he had anything to do with the editorial work of Chandrika or the publication of the speeches or articles etc.
It may be pertinent to note here that even the petitioner in his petition has not at all 669 alleged or described the nature of the duties which the appellant performed as Chief Editor nor has he stated that as Chief Editor he was controlling the materials published in the paper so as to ascribe constructive knowledge to him of the articles published in Chandrika.
ALL that the petitioner pleaded in his petition on this subject may be extracted thus: "The respondent is the Chief Editor of Chandrika, a daily newspaper published from Calicut.
It is published by the Muslim Printing and Publishing Company Limited.
The major shares of this company is owned by the Muslim league Party and the respondent holds share worth of Rs. 3 lakhs in the above company.
The daily Chandrika is the official organ of the Muslim League Party.
It is submitted that in the daily Chandrika of which the respondent is the Chief Editor, is published reports and articles appealing to the members of the Muslim community not to vote for the candidates of the Muslim League (opposition) in the name of religion and community".
As regards the speech while the petitioner admitted that he did make a speech as would appear from the extract exhibit P.1(a) but denied that he made any communal allegations against the Janasangh but stated that some of the words used by him in the speech were used purely in a figurative sense.
When the appeal was heard before us counsel for the parties agreed that the only items of evidence which could be relied upon against the appellant were (1) his speech exhibit P.1(a), (2) Cartoon exhibit
P.5 and (3) other offending speeches and articles which were published in the paper of which he was the Chief Editor.
It was conceded by Dr. Chitale, counsel for the petitioner that if he was not able to prove that the appellant was really the Editor of the paper then the presumption under section 7 of the Press and Registration of Books Act 1867 (hereinafter called the Press Act) would not apply and the case of the petitioner would stand or fall on Ex.P.1(a) and Exhibit P.5.
It is also not disputed that although the High Court has relied on a number of articles and extract of speeches published in the various issues of Chandrika yet none of these have been proved according to law by examining the writer or the reporter or producing the original script or the paper.
If, therefore.
the petitioner fails to establish that the appellant was virtually the Editor of Chandrika or at any rate performed the duties of the editor then no constructive knowledge of these articles can be attributed to him.
The High Court framed the following issues: 1.
Whether the petition is maintainable ? 670 2.
Whether the election is vitiated by all or any of the corrupt practices alleged in the petition? 3.
Regarding reliefs and costs.
As regards issue No. 1 the High Court held that the petition was maintainable and decided this issue against the appellant.
This finding has not been challenged by the appellant before us and we there fore affirm the same.
The main issue in the case was issue No. 2 and we should have expected the High Court to have framed a more detailed issue giving the nature and character of the corrupt practices alleged by the petitioner against the appellant in order to give a clear picture to the parties regarding the matters which were to be decided by the court.
However, as both the parties understood what the allegations were and proceeded to trial on that basis the vagueness of the issues framed by the High Court has not caused any prejudice to any of the parties.
The main corrupt practice pleaded against the appellant by the petitioner and which has been vehemently argued before us is to be found in paragraph 5 of the petition which is regarding the inflammatory speech Exhibit P.1(a) said to have been made by the appellant and which according to the petitioner fell within the mischief of section 123 (3A) of the Act.
Another important averment made in the petition was in paragraph 11 of the petition which refers to the cartoon and may be extracted thus: "In Chandrika dated 12 3 1977 on the front page a cartoon is published.
It depicting Jansangh as a Pig and Shri E. M. Sankaran Namboodiripad, the Marxist Leader, cutting to the flesh of the pig and serving it to the Muslim.
This is an attempt to promote feelings of enmity and hatred between different classes of citizens of India on grounds of religion.
It is well known to eat pork is pardial ansthma (haram) for true muslims.
The publication of this cartoon in Chandrika is with the consent and knowledge of the respondent, which promoted hatred of the Muslims against the United Front of Marxist Party and Janata Party and Muslim League (opposition) of which the petitioner is a candidate from the concerned constituency".
It is clearly pleaded that the cartoon was published in Chandrika with the consent and knowledge of the appellant.
Thus, in other cases, consent and knowledge were not expressly pleaded by the petitioner, who sought to rely only on the presumptions to be drawn under section 7 of the Press Act.
671 We shall first take up, therefore, the question whether The petitioner can avail of the presumption to be drawn under section 7 of the Press Act.
The High Court has found that in the circumstances of the case, section 7 of the press Act fully applies to the facts of the present case.
We are however for the reasons that we shall give hereafter unable to agree with the view taken by the High Court.
Before dealing with the various provisions of the Press Act, it may be necessary to divide this question into two parts: (t) the legal aspect and (2) the factual aspect.
The legal aspect concerns the effect of the various provisions of the Press Act and the extent of their applicability to the appellant.
The actual aspect would take within its fold the duties and responsibilities performed by the appellant as the Chief Editor.
We will first take up the legal aspect.
The Preamble to the Press Act runs thus: "Whereas it is expedient to provide for the regulation of printing presses and of newspapers, for the preservation of copies of every book and newspaper printed in India and for the registration of such books and newspaper, it is hereby enacted as follows": It would thus appear that the object of the Press Act was to regulate printing presses and newspapers in order to preserve copies of newspapers and books.
Moreover, in order to avoid multiplicity of suits and uncertainties of liabilities, it was considered necessary to choose one of the persons from the staff and make him liable for all the articles or matters published in the paper so that any person aggrieved may sue only the person so named under the provisions of the Press Act and is relieved from the necessity of making a fishing or roving enquiry about persons who may have been individually responsible for the offending matters published in the paper.
Our opinion in this regard is however re informed be the statement, object and reasons accompanying the Press Act which mark be extracted thus: "Whereas it is expedient to repeal the Indian Press Act, 1910 and the newspapers (Incitements to offences) Act, 1908, and to make further provision in the Press and Registration of Books Act, 1867, for the liability of editors of newspapers in civil and criminal proceedings and to make certain amendments in that Act in order to facilitate the registration of printers and publishers; and to provide in the , the Code of Criminal Procedure, 1898, and the Indian Post office Act, 1898 for the seizure and disposal of certain documents; it is hereby 9 549 S Cl/78 672 encted as follows :" It was with this avowed object that the Press Act clearly defines 'Editor` who has a clear legal status under the Press Act.
Section 1 (1) of the Press Act defines 'Editor ' thus: "Editor" means the person who controls the selection of the matter that is published in a newspaper".
Section 5 of the Press Act provides that no newspaper shall be published except in conformity with the rules hereinafter laid down.
Section 5(1) runs thus: "Without prejudice to the provisions of section 3, every copy of every such newspaper shall contain the names of the owner and editor thereof printed clearly on such copy and also the date of its publication".
It would thus be clear that under section 5(1) of the Press Act the legal requirement is that every newspaper shall contain the name of the owner.
and the editor printed clearly, so that there is no con fusion in the minds of the people on this account.
Sub section (2) of section 5 of the Press Act makes it incumbent on the printer and the publisher to appear before the authorities mentioned in that section and make a declaration.
Sub rule (2) of rule 8 of the Rules made under the Press Act runs thus: "Every copy of every newspaper shall have printed legibly on it the names of the printer, publisher, owner .
and editor and the place of its printing and publication in the following form: Printed by . and published by . on behalf of . (name of owner) . . and printed at . (place of printing) . and published at . (place of publication. Editor . . " "This rule enjoins that the name of the printer, publisher, owner and editor must be clearly indicated.
The note to this rule is extracted thus: "Note: This form may be modified to suit the circumstances of each paper, for example, where The printer, publisher and owner are the same the imprint line can be Printed, published and owned by .
The editor 's name, however, should be given separately in every case".
This requires that the editor 's name however, should be given separately in every case.
Rule 6 requires every publisher to submit an annual statement to the Press Registrar.
It is not disputed in the 673 present case that this statement was not made by the appellant but by P.W. 2 Aboobaker who was the editor, publisher and printer of Chandrika.
The annual statement which has to be filed in form 2 contains one of the columns where the editor 's name has to be shown.
Section 7 of the Press Act runs thus: "In any legal proceeding whatever, as well civil as criminal, the production of a copy of such declaration as is aforesaid, attested by the seal of some Court empowered by this Act to have the custody of such declarations, or, in the case of the editor, a copy of the newspaper containing his name printed on it as that of the editor shall be held (unless the contrary be proved) to be sufficient evidence, as against the person whose name shall he subscribed to such declaration, or printed on such newspaper as the case may be, that the said person was printer or publisher, or printer and publisher (according as the words of the said declaration may be) of every portion of every newspaper whereof the title shall correspond with the title of the newspaper mentioned in the declaration or the editor of every portion of that issue of the newspaper of which a copy is produced.
Section 8(A) of the Press Act provides that where any person 's name has appeared as an editor in a paper although he was not an editor he shall within two weeks of his becoming aware that his name has been so published" appear before the District? Presidency or Sub Divisional Magistrate and make a declaration that his name has been incorrectly published and get a certificate from the Magistrate that the provisions of section 7 shall not apply to him.
It may be interesting to note the following facts here: 1 That the issues of Chandrika shown to US clearly and unmistakably mention the name of Aboobaker as the printer, publisher and editor of Chandrika and does not mention the appellant as the Editor of Chandrika.
The appellant is merely shown as the Chief Editor but this is an officer which is not at all contemplated by the Press Act.
That if the appellant was really the editor of the paper then P.W. 2 Aboobaker ought to have resorted to section 8(A) to correct the mistake in the paper where his name was shown as the editor but no such thing has been done.
One the other hand, P.W. 2 Aboobaker tacitly and clearly admits that he is the editor of the paper.
674 3.
That the petitioner has not at all pleaded in his petition the nature of the duties performed or responsibilities shouldered by the appellant as Chief Editor.
There is no averment at all in the petition that the appellant controls the selection of matter that is published in the newspaper which alone would make him an editor as defined in section 1 (1) of the Press Act.
The word 'Chief Editor ' is clearly absent from the Press Act and in fact foreign to it because the Press Act has selected only one person who has a special status and that is the editor who can be sued, if necessary, or can sue and against whom alone a presumption under section 7 of the Press Act can be drawn.
While holding that the presumption under section 7 of the Press Act is available to the petitioner, the High Court has completely over looked the aforesaid aspects mentioned by us.
The law on the subject is absolutely clear and there are a number of decisions of this Court which have interpreted the relevant sections of the Press Act.
In the case of State of Maharashtra vs Dr. R. B. Chowdhary & Ors.
(1) this Court observed as follows: "The term 'editor ' is defined in the Act to mean person who controls the selection of the matter that is published in a newspaper.
Where there is mentioned an editor as a person who is responsible for selection of the material section 7 raises presumption in respect OF such a person.
The name of that person has to be printed on the copy of the newspaper and in the present case the name of Madane admittedly as printed as the editor of the Maharashtra in the copy of the Maharashtra which contained the defamatory article.
The declaration in Form I which has been produced before us shows the name of Madane not only as the printer and publisher but also as the editor.
In our opinion the presumption will attach to Madane as having selected the material for publication in the newspaper .
In the circumstances not only the presumption cannot be drawn against the others who had not declared themselves as editors of the newspaper but it is also fair to leave them cut because they had no concern with the publishing of the article in question".
(1) ; 675 This case, therefore, clearly holds that where a person is not shown A in the paper to be its editor no such presumption under section 7 of the Press Act can be drawn but it must be held that he has no concern with the publishing of the article.
To the same effect is another decision of this Court in the case of D. P. Misra Kamal Naran Sharma & Ors.(1).
In this case which was also an election matter a newspaper called Mahakoshal was published from Raipur and one Shukla was registered as the printer, publisher and editor with the Press Registrar.
The defence of Shukla was that he had appointed one Tarangi as the editor of Mahakoshal in June 1962 and was not present at the relevant time.
This Court pointed out that the proceedings for naming a person who is found responsible for publication of an offending matter and for constituting a corrupt practice are in the nature of quasi criminal proceedings.
It follows therefore that being a corrupt practice it has to be proved beyond reasonable doubt and not by the measure of preponderance of probabilities.
The Court observed in this connection as follows: "Section 7 raises a presumption that a person whose name is printed in a copy of a newspaper is the editor of every portion of that issue.
The presumption must be re butted by evidence .
The presumption under section 7 of the Press and Registration of Books Act undoubtedly arises, but in a charge under section 123(4) of the Representation of the People Act the presumption under section 7 of the Press and Registration of Books Act, 1867 would come with greater or less force, according to the circumstances to the aid of a person claiming that the editor was responsible for the publication and that the publication was to the knowledge of editor".
"Granting that there was close association between Mishra and Shukla and even granting that Mahakoshal was exclusively carrying on propaganda on behalf of Mishra, unless there is evidence to prove that Shukla had either authorised the publication of the offending matter, or had undertaken to be responsible for all the publications made in the Mahakoshal, no inference that the offending publications were made to the knowledge and with the, consent of Shukla may be raised".
"The statement filed by Shukla is not inconsistent with the case set up by him in this proceeding.
Responsibility for publication was accepted by him but he had clearly stated (1) [1971] 3 section C. R. 257 676 that the publication of news items from the correspondents were attended to by the Sub editors and That he generally laid down the policy of the newspaper and gave general directions.
He admitted his responsibility because he personally had with knowledge published the article which constituted contempt of Court".
We may mention here that in this case Shukla in his statement has clearly stated that the publication of the news items in the paper were attended to by Sub editors and he generally laid down the policy of the newspaper and gave general directions.
No such allegation or evidence is forthcoming in the instant case because it has neither been alleged nor proved that the appellant was in any way controlling selection of the matters published in the paper.
In the case of Narasingh Charan Mohanty vs Surendra Mohanty(1) this Court pointed out that consent or agency could not be inferred but had to be proved affirmatively like any other fact.
In this connection the Court observed as follows :. "Consent or agency cannot be inferred from remote causes.
Consent cannot be inferred from more close friend ship or other relationship or political affiliation.
As pointed out in D. P. Mishra 's case (supra) however close the relationship unless there is evidence to prove that the person publishing or writing the editorial was authorised by the returned candidate or he had undertaken to be responsible for all the publications, no consent can be inferred".
It was further held in this case that the presumption under section 7 of the Press Act is a rebuttable presumption and the so called editor can rebut the presumption by showing that he had nothing to do with t he publication of the editorial or the news report.
In our opinion, even if any presumption is sufficiently rebutted by him not only from the evidence adduced by the appellant but also by the evidence adduced by the petitioner.
We shall presently deal with this facet of the matter, namely the factual aspect of this question.
The court further observed as follows: "When once it is established that neither the editorial (ext. 1) nor the news report (Ext. 2) were published by the respondent or by some one else with his consent or that the speech alleged to be made by Biju Patnaik even if it amounts to corrupt practice, was made without the consent of the respondent, and that Biju Patnaik was not his agent.
It is unnecessary to consider the question whether the (1) 119741 2 section C. R. 39.
677 editorial and the news report as well as the speech of Biju Patnaik did in fact constitute corrupt practice under sub section (3) of section 123 of the Act".
As against this Dr. Chitale, counsel appearing for the petitioner submitted two points before us.
In the first place, he argued that the provisions of rule 8 thereof have not at all been complied with, and, therefore, the appellant cannot escape his liability even though he was the Chief Editor.
It was argued that the note to rule 8 as also the form mentioned in rule 8 sub rule (2) clearly provide that the editor 's name must be separately shown in every paper and in the instant case the issue of the paper Chandrika shows in a composite form that the editor, printer and publisher of the paper was P.W. 2 Aboobaker.
It was thus contended that the provisions of rule 8(2) have not been complied with because the name of the editor has not been separately shown.
In these circumstances, it was argued that as the name of the Chief Editor was separately shown he must be taken lo be the editor of the paper under the provisions of the Press Act and the rules made thereunder.
We are however unable to accept this argument.
In the first place, the paper clearly shows the name of the editor as Aboobaker.
As the printer, publisher and the editor was one and the same person it cannot be said that merely because the name of the editor was not shown at a separate place he was absolved of his responsibilities as the editor.
The intention of the rule is merely to clarify who the editor of the paper is and once this is shown then there is a substantial though not a literal compliance of the rule.
Secondly, the Press Act does not recognise any other legal entity except the editor insofar as the responsibilities of that office are concerned.
Therefore, mere mention of the name of the Chief Editor is neither here nor there, nor does it in any way attract the provisions of the Press Act particularly section 7.
Thirdly, it is not even pleaded in the petition, much less proved, that the appellant being the Chief Editor, it was part of his duty to edit the paper and control the selection of the matter that was published in the newspaper which in fact has been demonstrably disproved by ' the appellant.
Thus? we are unable to accept the finding of the High Court that any presumption under section 7 of the Press Act can be drawn against the appellant.
This brings us to the factual aspect of the matter.
In this connection, the definite case of the appellant is that although he has been shown as the Chief Editor of Chandrika he was not at all connected with any editorial function but his name was lent to the paper because of his past services to Chandrika and because he used to get lot of 678 money for this paper being an influential man.
This has been proved not only by the evidence led by the appellant but also by the evidence adduced by the petitioner.
Before taking the evidence on this point we might mention a few admitted facts which loom large in our minds (1) that the petitioner proceeds on the footing in his petition that the appellant was the Chief Editor and no where he has been mentioned as the editor of Chandrika, (2) there is no pleading by the petitioner that the appellant was an editor within the meaning of section 1(1) of the Press Act particularly when the paper Chandrika was the pivot and the sheet anchor of his case and which clearly showed that the appellant was not the editor but P.W. 2 Aboobaker was officially and factually the editor of the paper and yet there is no positive denial of this fact in the petition; (3) no particulars of the functions, duties and powers of the appellant as Chief Editor have been pleaded.
On the other hand, it has been pleaded that the appellant held shares worth Rs. 3 lakhs in the company but that will not attract the provisions of the Press Act at all; and (4) as Aboobaker was admittedly the editor of the paper Chandrika as clearly admitted by the petitioner himself in his evidence, the onus was clearly on the petitioners to allege and prove that the duties of the editor were actually performed not by P.W. 2 Aboobaker but by the appellant.
In this background we would now discuss the evidence of the parties on this point.
P.W. 1 Thangal (Petitioner) categorically states thus: "V. C. Aboobaker is the editor and printer of Chandrika".
He further admits that Aboobaker 's responsibility is to submit the reports and the speeches supplied by the appellant.
He also admitted that Aboobaker does the editing.
The witness no doubt says that he had seen the appellant in the Chandrika office twice but that by itself would not show that the appellant was the editor of the paper.
Strong reliance was placed by counsel for the petitioner on the statement of P.W. 1 to the effect that the appellant was doing the day to day.
editorial work of Chandrika.
In the first place, this statement does not appear to, be true and is clearly contradicted by the petitioners own witnesses, namely, P.Ws. 2 and 5 who have categorically stated that Aboobaker was the editor and the appellant was not a member of the editorial group and was extremely busy with the elections to be able to devote any time to do the work of the editor.
The evidence of this witness shall be discussed hereafter.
679 Another important aspect of the matter is that as the petitioner was not connected with Chandrika he is not competent to depose to show who did the editing work of Chandrika.
The only competent witnesses on this point are P.Ws. 2 and 5 and the appellant and they have said that the appellant had nothing to do with the editorial work of the paper.
Moreover, it would appear from the evidence of P.W '.
5 that there is a special attendance register for the editorial staff and that the appellant had not signed the said register which clearly shows that the appellant had no concern at all with the editorial group.
Finally, the allegation that the appellant was doing day to day editing work of Chandrika is not merely a piece of evidence but a material fact which ought to have been pleaded in the petition if the petitioner wanted to rely on the presumption under section 7 of the Press Act.
If this fact was within the knowledge of the petitioner there was no reason why he did not mention it in his petition.
In these circumstances, therefore, the statement of P.W. 1 on the point cannot be accepted.
P.W. 2 Aboobaker who has been examined as the petitioner 's own witness categorically states that he is the printer, publisher and editor of Chandrika and his statement on this point is extracted thus: "I am the Printer, Editor and Publisher of the Malayalam Daily Chandrika.
This is published by Chandrika Printing and Publishing Company".
He further states that in this institution (Chandrika) the post of Chief Editor is an ornamental post.
Thus, the witness fully supports the appellant 's case that he was the Chief Editor only in name and his post was purely ornamental.
The witness further admits that all responsibilities are with the editor and Chandrika has no regular Board called the Editorial Board.
He further admits that as an editor he knows what his responsibilities are.
The witness further admits in clearest possible terms that the authority to change the policies from time to time is vested in him.
His statement may be extracted thus: "The authority to change policy from time to time is vested in him.
" He further states that the reports or the news are published only after `he is satisfied about the truthfulness of the report concerned.
This shows clearly that P.W. 2 was both de jure and de facto an editor inasmuch as the control of the policy was vested in him.
He was performing the duties and shouldering the responsibilities of the editor and the reports were published under his authority.
680 Reliance was however placed by counsel for the petitioner on the statement of the witness P.W. 2 which runs thus: "In the Chandrika Office, Chief Editor has got a special room .
He is interested in the maintenance of the standards of Chandrika as a newspaper .
He knows the policy of the paper.
If anything appears against the declared policy of the paper he has got the authority to give necessary direction to me about that".
To show that the appellant was controlling the general policy of the paper.
We are unable to infer from this statement that the appellant was controlling the selection of the matter published in the paper so as to fall within the definition of the word 'editor ' as defined in section 1(1) of the Press Act.
The appellant was no doubt connected with the paper for a long time and there is nothing wrong in his giving directions to the editor if he found that some event took place against the declared policy of the paper.
The witness at a later stage of his evidence has clearly stated that he had not discussed with the appellant the news item which appeared in the paper nor did the appellant give any direction to the witness about the printing and editing of the paper.
This statement may be extracted thus: "I have not discussed with the respondent about the news items which appeared in the paper.
He did not give any direction about the printing and publishing of the paper".
The witness further clarifies that the Chief Editor has no such special ' responsibility.
He further states thus: "In the editorial staff of Chandrika there are 20 persons including me.
This 20 include trainees also.
Under them there are two news editors.
There are two Chief Sub Editors.
5 or 6 Sub Editors.
I have got supervision of their work .
I have only responsibility of editing and printing of the paper".
This clearly shows that the witness was not only entirely responsible.
for the printing and editing of the paper but was also supervising the work of the Sub editors under him.
He also admits that the declaration under the Press Act was filed by him.
To an express question whether the appellant has been selecting or editing any of the day to day matters appearing in the paper the witness categorically denied the same.
The statement may be extracted thus. "The declaration under the Registration of Press and Books Act was filed by me.
Has the respondent been selecting or editing any of the day to day matter appearing 681 in the paper? (Q) No. (Ans.) .
At the time of election because of his responsibility as the Secretary of the Muslim League and as a leader of the United Front, during the months of February and March, the respondent was mostly on tour. on all days when I was present, I sign the register".
It is, therefore, clear that even the witness examined by the petitioner has knocked the bottom out of the case of the petitioner that the appellant had anything to do with the duties and functions of an editor, and the question put to the witness which is denied by him clearly shows that the appellant has demonstrably disproved that he could be an editor of the paper as defined in section 1 of the Press Act.
Further this witness has also admitted that at the time of election because of the appellant 's being the Secretary of the Muslim League and leader of the United Front he was mostly on tour.
This admission goes to show that the appellant was too busy to be ascribed knowledge of the articles or speeches published in Chandrika.
P.W. 3 C. K. Hassan who is a worker of the petitioner merely says that the appellant Haji C. H. Mohd. Koya was the Chief Editor and it was mentioned in the Chandrika paper that the Chief Editor would give speeches.
The witness further says that since it was printed in the Chandrika paper it was understood that the appellant was the Chief Editor.
This takes us nowhere because the witness does not throw any light on the duties performed by the Chief Editor and also does not say who was the editor of Chandrika.
In these circumstance, the evidence of this witness is absolutely valueless on the point in issue.
P.W. 4 Mohammed Ali Shihab Thangal is an important witness being the President of the Muslim League and Managing Director of the Muslim Printing and Publishing Press which published the paper Chandrika.
The witness was fully conversant with the working of the editorial department of the paper.
The witness clearly states that the appellant was the Chief Editor and the editor was under him.
The witness further categorically asserts that the policy of Chandrika is decided by the editorial staff which as has already been seen does not include the Chief Editor.
This fact was admitted by P.W. 2 as reported above.
Even this witness does not say that the appellant as the Chief Editor was a member of the editorial staff.
On a specific question asked to him whether the appellant as the Chief Editor had powers to take decision about the paper, the witness has denied knowledge of the same.
The witness further proves that the appellant as 682 the Chief Editor was drawing a salary of Rs. 700 per month, but the witness admits that the entire management is done by Seethi Sahib as Director in Charge.
Thus, according to this witness, Seethi Sahib who has been examined as P.W. 5 is the most competent witness to prove as to what was the exact nature of the duties of the Chief Editor.
P.W. 5 Seethi Haji is the Director in charge of the Muslim Printing and Publishing Press and admits that he attended to the administrative functions of the Press.
He clearly admits that Aboobaker (P.W. 2) was the editor of Chandrika paper and, his responsibilities are the same as they were in 1974 75.
While explaining the reason why the post of Managing Editor and Chief Editor existed in the establishment, he says that this was because it was thought that the names of big personalities would be prestigious.
In other words, the witness fully corroborates the version given by P.W. 2 that the appellant 's name as Chief Editor was merely ornamental.
The witness also says that although the appellant had a lot of experience in journalism yet that was not the only reason why he was made the Chief Editor but another consideration that swayed with the authorities concerned was that the appellant was a leader of the community.
The witness further asserts thus: "To write 'Chief Editor` has a value of its own that was why the name was inserted.
(Ans.) He is also a leader of the community as well as a journalist.
He is an M.P.
So his name was inserted".
The witness stoutly denied the suggestion put to him that there was an impression among the public that Chandrika and everything about it constitutes the responsibility of the appellant.
The witness says that from 1967 to 1974 the appellant was in Chandrika but there is no such impression in the public.
The appellant is a shale holder having invested Rs. 400 whereas Rs. 3 lakhs has been invested in the name of the Muslim League.
Another important suggestion which is denied by the witness was an answer to the following question: "Will you work out the policy of the paper on your own accord without the knowledge of C.H. ?" the witness answer is as follows: "I do things now, after consulting P.W. 2.
Till now I have not asked C.H." It is, therefore, clear that even in matters of policy the witness who was in charge of the administration of the paper would not consult the appellant but only P.W. 2 who was admittedly the editor of the 683 paper.
In other words, it is clear that the appellant had nothing to do with the policy of the paper much less the editing part of it.
To a question that except Chief Editor the appellant has got any other official position in this company the witness answered 'nothing '.
The witness further stated that the Chief Editor had not raised any objection to him about any news item published in Chandrika or the policy matter of the paper from which he inferred that the Chief Editor had approved the policy for if he had no objection he would have told him.
Again, the witness makes a very significant statement which runs thus. "I am present in the office on almost all days.
I was in charge of going through the publications appearing everyday in the paper and checking up as to whether they are in conformity with the declared policies and interests of the paper.
It was my responsibility to place objections, if any, if they were against the declared policies".
The witness further stated that the Manager had nothing, to do with the editing and printing of the Paper but categorically asserted that P. W. 2 is selecting and editing everyday 's matters in the Chandrika.
Thus, on the admission of this witness who was fully conversant with the working of the paper P.W. 2 alone fulfils the requirements of the definition of an editor as given in section 1 of the Press Act and totally excludes the appellant from the scope and ambit of an editor as defined in the aforesaid, section.
The witness further admits that there is a special attendance register for the editorial staff and when the register is shown to him he admits that this is the same register since January 1977.
This register is marked Exhibit R 7.
The witness further admits that the register is for the entire editorial staff including P.W. 2.
The witness further asserts that the appellant who was the Chief Editor had not signed in this register.
This therefore clearly and conclusively proves and unmistakably shows that the appellant was not a part of the editorial staff at all and had no concern with that department.
This is all the evidence led by the petitioner and from this evidence it has not at all been proved that the appellant as the Chief Editor performed any functions of the Editor or was an editor within the meaning of section ] of the Press Act.
Before concluding this part of the case was might refer to the evidence of the appellant himself.
But before we do that it would he necessary to analyze the pleading of the appellant.
684 In para 4 of the counter affidavit which is really a substitute tor the written statement the appellant avers as follows: "The actual functions of the editor are being looked after by Sri V. C. Aboobaker who is the editor, printer and publisher of the Chandrika.
This respondent has very little time to perform the functions of the Chief Editor as he is pre occupied with other important activities on account of his membership of Parliament and his being the Secretary of the Indian Muslim League, both all India and State The actual editing and publishing were entirely looked after by Sri V. C. Aboobaker".
In the evidence given by the appellant as his own witness what he has stated in his counter affidavit is fully proved and further supported by the evidence of P.s. 1 to 5 as discussed above.
At any rate the appellant himself has made the entire position clear in his evidence which is fully corroborated by the witnesses of the petitioner examined by him.
On a specific question put to him as to whether he worked as Chief Editor during those days, the witness has categorically denied the same.
The witness further stated that he became the Chief Editor in 1971 and continued to be so till 1977.
He has further clarified that when he became the Chief Editor he was not doing the editing work which he was doing before.
According to the witness, he joined the paper as far back as 1944 as Sub Editor.
It is, therefore, natural that in the early stages of his career he was a part of the editorial staff and must be performing editorial duties when he became the editor.
But what we have to see is what was the position in 1977 after he became the Chief Editor.
On this point, the witness has categorically stated that as Chief Editor he was not doing any editing work.
The witness has further explained that when he became the Chief Editor he was also an M.P. and so he did not get any time for doing the editorial work.
The witness then goes on to state that from 1974 to 1977 till the Lok Sabha was dissolved he was in Delhi as an M.P. and even during that time his name used to be printed in the paper as Chief Editor but he was not doing any editing work.
He further states that as leader of the United Front and of the Muslim League he had much work to do during the election time and he was very busy with the election speeches.
Explaining the responsibilities and duties of an editor the witness stated thus: "The responsibility of editing Chandrika is of P.W. " Aboobaker.
There is a large staff of Chief Sub Editors and Sub Editors to assist him.
There are two Chief Sub Editors, 685 including Sub Editors there are about 10, 20 persons.
The A work of these persons is supervised and co ordinated by PSHAW. 2".
The witness further states that the Chief Editor has No. room in the editorial section.
He further corroborates PSHAW.
2 by stating that PSHAW.
2 has given the declaration under the Press Act.
Regarding the nature of the functions which he actualy performed the witness asserted thus. "You had no difference of opinion with the reports and articles which appeared in Ext.
P. 1 to 11 .
Having read I did not think that any of those would constitute corrupt practices.
If I had thought so I would have tried to rectify them".
He further stated that he did not belong to the regular staff.
He further admitted that he collected funds from the Gulf countries to finance the paper Chandrika and the Muslim League holds the shales in the name of the witness.
Learned counsel for the petitioner laid very great stress on exhibit P. 2 a letter signed by the appellant to show that he was doing the editorial work.
This letter was sent to one of the correspondents of the paper Chandrika and the appellant has explained in his statement that in the absence of the editor P.W. 2 the Manager requested the appellant to sign the letter and so he signed it This was just an act of official accommodation which was totally unconnected with the duties performed by the appellant.
After all the appellant was a high officer in the said organisation and if the letter had to be sent to one of the correspondents and was a little urgent instead of waiting for the editor to come there could be no harm if the Manager asked the appellant as Chief Editor to sign it.
Such a casual act on the part of the appellant done, not voluntarily, but at the request of the Manager cannot clothe him with the legal status of an editor.
Thus, this fact alone would not show that he was performing any editorial functions.
The witness further states that the Chandrika has no editorial Board but there is an editorial group consisting of Editor, Sub Editor and others.
This is the relevant part of the evidence of the appellant on this question.
Thus, on a close and careful consideration of the evidence discussed above.
the following inescapable conclusions emerge: 1.
P.W. 2 Aboobaker was admittedly the editor of Chandrika, fulfilled all the conditions of section 1(1) of the 686 Press Act and his name was printed as editor in the of Chandrika. 2.
P.W. 2 as the editor of the paper supervised the editorial staff, controlled the selection of materials to be published in the paper, approved the policies to be followed in publication and was wholly in charge of the editorial group.
The appellant was never shown or referred to as the editor anywhere.
Even the register which is meant to be signed by the editor and the other staff on the editorial rial group was not signed by the appellant as he had nothing to do with the editorial work.
The appellant had been appointed as Chief Editor because he was a Member of Parliament and an influential man who could get finance for the paper from the Gulf States but he had no hand at all in any of the functions and duties performed by the editor.
The appellant was no doubt shown as Chief Editor in the issues of the Chandrika but the Press Act as held by us does not recognise any such legal entity and the only person who is recognised by the Press Act is the editor who in this case was P.W. 2 and who had admittedly filed the declaration under section 5(2) of the Press Act.
Although section 8A was the specific provision under which a person could apply for a certificate that he 1. ' ceased to be the editor no such action was taken by P.W. 2 to get his name struck off from the roll of editor.
This clearly shows that P.W. 2 alone was the editor and the appellant was merely a name lender and his post was purely ornamental.
The petitioner himself has not at all anywhere pleaded in his petition that the appellant was the editor nor has he mentioned the duties or responsibilities which were performed by the appellant as Chief Editor so as to bring him within the fold of section 1 of the Press Act.
From the facts established above, it is manifest that the petitioner has miserably failed to prove either that the appellant was the editor of the paper or that he was performing the functions.
duties or 687 shouldering the responsibilities of the editor.
It is obvious that a presumption under section 7 of the Press Act could be drawn only if the person concerned was an editor within the meaning of section l of the Press Act.
Where however a person does not fulfil the conditions of section 1 of the Press Act an(l does not perform the functions of an editor whatever may be his description or designation the provisions of the Press Act would have no application.
In these circumstances, therefore, the High Court had no legal justification to draw a presumption against the appellant under section 7 of the Press Act in holding that he was proved to be the editor of Chandrika and! therefore, must be deemed to be aware of the articles published in the said paper.
Even if, for the sake of argument, it is assumed that the appellant was the editor it has been pointed out by this Court that the presumption to be drawn under section 7 of the Press Act is rebuttable and the evidence and the circumstances of this case discussed above show that this presumption has been sufficiently rebutted.
The next question that arises for consideration is that if the finding of the High Court on this point is rejected as it must be then can the petitioner be liable for the materials or speeches published in the paper Chandrika.
The publication of the materials promoting hatred between two classes of citizens is undoubtedly a corrupt practice and` it is well settled by long course of decisions of this Court that such practices must be clearly alleged with all the necessary particulars and proved not by the standard of preponderance of probabilities but beyond reasonable doubt.
We are fortified in our view by the decision of this Court in the case of Mohan Singh vs Bhanwar Lal & Ors.(1) where this Court observed as follows: "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.
" To the same effect is a decision of this Court in the case of Magraj Patodia vs R. K. Birla & Ors.(2) where this Court observed as follows: "But the fact remains that burden of proving the com mission of the corrupt practice pleaded is on the petitioner (1) A. 1.
R. (2) ; 10 549 SCI/78 688 and he has to discharge that burden satisfactorily.
In doing so he cannot depend on preponderance of probabilities.
Courts do not set at naught the verdict of the electorate except on good grounds".
ln the case of D. Venkata Reddy vs R. Sultan & Ors.(1) this Court after reviewing most of the previous decisions of this Court observed as follows: "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.
lt 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 t cannot be lightly brushed aside in election disputes. .
Another principle that is equally well settled is that the election petitioner in order to succeed must plead all material particulars and prove them by clear and cogent evidence.
The allegations of corrupt practice being in the nature of a quasi criminal charge the same must be proved beyond any shadow of doubt".
In the case of Ramanbhai Nagjibhai Patel vs Jaswantsingh Udesingh Dabhi & ors.(2) this Court observed as follows: "We may state that the charge of bribery is in the nature of a criminal charge and has got to be proved beyond doubt.
The standard of proof required is that of proving a criminal or a quasi criminal charge.
A clear cut evidence, wholly ! credible and reliable is required to prove the charge beyond doubt.
Evidence merely probabilising and endeavouring to prove the fact on the basis of preponderance of probability is not sufficient to establish such a charge".
In the light of these decisions we shall now proceed to decide the next question.
In view of our finding that the appellant has not been (I ) 11976] 3 section C. R. 445.
(2) A. 1.
R. 689 proved to be the editor of the paper Chandrika Ext.
P. 2 to P. 11 excepting Ext.
P. 5 will have to be totally excluded from consideration because those are speeches and articles of various persons published in Chandrika and the constructive knowledge of this has been ascribed to the appellant by virtue of the allegation that he was the editor of the paper.
As however this has not been proved it was incumbent on the petitioner to prove knowledge of these articles or speeches like any other fact.
The admitted position appears to be that neither the writer of the article nor the speaker who delivered the speech nor the reporter nor even the manuscripts of the speeches have been produced before the Court.
In these circumstances, therefore, all these articles and speeches are inconsequential until they are shown to have been made with the knowledge and consent of the appellant.
Even in the pleading the petitioner has not averred that the appellant had any independent knowledge of these things or that these speeches or articles were written with his express or implied consent.
The petitioner has based his case entirely on the footing that as the appellant was the editor he must be deemed to be aware of these articles and speeches and if the speeches contained offending matters and promoted hatred and ill will between two classes of citizens the appellant must be deemed to have committed the corrupt practice under section l 23 (3A) of the Act.
As the entire edifice built by the petitioner for the admissibility of exhibit P. 2 to P. ll except P. 5 collapses, the allegation of the petitioner on this score is clearly disproved.
Moreover, we are fortified in our view by the decision of this Court in the case of Samant N. Balakrishna etc.
vs George Fernandez Ors.
etc.(1) where this Court observed as follows: "The best proof would have been his own speech or some propaganda material such as leaflets or pamphlets etc but none was produced .
A news item without any further proof of what had actually happened through witnesses is of no value.
It is at best a second hand secondary evidence.
It is well known that reporters collect information and pass it on to the editor who edits the news item and then publishes it.
In this process the truth might get perverted or garbled.
Such news items cannot be said to prove them selves although they may be taken into account with other evidence if the other evidence is forcible".
We might also mention here that the High Court rejected EXT.
P. 12 rand P. 13 by finding that these documents did not fall within the mischief of section 123(3A) of the Act.
Some reliance was however (1) [ ; 690 placed on exhibit P. l(d) which is said to have been written by the appellant.
This document cannot be taken into consideration for two reasons.
In the first place, this was undoubtedly a material particular if it was an article actually written by the appellant and contained offending matter, and, therefore, it was necessary that it should find place in the petition before being considered by the Court.
Secondly, it has not been proved to have been written by the appellant at all.
This document is in the nature of an editorial written on 1 3 1977.
The appellant has already denied that he had anything to do with the editorial work and was too busy with the election work as an M.P. and had no time to devote to these things.
The learned Judge of the High Court has wrongly mentioned in his judgment at page 28 of the paper book Vol.
l that the petitioner had made out a case that Ext.
P. 1 (d) was written by the appellant.
There is no such averment in the petition at all and the High Court has committed a clear error of record.
Thirdly, the appellant stated that he could not say after such length of time that the editorial was written by him.
But on reexamination the appellant categorically asserted that the editorial written could not be in his language and thus denied having written the editorial.
Although P.W. 2 the editor of the paper was examined by the petitioner and being the editor he was the best person to know whether or not this editorial was written by the appellant yet this document was not put to him.
In these circumstances, this document has not been proved according to law, and, therefore, must be excluded from consideration.
Counsel for the petitioner also did not press us to consider these documents Ext.
P. 2 to 1 '.
ll except P. S if we find that the appellant was nor the editor of the paper Chandrika or that the presumption is not available to the petitioner.
Reliance was however placed by counsel for the petitioner as also by the High Court on two documents, namely, exhibit
P. l(a) which was an extract of a speech delivered by the appellant at one of the election meetings where he is said to have made certain observations which tended to promote hatred or ill will between the Janasangh and the Muslim League.
Reliance was further placed on exhibit P. S which was a cartoon printed in the paper Chandrika and it was alleged by the petitioner that it was done with the knowledge and consent of the appellant.
The cartoon, according to the High Court, did contain offending matter inasmuch as it tried to promote feelings of hatred between two classes of citizens.
So far as exhibit P. l(a) the speech of the appellant is concerned the petitioner made the following averments in the petition which may be extracted thus: 691 "The respondent is the Chief Editor of Chandrika, a daily newspaper published from Calicut.
It is published by the Muslim Printing and Publishing Company Limited.
The major shares of this company is owned by the Muslim League Party and the respondent holds share worth of Rs. 3 lakhs in the above company.
The daily Chandrika is the official organ of the Muslim League Party.
It is submitted that in the daily Chandrika of which the respondent is the Chief Editor, is published reports and articles appealing to the members of the Muslim community not to vote for the candidates of the Muslim League (opposition) in the name of religion and community".
The analysis of the averment clearly discloses the following facts: 1.
The petitioner has not mentioned the name of a single person who had actually heard the speech and made a report.
According to the evidence of P.W. 1 he was present at the place where the speech was delivered by the appellant and yet this fact, though a very material particular, does not find mention in the averment in the petition referred to above.
It is not indicated in the petition as to how and in what manner the speech tended to promote feelings of enmity or hatred between two classes of citizens.
Even the classes of citizens against whom hatred was preached by the speaker has not been mentioned.
From the infirmities mentioned above, it is clear that so far as the speech is concerned the allegations made in the petition are vague.
Assuming however that para S may amount to an allegation as contemplated by section 123(3A) of the Act, we shall proceed now to determine how far the petitioner has been able to prove his case within the four corners of the aforesaid section.
No evidence was produced by the petitioner to prove whether the extract of the speech was correct and was a reproduction of the very words used by the appellant.
Although the witnesses for the petitioner admitted that his speeches were reported to the paper by the reporters neither the script of the speech nor the reporter concerned was examined as a witness to prove that the contents were the transcript of the speech delivered by the appellant.
The entire case of the petitioner on this point rests on an admission made by 692 the appellant in his statement in court that the extract printed in the paper was more or less the correct reproduction of his speech.
Thus, it is clear that the petitioner relies on this part of the case solely on the admission of the appellant.
It is well settled that an admission unless it is separable has to be taken as a whole or not at all.
In the case of Hanumant vs The State of Madhya Pradesh(l) this Court observed as follows: "It is settled law that an admission made by a person whether amounting to a confession or not cannot be split up and part of it used against him.
An admission must be used either as a whole or not at all".
To the same effect is the decision of this Court in the case of Palvinder Kaur vs The State of Punjab(i ') where Mahajan, J. speaking.
for the Court observed as follows: "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".
The same view was taken in a recent decision of this Court in the case of Dadarao vs The State of Maharashtra(3) where this Court observed as follows: "It may not, however, be overlooked that the admission made by the appellant must be read as a whole, for what he has stated is that he had made his signature in the.
account books of the branch office after an audit objection was raised that he ought to have signed the books at the end of every day in his managerial capacity.
The statement of the appellant on this aspect is not capable of dissection because the particular part thereof on which the High Court relies is inextricably connected with the other part which the High Court has not taken into consideration".
In view of the settled law on the question, it is manifest that the petitioner would fail or succeed on the admission of the appellant and the admission will have to be read in the light of what the (1) [1952] S.C.R. 1091.
(2) (3) 693 appellant has himself stated in his statement unless there are other A satisfactory reasons for taking a contrary view.
To begin with the offending words of the extract may be quoted thus: "C.H. declared emphatically that the assassins who dissected the community are now canvassing votes for the United Front of Janasangh and R.S.S. who were thirsting for Muslim blood.
He loudly declared that the community should rest only after completely flooring this front in the ring of the elections.
C.H. exhorted the gathering to cut down the fascist scarecros to the extent that they cannot rise again".
Out of the entire speech this is the only portion against which offence has been taken as falling within the mischief of section 123 (3A) of the Act.
It was suggested by counsel for the petitioner that the words used by the speaker clearly indicate that the party of the United Front of Jana Sangh and R.S.S. was after Muslim blood and the Muslim community should not rest unless this party is obliterated from the election.
Strong exception has been taken by counsel for the petitioner to the use of the words 'assassins ' for describing the Muslim who had gone over to the side of the United Front.
This passage was put to the appellant who stated thus: "In Ext.
P. 1(a) second paragraph it is said 'Murderers who split the community ' which community was split (Q).
I was referring to the split in the Muslim League (Ans.). .
The speech was at 2 o 'clock in the night.
I do not know whether the words which I exactly used have come in the paper.
The general idea is the same.
I say that you used these very words; can you deny (Q.).
I am not sure (Ans.).
When a speech is made different versions will come in the paper.
I do not usually prepare my speeches.
I speak extempore".
"I cannot say that I used the very same words.
But I have strongly urged that the opposition Front be defeated.
(Ans.) Have you said "RSS Jana Sangh which was thirsting for the Muslim blood".
(Q) The speech was made a year ago.
I do not remember the actual words used.
exhibit P. 1(a) report was written by Chandrika reporters.
The ideas were mine.
The phrase 'thirsting for blood ' was used in figurative language (Ans.).
" It is clear that the appellant does not admit that the extract contains the very words which were used by him in his speech particularly when the appellant had delivered an extempore speech.
As the 694 speech was delivered a year before by the appellant, it is quite natural that he would not have been able to remember the actual words used by him.
The appellant however makes it clear that the phrase 'thirsting for Muslim blood ' was used in a figurative sense and not literally.
That must obviously have been so.
He has further stated that he used the words 'thirsting for blood ' in a figurative sense and not in the sense of drinking blood.
What he meant was to give the Muslim community a warning that it would guard itself against such undesirable candidates by defeating them in the election.
It was, therefore, a speech in a political matter.
Further while explaining the words 'Getting into the battle field ' the witness has stated that he used the same in the sense of getting ready for a political contest.
This is how the appellant has explained his speech and the explanation given by him can not be rejected because no other evidence has been produced by the petitioner excepting the statement of the appellant regarding the interpretation of the speech.
Furthermore, the extract of the speech quoted above also shows that there does not appear to be any intention on the part of the speaker to preach hatred or enmity between two classes of citizens, namely, Janasangh, RSS and the Muslim League.
We might mention that a good deal of argument was advanced before us by counsel for the appellant as to the nature, character and significance of the term 'citizen ' and it was contended that political parties having a particular ideology could not be treated as a class of citizens as contemplated by section 123(3A) of the Act.
In the view which we have taken it is not necessary for us to examine this question.
We shall assume for the sake of argument that Janasangh, R.S.S. and the Muslim League were different classes of citizens, but even then that does not advance the case of the petitioner any farther.
We feel ourselves in complete agreement with the interpretation given by the appellant regarding the speech made by him.
In the first place, being the speaker the appellant was the best person to say what he meant by the speech he delivered.
Secondly, the petitioner has not produced either the reporter who was present at the meeting when the appellant spoke nor has he called for the script of the speech the extract of which was given in the newspaper.
It is very difficult to interpret a part of the speech completely torn from its context.
Furthermore, the words 'thrist for Muslim blood ' have been used for a particular purpose as explained by the appellant, because the words following, namely, 'he loudly declared that the community should rest only after completely flooring this front in the ring of the elections ' clearly show that what the speaker meant 695 was that as Jana Sangh and R.S.S. were against the Muslims they A should muster all efforts to get them defeated and teach a lesson to the dissident Muslims who had joined the Janasangh party.
There does not appear to be any element of hatred or enmity in the extract of the speech of the appellant reported above.
There is no exhortation by the speaker to the Muslims to attack the Janasangh or the R.S.S. Or to do any kind of harm or violence. 'the entire speech is made against a political background and for a political purpose.
Another intrinsic circumstance which takes the speech out of the ambit of section 123(3A) of the Act is the conduct of the petitioner.
The petitioner admits in his evidence that he heard the speech of the appellant but did not take down the same.
He further clearly admits that the speech excited religious sentiments which is an election offence and yet he did not complain to any one about the speech of the appellant.
In this connection, the petitioner stated thus: "It is a speech which excites the religious sentiments.
That is an election offence.
I had not complained to any authority about the speech of the respondent".
the petitioner has not examined any independent member of the public belonging to the place where the speech was delivered and who had heard the same to prove that the speech tended to promote hatred or enmity between different communities, nor is there any such evidence consisting of the members of the people to show what impact the speech made on them.
On the other hand, it was rightly pointed out by Mr. Nariman, counsel for the appellant that there is reliable evidence to show that the speech was not treated to be an offending one or one that fell within the mischief of section 123(3A) of the Act.
P.W. 1 admits in his statement that a paper called 'Mathrubhumi ' dated 1 3 1977 which was shown to him contains the correct reproduction of the speech of the appellant.
In this connection, the witness state as follows: "I read the Mathrubhumi also.
`Mathrubhumi ' dated 1 3 1977 shown to witness.
Is not the news item under the heading the United Front will return to power on 696 page 3 in this about the same news P. l(a) meeting (Q).
A copy of paper shown to witness.
The witness reads the passage.
The report about the meeting may be correct.
Does it give an exact report of the speech of the respondent on that day (Q) Yes (A).
" This extract in the Mathrubhumi is exhibit R l and runs thus: "C.H. Mohammed Koya expressed the opinion that the fate of those who condemned and denigrated the leaders of the community and those who stabbed the organisation from behind the back will be known by the next election".
A perusal of this extract would clearly show that the appellant never preached any hatred or enmity between two classes of citizens, but had merely condemned the dissident leaders of the community who had stabbed the organisation, namely, the Muslim League in the back and who were seriously condemned for their defection.
Had the speech been understood by the public and the intellectuals as promoting hatred or enmity between two parties, some comment on this aspect must have been found in the paper Mathrubhumi which be longed neither to the Jana Sangh nor to the Muslim League.
Furthermore, there is another paper 'League Time ' which is exhibit R 14 and which clearly mentions that in the last election communalism has not played any part at all.
The relevant extract may h ' be quoted thus: "Communalism has not played any part in the election.
Mr. Rajagopal pointed out this is a hopeful situation".
Thus, both these papers found no communal tinge nor any sermon! preaching hatred or enmity between Janasangh and Muslim League in any of the speeches delivered by the appellant at the various meetings in the course of the elections.
In view of the circumstances, therefore, the only evidence from which the court can find that the appellant had committed a corrupt practice as contemplated by section 123(3A) of the Act is the evid 697 ence of the appellant containing the explanation and the ramifications of his speech which being an admission has, in the facts and circumstances of this case, to be taken as a whole or not at all.
Moreover, as the offending, extract of the speech is an integral part of the speech of the appellant it cannot be dissected.
In other words.
a corrupt practice must be proved beyond reasonable doubt and applying this standard we must hold that the petitioner has failed to prove that the speech given by the appellant promoted or attempted to promote hatred or enmity between two classes of citizens.
In these circumstances.
stances, the allegation in para S of the petition against the appellant has not been proved.
None of the aspects discussed by us have been adverted to by the High Court which seems to have proceeded on presumptions and assumptions.
Lastly we come to the next item on which reliance is placed which is exhibit P. 5, the cartoon.
The allegation regarding the cartoon is made by the petitioner in para 11 of the petition which may be extracted thus: "In Chandrika dated 12 3 1977 on the front page a cartoon is published.
It is depicting Jana Sangh as a Pig and Shri E. M. Sankaran Namboodiripad, the Marxist leader, cutting the flesh of the pig and serving it to the Muslim.
This is an attempt to promote feelings of enmity and hatred between different classes of citizens of India on grounds of religion.
It is well known to eat pork is pardial ansthma (haram) for true Muslims The publication of this cartoon in Chandrika is with the consent and knowledge of the respondent which promoted hatred of the Muslims against the United Front of Marxist Party and Janata Party and Muslim League (opposition) of which the petitioner is a candidate from the concerned constituency".
It may be pertinent to note that in this averment the petitioner has pleaded that the cartoon was published with the consent and knowledge of the petitioner a fact which the petitioner has miserabIy failed to prove.
There is absolutely no evidence on record to show that the cartoon was shown to the appellant and his approval was obtained before it was published, nor is there any evidence to show that the appellant had any knowledge direct or indirect about the cartoon before its publication in Chandrika.
We might indicate 698 here that the term 'consent ' is a much stronger word than knowledge because it implies conscious assent and there is nothing to show that the appellant at any time gave his consent to the publication of the cartoon.
The actual cartoon seems to depict Janasangh as a pig and Shri E. M. section Namboodiripad the Marxist Leader cutting the flesh of the pig and serving it to Muslims It is well known that pork is strictly prohibited by Islam and the very act of offering pig to a Muslim is extremely abhorrent to the Muslim so the cartoon no doubt attempts to promote feeling of hatred between the Hindus and the Muslims and the High Court was right in coming to this finding.
But this does not conclude the matter because it must be affirmatively provide by the petitioner that this cartoon was shown to the appellant or was within his knowledge or had his consent before its publication.
on this there is no evidence at all.
Indeed if there is any evidence it is to negative this fact.
The petitioner has mainly relied on the statement of P.W. 2 the editor which is to the effect that the copy of Chandrika used to be sent to the appellant.
That by itself would not show that the appellant must have read all the issues of Chandrika including the one which contained the cartoon.
In fact, as indicated above, P.W. 2 has himself admitted that at the time of election because of his responsibilities as the Secretary of the Muslim League and as a leader of the United Front during the months of February and March the appellant was mostly on tour.
The appellant has also admitted that during the relevant time he never got time to read the paper completely.
He has also stated categorically as indicated by us while dealing with his evidence that he was extremely busy and has stated l thus: "As a leader of the United Front and the leader of the Muslim League I got much work to be done during election time.
During this time were you very busy with your election speeches ? (Q) Yes (Ans.) I was very busy".
He has further admitted that although a copy of Chandrika was sent to him yet he did not get time to read fully.
The statement runs thus: "As Chief Editor one issue of Chandrika used to be sent to me.
Did you have time to read Chandrika and other newspapers during election time ? (Q) l do not get time to read fully (Ans.)" This is all the evidence that has been produced in the court to show that the cartoon was printed with the knowledge and consent of the appellant.
Putting however the case of the petitioner at the 699 highest all that has been shown is that the appellant may have seen A or received the paper and at the same time it is equally possible that in view of his pre occupation the appellant may not have read or seen the paper at all.
In such a situation, the onus of proof being on the petitioner to prove that the appellant had knowledge of the publication of the cartoon, and applying the standard of proof by the doctrine B of benefit of doubt, the allegation of the petitioner that the appellant was aware of the cartoon or gave his consent to its publication stands disproved for the appellant will get the benefit of doubt if two clear possibilities are available.
Thus, it is impossible for us to jump to the conclusion that the appellant had any knowledge of the publication of the cartoon before its publication, or that he gave his consent C to its publication merely from the fact that the appellant was the Chief Editor and received a copy of Chandrika every day particularly hen the appellant has explained that he was too busy and did not find time to read the paper fully.
As the allegation regarding the cartoon is also a corrupt practice it has to be proved by clear and cogent evidence which is wholly wanting in this case.
It is true that the appellant was shown the cartoon while he was deposing in court and was asked to give his impression but whatever he might have said in court is totally irrelevant because that would not show that he had any knowledge of the cartoon prior to its publication.
He gives his impression only when the cartoon is shown to him.
On a careful consideration of the evidence we are clearly of the opinion that the petitioner has not been able to prove the corrupt practice alleged against the appellant.
There is no legal or satisfactory evidence to prove that the speech Ext.
P.L(a) made by the appellant promoted or attempted to promote feeling of enmity and hatred between two classes of citizens, namely, the Janasangh and R.S.S.
On the one side and the Muslim League on the other.
Similarly, there is no reliable evidence to show that the appellant had any knowledge or had given prior consent to the publication of the cartoon exhibit P. section Thus, the petitioner has miserably failed to prove the allegation made by him in paragraphs S and 11 of the petition which alone have been pressed before us.
We have also come to the conclusion that the presumption under section 7 of the Press Act is not available to the appellant and the learned Judge was wrong in relying on the same.
The result is that the appeal is allowed with costs.
The judgment of the High Court setting aside the election of the appellant and unseating him is quashed as also the order of the High Court disquali 700 fying the appellant from contesting the election for a period of sixyears.
The election petition filed by the petitioner before the High Court is dismissed.
Civil Appeal No. 865 of 1978 FAZAL ALI, J.
In view of our decision in the case of Haji C. H. Mohammed Koya vs T. K. section M. A. Muthukoya (Civil Appeal No. 12 of 1978), the appeal is dismissed but without any order as to costs.
P.H P. C. A. No. 12/78 allowed.
C.A. No. 865/78 dismissed.
| The appellant Corporation, which grants or guarantees the loan to be raised By industrial concerns either from the scheduled banks or state Cooperative Banks or those floated in public market, is entitled to make, for one or more of the reliefs set out in Section 31 ( 1 ) of the state Financial Cooperation Act, an application to the District Judge within the limits of whose jurisdiction the industrial concern carries on the whole or substantial part of its business, when any such concern defaults in repayment of loan or fails to comply with the terms of the agreement.
The Corporation made several applications purporting to be under Section 31(1) of the Act in various district courts in the State of Gujarat.
question was raised in the District Courts about the proper court fee payable on sch applications. ' The Corporation contended that the application would be governed k Article 1 (c) of Schedule II of the Bombay Court Fees Act, 1959 and a fixed court fee in the amount of 65 paise would be payable in respect of the application.
But the state contended that the application could be governed either by Article I of Schedule I or at any rate Article 7 of Schedule I and the court fee payable would be ad valorem on the amount of value o the subject matter in dispute or on the amount of the monetary gain or loss to be prevented according to the scales prescribed under Article 1 of Schedule I.
All the district courts except Broach accepted the contention of the state; but the Broach district court opined that the application under Section 31(1) was in the nature of an execution application and it would be governed by Article I (c) of Schedule II.
Both the Corporation and state of Gujarat went in revision before the High Court.
The High Court by a common judgment held that an appellation under Section 31(1) should bear an ad valorem court fee.
In reaching this conclusion, the High Court treated the application under Section 31(1) of the Act on par with a suit by a mortgagee to enforce the mortgage debt by sale of the mortgaged property which is being treated as a money suit falling within the purview of Article I of Schedule I. Alternatively, it was held the even if the application under Section 31(1) is not plaint within the meaning of Article I of Schedule I it would fall within the purview o Article 7 of Schedule I.
Allowing the appeal, by special leave the Court ^ HELD: 1.
The form of the application, the nature of the relief, the compulsion to make interim order, the limited enquiry contemplated by sub section (6) of Section 32 and the nature of relief that can be granted and the manner of execution clearly show that the application under Section 31 (1) is neither a plaint as contemplated by Article 1 of Schedule I nor an application in the nature of a plaint as contemplated by Article 7 of the Court Fees Act.
182 B C] 373 Once Article 7 of the Schedule I of the Court Fees Act is excluded there A was (and could be) no dispute that an application under Section 31(1) of trill Act would be covered by the residuary Article 1 (c) of Schedule II of the Court Fees Act and it should bear a fixed court fee in the sum of 65 paise.
[382 D] 2.
Section 31(1) of the Act prescribes a special procedure for enrichment of the claims of the Financial Corporation.
The Corporation is to make an application for the reliefs set out Indecision 31(1).
The reliefs that a Court can gram are the sale of the property mortgaged etc.
to a Financial Corporation as security for the loan or advance; transfer of the management of the industrial concern to the Financial Corporation; or restraining the industrial concern from transferring or removing its machinery or plant or equipment from the industrial concern without the permission of the Board of the Financial Corporation.
An application for such a relief is certainly not a plaint in a suit for recovery of mortgage loan.
It is not even something akin to a suit by a mortgage to recover mortgage money by sale of mortgaged property.
The distinguishing features noticeable between a suit for recovery of mortgage money by sale of mortgaged property and an application under section 31 for one or more of the relief specified therein lares that even if the Corporation as applicant so chooses, it cannot in the application, pray for a preliminary decree for accounts or a final decree for payment of money nor can it seek to enforce any personal liability even if such one is incurred under the contract of mortgage.
At any rate in an application under Section 31 ( 1 ) the Corporation does not and cannot pray for a decree for its outstanding dues.
It can make an application for one of the three reliefs, none of which, if granted, results in a money decree or decree for recovery of outstanding loans or advance.
The foreign of the relief by itself would not attract one or the other Article of Court Fees Act.
Section 32 of the Act clearly points to the conclusion that the proceedings under Section 31(1) of the Act are not in the nature of a money recovery proceedings.
Article 1 of Schedule I would, therefore not be attracted.
attracted 3.
The whole conspectus of provisions in Section 32 coupled with the nature relief sought under section 31(1) makes it clear that special provision is made for certain types of reliefs that can be obtained by a Corporation by an application under Section 31 ( I ) which could not be styled as substantive relief for repayment of mortgage money by sale of mortgaged property.
Nor can it be said to be a proceeding to obtain substantive relief capable of being valued in terms of monetary gain or prevention of monetary loss.
The substantive myself in an application under Section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree.
It may be that in the ultimate analysis the result would be that the property will be sold for repayment of the loan or advance taken by the industrial concern from the Corporation but it could not be said that it is substantive relief claimed by the Corporation which can be valued in terms of monetary gain or prevention of monetary loss as envisaged by Article 7 of Schedule I of Court Fees Act.
[382 A C & 381G H] Sub section (6) of Section 32 of the Act has to be read in the context in which it is placed.
It does not expand the contest in the application as if it is suit between a mortgagee and the mortgagor for sale of mortgaged property.
[38 I E] 374 Observation: [When dealing With a question o court fee, the perspective should be informed by the spirit of the magna carta and of equal access to justice which suggests that a heavy price tag on relief in Court should be regarded as unplayable.] [382E]
|
Civil Appeal No. 3015 of 1987.
From the Judgment and order dated December 11, 1985 of the Delhi High Court in Civil Revision (R) No. 47 of 1984.
Rajinder Sachhar, P.C. Mudgal and S.P. Gupta for the Appellant.
Anil Nauria and Mrs. Rekha Pandey for the Respondent.
The Judgment of the Court was delivered by 1061 RANGANATHAN, J.
The appellant is an advocate.
He is the owner of premises No. H 2/6 Model Town, Delhi.
He let out a part of this premises comprising a set of rooms above the garage (which may be briefly referred to as 'servants ' quarters ') and a hall on the ground floor of the building to the respondent.
The letting was oral and on a monthly rent of Rs.600 (exclusive of electricity and water charges) from July 1976.
In January 1980, the landlord filed an eviction petition under proviso (e) to section 14(1) of the Delhi Rent Control Act.
He claimed that he needed the premises bona fide for the personal residential requirements of himself and the members of his family.
His case was that he was having his office at Chandni Chowk on a first floor but, as he had been advised by the doctor not to climb upstairs, he desired to move the office and library to the ground floor hall of the premises in question.
He also claimed that the servants ' quarters were required for the use of his servants and their families.
The petition was resisted by the respondent on a number of grounds.
We are, however, concerned here only with two of the grounds put forward by the tenant.
His first submission was that though the premises had initially been taken only for the residential use of himself, subsequently two separate tenancies had been created in respect of premises in dispute.
He claimed that he was the tenant only of the servants ' quarters and that the hall or the ground floor had been let out to Bal Kunj (a society registered under the ) of which he was the Secretary.
It was pointed out that from November 1986 onwards, the petitioner was being paid two sums, a sum of Rs.250 by the respondent and another sum of Rs.350 per month by the respondent on behalf of Bal Kunj.
It was, therefore, contended that the petition as filed was not maintainable.
The second plea taken by the respondent was that the intended use of the ground floor hall as the office of the petitioner lawyer constituted a non residential use and was, therefore, outside the purview of proviso (e) to section 14(1).
The Rent Controller rejected the contentions of the tenant.
He held that there had been a single tenancy.
The premises had been let out by the landlord only to the respondent, Prabhu Chaudhury, on a rent of Rs.600 per month.
On the second aspect, the claim of the landlord that he required the entire premises for use by himself and his servants and that the ground floor was needed for setting up his office and library was held by the Rent Controller to fall within the scope of 1062 the relevant statutory provision.
The Rent Controller, therefore, directed eviction as prayed for by the petitioner.
The above order had been passed under the provisions of section 25B of the Delhi Rent Control Act.
The landlord having succeeded in his eviction petition, the tenant filed a revision petition before the Delhi High Court under sub section (8) of that section.
The learned Judge who heard the petition reversed the findings of the Rent Controller.
He held that the landlord would be entitled to be put in possession only of the servants ' quarters and that the petitioner could not claim the use of the hall on the ground floor.
In the result, therefore, the learned Judge modified the order passed by the Rent Controller.
He restricted the eviction order granted by the Rent Controller to the servants ' quarters.
We may mention here that, in compliance with the order of the learned Judge, the respondent has since vacated and delivered vacant possession of the servants ' quarters to the landlord.
The controversy before us is restricted to the hall on the ground floor.
The first question that arises for our consideration is whether the High Court was right in holding that there were two separate tenancies, one in respect of the servants ' quarters and the other in respect of the hall on the ground floor.
The position is this.
There was oral evidence let in by the petitioner to show that the premises had been let out to the respondent in July 1976 at Rs.600 p.m.
It appears the respondent started paying two separate amounts of Rs.250 and Rs.350 since November 1976.
It also appears that the former amount was paid by the respondent and the letter by means of cheques in the name of the trust.
It also seems to be common ground that the respondent was occupying the servants ' quarters and the Bal Kunj was occupying the hall on the ground floor though it is not clear at what point of time this happened.
Counsel for the respondent relies on these circumstances.
He wants to use the fact that the petitioner who was also occupying a hall on the ground floor adjacent to the hall occupied by the trust clearly must have been aware of the use of the hall to submit that the trust had been accepted as a tenant in respect of the hall at Rs.350 p.m.
He also relies on a fact which he says the Rent Controller completely missed that in 1978, when a number of cheques given to the landlord had been returned dishonoured, the landlord wrote a letter dated 26.11.1978 to the tenant in which he specifically referred to the fact that five of the cheques "belong to Balkunj.
" It is submitted that these facts clearly put the matter beyond all doubt that, though initially the premises had been taken only by the 1063 respondent, it had subsequently been converted into two tenancies.
Learned counsel for the landlord on the other hand submitted that the question whether there was a single tenancy or two tenancies is essentially a question of fact.
The Rent Controller, after appreciating all the circumstances, had come to the conclusion that there was a single tenancy.
There was clear evidence to show that initially, in July 1976, the landlord had let out the premises only to the respondent for a monthly rent of Rs.600.
It is true that subsequently, after a few months, the tenant paid the rent by way of two cheques one drawn by himself and the other drawn on behalf of Balkunj.
But, learned counsel submits, relying on the decision in Sheodhari Rai vs Suraj Prasad Singh, AIR 1954 S.C. 758, this alone cannot lead to the conclusion that a separate tenancy had been created in respect of the hall between Balkunj and the petitioner.
Learned counsel also pointed out that the Rent Controller had referred to two important documents, AW 8/18 and AW 8/20.
These were two letters dated 5.8.1977 and 15.1.1978.
In these two letters the landlord had specifically and categorically denied the tenancy on behalf of Balkunj.
What had happened was that the respondent on behalf of Balkunj had written to the landlord making certain claims for repairs etc.
in respect of the hall occupied by Balkunj.
Immediately the landlord wrote back saying that he had nothing to do with Balkunj, that the tenancy was only in favour of the respondent, and that he did not recognise Balkunj as his tenant.
These two letters remained unanswered.
Learned counsel for the landlord, therefore, submitted that there was ample material and clinching evidence before the Rent Controller to come to the conclusion that there was a single tenancy and that was between Prabhu Chowdhary and the landlord and that, therefore, there was no question of there being two tenancies as held by the High Court.
We are inclined to agree with this submission of the landlord.
The initial tenancy was only an oral tenancy.
Nevertheless there were two witnesses who deposed that the original tenancy agreement was only between the petitioner and the respondent.
At that time, admittedly, there was no question of Balkunj being the tenant in respect of any portion of the premises.
All that the respondent says is that subsequently cheques were being issued in the name of Balkunj also and that this must be taken to lead to an inference that the petitioner had accepted Balkunj as its tenant.
It is very difficult to accept this argument.
It is no doubt true that the rent has been paid by two cheques since November 1976 but the mere payment of rent by two cheques, in the circumstances of this case, cannot mean that there were two tenancies.
The landlord was entitled to a rent of Rs.600 p.m. and so 1064 long as he got this amount, it was immaterial for him whether the amount was paid in a lump sum or by one cheque or more than one cheque and who the makers of the cheques were.
It is not unusual to come across cases where a tenant pays the rent not by a cheque drawn by himself but by a cheque drawn by some other concern in which he has an interest such as a partnership concern a limited company or other entity in which he is interested.
So, the mere fact that for some reason the respondent chose not to issue a single cheque for the rent of Rs.600 but that he gave two separate cheques, one for Rs.250 drawn by himself and one for Rs.350 drawn in the name of Balkunj cannot lead to an irresistible conclusion that the tenancy was created in favour of Balkunj with the concurrence of the landlord.
The letter dated 26.11.78, far from "clinching" the respondent 's claim, as held by the High Court, does not in our view improve the tenant 's case at all.
It only evidences the fact that the landlord was receiving the cheques issued in the name of the trust in discharge of the respondent 's obligation to pay the rent of Rs.600 p.m.
It is also true that, since the landlord was also occupying a part of the ground floor premises, he might have been aware that certain activities of Balkunj were being carried on in the hall.
But this can only mean that the landlord permitted the tenant to use a portion of the premises let out for running the activities of the trust.
Even assuming that, standing by themselves these two facts might have been sufficient to draw any such inference as is suggested, the two letters of 5.8.77 and 15.1.78 place the matter beyond all doubt.
The landlord categorically asserted in these letters that he does not recognize Balkunj as his tenant and that the respondent alone was his tenant.
There was no reply to these letters from the respondent.
In these circumstances there can be no doubt at all that the premises had been let out only to the respondent by the petitioner and that Balkunj cannot be considered to be a tenant of the premises or any portion thereof.
The finding of the Rent Controller that there was only a single tenancy was essentially a finding of fact based on the material and circumstances to which we have adverted and we are also inclined to accept the conclusion of the Rent Controller as the correct one.
We also agree with the landlord that this is a finding with which the High Court should not have interfered.
Though under Section 25(B)(8) of the Delhi Rent Control Act the powers of the High Court are somewhat wider than similar powers of revision under section 115 of the Civil Procedure Code, it is well established by a series of decisions of this Court that the power of revision under the Rent Control Acts does not entitle the High Court to enter into the merits of the factual con 1065 troversies between the parties and to reverse findings of fact in this regard.
It is sufficient, in this context, to refer to the decision of this Court in Helper Girdharbhai vs Saiyed Mohmad; , which was reviewed earlier decisions.
The decision in Sushila Devi vs Avinash Chandra Jain, to which counsel for the respondent referred, lays down no different principle.
So far as the second point is concerned, learned counsel for the respondent relied upon two decisions of this Court in Mohanlal vs Kondi, ; and in Subramania Mudaliar vs Kolapur Traders, In the former, it was held that the profession of a lawyer is "business" within the meaning of section 10(3)(a)(iii) of the Andhra Pradesh Building (Lease, Rent & Eviction) Control Act, 1960.
The latter is a decision to a like effect.
These decisions are not of much help in the context of the present case and of the provisions of clause (e) of the proviso to section 14(1) of the Delhi Rent Control Act.
Here the landlord is seeking to recover possession of a residential premises.
There is, as we have already held, a single tenancy in favour of the respondent for a residential purpose.
Though learned counsel for the respondent invited us to say that, so far as the hall was concerned, the premises were being used by a trust and, hence for a non residential purpose, we cannot permit him to raise this plea.
Such a plea was not taken before the High Court.
Against the order of the High Court, the respondent had also filed a special leave petition to this Court which has been dismissed.
It is therefore not open to the respondent to urge this point before us.
The only point taken before the High Court was that the petitioner could not get relief because the use of the hall by a lawyer as his office and library could not amount to a residential requirement.
We shall, therefore, confine ourselves to this question.
In our opinion, the contention of the respondent cannot be accepted in the extreme form in which it is urged here.
It may be that in a case where a lawyer seeks to evict a tenant on the ground that the entire premises sought to be got vacated are solely needed by him for use as his office and library, his requirement may not satisfy the requirements of clause (e) of the proviso to section 14(1).
But this is quite different from saying that where the premises are sought to be got vacated for use as a residence and, the landlord being a lawyer desires to use a part of such residence as a study, office or library, such use would be a non residential use.
Any professional man of standing would necessarily have to set apart a portion of his residence for such purposes and the premises do not cease to be his residence because 1066 of that.
in the present case, the petitioner seeks eviction of the suit premises for his bona fide residential requirement and the use of the hall as an office is only incidental to such a requirement.
In ascertaining the bona fide need of residence, in the case of a lawyer, the fact that a room has to be used as an office cannot be a consideration extraneous to the scope and content of clause (e) of the proviso to section 14(1).
To test our conclusion, we may see what the position would be in the converse case.
If, in the present case, the petitioner had stated that he required the hall because he had no living room in the premises which he was occupying as the only room there was being, or had to be, used by him as an office, the petitioner 's claim could not have been rejected, for he would then have needed the hall clearly as part of his residential requirement.
The decision in Khanna vs Batra, illustrates this.
There, an advocate, had asked for eviction of a tenant from the first floor as the ground floor premises occupied by him were not sufficient for his needs for purposes of residence and office.
The Rent Control Tribunal held that since the appellant intended to convert the existing residential accommodation in his possession into an office and library for the use of his clerk and clients, such a user was not permissible in law.
Reversing this conclusion, Grover, J observed: "It seems to me that the Rent Control Tribunal was clearly in error in thinking that merely because the appellant wanted to use the accommodation in his possession for professional purposes, he could not claim benefit of the provision contained in clause (e) of the proviso to section 14(1) of the Act.
It was this error which led to the conclusion at which the Rent Control Tribunal arrived upholding the decision of the Controller on the second point, namely the requirement of the appellant on personal grounds.
I cannot therefore, accede to the submission of the learned counsel for the respondent that the finding of the Rent Controller Tribunal with regard to the personal need or requirement was one of fact and thus immune from challenge in the second appeal.
Should the position is different in this case? Merely because the petitioner has come forward with an honest plea that he intends to use a part of his residence as an office, should a different result follow, particularly in a case like this where ill health compels him to have his 1067 office at home? Should the result depend on the jugglery of pleadings or the substance of the matter? We think the substance should prevail.
In our opinion, where a landlord applies for the possession of his residential premises, his bona fide requirement of the premises for his residential purposes will not stand vitiated merely because he intends to use a portion of the premises for purposes of his office, library or study.
We are, therefore, of opinion that the High Court should not have interfered with the findings of the Rent Controller on this point as well.
This is no doubt a mixed question of fact and law but, for the reasons given earlier, we are inclined to agree with the conclusion of the Rent Controller.
In the result, we hold that the High Court was in error in granting relief to the petitioner only in respect of the servants ' quarters and in declining to grant the petitioner relief in respect of the hall.
We allow the appeal, set aside the judgment of the High Court and restore the order of the Rent Controller that the petitioner is entitled to the possession of the entire premises in question.
There will, however, be no order as to costs.
R.S.S. Appeal allowed.
| % The question which arose for determination in this case was whether a Letters Patent Appeal would lie to a Division Bench of the High Court of Gujarat from an interlocutory order of a Single Judge of that High Court in the course of the trial of an election petition filed under the Representation of the People Act, 1951.
The appellant and respondents Nos.
1 to 6 were candidates at an election held to fill a seat in the Legislative Assembly of the Gujarat State.
The appellant was declared elected.
Thereupon, the 1st respondent filed an election petition in the High Court, challenging the validity of the election of the appellant on a number of allegations, and in order to establish his case, he filed an application before the Single Judge who was trying the election petition, to direct the Returning Officer to produce all the records of the election, mentioned in the application, and prayed for permission to inspect the same.
The appellant opposed the prayers made by the 1st respondent.
The Single Judge declined to grant the application made by the Ist respondent.
Against the order of the Single Judge, the Ist respondent preferred an appeal under clause 15 of the Letters Patent of the Gujarat High Court.
The Division Bench of the High Court allowed the appeal to the extent indicated in its judgment, overruling the contention of the appellant that the appeal was not maintainable as there was no provision in the Act, permitting an appeal to the Division Bench of the High Court against an interlocutory order of a Single Judge hearing an election petition filed under the Act.
Aggrieved by the decision of the Division Bench, the appellant moved this Court for relief by special leave.
Allowing the appeal, setting aside the judgment of the Division 1044 Bench of the High Court and dismissing the Letters Patent Appeal while expressing no opinion on the merits of the case, the Court, ^ HELD: The only point urged in this appeal by the appellant was that the appeal filed under clause 15 of the Letters Patent of the High Court against the interlocutory order passed by the Single Judge was not maintainable and, therefore, the judgment of the Division Bench was liable to be set aside.
[1048C D] Under the provisions of the Act as amended and the provisions of the Constitution of India, no Court exercising power under any ordinary law other than the Judge of a High Court who had been assigned the work of trying an election petition under sub section (2) of section 80 A of the Act and the Supreme Court which was empowered to hear an appeal against any order passed by the judge of the High Court under section 98 or section 99 of the Act, could decide any question arising out of an election petition.
The power of the Supreme Court under the provisions of the Constitution was, however, unaffected by any of the provisions of the Act.
It meant that when an election petition was pending in the High Court, only the judge who was asked to try the election petition could deal with the questions arising in it and no other judge or judges of the High Court could deal with them.
When an order was passed under section 98 or section 99 of the Act by a judge of the High Court in an election petition, it was subject to the appellate jurisdiction of the Supreme Court under section 116 A of the Act, Article 136 of the Constitution being excluded in view of the express provisions of section 116 A of the Act, and being resorted to by any party aggrieved by any order passed by the judge trying an election petition not falling under section 98 or section 99 of the Act.
It followed that the Division Bench of the High Court, which was entitled to hear an appeal against any order of a Single Judge under clause 15 of the Letters Patent of the High Court, which was an ordinary law, could not hear an appeal against any interlocutory order passed in the course of the trial of an election petition by the Judge trying the election petition, since the Division Bench was not specified in the Act as an appellate authority which could deal with questions arising out of an election petition filed under the Act.
[1053G H; 1054A D] Under clause 15 of the Letters Patent, an appeal no doubt lay from an order of a Single Judge of the High Court exercising Original Jurisdiction to the High Court itself irrespective of the fact that the judgment was preliminary or final or that it was one passed at an interlocutory stage, provided it satisfied certain conditions, but the said 1045 provision could not be extended to an election petition filed under the Act.
Conferment of the power to try an election petition under the Act did not amount to enlargement of the existing jurisdiction of the High Court.
The jurisdiction exercisable by the Single Judge under the Act was a special jurisdiction conferred on the High Court by virtue of Article 329(b) of the Constitution.
In view of the limited nature of the appeal expressly provided in section 116 A of the Act, it should be held that any other right of appeal (excluding that under the Constitution) was taken away by necessary implication.
Therefore, it was difficult to subscribe to the view that when once the jurisdiction to try an election petition was conferred on the High Court, all other powers incidental to the ordinary original jurisdiction exercised by a single Judge of a High Court would become applicable to an election petition under the Act.
If the Parliament had intended that the Division Bench of the High Court should exercise its appellate jurisdiction under clause 15 of the Letters Patent of the High Court, probably, it would not have enacted sub section (7) of section 86 of the Act, having regard to the well known tendency of one or the other party to an election petition preferring appeals against the interlocutory orders to the Division Bench.
If such appeals against the interlocutory orders to the High Court, were permitted, perhaps, no election dispute would be finally settled till the next election became due.
As regards the jurisdiction to try an election petition and the right of appeal of the parties to an election petition, the provisions of the Act (apart from the provisions in the Constitution) constituted a complete code and no Judge or Judges other than the Single Judge of the High Court, who was asked to try an election petition, and the Supreme Court, exercising the appellate powers under section 116 A of the Act in respect of orders passed under section 98 or section 99 of the Act or under Article 136 of the Constitution in respect of other orders, could have any jurisdiction to deal with any matter arising out of an election petition filed under the Act.
The Court disagreed with the view expressed on this question by the Gujarat High Court in Dr. Chotalal Jivabhai Patel vs Vadilal Lallubhai Mehta & Ors., (12 Gujarat Law Reporter 850), and overruled that decision of the High Court.
The Court also overruled the decision of the Madras High Court in Kadiravan alias Shamsudeen vs B. Thirumalaikumar, ILR (1970) 2 Mad.
183 and the decision of the Madhya Pradesh High Court in Laxmi Narayan Nayak vs Ramratan Chaturvedi & Ors, AIR 1986 Madhya Pradesh 165 which had taken the same view as in Dr. Chotalal Jivabhai Patel 's Case (supra).
The Court agreed with the view expressed by the Allahabad High Court in Siaram vs Nathuram & Ors., [1968] ALL.
L.J. 576 and by the Rajasthan High Court in Ramdhar vs Shanwar Lal, AIR which held that by necessary 1046 implication an appeal to the High Court from an interlocutory order of the Single Judge of the High Court in the course of trial of an election petition filed under the Act, was excluded.
[1054G H; 1055A H; 1056A H] The Division Bench of the High Court of Gujarat had no jurisdiction to hear the appeal filed by the Ist respondent against the interlocutory order passed by the Single Judge who was trying the election petition.
Judgment of the Division Bench of the High Court set aside, Letters Patent Appeal dismissed.
[1057B] Dr. Chotalal Jivabhai Patel vs Vadilal Lallubhai Mehta Shamsudeen vs B. Thirumalai Kumar, ILR ; and Laxmi Narayan Nayak vs Ramratan Chaturvedi and Ors., A.I.R. 1986 Madhya Pradesh 165, overruled.
Siaram vs Nathuram and Ors., [1968] All.
L.J. 576 and Ramdhan vs Bhanwarlal, A.I.R. approved.
N.P. Ponnuswami vs Returning Officer, Namekkal Constitutency and others; , ; Shah Babulal Khimji vs Jayaban D. Kania & Anr., ; and National Telephone Company Ltd. vs Post Master General, [1913] A.C.546, referred to.
|
Civil Appeal No. 822 of 1966.
Appeal by special leave from the judgment and order, dated April 27, 1965 of the Punjab High Court in Civil Revision No. 841 of 1964.
Sarjoo Prasad, D.N. Mishra and Ravinder Narain, for the appellants.
A.K. Sen, S.V. Gupte, B.P. Maheshwari and R.K. Maheshwari, for respondent No. 1 The Judgment of S.M. SIKRI and R.S. BACHAWAT was delivered by SIKRI, J.K.S. HEGDE, J., delivered a separate Opinion.
Sikri, J.
This appeal by special leave is directed against the judgment, dated April 27, 1965, of the High Court of Punjab at Chandigarh (section B. Capoor, J.) dismissing Civil Revision No. 841 of 1964.
The Civil Revision arose out of the following facts.
The following pedigree table shows the relationship between the parties: Sohan Lal (Decd.) Husband of Gujri Harbans Lal (D) Sudarshan L(D) husband of Kamla Wati husband of Lachmi Devi (Resp.6) Satish Rakeah Jatindar Kaka Chand Surinder Kumar Kumar Kumar Kumar (Minor) Rani (Resp.
6) App.
1 App.
2 App.
3 App. 4 (Minor) Smt.
Smt Nirmal Kanda Lajya Devi Devi Devi Reap.
3 Reap.4 Reap.5 On the death of Sohan Lal, Behari Lal was appointed as arbitrator by Harbans Lal, Surinder Kumar (then a minor through his mother Smt.
Lachmi Devi) and Smt.
Gujri, widow of Sohan Lal, for partition of the joint property.
Behari Lal, by his award dated October 21, 1956, divided the property into two equal 246 shares, between Harbans Lal and Surinder Kumar.
Harbans Lal and Surinder Kumar signed the award.
Harbans Lal died on May 20, 1960, upon which Surinder Kumar filed a suit for partition of the properties, the subject matter of the award.
This suit was dismissed as withdrawn on March 13, 1962.
On March 11, 1962, Behari Lal, arbitrator, filed an application under section 14 of the Indian (X of 1940) hereinafter referred to as the Act for filing the award in Court and for making the same a rule of the Court.
Surinder Kumar entered appearance and filed objections under section 30 of the Act.
One of the objections was that the award dated October 21, 1956, was not admissible in evidence for want of proper stamp and registration and could not, 'therefore, be made a rule of the Court.
On January 31, 1963, the objections were dismissed by Miss Harmohinder Kaur, Subordinate Judge, First Class, Ludhiana, as time barred, but she did not make the award a rule of the Court as there was a further objection to the effect that the award not having been executed on a properly stamped paper and not having been registered, was not admissible in evidence.
This objection was dealt with by Shri Om Parkash Saini, Subordinate Judge, First Class, Ludhiana, who, by his order, dated June 5, 1963, held that the award in question was not admissible in evidence as it was executed on deficiently stamped paper and was not registered.
He accordingly dismissed the application.
An appeal was taken to the District Judge, and the Additional District Judge by his order, dated November 23, 1964, upheld the order of the Subordinate Judge.
A revision was then taken to the High Court.
Capoor, J., held that the award actually effected a partition and required registration under section 17(1)(b) of the Indian .
The learned Judge dissented from the decision of & Full Bench of the Patna High Court in Seonarain Lal vs Prabhu Chand(1), and preferred to follow the view expressed by the Bombay High Court in Chimanlal Girdhar Ghanchi vs Dahyabhai Nathubhai Ghandhi,(2) by the Nagpur High Court in M .A. M. Salamullah Khan vs
M. Noorullah Khan,(3) by the Rangoon High Court in U. Keltaha vs
U. Pannawa,(4) and by the Calcutta High Court in Nani Bela Saha vs Ram Gopal Saha(5).
He accordingly dismissed the revision petition.
The decision of the Patna High Court was, however, later followed by a Full Bench of the Punjab and Haryana High Court in Sardool Singh vs Hari Singh(6), judgment, dated November 8, 1966.
(1) I.L.R. 37 Pat.
(2) A.I.R. 1938 Bom.
(3) A.I.R. 1939 Nag. 233, 235.
(4) A.I.R. 1940 Rang.
(5) A.I.R. 1945 Cal.
19, 21 22.
(6) I.L.R. [1967] 1 Pun.
& Hat.
247 The question which arises before us is whether an award given under the Act on a private reference requires registration under section 17(1) (b) of the Indian , if the award effects partition of immovable property exceeding the value of Rs. 100.
The main reason given by Sinha, J. speaking for the Patna Full Bench in Seonarain Lal vs Prabhu Chand(1), for holding that such an award does.
not require registration is that under the scheme of the Act a private award, unless a decree is passed in terms of the award, has no legal effect.
this, according to him, follows from the conclusion that once a matter has been referred to arbitration, it comes within the immediate control of the Court under the Act, and no other authority has any jurisdiction to deal with the matter except as provided for in section 35 of the Act.
He thought that what distinguishes the provisions in the from the provisions in the Second Schedule in the Code of Civil Procedure is that the Act bars jurisdiction of all Courts to Pronounce upon the validity, effect or existence of an award or arbitration agreement except the Court under the Act itself.
Sinha, J., looking at it from another point.
of view, namely, that an award is only effective when a decree follows the judgment upon the award, observed that such an award may be covered by the exception mentioned in section 17(2)(vi) (any decree or order of a Court) of the .
The Punjab Full Bench has followed this reasoning, and indeed reproduced paras 5 to 15 of the Patna Full Bench judgment in its own judgment.
Mahajan, J., with whom the two other Judges agreed, observed: "I am in respectful agreement with the entire line of reasoning in the Patna case barring the underlined observations : ". an award is only effective when a decree follows the judgment on the award such an award may be covered by the exception mentioned in section 17(2) (vi) (any decree or order of a Court) of the ." If these.
observations are meant to convey that award as such is covered by the exception (vi) of section 17 (2) of the , I am unable to agree.
But the decree that follows the award when it is made a rule of the Court, no exception can be taken to the view that such a decree is covered by the exception.
" The Punjab Full Bench gave two additional reasons: "(1) If an award is registered, it is still a waste paper unless it is made a rule of the Court.
Thus registration does not, in any manner, add to its efficacy or give it any added competence.
Section 32 of the (1) I.L.R. 37 Pat.252.
248 is specific for no right can be rounded on an award as such after coming into force of the 1940 ; (2) It is not disputed and indeed it could not be that the Court has the power, under section 16, to remit the award from time to time.
If registration of an award is an essential pre requisite before it could be made a rule of the Court under section 17, every time an award is remitted and a new award is made, the new award will require registration.
The result would be that, in the same controversy, there can be not only one registration but a number of registrations regarding the same title, a situation which is not even envisaged by the .
" It seems to us that the main reason given by the two.
Full Benches for their conclusion is contrary to.
what was held by this Court in its unreported decision in M,Is.
Uttam Singh Dugal & Co. vs The Union of India(1).
The facts in this case, shortly stated, were that M/s. Uttam Singh Dugal & Co. filed an application under section 33 of the Act in the Court of the Subordinate Judge,Hazaribag.
The Union of India, respondent No. 1, called upon respondent No. 2, Col. S.K. Bose, to adjudicate upon the matter in dispute between respondent No. 1 and the appellant company.
The case of M/s. Uttam Singh Dugal & Co. was that this purported reference to respondent No. 2 for adjudication on the matters alleged to be in dispute between them and respondent No. 1 was not competent because by an award passed by respondent No. 2 on April 23, 1952, all the.
relevant disputes between them had been decided.
The High Court held inter alia that the first award did not create any bar against the competence of the second reference.
On appeal this Court after holding that the application under section 33 was competent observed as follows: "The true legal position in regard to the effect of an award is not in dispute.
It is well settled that as a general rule, all claims which are the subject matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims. can be determined only on the basis of the said award.
After an award is pronounced, no action can be started on the original claim which had been the subject matter of the reference.
As has been observed by Mookerjee, J. in the case of Bhajahari Saha Banikya vs
Behary Lal Basak(2) "the award is, in fact, a final (1) Civil Appeal No. 162 of 1962 judgment delivered on October 11, 1962.
(2) at p. 898.
249 adjudication of a Court of the 'parties ' own choice, and until impeached upon sufficient grounds in an appropriate proceeding, an award, which is on the fact of it regular, is conclusive upon the merits of the controversy submitted, unless possibly the parties have intended that the award shall not be final and conclusive. in reality, an award possesses all the elements of vitality, even though it has not been formally enforced, and it may be relied upon in a litigation between the parties relating to the same subjectmatter.
" This conclusion, according to the learned Judge, is based upon the elementary principle that, as between the parties and their privies, an award is entitled to that respect which is due to the judgment of a court of last resort.
Therefore, if the award which has been pronounced between the parties has, in fact, or can, in law, be deemed to have dealt with the present dispute, the second reference would be incompetent.
This position a lso has not been and cannot be seriously disputed." ' This Court then held on the merits "that the dispute in regard to overpayments which are sought to be.
referred to the arbitration of respondent No. 2 by the second reference are not new disputes; they are disputes in regard to.
claims which the Chief Engineer should have made before the arbitration under the first reference.
" This Court accordingly allowed the appeal and set aside the order passed by the High Court.
This judgment is binding on us.
In our opinion this judgment lays down that the position under the Act is in no way different from what it was before the Act came into force, and that an award has some legal force and is not a mere waste paper.
If the award in question is not a mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of section 17(1)(b) of the .
We may mention that an appeal was filed in this Court against the decision of the Division Bench of the Patna High Court, which had referred the case of Sheonarain Lal vs Prabhu Chand(1) to the Full Bench for opinion on certain questions and which decided the case in accordance with that opinion, and the same was dismissed by this Court in Sheonarain Lal vs Rameshwari Devi(2) in which the judgment was delivered by the same Bench which decided the case of M/s. Uttam Singh Dugal vs The Union of India(a).
It is true that this Court in Sheonarain Lal vs Rameshwari Devi(2) did not expressly rule on the validity (1) I.L.R. 37 Pat.
(2) Civil appeal No. 296 of 1960 judgment delivered on December 6, 1962.
(3) Civil Appeal No. 162 of 1962 judgment delivered on October 11, 1962.
C1/69 17 250 of the answer given by the Patna Full Bench in Sheonarain Lal vs Prabhu Chand(1) that such awards did not require registration, but decided the case on the point whether the award in dispute in that case in fact purported or operated to create a right, title or interest of the value of more than Rs. 100 in immovable properties.
But, after holding that the document did not operate to create or extinguish any right in immovable property, this Court observed: "The position would have been otherwise if the arbitrators had directed by t he award itself that tiffs shop would go to Prabhu Chand without any further document.
In that case the award itself would have created in Prabhuchand a right to these properties.
That is not, however, the provision in the award.
In the absence of a registered document, Prabhu Chand would get no title on the award and Sheonarain 's title would remain in the shop.
" In this connection we may mention two other decisions of this Court.
In Champalal vs Mst.
Samarath Bai(2), Kapur, 1., speaking for the Court, observed as follows: "The second question that the award required registration and would not be filed by the arbitrators before it was registered is equally without substance.
The filing of an unregistered award under section 49 of the is not prohibited; what is prohibited is that it cannot be taken into evidence so as to affect immovable property falling under section 17 of the Act.
That the award required registration was.
rightly admitted by both parties.
" Again in Kashtinathsa Yamosa Kabadi vs Narsingsa BhctsKarsa Kabadi(3) Shah J., speaking for the Court observed: "The records made by the Panchas about the division of the properties, it is true, were not stamped nor were they registered.
It is however clear that if the record made by the Panchas in so far as it deals with immovable properties is regarded as a non 'testamentary instrument purporting or operating to create, .declare, assign, limit or extinguish any right, title or interest in immovable property, it was compulsorily registerable under section 17 of the , and .would not in the absence of registration be admissible in evidence." (1) I.L,R. 37 Pat. 252.
(2) ; , 816 (3) ; , 806. 251 In view of the above decisions it is not necessary to refute the other reasons given by both the Full Benches, but out of respect for the learned Judges we will deal with them.
We may mention that no comment was made in these cases on the provisions of para 7 of Schedule 1 to the Act.
This para provides: "7.
The award shall be final and binding on the parties and persons claiming under them respectively.
" If the award is final and binding on the parties it can hardly be said that it is.
a waste paper unless.
it is made a rule of the Court.
We are unable to.
appreciate why the conferment of exclusive jurisdiction on a court under the Act makes an award any the less binding than it was under the provisions of the Second Schedule of the Code of Civil Procedure.
The Punjab Full Bench held that the registration does not in any manner add to its efficacy or give it any added competence.
We cannot concur with these observations.
If an award affects immovable property over the value of Rs. 100, its registration does get rid of the disability created by section 49 of the .
Regarding the difficulty pointed out by the Punjab Full Bench that there may be many registrations we are not called upon to decide whether these difficulties would arise because the language of section 17 of the is plain.
It may be that no such difficulties will arise because under section 16(2) of the Act what the arbitrator submits to the Court is his decision and it may be that the decision may not be registerable under section 17 of the .
But as we have said before we are not called upon to decide this point.
In our opinion, Capoor, J., was right in dissenting from the Patna Full Bench in Sheonarain Lal vs Prabhu Chand(1) and holding that the award in dispute required registration.
In the result the appeal fails and is.
dismissed with costs.
We may make it clear that we are dealing only with an award made on a reference by the parties without the intervention of court.
Hegde, J. I agree.
But I would like to add few words.
Arbitration proceedings, broadly speaking may be divided into two stages.
The first stage commences with arbitration agreement and ends with the making of the award.
And the second stage relates to the enforcement of the award.
Paragraph 7 of the First Schedule to the lays down that, "the award shall be final and binding on the parties and persons claiming under them respectively".
Therefore it is not possible to agree with the Full Bench decisions of the Patna High Court (1) I.L.R. 37 Part.
252. 252 and that of the Punjab and Haryana High Court that an award Which is not made a decree of the Court has no existence in law.
The learned Judges ' who decided those cases appear to have proceeded on the basis that an award which cannot be enforced is not a valid award and the same does not create any rights in the property which is the subject matter of the award.
This in my opinion is not a correct approach.
The award does create rights in that property but those rights cannot be enforced until the award is made a decree of the Court.
It is one thing to say that a right is not created, it is an entirely different thing to say that the right created cannot be enforced without further steps.
For the purpose of section 17(1)(b) of the , all that we have to see is whether the award in question purport or operate to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property.
If it does, it is compulsorily registerable.
In the aforementioned Full Bench decisions sufficient attention has not been given to section 17 of the .
The focus was entirely on the provisions of the and there again on the enforcement of the award and not in the making of the award.
A document may validly create rights but those rights may not be enforceable for various reasons.
Section 17 does not concern itself with the enforcement of rights.
That Section is attracted as soon as its requirements are satisfied There is no gainsaying the fact that the award with which we are concerned in this case, at any rate, purported to creat rights in immovable property of the value of rupees more than one hundred.
Hence it is compulsorily registerable.
Y.P. Appeal dismissed.
| An arbitrator appointed by the appellants and respondent partitioned their immovable property exceeding the value of Rs. 100.
The arbitrator applied under section 14 of the Indian to the Court for making the award a rule of the court.
On the question whether the award was admissible in evidence as it was not registered, HELD:(per Full Court.) The award required registration.
(Per Sikri and Bachawat, JJ.) All claims which are the subject matter of a reference to arbitration merge in the award which is pronounced In the proceedings before the arbitrator and after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award.
After an award is pronounced, no action can be started on the original claim which had been the subject matter of the reference.
The position under the Act is in no way different from what it was before the Act came into force.
Therefore.
the conferment of exclusive jurisdiction on 'a court under the does not make 'an award any less binding than it was under the provisions of the Second Schedule of the Code of Civil Procedure.
The filing of an unregistered award under section 49 of the Registration Act is not prohibited: what is prohibited is that it cannot be taken into evidence so as to affect immovable property falling under section 17 of the Registration Act.
It cannot be said that the registration does not in any manner add to its efficacy or give it added competence.
If an award affects immovable property order the value of Rs. 100 its registration does get rid of the disability created by section 49 of the Registration Act.
The award in question was not a mere waste paper but had some legal effect and it plainly purports to affect or affects property within the meaning of section 17(1)(b) of the Registration Act [248 F H; E] M/s. Uttam Singh Dugal & Co. vs Union of India, C.A. No. 162 of 1962 dated 11 10 1962, Champalal vs Mst.
Samarath Bai; , 816 and Kashinathsa Yamosa Kabadi vs Narsingsa Baskarsa Kabadi, [1961] 3 S.C.R. 792, 806, followed.
Sheonarain Lal vs Prabhu Chand, I.L.R. 37 Pat.
252 and Sardooll Singh vs Hari Singh I.L.R. [1967] 1 Punj.
& Har. 622 disapproved.
Chamanlal Girdhat Ghanchi vs Dhayabhai Nathubhai Ghandi A.I.R. 1938 Bom.
422, M.A. M. Salamullah Khan vs
M. Noorullah Khan, A.I.R. 1939 Nag. 233, Keltaha vs
U. Pannawa A.I.R. 1940 Rang.
228, Nani Bela Saha vs Ram Gopal Saha.
A.I.R. 1945 Cal.
19 and Bhajahari Saha Banikya vs Behary Lal Basak, , approved.
(Per Hegde.
J. concurring): It is one thing to say that a right is not created.
it is an entirely different thing to.
say that the right created can 245 not be enforced without further steps.
An award does create rights in that property but those rights cannot be enforced until the award is made a decree of the Court.
For the purpose of section 17(1)(b) of the Registration Act, all that had to be seen is whether the award in question purport or operate to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property.
Since it does, it is compulsorily registerable.
[252 B D]
|
Appeal No. 175 of 1951.
Appeal by Special Leave from the Order and Decree dated the 30th March, 1951, of the High Court of Judicature at Patna (Ramaswami and Rai JJ.) in Miscellaneous Appeal No. 19 of 1951 arising out of the Order dated the 18th December, 1950, of the 'Court of the Additional Sub Judge Second at Gaya in Title Suit No. 47 of 1950.
N. C. Chatterjee (Rameshwar Nath, with him) for the appellant.
M. C. Setalvad Attorney General for India, and Mahabir Prasad, Advocate General of Bihar (B. J. Umrigar with them) for the respondent.
February 3.
The Judgment of the Court was delivered by MAHAJAN J.
This appeal by special leave arises out of an application made by the State of Bihar against the Gaya Electric Supply Co. Ltd. under section 34 of the Indian Arbitration Act for stay of proceedings in a suit filed by the company on 28th September, 1950.
The facts relevant to this enquiry are these.
574 A licence of or the supply of electric energy in the town of Gaya was obtained by one Khandelwal in the year 1928 under the .
With the required sanction of the Government the licence was transferred to the company in 1932.
By a notification dated 23rd June, 1949, the licence was revoked by the Government with effect from 9th July, 1949.
Thereupon the company filed a suit against the State for a declaration that the revocation of the licence was arbitrary, mala fide and ultra vires.
During the pendency of the suit negotiations started between the company and the State for a settlement of the dispute and ultimately on 28th October, 1949, a deed of agreement was arrived at between them.
The effect of the agreement and the correspondence referred to therein was substantially as; follows : (a) That the company would withdraw the suit No. 58 of 1949 unconditionally on 25th October, 1949.
(b) That within three days of the withdrawal of ,the suit the State of Bihar would make an advance payment of rupees five lakhs to the company, and, simultaneously the company would formally hand over the possession of the undertaking to an authorized officer of the Government.
(c) That both parties will make their respective valuations within three months of talking over the undertaking and any balance of money found due to the company as per Government valuation will be paid to the company and in case of overpayment the excess paid to the company on account of the " on account payment " of rupees five lakhs will be refunded to the, Government.
(d) That in the case of any difference or dispute between,the parties over the payment of the balance which may be found due after valuation such dispute shall be submitted to the sole arbitration of a single arbitrator who should be a high government officer of the provincial government of rank equal to or higher than a Divisional Commissioner and his award shall be binding and final on both parties.
575 The arbitration clause is contained in a letter dated 13th October, 1949, and was substantially accepted by the company in its letter dated 17th October, 1949.
As set out by the State Government in its application under section 34, it runs as follows " In the case of any difference or dispute between the parties over the valuation as arrived at by the Government and that arrived at by the company, such difference or dispute, including the claim for additional compensation of 20 % shall be referred to arbitration. " In pursuance of the agreement the respondent took over the undertaking on 28th October, 1949, and also made a payment of rupees five lakhs to the company.
On the 19th January, 1950, the company sent a statement of valuation of the assets amounting to RS.
22,06,072, to the Chief Electrical Engineer, Bihar.
The Chief Electrical Engineer characterized the valuation of 22 lakhs by the company as fantastic and stated that according to a rough valuation the amount would be ' approximately five lakhs and that the final valuation would be settled after the company had furnished a detailed history of the plants and machineries.
The company declined to give any further details and stated that time was of the essence of the. contract and it would be extended from 28th January, to 15th February, 1950 On 6th April, 1950, the Chief Electrical Engineer intimated that the 'valuation amounted to Rs. 6,56,221.
No reply to this letter was received and the State Government intimated to the company that as difference and dispute had arisen relating to valuation, Mr. M. section Rao, I.C.S. was being appointed as sole arbitrator to decide the dispute.
On 28th September, 1950, the company instituted the suit, the subject matter the application for stay, after necessary notice under section 80 of the Code of Civil Procedure.
In the plaint it was alleged ,that as the State Government had failed and neglected to make its valuation or to make payment to the 576 company by the 15th March, 1950, it committed a breach of the agreement and by reason of this breach the company had rescinded the agreement and had forfeited the sum of five lakhs paid as advance by the State.
The company prayed inter alia for the reliefs of declaration that the, electrical undertaking belonged to them, for damages, for appointment of receiver and for injunction.
On the 9th October, 1950, the State Government filed the present appli cation under section 34, of the Indian Arbitration Act.
It was stated therein that the company had with a, dishonest and mala fide motive and with a view to avoid the decision of the matter in dispute in arbitration instituted the suit on incorrect and false allegations.
that the arbitration agreement was still subsisting and valid and binding on the parties and could not be taken as having been rescinded as alleged by the company, that the cause of action as alleged in the plaint being noncompliance with the agreement the suit arose out of and related to the agreement and was covered by the arbitration clause and that the State Government was ready and willing to have the dispute settled by arbitration.
The company denied the allegations of mala fides and pleaded that the arbitration clause was no longer in existence and that even assuming it to be in existence, the suit was in no way connected with the 'same and it was contended that the suit should not be stayed.
The subordinate judge held that the suit was no in respect of any matter agreed to be referred, and that the court had no ' jurisdiction to stay the proceedings.
In the result the stay application was dismissed.
Against this order the State Government appealed to the High Court.
The High Court held that the dispute in the suit was one which arose out of or was in respect of the agreement and that the question in the suit was directly within the scope of the arbitration clause.
By an order of this court dated 22nd May, 1951, the company was granted special leave ' under article 136(1) of the Constitution. ' 577 Section 34 of, the Indian Arbitration Act runs thus "Where any party to an arbitration comment Cost any legal proceedings against any other party to the agreement in respect of any matter agreed to be ,referred, any party to such legal proceedings may, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at ,the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of 'the arbitration, such authority may make an order staying the proceedings.
" From the language of the section it is quite clear that the legal proceeding which is sought to be stayed must be in respect of a matter which the parties have agreed to refer and which comes within the ambit of the arbitration agreement.
Where, however, a suit is commenced as to a matter which lies outside the submission, the court is bound to refuse a stay.
In the words of Viscount Simona L. C. in Heyman vs Daruins Ltd ' (1).
the answer to the question whether a dispute falls within an arbitration clause in a contract must depend on (a) what is the dispute, and (b) what disputes the arbitration clause covers.
If the arbitration agreement is broad and comprehensive and embraces any dispute between the parties "in respect of" the agreement, or in respect of any provision in the agreement, or in respect of anything arising out of it, and one of the parties seeks to avoid the contract, the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself. ' Where, however, the party soaks to avoid the contract for reasons dehors it, the arbitration clause cannot be resorted to as it goes along with other terms of the contract.
In other words, a party cannot rely on a term of the contract (1) , 578 to repudiate it and still say the arbitration clause should not apply.
If he relies upon a contract, be must, rely on it for all purposes .
Where, however, an arbitration clause is not so comprehensive and is not drafted in the broad language which was, used in the House of Lords,case, namely ' "in respect of" any agreement, or in respect of something, arising out of it", that proposition does not hold good.
The arbitration clause is a written submission agreed to by the parties in a contract and like every written submission to arbitration must be considered according to its language and in the light of the circumstances in which it is made.
Now as regards the first question, viz., what is the present dispute about, the answer is to be gathered from paragraphs 14 to 17 of the plaint.
It is averred therein that the Government of Bihar committed breach of the agreement and failed to make any, valuation of the undertaking or pay the balance of the compensation money, that time being of the essence of the contract, the defendant failed and neglected to complete the valuation within the time originally fixed or the extended time, and that by reason of the breach of contract the plaintiff rescinded the agreement and forfeited the sum of rupees five lakhs and that it is entitled to compensation for the wrongful deprivation of the use of its property.
No claim has been made in the plaint for the valuation of the undertaking or for the payment of any compensation for the undertaking; on the other hand, the claim in the suit is founded on the rescission of the agreement containing the arbitration clause and on a breach of that agreement.
These are matters which may well be said to arise out of the agreement and if the arbitration clause was broadly worded and stated that all disputes arising out of the agreement would be referred to arbitration, it could then probably have been said that the scope of the suit was within the ambit of the arbitration clause, but the clause here is differently worded.
The clause here is that if any difference.
or dispute arises between the parties over the payment of the 579 balance which may be found due after valuation such dispute shall be submitted to the sole arbitration of a single arbitrator.
The scheme of the agreement is that the Government was to make a valuation as laid ' down in the within three, months of taking over the undertaking and any balance of money found due to the company as per Government valuation was to be paid by the Government, and in case of over payment, the excess paid to the company on account of the "on account payment" of rupees five lakhs mentioned in paragraph 1 had to be refunded to government.
In the case of any difference between the parties over the valuation as arrived at by the Government and that arrived at by the company, such difference or dispute, including the claim for additional compensation of twenty per cent.
had to be referred to arbitration a scope of it is arbitration clause is a very narrow one.
It only confers jurisdiction on the arbitrator on the question of valuation of the undertaking pure and simple and does not say that all disputes arising out of the agreement or in respect of it will be decided by arbitration.
Questions relating to the breach of contract or its rescission are outside the reach of this clause.
The arbitrator has not been conferred the power by this clause to pronounce on the issue whether the plaintiff was justified in claiming that time was of the essence of the contract and whether the State Government committed a breach of the contract by not making a valuation within the time specified.
This clause is therefore no answer to the company 's querry "Show me that I have agreed to refer the subject matter of the suit to an arbitrator.
" Besides this clause in the agreement there is nothing else which can deprive the court of its jurisdiction to decide the plaintiff 's suit as brought.
Ramaswami J., with whom Rai J. concurred, held that upon a perusal of the term,; of the contract and of the correspondence it was obvious that no stipulation was made that the compensation money 75 580 should be paid within the period of three months, that on the contrary, the intention of the parties that the Government would pay compensation money only after the award had been made by the arbitrator.
Now this is the very point which would be in issue in the suit itself, and the learned Judge was in error in considering and deciding this point in this enquiry under section 34.
The validity of the plaintiff 's contention in the suit cannot be gone into by that court exercising jurisdiction under this section as its function is a very limited one.
The only point in such cases to be decided is whether the claim which is brought whether it is good, bad or indifferent comes within the submission to arbitration.
It may be that there are grounds upon which the defendant would be able to satisfy the proper tribunal that the plaintiff 's claim was frivolous and vexatious, but those considerations, as pointed out by Banks L. J in Monro vs Bognor Urban Council (1), are material only if the question to be considered is whether the case made was a frivolous and vexatious one and ought to have had no weight at all upon the question of what the plaintiff 's claim in fact was and one can only find out what his claim is by looking at the plaint.
The learned Judges in the High Court seem to have thought that the arbitration clause here had been drafted broadly and that all "disputes arising out of or in respect of the agreements were referable to arbitration.
Their reliance on the decision of the Calcutta High Court in Harinagar Sugar Mills Ltd. vs Skoda India Ltd.(") in support of the decision indicates the error.
In that case the arbitration clause was drafted in a comprehensive language and stated that a dispute arising out of the agreement had to be referred to arbitration.
Their reference to the case of Governor General in Council vs Associated Livestock Farm Ltd. (3) also shows that they were under the same erroneous impression.
In this case the arbitration clause was in these terms : (1) [1915] 3 K.B. i67.
(2) (3) A.I.R. 1948 Cal, 230, 581 "Any dispute or difference arising out of the contract shall be referred to the arbitration of the officer sanctioning the contract whose decision shall be final and binding.
" It is obvious that these decisions could have no relevance to the arbitration clause as drawn up in the present case.
If the nature of the claim is as we have indicated above, it seems plain that it does not come within the scope of the submission.
In our judgment, therefore, the decision of the learned Subordinate Judge was right and the Judges of the High Court were in error in reversing it.
In the result the only course open to us is to allow the appeal with costs and to say that the plaintiff 's claim is not within the scope of the submission and that the petition under section 34 was rightly dismissed by the Subordinate Judge.
Appeal allowed.
Agent for the appellants Rajinder Narain.
Agent for the respondent P. K. Chatterji.
| K, H and M filed four suits each against four sets of defendants in respect of different sets of plots under section 175 U. P. Tenancy Act, 1939.
Since similar points were involved the twelve suits were tried together and were disposed of by a common judgment decreeing them.
Twelve decrees were prepared and the defendants preferred twelve appeals to the Additional Commissioner.
Three appeals by one set of the defendants B were dismissed for default and the remaining nine were dismissed on merits.
Against the dismissal of the nine appeals on merits the three sets of defendants preferred nine second appeals before the Board of Revenue but they were dismissed as barred by res judicata on May 7, 1954.
In November, 1954, the appellants filed petitions for special leave before the Supreme Court and on April 18, 1955, special leave was granted.
In July 1954, the villages in Which the lands in suit were situate came under consolidation operations under the U. P. Consolidation of Holdings Act, 1953, and the operations were completed by the publication of a notification 218 under section 52 of the Act on October 17, 1953.
The appellants did not file any objections before the consolidation authorities.
The respondent contended that in view of the consolidation operations the appeals before the Supreme Court had become infructuous.
Held, that the appeals had not become infructuous.
There was nothing in the U. P. Consolidation of Holdings Act, 1953, as it stood during the period the village in suit was under consolidation operations which could have in any way affected these appeals, during or after the consolidation operations.
The subsequent Amending Acts did not affect the appeals as they were prospective in operation and applied only to cases where the consolidation operations were started after the Amending Acts had come into force.
Held, further that the appeals before the Board of Revenue were not barred by resjudicata.
It was essential for the bar of res judicata that the previous and judication must have been between the same parties.
The three suits in which judgments had become final were against one B and not against any of the appellants .
The matter in issue in those three suits was different from that in the other nine suits as each of the suits related to different plots.
The common judgment was really twelve judgments in the twelve suits.
Badri Narayan Singh vs Kamdeo Prasad Singh, (1962) 3. section C. R. 759 referred to.
|
il Appeal No. 1178 of 1966.
Appeal by special leave from the judgment and order dated June 15, 16, 1965 of the Bombay High Court in Special Civil Application No. 2061 of 1963.
V. A. Seyid Muhammad and section P. Nayar, for the appellant.
N. N. Keswani for the respondents.
This appeal by special leave is directed against the decision of a Division Bench of the Bombay High Court allowing 441 a petition under articles 226 and 227 of the Constitution by Arjandas Dayaram Vachhani challenging the order of the Deputy Chief Settlement Commissioner (with delegated powers of Chief Settlement Commissioner) under the (44 of 1954), hereafter referred to as the Act disallowing the writ petitioner 's revision from the order of the Settlement Officer (with delegated powers of Settlement Commissioner) which had affirmed on appeal the order of the Assistant Settlement Officer.
The writ petitioner 's case was held to fall within r. 19(3) of the Displaced Persons (C & R) Rules, hereafter called the Rules, made by the Central Government under section 40 of the Act.
The question which falls for decision is a very short one and it relates to the meaning and effect of r. 19(3).
The facts are not in dispute.
Kishanchand Dayaram Vachhani and his four sons Arjandas Dayaram Vachhani, Dayaram A. Vachhani, Ramchand Dayaram Vachhani and Kanayalal Dayaram Vachhani constituted a joint Hindu family when, as a result of partition of the country in 1947, they migrated from Sind (now in Pakistan) to India.
After their migration Kishanchand Dayaram Vachhani, the father, made an application for vertification of claim in respect of the properties left by the joint Hindu family in Sind.
This claim was duly verified.
It is unnecessary to make a detailed reference to the history of the case.
Suffice it to say that on October 28, 1961 'Shri Purshottam Sarup, Deputy Chief Settlement Commissioner (with delegated powers of Chief Settlement Commissioner) (Rehabilitation Department) allowed the appeal preferred by Arjandas Dayaram Vachhani from the order of Shri H. K. Chaudhary, Regional Settlement Commissioner, Bombay, dated May 14, 1961 and after setting aside the impugned order, directed that the property.
in question be treated as joint family property in which the parties would be entitled to apportionment as members of joint Hindu family in accordance with the Rules.
Pursuant to this direction Shri K. section Bedi, Assistant Settlement Officer, Bombay, on June 12, 1963 directed that the case be re processed.
Shri Arjandas Dayaram Vachhani appealed from this order to the Settlement Officer (with delegated powers of the Regional Settlement Commissioner) but without success.
That officer recorded a fairly exhaustive order dated October 21, 1963 in which the entire history of the case was noticed.
A revision was taken to the Deputy Chief Settlement Commissioner, Shri Purshottam Sarup (with delegated powers of Chief Settlement Commissioner).
That officer also went into the controversy at some length and by his order ' dated February 13, 1964 disallowed Shri Arjandas Dayaram Vachhani 's claim both under r. 20 and r. 19(2).
of the Rules.
It was pointed out that in his (Shri Purshottam Sarup 's) earlier order it had 442 been clearly stated that the parties constituted a joint Hindu family and were entitled to apportionment.
The father and the sons could not be treated as separate and that their claim as tenants in common or as co sharers was contrary to his earlier decision which had remained unchallenged.
In view of sub r.
(3) of r. 19, r. 19(2) was held inapplicable.
On an application under articles 226 and 227 of the Constitu tion the High Court disagreed with the view of the Chief Settlement Commissioner and held r. 19(3) to be inapplicable when the joint Hindu family consists only of father and his sons.
On this view the order of the departmental authorities was set aside.
The short question which now falls for our determination in this appeal is whether the sons of Kishanchand Dayaram Vachhani are entitled to claim the benefit of r. 19(2) which has been granted by the High Court on their writ petition in disagreement with the view of the departmental authorities which excluded the claim of the sons under r. 19(3).
Rule 19 may here be re ad "Special provision for payment of compensation to joint families : (1) Where a claim relates to properties left by the members of an undivided Hindu family in West Pakistan (hereafter referred to as the joint family) compensation shall be computed in the manner hereinafter provided in this rule.
(2) Where on the 26th September, 1955 hereinafter referred to 'as the relevant date the joint family consisted of (a) two or three members entitled to claim partition, the compensation payable to such family shall be computed by dividing the verified claim into two equal shares and calculating the compensation separately on each such share, (b) four or more members entitled to claim partition, the compensation payable to such family shall be computed by dividing the verified claim into three equal shares and calculating 'the compensation separately on each such share.
(3) For the purpose of calculating the number of the members of a joint family under sub rule (2), a person who on the relevant date: (a) was less than 18 years of age, 443 (b) was a lineal descendant in the main line of another ' living member of joint Hindu family entitled to claim partition shall be excluded : Provided that where a member of a joint family has died during the period commencing on the 14th August, 1947 and ending on the relevant date leaving behind on the relevant date all or any of the following heirs namely: (a) a widow or widows, (b) a son or sons (whatever the age of such son or sons) but no lineal ascendant in the main line, then all such heirs shall, notwithstanding anything contained in this rule, be reckoned as one member of the joint Hindu family.
Explanation : For the purpose of this rule, the question whether a family is joint or separate shall be determined with reference to the status of the family on the 14th day of August, 1947 and every member of a joint family shall be deemed to be joint notwithstanding the fact that he had separated from the family after that date.
" According to the High Court the other living member of the joint Hindu family whose lineal descendants are to be excluded under sub r. (3) (b) must be a person other than their own father.
This view, in our opinion, is ' contrary to the plain words used in this sub rule.
The High Court expressed its opinion in these words "It is clear that this condition is intended to apply to a case where a joint family consists of more than two persons where each one of them is entitled to claim partition and the members sought to be excluded are lineal descendants of one of such members.
It is only in such cases that it could be said that they were lineal descendants of a member who was ' entitled to claim partition against another.
In the present case the father and each of the sons is entitled to claim partition against each other.
If the lineal descendants are to be excluded even in a case like the present it only means that all the descendants of the father must be excluded even though there is no other member against whom the father can seek to enforce partition.
Having regard to the words used the only interpretation which can be placed on clause (b) of sub rule (3) of r. 19, is the one adopted by us.
" 444 The error into which the High Court seems to have fallen is that it has assumed that a person against whom partition can be claimed by the father ' of the lienal descendants constituting the joint Hindu family must be some member of that family other than his lienal descendants and that it excludes his right to claim partition when the only other members of the joint family are his own lineal descendants.
Far this assumption there does not seem to us to be any.
justification either in the language or in the scheme of the Act and the rules or in any other provision of law applicable to the parties before us and governing the present controversy.
According to the general provisions of Hindu law the father in a joint Hindu family has the power to partition the joint family property and indeed in the present case the High Court has accepted the legal position that the father and each of his sons are entitled to claim partition against each other.
It is only on the language of r. 19(3) and as the judgment under appeal suggests, on that Court 's disinclination to accept as proper, the exclusion of the sons when the, joint family consists only of the father and his sons that the High Court construed r. 19(3) in the, manner stated above.
We are unable to find any warrant for this view.
The plain reading of r. 19(3) is against it.
The language is not susceptible of the meaning that there should be in existence some member of the joint family other than the sons, against whom the father should be entitled to claim partition.
The words of the sub rule being plain and unambiguous they have, in our view, to be construed in their natural and ordinary sense.
No cogent reason has been suggested for departing from the rule of literal construction in this case.
The consequence flowing from.
this construction is quite intelligible and seems to us to be rational and logical.
The special provision embodied in r. 19 for paying compensation to joint Hindu families is, in our view, intended to treat a joint Hindu family consisting only of a father and his sons as one, unit for the purpose of payment of compensation for the joint family property left in Pakistan.
Such a joint family is not intended to be broken up by the statutory scheme of the Act and the Rules.
Sub rule (3) (b) of r. 19 was, in our opinion correctly construed by the Chief Settlement Commissioner and the High Court was wrong in disagreeing with it and in allowing the writ petition.
The appeal accordingly succeeds and is allowed with costs.
V.P.S. Appeal allowed.
| The appellants, who were holders of a licence under the U.P. Sugar Dealers ' Licensing Order, 1962, to deal in sugar and were also licenced to deal in flour, were called upon by a letter dated June 5,1967 to explain certain irregularities detected on inspection of their shop.
The next day they were directed to hand over their stocks of sugar and flour to a Cooperative Marketing Society.
Their representations against this direction to the District Magistrate were not attended to, and they were therefore obliged to surrender their stocks.
By a letter dated June 28, 1967, the appellants were informed that the District Magistrate had cancelled their licences as dealers in sugar and flour but no reasons were given for this order.
An appeal under clause 8 of the Order of 1962 to the State Government was rejected but no reasons were communicated to the appellants for this rejection.
A writ petition challenging the orders of the District Magistrate and the State Government in appeal was dismissed by the High Court.
On appeal to this Court, HELD : The orders passed by the District Magistrate and the State Government cancelling the licences of the appellants must be quashed.
The authorities had disclosed by their conduct a reckless disregard of the rights of the appellants.
The order passed by the District Magistrate cancelling the licences was quasi judicial; it could be made only on a consideration of the charges and the explanation given by the appellants.
That necessarily implied that the District Magistrate had to give some reasons why he held the charges proved, and the explanation unacceptable.
The appellants had a right to carry on their business and they could be deprived of their right only by an order supported by good and adequate reasons ' Under the rules appellant had a right of appeal to the State Government.
Unless reasons were given in the District Magistrate 's Order the aggrieved party had no opportunity to convince the State Government that the order was erroneous.
, if the aggrieved party was not supplied the reasons the right of appeal was an empty formality.
[203 H 204 D] There was nothing on the record to show that the representations made by the appellants to the State Government were even considered.
The fact that cl. 7 of the Sugar Dealers ' Licensing Order to which the High Court had referred does not "require the State Government to pass a reasoned order" is wholly irrelevant.
The nature of the proceeding requires that the State Government must give adequate reasons which disclose that an attempt was made to reach a conclusion, which was according to law and just.
[205 H] Opportunity to a party interested in the dispute to present his case on questions of law as well as fact, ascertainment of facts from materials L 11 Sup.
C 1 14 20 2 before the Tribunal after disclosing the materials to the party against whom it is intended to use them, and adjudication by a reasoned judgment upon a finding of the facts found, are attributes of even a quasi judicial deter mination.
It must appear not merely that the authority entrusted with quasi judicial authority has reached a conclusion on the problem before him: it must appear that he has reached a conclusion which is according to law and just, and for ensuring that he must record the ultimate mental process leading from the dispute to its solution.
[204 H] Madhya Pradesh Industries Ltd. vs Union of India & Others (per Subba Rao, J.) ; ; Bhagat Raja vs Union of India and Ors. ; ; State of Madhya Pradesh and Anr.
vs Seth Narsinghdas Jankidas Mehta, C.A. No. 621 of 1966 decided on April 29, 1969.
The Slate of Gujrat vs Patel Raghav Natha and Ors., C.A. No. 723 of 1966 decided on April 21,1969 and Prag Das Umar Vaishya vs The Union of India and Ors., C.A. No. 657 of 1965 decided on Aug. 17, 1967; referred to.
|
N: Criminal Appeal No. 362 of 1975.
Appeal by Special Leave from the Judgment and order dated the 11th July, 1975 of the Kerala High Court in Criminal Revision Petition No. 73 of 1975.
section Govind Swaminadhan, E. V. Rangam and N. S Sivam for the Appellant.
Soli J. Sorabjee, Addl.
of India, R. N. Sachthey and E. C. Agarwala for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by special leave is directed against the judgment and order of the High Court of Kerala dated 11th July, 1975 834 dismissing a criminal revision petition filed by the appellant before the High Court The point involved in the present appeal lies within a very narrow compass.
The appellant was being prosecuted for offences under sections 120 B, 420, 471 and 468 read with section 34 I.P.C., section 167 (72) of the sea of the Sea Customs Act and section 5 (2) read with section 5 (1)(d) of the Prevention of Corruption Act.
At the time when the chargesheet was filed and the Special Judge took cognizance against the appellant sometime in October, 1970 the appellant ceased to be a public servant and, therefore, no sanction under section 6 of the Prevention of Corruption Act (hereinafter referred to as the Act) was obtained.
It appears that in pursuance of a departmental enquiry held against the appellant he was charge sheeted and ultimately dismissed by the appointing authority.
Thereafter, the appellant filed an appeal before the President of India on 18 10 1967 against his removal from service.
After consulting the Union Public Service Commission the President by his order dated 25 9 1972 allowed the appeal and set aside the order of removal from service passed by the Collector of Customs against the appellant.
The order of the President further directed that the period of absence from 5 9 1967 till the date of reinstatement was to be treated as under suspension.
The appeal appears to have been allowed by the President mainly on the ground that there was some defect in the charge sheet served by the disciplinary authority.
The disciplinary authority was directed to institute de novo proceedings against the appellant after rectifying the defect in the charge sheet.
While these proceedings before the President were going on, the trial against the appellant proceeded to its logical end and we now understand that evidence has already been led and the arguments have to be heard.
The appellant on being reinstated by the President filed an application before the special Judge praying that all further proceedings be dropped inasmuch as the prosecution against the appellant was initiated in the absence of a proper and valid sanction having been obtained under section 6 of the Act.
The special Judge, however, rejected the petition as a result of which the appellant moved the High Court but was not successful there.
The only point raised by the appellant before the High Court as also before us was that in view of the order of the President reinstating the appellant retrospectively, the appellant must be deemed to be in service with effect from the date from which the departmental proceedings were started against him, and, therefore, he would be a public servant at the time when cognizance was taken by the special Judge, and 835 as no sanction under section 6 of the Act was obtained, the entire proceedings became void ab initio.
Mr. Sorabjee appearing for the respondents has submitted that admittedly and factually at the point of time when the special Judge took cognizance of the case on 14 10 1970 the appellant having been dismissed from service was no longer a public servant, and, therefore, section 6 of the Act had no application.
Section 6 of the Act runs thus: "6(1) No court shall take cognizance of an offence punishable under section 161 or section 164 or section 165 of the Indian Penal Code, or under sub section (2) or sub section (3A) 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 Union and is not removable from his office save by or with the sanction of the State Government or of the Central Government; (b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the Central Government or of the State Government; (c) in the case of any other person, of the authority competent to remove him from his office.
" A perusal of this section would clearly disclose that the section applies only where at the time when the offence was committed the offender was acting as a public servant.
If the offender had ceased to be a public servant then section 6 would have no application at all.
Further more, it is also manifest from the perusal of section 6 that the point of time when the sanction has to be taken must be the time when the court takes cognizance of an offence and not before or after.
If at the relevant time, as indicated above, the offender was not a public servant no sanction under section 6 was necessary at all.
Construing section 6 of the Act this Court in the case of section A. Venkararaman vs The State(1) pointed out as follows: "When the provisions of section 6 of the Act are examined it is manifest that the two conditions must be fulfilled before its provisions become applicable.
One is that the offences mentioned therein must be committed by a public servant and the other is that that person is employed in connection with the affairs of the Union or a State and is not removable from his 836 office save by or with the sanction of the Central Government or the State Government or is a public servant who is removable from his office by any other competent authority.
Both these conditions must be present to prevent a court from taking cognizance of an offence mentioned in the section without the previous sanction of the Central Government or the State Government or the authority competent to remove the public servant from his office.
If either of these conditions is lacking, the essential requirements of the section are wanting and the provisions of the section do not stand in the way of a court taking cognizance without a, previous sanction . . . .
Conversely, if an offence under section 161 of the Indian Penal Code was committed by a public servant, but, at the time a court was asked to take cognizance of the offence, that person had ceased to be a public servant one of the two requirements to make section 6 of the Act applicable would be lacking and a previous sanction would be unnecessary.
The words in section 6(1) of the Act are clear enough and they must be given effect to".
To the same effect is a later decision of this Court in the case of C. R. Bansi vs State of Maharashtra(1) In view of the observations referred to above, it is manifest that as the appellant had ceased to be a public servant at the time when the cognizance of the case was taken against him by the Special Judge no sanction under section 6 of the Act was necessary.
It was, however, argued by Mr. Swaminadhan, learned counsel for the appellant that the logical consequence of the order of the President reinstating the appellant was that he would be deemed to have been put jack into service on the date the charge sheet was submitted against him, and, therefore, he must be deemed to be a public servant within the meaning of section 6 of the Act.
In other words, the learned counsel wanted us to import a legal fiction arising from the Presidential order by which even though factually the appellant may not have been a public servant at the time when the cognizance was taken, he would be deemed to be so by virtue of the Presidential order even though the Presidential order may have been passed years after the cognizance was taken.
We are however unable to agree with the somewhat broad arguments advanced by the learned counsel for the appellant.
837 To begin with, the dismissal of the appellant was not a nullity so as to vitiate all proceedings previous or subsequent.
It was merely an order passed by the President in an appeal and the appellant succeeded because of a manifest defect in the charge sheet.
The order passed by the President was therefore not an order on merits.
There is nothing to show that the President ever intended that the appellant should be deemed to have been reinstated even for the purpose of section 6 of the Act so as to nullify actions completed, consequences ensued or transactions closed.
In fact, when the President observed that the appellant shall be deemed to have been placed under suspension from the date of the original order of dismissal it merely meant that for the purpose of certain civil consequences flowing from the order of the President.
namely, the grant of subsistence allowance or other benefits the, order would be deemed to be retroactive in character.
It is well settled that a deeming provision cannot be pushed too far so as to result in a most anamolous or absurd position.
In the case of Commissioner of Sales Tax, Uttar Pradesh vs The Modi Sugar Mills Ltd. (1) while laying down the principles on the basis of which a deeming provision should be construed this Court observed as follows: "A legal fiction must be limited to the purposes for which it has been created and cannot be extended beyond its legitimate field".
Similarly in the case of Braithwaite & Co. (India) Ltd. vs Employees ' State Insurance Corporation(2) this Court further amplifying the principle of the construction of a deeming provision observed thus: "A legal fiction is adopted in law for a limited and definite purpose only and there is no justification for extending it beyond the purpose for which the legislature adopted".
In the Bengal Immunity Co. Ltd. vs State of Bihar and Ors.(3) this Court pointed out that "explanation should be limited to the purpose the Constitution makers had and legal fictions are created only for some definite purpose".
In the case of Commissioner of Income Tax Bombay City vs Elphinstone Spinning and Weaving Mills Co. Ltd.(4) this court observed as follows: 838 "As we have already stated, this fiction cannot be carried further than what it is intended for".
Thus, it is well settled that a deeming fiction should be confined only for the purpose for it is meant.
In the instant case, the order of the President reinstating the appellant and creating a legal fiction regarding the period of suspension must be limited only so far as the period of and the incidents of suspension were concerned and could not be carried too far so as to project it even in cases where actions had already been taken and closed.
In other words, the position seems to be that at the time when actual cognizance by the court was taken the appellant had ceased to be a public servant having been removed from service.
If some years later he had been reinstated that would not make the cognizance which was validly taken by the court in October, 1970 a nullity or render it nugatory so as to necessitate the taking of a fresh sanction.
We, therefore, entirely agree with the view taken by the High Court that in the facts and circumstances of the present case legal fiction arising out of the Presidential order cannot be carried to nullify the order of cognizance taken by the special Judge.
The argument of the learned counsel for the appellant is, therefore, overruled.
No other point was pressed before us.
The appeal being without merit is accordingly dismissed.
The special Judge would now hear the arguments of the parties and dispose of the case as expeditiously as possible.
Let the records be sent back to the special Judge immediately.
V.D.K. Appeal dismissed.
| A large sum of Rs. 30 lakhs in cash having been recovered from the respondent in pursuance to a search by the Income Tax officials his assessments for the years 1962 63 to 1972 73 were reopened by the Department.
The total tax burden on the respondent was over Rs. 30 lakhs and an additional sum of Rs. 35 lakhs was assessed for the year 1973 74.
The respondent was also prosecuted under s 277 of the Income Tax Act.
Appeals by the respondent to the Appellate Assistant Commissioner brought down the assessable income by about Rs. 10 lakhs.
The respondent and the department both appealed to the Income Tax Appellate Tribunal, the former filing 12 appeals and the latter 10 appeals.
The respondent moved the Settlement Commission for composition under section 245M.
The assessee withdrew his appeals and the revenue declared their assessments and appeals 'weak ' and withdrew them.
The Settlement Commission on receipt of the application under section 245C acted under section 24SD(l) and called for a report from the appellant.
The appellant reported that prosecution proceedings for concealment of income and also false verification in the return by the respondent were pending against the respondent in the Magistrate 's Court and that it was not a fit case to be proceeded with by the Commission.
The Settlement Commission after some correspondence with the respondent and without giving a hearing informed him that as the appellant had objected under section 245D ( I ), the Settlement Commission did not allow the application to be proceeded with.
The appellant thereupon moved the Income Tax Appellate Tribunal for restoration of its appeals although no specific provision enable such a restoration, the asssessee being entitled to apply for restoration under section 245M.
The respondent urged the Settlement Commission to review its order as no hearing as such was given to him.
The Settlement Commission yielded to his 1134 submission, reached the reverse conclusion that the appellant 's opposition to the composition notwithstanding, the application for settlement be considered on merits.
The core controversy in the appeals to this Court were whether in view of the withdrawal of the departmental appeals before the Income Tax Appellate Tribunal, the Commissioner is estopped from making a report under section 245D(1) proviso 2 to the Settlment Commission objecting to the application from being proceeded with.
On behalf of the appellant it was contended that (a) there was no power of review for the Commission, since it had declined to proceed with the application for settlement and consequently the re opening of the Settlement proceedings was invalid, (b) even though the C.T.T. had withdrawn his appeals and thus facilitated the filing of an application under section 245C no bar of estoppel could be spelt out to forbid the Commissioner from exercising his statutory power of withholding consent to the settlement proceedings and (c) the C.l.
T 's veto was not subject to review or invalidation by the Settlement Commission Allowing the appeals: ^ HELD 1.
The Settlement Commission should be inhibited from proceeding with the application of the assessee and the appeals by the assessee before the Income Tax Appellate Tribunal must be revived and disposed of expeditiously.
[1164F1 2.
The departmental appeals, having been admitted by the Commissioner of Income Tax himself to be very weak and frivolous, should not be revived as it will be only a waste of public time and money.
[iy] 3.
If the Department files an appeal which it drops to enable an application before the Commission, then the proviso to section 245M(1) does not debar the motion for settlement.
[1156C] 4.
Functionally speaking, Chapter XIXA in the Income Tax Act, 1961, enacted by the Taxation Laws (Amendment) Act, 1975, engrafted in partial implementation of the Wanchoo Committee Report, provides for settlement of huge tax disputes and immunity from criminal proceeding by a Commission to be constituted by the Central Government when approached without objection from the Tax Department.
[1138E] 5.
Fiscal philosophy and interpretation technology must be on the same wavelength if legislative policy is to find fulfilment in the enacted text.
[1138 H] 6.
The mechanics of section 245D provides that the application for settlement, when filed, shall be forwarded to the Commissioner for a report and is only on the basis of the material contained in such report that the Settlement Commission may allow the application to be proceeded with or reject the application.
To reject an application is to refuse relief outright and affect the applicant adversely.
So it is provided "that an application shall not be rejected unless an opportunity has been given to the applicant of being heard.
" An applicant before the settlement Commission is therefore entitled to a hearing before his application for composition is rejected [1146G H] 1135 7.
The rule of fairplay incorporated in the first proviso to section 245D(l) A obligates the Commission to hear the applicant before rejection.
Even apart from any specific provision, it is legal fairplay not to hurt any party without hearing him unless the Act expressly excludes it.
Nothing is lost by hearing a petitioner whose application for settlement is being rejected and much may be gained by such hearing in properly processing the application in the spirit of Chapter XIXA.
S 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, indeed fundamental, that no man is prejudiced by action without opportunity to show to the contrary.
Law leans in favour of natural justice where statutory interdict does not forbid it.
[1147A D, F] Mohinder Singh Gill v Chief Election Commissioner, ; ; Maneka Gandhi vs Union of India, [1978] 1 SCC 248 referred to.
In the instant case, the Settlement Commission in the first instance rejected the application because the Commissioner of Income Tax objected to it.
The rule of fairplay incorporated in the first proviso to section 245(1) obligates the Commission to hear.
the applicant, before rejection.
The Settlement Commission 's decision to re hear and pass a de novo order cannot, therefore, be said to be illegal.
[1147E] 8.
The second proviso to section 245D ( 1 ) is compulsive in tune and import, for it mandates "that an application shall not be proceeded with under this sub section 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. has been established or is likely to be established by any income tax authority, in ' relation to the case.
" There is little diffculty in holding that the application for settlement, having been rejected by the Commissioner, could not be proceeded with.
The veto of the Commissioner was the Waterloo of the application.
[1147G 1148A, D] 9.
Section 245H is of great moment from the angle of public interest and public morals at it immunises white collar offenders against criminal prosecutions and, in unscrupulous circumstances, becomes a suspect instrument of negotiable corruption.
More than the prospect of monetary liability and mounting penalty is the dread of traumatic prison tenancy that a tax dodging F tycoon is worried about.
And if he can purchase freedom from criminal prosecution and incarceratory sentence he may settle with the Commission, and towards this end, try to lay those who remotely control the departmental echelons whose veto or green signal, opens the prosecutions.
Thus, section 245H, which clothes the Commission with the power to grant immunity from prosecution for "any offence under this Act or under the Indian Penal Code or under any other Central Act. " is a magnet which attracts large tax dodgers and offers, indirectly an opportunity to the highest departmental and political authorities a suspect power to bargain.
[1150C E] 1O Section 245M enables certain persons who have filed appeals to the Appellate Tribunal to make applications to the Settlement Commission.
The section (a) enables withdrawal of appeals before tribunals by assessee as condition precedent to applications for composition by the Settlement Commission, (b) applies, by a legal fiction, Section 245C and to such applications, and (c) where the proceedings before the Commission is not entertained, allows revival of the withdrawn appeals thus restoring the Status quo ante.
1136 The proviso to section 245M(l) places an embargo on the right of the assessee to move the Commission where the income tax officer has preferred an appeal under sub s.(2) of section 253 against the order to which the assessee 's appeal relates.
The proviso interdicts entertainment of a settlement application if departmental appeals are filed.
[IISOF, 1151G, 1152C, 1153F] 11.
Purposefully interpreted preferring an appeal means.
more than formally filing it but effectively pursuing it.
If a party retreats before the contest begins it is as good as not having entered the fray.
After all, Chapter XIXA is geared to promotion of settlement and creation of road blocs in reasonable composition.
The teleological method of interpretation leads to the view that early withdrawal of the I.T.O 's appeal removed the bar of the proviso.
[1153C D] 12.
The purpose of substituting the method of investigative negotiation, just settlement and early exigibility by a high powered Commission for a tier upon tier of long protracted litigation, where victory may be phyrrhic and futile, is ill served by keeping out cases solely for the reasons that departmental appeals have been filed.
[1153H 1154A] 13.
The obvious object of the clause, "the assessee shall not be deemed to have withdrawn the appeal from the appellate tribunal," is to restore the parties to status quo ante, and in fairness, must apply to the Department as to the assessee.
This non discriminatory import can be reasonably read into the clause if we construe the expression "the assessee in wider way so as to include all parties affected by the subject matter of the assessment.
In that case, the clause may mean that no one who is aggrieved by the assessment shall be deemed to have withdrawn the appeal from the appellate tribunal.
" An equitable and purpose oriented construction of the clause means that the assessee will be put back in the same position vis a vis his appeals and if, to facilitate his moving the Commission the I.T.O. has withdrawn the depart mental appeals, the Commission 's rejection of the application shall not pre judice the Revenue.
Actus curie neminem gravabit is the principle of wider import and is a tool of construction too.
This perhaps may be making up for a lacuna by a restructuring of the clause so as to work out justice to the Department.
[1154E G] 14.
The scheme of section 253(4) contemplates filing of memorandum of cross objections by the ITO on receipt of notice of the appeal by the assessee.
So much so it is also possible, alternatively to read into section 245 (7) the right of the department to file an appeal de novo on receipt of notice of the revival of the assessee 's appeal, within the period specified in section 253 (4) .
This does not do violence to the language of section 245M(7) and affords equitable relief to the Department by enabling it to bring its appeal back to life notwithstanding the earlier withdrawal, when the assesses 's appeal reincarnates section 245M(7).
[1154H ll55B] 15.
The judicial process does not stand helpless.
with folded hands but engineers its way to discern meaning when a new construction with a view to rationlisation is needed.
[1155C] Seaford Court Estates Ltd. vs Asher, , referred to.
A casual perusal of Chapter XIXA convinces the discerning eye that the Settlement Commission exercises many powers which affect, for good or otherwise, the rights of the parties before it And vests in it power to grant 1137 immunity from prosecution and penalty, to investigate into any matters and to A enjoy conclusiveness regarding its orders or settlement.
Section 245L declares all proceedings before the Settlement Commission to be judicial proceedings.
Settlement Commission are therefore tribunals.
[ll57D E, ll56E] Associated Cement Companies Ltd. vs P. N. Sharma and another ; referred to.
The Commissioner has a duty to the public Revenue and more importantly, a duty to object to any assessee who is prima facie guilty of grave criminal conduct in the shape of concealment of income or perpetration of fraud getting away with it by invoking chapter XIXA.
The gravity of this public policy cannot be undermined by interpretative softness of second puroviso to section 245D(l).
To whittle down the imperative nature of this veto power is to undo the expectations of the Wanchoo Committee and amounts to stultify the rule of law, an integral part of which is that the law shall not let the greater felon loose.
[1158E; 1158H 1159A] 18 Section 245D by the 2nd Proviso, casts a public duty on the Commissioner of Income Tax to consider in the light of the case made out in the assessee s application whether "concealment of particulars of income on the part of the applicant or prepetration of fraud by him for evading any tax or other sum chargeable or imposable under the Indian Income Tax Act, 1922 (11 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," and exercise his veto power to prevent escape of macro criminals prima facie guilty of grave economic crimes.
He cannot bargain over this interdict in advance or barter away a legal mandate in anticipation.
He may permit or even assist the filing of a. conciliation motion of the assesse 'e but when the Commission intimates him under section 245D(l) he shall, with statutory seriousness.
exercise his discretion.
He cannot enter into a 'deal ' over this power without betraying the statutory trust.
The plea that the Commissioner of Income Tax, by conduct and understanding has 'irredeemably mortgaged ' his statutory duty to object if the case deserves such objection has to be negatived.
Estoppel then is both odious and omnius and discretion the door to corruption [1160D G] 19.
In the instant case, the CIT withdrew the appeals but it is not correct that he made representations to the assessee to act in a particular manner with a provision of doing something to his advantage leading to the assessee in turn acting to his own prejudice by withdrawing his appeals His withdrawal of the appeals was independently decided upon by him so that he could move the Commission.
Thereafter he moved the department to withdraw its appeals so as to entitle him to make an application to the Commission.
The canons that govern the application of the principle of estoppel contradict its 'extension to a. situation like the present.
The plea of estoppel which has found favour with the Commission has therefore to be over ruled.
The objection raised by the CIT is a potent interdict on the jurisdiction of the Commission.
[1163H 1164A, C] 20.
The policy of the law as.
disclosed in Chapter XIXA is not to provide a rescue shelter for big tax dodgers who indulge in criminal activities by approaching the Settlement Commission The Settlement Commission will certainly take due note of the gravity of economic offences on the wealth of the nation which the Wanchoo Committee has emphasised and will exercise 1138 its power of immunisation against criminal prosecutions by using its power only sparingly and in deserving cases, otherwise such orders may become vulnerable if properly challenged.
[1164 E]
|
Appeal No. 365 of 1965.
Appeal by special leave from the Judgment and order dated February 18, 1963 of the Madhya Pradesh High Court (Indore F Bench) in Second Appeals Nos.
68 and 70 of 1961.
C. B. Agarwala, B. Dutta, J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for the appellant.
K. B. Chaudhry, for the respondent.
B. R. L. lyengar, G. L. Sanghi and A. G. Ratnaparkhi for Intervener No. 1.
J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for interveiier No. 2.
The Judgment of the Court was delivered by Shah, J.
Ramgopal respondent in this appeal was a tenant F of certain Inam land situate in village Nanda Panth in Indore Tahsil.
the appellant Rao Nihalkaran holder of the Inam 429 served a notice terminating the tenancy on the ground that he needed the land for personal cultivation, and commenced an action in the Court of the civil Judge, Class 11, Indore, on July 21, 1950, against Ramgopal for a decree in ejectment.
The Trial Court decreed the suit.
During the pendency of the appeal to the District Court, Indore, by Ramgopal against the decree, Madhya Bharat Muafi & Inam Tenants and Sub tenants Protection Act 32 of 1954 was enacted, and pursuant to the provisions thereof hearing of the appeal remained stayed till 1960.
in the mean time the Madhya Pradesh Land Revenue Code (Act 20 of 1959) was brought into force.
Ramgopal urged before the District Court that he had by virtue of section 185 of the Code acquired rights of an occupancy tenant and the appellant 's right to obtain an order in ejectment on the ground set up must be refused.
The District Judge accepted the contention of the respondent and allowed the appeal.
Against the decree passed by the District Court, Indore, the appellant appealed to the High Court of Madhya Pradesh, Indore Bench.
Following their judgment in Rao Nihalkaran vs Ramchandra and Others (1), the High Court confirmed the decree of.
the District Judge, and dismissed the appeal.
With special leave granted by this Court, this appeal has been preferred.
The dispute in the appeal centres round the meaning of the expression "tenant" used in section 185(i) cl.
(ii) (a) of the Madhya Pradesh Land Revenue Code.
The material part of the clause reads: "Every person who at the coming into force of this Code holds (i) (ii) in the Madhya Bharat region (a) any Inam land as a tenant, or as a sub tenant or as an ordinary tenant, shall be called an occupancy tenant, and shall have all the rights and be subject to all the liabilities conferred or imposed upon an occupancy tenant by or under this Code.
" It is common ground that the tenancy of ran occupancy tenant may be determined under section 193 of the Madhya Pradesh Land Revenue Code by an order of the Sub Divisional Officer on the grounds specified in that section, and personal requirement of the land lord is not one of such grounds.
But counsel, for the appellant urged that the rights of an occupancy tenant arise in favour of a person under section 185 (1) cl.
(ii) (a) only if there is between him and the claimant to the land a subsisting relation under which he holds land (1) L. P. A. No. 14 of 1961 decided on Sept. 24, 1962.
430 as a tenant at the date when the Code came into force.
The Code has, it is said, no retrospective operation, and the person who under the law in force before the commencement of the Code had ceased to be a tenant because, of termination of the contract between, him and the landlord is not invested with the rights of an occupancy tenant under section 185 (1) (ii) (a).
In the alternative it is contended that by virtue of section 261 and section 262(2), operation of section 185 is expressly excluded, when a person against whom proceedings have been instituted prior to the commencement of the Code for ' a decree in ejectment in enforcement of a right acquired under the law then in force, claims the states of an occupancy tenant.
The District Court held that the expression "tenant" within the meaning of section 185 (1)(ii)(a) of the Code includes a person whose tenancy stood determined before the commencement of the Code, and with that view the High Court agreed.
Counsel for the appellant complained that in reaching this conclusion, the Courts below ignored the definition in section 2(y) of the Code that the expression "tenant" means a person holding land from a Bhumiswami as an occupancy tenant under Ch.
XIV, and said that a person qua whom the contractual relation under which he was inducted as a tenant was determied prior to the commencement of the Code is not a tenant within the meaning of section 185(i)(ii)(a).
To appreciate this argument it is necessary to examine the relevant legislative history culminating in the enactment of the Code in 1959.
In 1948 twenty Indian States including the States of Gwalior, Indore and Malwa formed themselves into a Union.
Five more States were later incorporated into this Union.
Under the Constitution, Madhya Bharat was formed as a Part B State out of the territories of the United States of Gwalior, Indore & Malwa and certain enclaves merged therein and the Chief Commissioner 's Province of Panth Piploda.
Under the a new State of Madhya Pradesh was formed as from November 1, 1956 consisting of the Part B State of Madhya Bharat, parts of the former State of 'Madhya Pradesh, the territories of the States of Bhopal and Vindhya Pradesh and Sironj sub division of Kotah in the former State of Rajasthan.
Apparently the diverse land tenures prevalent in the covenanting States and the laws governing them remained in operation in their respective territories, even after the formation if the Part B State of Madhya Bharat.
Attempts were made to evolve a uniform pattern of revenue administration in conformity with the directive principles of State Policy in the Constitution to bring the tiller of the soil into direct relation with the State.
The Legislature of the Part B State of Madhya Bharat enacted Act 66 of 1950 to consolidate and declare the law relating to revenue administration in the United States of Gwalior, Indore and Malwa and land revenue, land tenure 431 and other matters connected with the land in the Ryotwari tracts or villages of the United States.
Section 54 of Act 66 of 1950 defined "Pakka tenant", "ordinary tenant", "sub tenant" and prescribed the duties of a tenant by section 55.
By section 73 a "Pakka tenant" was prohibited from sub letting for any period any land comprised in his holding, unless he belonged to any of the classes mentioned in section 74.
By section 74 certain classes of disabled persons were permitted to sub let the whole or any part of their holding.
But such a sub lease made in pursuance of the provisions of the Act was to cease to be in force after one year of the determination of the disability by death or otherwise.
By section 75 it was provided that a sub lease of the whole or any part of the holding of a "Pakka tenant" effected "properly and legally" prior to the commencement of the Act was to terminate after the expiry of the period of sub lease or expiry of four years after the commencement of the Act, whichever period was less.
By section 76 a sub lessee failing to hand over pos session after expiry of his right was to be deemed a tresspasser and liable to ejectment in accordance with the provisions of the Act.
The Legislature with the object of improving the conditions of agriculturists and with a view to remove the middleman between the State and the tiller of the soil also enacted the Zamindari Abolition Act and the Abolition of Jagirs Act.
Another statute which has a bearing on the dispute in this appeal the Madhya Bharat Muafi and Inam Tenants and Sub tenants Protection Act 32 of 1954 was enacted to provide, for the duration of the Act, for the protection of tenants or ordinary tenants and sub tenants of Muafidars, Inamdars and Istumurardars in Madhya Bharat against eviction by such Muafidars or Inamdars of their tenants, as the case may be, and for stay of suits and other proceedings relating to such eviction.
By section 2(ii) the terms "tenant", "sub tenant", "ordinary tenant" and "rent" were given the same meaning as was assigned to them in sub sections
(1) (7), (8) & (9) of section 54 of Act 66 of 1950.
By section 1 a restriction was placed, upon eviction of any tenant, sub tenant.
or ordinary tenant of Inam land during the continuance Act and it was declared that the tenant, sub tenant or ordinary tenant shall not pay rent higher than what he was 'paying in the agricultural year ending June 30, 1948.
By section 4 all suits, proceedings in execution of decrees or orders and other proceedings for the eviction of Inam land tenants, sub tenants or ordinary tenants from Inam lands, or in which a claim for such eviction was involved, pending in the Court at the commencement of the Act or which may be instituted after such commencement, were to be stayed subject to the provisions contained in the Act.
By sub section
(II) of section 4 it was provided that if the Inamdar, Muafidar or Istumurardar had taken possession of the land illegally from a tenant, sub tenant or an ordinary tenant after August 15, 1947 such a tenant, sub tenant or an ordinary 432 tenant may apply to the Tahsildar to be restored to possession of such land and on such application the Tahsildar shall cause the land to be returned to such tenant, sub tenant or ordinary tenant from the Inamdar, Muafidar, or Istumurardar, as the ease may be.
By section 6 it was provided that all suits and proceedings shall, after the expiration of the Act, be proceeded with subject to the provisions of any law which may then be in force from the stage which had been reached when the suit or proceeding was stayed.
Act 32 of 1954 was intended initially to remain in force for a period of two years, but its life was extended by later enactments.
Protection against eviction during the continuance of Act 32 of 1954 by enforcement of a decree passed in a suit or a proceeding either before or after the date on which the Act was brought into force was conferred upon tenants, sub tenants and ordinary tenants.
It is clear from the terms of sections 3 & 4 of the Act that the Legislature did not seek to grant protection only to persons between whom and the claimants for protection there was a subsisting contractual relation.
A person who was inducted into the land as a tenant, sub tenant or ordinary tenant and who continued to hold the land at the commencement of the Act was entitled to protection, notwithstanding that under the law in force prior to the Commencement of the Act the contractual relation was determined.
The Madhya Pradesh Land Revenue Code was enacted in 1959.
By section 157 of the Code it was declared that there shall be only one class of tenure holders of lands held from the State to be known as Bhumiswami, and by section 158 it was provided that every person, who at the time of coming into force of the Code, belongs to any of the four classes specified shall be called a Bhumiswami, and shall have all the rights and be subject to all the liabilities conferred or imposed upon a Bhumiswami by or under the Code, and among the persons specified is "every person in respect of land held by him in the Madhya Bharat region as a Pakka tenant or as a Muafidar, Inamdar or Concessional holder as defined in the Madhya Bharat Land Revenue and Tenancy Act Samvat 2007".
The argument of counsel for the appellant is that the respondent not being a tenant at the commencement of the Code could not acquire the rights of an occupancy tenant, and that any proceeding instituted against the tenant must be heard and disposed of according to the law in force prior to the commencement of the Code.
The definition of the expression "tenant" in section 2(y) postulates a subsisting tenancy, but that definition may be resorted to for interpreting section 185 (1) only if the context or the subject matter of the section does not suggest a different meaning.
A tenant is by the definition a person who holds land as an occupancy tenant from a Bhurmiswami: but the status of a Bhumiswami is recognized 433 for the first time by the Code, and an occupancy tenant from a Bhumiswami would mean only a person belonging to that class who acquires rights of occupancy tenant after the Code comes into force.
The position of a tenant prior to the date on which the Code was brought into force does not appear to have been dealt with in this definition.
The definition which is specially devised for the purpose of the Act throws no light on the nature of the right which invests.
the holder of land with the status of an occupancy tenant at the commencement of the Code.
In the context in which the expression "tenant" occurs in section 185 the defi nition could not be intended to apply in determining the conditions which invest upon a holder of land the status of an occupancy tenant.
If the expression "tenant" in section 185 (1) be released from the artificial definition as given in section 2(y), in view of the context in which it occurs, the expression "tenant" in section 185(1)(ii)(a), having regard to the object of the enactment would be ascribed the meaning that expression had in Act 32 of 1954.
This view is strengthened by certain indications found in cl.
(ii)(b) if section 185 (1) which provides that in the Madhya Bharat region every person who at the commencement of the Code holds any land as ryotwari sub lessee as defined in the Madhya Bharat Ryotwari Sub Lessee Protection Act 29 of 1955 shall be called an occupancy tenant.
Unless a ryotwari sub lessee as defined in Act 29 of 1955 included a sub lessee whose tenure was terminated before the commencement of the Code, that clause would not apply to any concrete case.
The Court would not unless compelled by unambiguous language impute to the Legislature an intention to enact a provision which was ineffective.
By section 73 of Act 66 of 1950 a Pakka tenant could not sub let for any period any land comprised in his holding except in the cases provided for in section 74,, and by section 75 it was provided that all sub leases in force at the commencement of the Act were to terminate either on the expiry of the period of sub lease or expiry of four years whichever was earlier.
All sub leases except those which were covered by section 74 i.e. sub leases granted by disabled persons before the commencement of Act 66 of 1950 stood terminated some time before the end of 1954 and by the express terms of section 76 the sublessees were to be deemed trespassers and liable to ejectment in accordance with the provisions of the Act.
Notwithstanding these provisions, by another Act 29 of 1955, scheme of which was substantially the same as the scheme of Act 32 of 1954, ejectment of ryotwari sub lessees other than a sub lessee under section 74 of Act 66 of 1950 was suspended for the duration of the Act, and all suits and proceedings in execution for ejectment were to be stayed.
By section 2(b) of Act 29 of 1955 "Ryotwari sub lessee" was defined as meaning "a person to whom a Pakka tenant of any ryotwari land has sub let on sub lease any part of his ryotwari land".
By 434 section 3 a ban was imposed against ejectment of all ryotwari sub lessees other than sub lessees under section 74 of Act 66 of 1950.
By section 4 provision was made for ejectment of ryotwari sub lessees and provisions similar to sections 5 & 6 of Act 32 of 1954 were made in this Act also.
A ban was therefore imposed against eviction of ryotwari sub lessees and proceedings for eviction against them were stayed by Act 29 of 1955.
Therefore ryotwari sub lessees who had ceased by determination of the sub leases to have right in the lands were still protected from eviction during the pendency of Act 29 of 1955, and by section 185(1)(ii)(b) of the Code upon the ryotwari sub lessees the rights of occupancy tenants were conferred.
If the expression "ryotwari sub lessee" were to be construed to mean a ryotwari sub lessee between whom and his lessor there was a subsisting contract of sub letting, the protection for all purposes would be ineffective, for, by express statutory provision read with section 74 of Act 66 of 1950 all ryotwari sub leases stood determined before Act 29 of 1955 was brought into force, and by virtue of section 185 (3) of the code a holder of land from a disabled Bhumiswami belonging to a class mentioned in section 168(2) of the Code does not qualify for the status of an occupancy tenant.
It may be noticed that in the class of disabled persons in sub s (2) of section 168 of the Code are included all persons who are declared disabled by sub section
(2) of section 74 of Act 66 of 1950.
If ryotwari sub lessees of disabled persons mentioned in subs.
(2) of section 74 of Act 66 of 1950 cannot claim rights of occupancy tenants by virtue of section 185 (3) of the Code and other ryotwari sublessees cannot qualify for those rights because of the determination of their interest as sub lessees by virtue of sections 75 & 76 of Act 66 of 1950 section 185, (1)(ii)(b) of the Code will not apply to any class of ryotwari sub lessees.
This is a strong ground in support of the view taken by the High Court that the expression "ryotwari sublessee" in section 185 (1)(ii)(b) of the Code include persons whose contractual relation has been det ermined either under the terms of contract of sub lease or statutorily under Act 66 of 1950.
If that be the true meaning of the expression "ryotwari sub lessee ' there would be no reason to think that the Legislature sought to make a distinction between tenants, sub tenants and ordinary tenants of Inam land in section 185(1)(ii)(a) of the Code and ryotwari sub lessees of other lands in section 185(1)(ii)(b).
A member belonging, to those classes would therefore be included in the protection provided at some time prior to the date on which the Code was brought into force, if he was in possession of land as a tenant, sub tenant or ordinary tenant and he continued to hold the land till the date of commencement of the Code.
The alternative argument that section 185 of the Code has Po application in respect of pending proceedings for ejectment is without substance.
By section 261 of the Code a large number of 435 statutes specified in Sch.
II were repealed.
By section 261 certain enactments specified in Sch.
11 including the Madhya Bharat Land Revenue and Tenancy Act 66 of 1950 and the Madhya Bharat Muafi and Inam Tenants and Sub tenants Protection Act 32 of 1954 were wholly repealed.
But it is expressly provided in section 261 that the repeat shall not affect(a) the previous operation of any law so repealed or anything duly done or suffered thereunder; or (b) any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed or (c ) any penalty, forfeiture or punishment incurred in respect of any offence committed against any law so repealed; or (d) any invest igation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the Act had not been passed.
Section 262 which deals with transitory provisions by sub section
(2) provides: "Any case pending in Civil Court at the coming into force of this Code, which would under this Code be exclusively triable by a Revenue Court, shall be disposed of by such Civil Court according to the law in force prior to the commencement of this Code." Relying upon these two provisions it was urged that persons who were tenants, sub tenants or ordinary tenants of Inam land prior to the date on which the Code was brought into for , whose rights have consistently with the law in force before that date been terminated, cannot set up rights of occupancy tenants acquired under section 185, for, within the meaning of section 261 the right to eject a tenant has accrued to the landlord before the commencement of the Code and a proceeding for enforcement of that right may be continued and the right enforced as if the Code had not been passed, and the Court in which the proceeding is pending would be bound to dispose of the proceeding according to the law in force prior to the commencement of the Code.
The argument is misconceived.
Act 66 of 1950 did not deal With the right of a landlord to evict a tenant from land.
Act 66 of 1950 was expressly repealed by the Code, but since the right to evict a tenant was governed G by the general law of landlord and 'tenant the proviso to section 261 had no operation.
In terms the proviso to section 261 protects a right, privilege, obligation, or liability which had been acquired, accrued or incurred under the law repealed by the Code.
The right to obtain possession not having been acquired under the law repealed, a legal proceeding pending at the date of the commencement of the Code will be disposed of according to the law "then in force '.
That was expressly provided by section 6 of Act 32 of 1954 and by section 6 of Act 29 of 1955.
If at the date of the trial the tenant had acquired the right of an occupancy tenant, he could not be evicted 436 otherwise than in the manner and for reasons mentioned in section 19 3 of the Code.
Personal requirement for cultivation of land is not, however, a ground on which claim, since the commencement of the Code, for ejectment may be maintained.
Section 262(2) is a transitory provision which enables a Civil Court to hear and dispose of a suit notwithstanding that under the Code such a proceeding would be triable by a Revenue Court.
It is expressly declared that such a proceeding shall be disposed of according to the law in force prior to the commencement of the Code.
That however does not imply that the contract between the parties which was sought to be enforced unaffected by the statutory declaration of occupancy tenants under section 185 in favour of the tenant may be enforced.
In our view sub section
(2) is only procedural: it provides that a Civil Court will continue to have jurisdiction to dispose of a civil suit pending before it at the commencement of the Code, which if it had been instituted after the Code was passed, would have been tried by a Revenue Court, and in the disposal of such a suit the Civil Court will be governed by the procedural law applicable thereto prior to the commencement of the Code.
There is nothing in section 262(2) which seeks to nullify the statutory conferment of occupancy rights upon persons in the position of tenants, sub tenants or ordinary tenants against whom proceedings were taken at the date when the Code was brought into force.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
| The respondent was assessed to sales tax and was served with a notice requiring him to pay the amount within 21 days.
He preferred an appeal against the order of assessment but did not pay the tax, nor did he obtain an order of stay of proceedings from teh appellate authority.
While the appeal was pending a complaint was filed against him under section 29(1)(d) of the Mysore Sales tax Act, 1957, because the demand was not complied with, but the trial court and the High Court acquitted In appeal to this Court by the State, HELD: The acquittal of the respondent was unwarranted as his action in not paying the tax within the time allowed, was deliberate and therefore wilful and such failure to pay is rendered an offence under section 29(1)(d).
[814 D, E] The liability to pay tax is created by the order of assessment.
Where the tax so assessed is not paid despite service of notice of demand, the tax may be recovered under section 13(3)(a) as an arrear of land revenue or under section 13 (3) (b) on an application to a magistrate as if it were a fine imposed on the assessee.
Under the proviso to section 13(3), the assessee has been afforded interim protection from action under section 13 (3) (a) or (b), provided he obtains from the appropriate appellate or revisional authority mentioned in the proviso, an order of stat of proceedings.
Merely because an appeal has been preferred, the liability of the assessee to pay the tax cannot be deemed to be suspended under section 20(5).
This provision requires that if the order of such appropriate authority lays down any condition, the proviso requires that the assess must comply with it before he can obtain interim relief.
Apart from these two methods of obtaining interim relief, the proviso to section 13(3) cannot be an answer to a prosecution under section 29(1)(d).
(813 E G]
|
ivil Appeal Nos.
768 769 of 1978.
Appeals by Special Leave from the Judgment and order dated 28.1.1977 of the Punjab and Haryana High Court in Income Tax Reference No. 29 of 1975.
B.B. Ahuja and Miss A. Subhashini for the Appellant.
G.C. Sharma, E.D. Helms, R.S. Sharma and K.B. Rohtagi for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The Commissioner of Wealth Tax, Amritsar has filed the above appeals by special leave against the judgment of the High Court of Punjab and Haryana in a reference made under section 27(1) of the (hereinafter 422 referred to as 'the Act ') answering in favour of the assessee the following two questions: "1.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the offence relating to the omission to file the Wealth tax returns was a continuing offence ? 2.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law upholding the penalties of Rs. 5382/ and Rs. 7759/ levied by the department on the assessee under section 18(1)(a) of the , for the assessment years 1964 65 and 1965 66 respectively ?" The assessee, the respondent in these appeals filed his wealth tax returns for the assessment years 1964 65 and 1965 66 on March 18, 1971 while he was required by section 14(1) of the Act to file the return for the assessment year 1964 65 on or before June 30, 1964 and the return for the assessment year 1965 66 on or before June 30, 1965.
The Wealth tax Officer completed the assessments for the aforementioned years on March 22, 1971 determining the total wealth at Rs. 1,45,800/ for the assessment year 1964 65 as against the declared wealth of Rs. 1,38,550/ and at Rs. 1,65,200/ for the assessment year 1965 66 as against the declared wealth of Rs. 1,59,127/ and also commenced proceedings for the levying penalty under section 18(1)(a) of the Act for late submission of returns.
Ultimately the penalties were levied as follows: "Assessment year 1964 65: (i) For the period from 1.7.64 to 31.3.69: Penalty at 2% p.m. subject to maximum of 50% of the wealth tax payable under section 18(1)(a) before its amendments on 1.4.69 by the Finance Act, 1969: Rs. 115/ (ii) For the period from 1.4.69 to 18.3.71: Penalty at 1/2% of the net wealth for each month of the default under section 18(1)(a) as amended by the Finance Act, 1969: Rs. 5,267/ Rs. 5,382/ 423 Assessment year 1965 66: (i) For the period from 1.7.65 to 30.3.69: Penalty at 2% p.m. subject to maximum of 50% of the wealth tax payable under section 18(1)(a) before its amendment on 1.4.69 by the Finance Act, 1969: Rs.163/ (ii) For the period from 1.4.69 to 18.3.71: Penalty at 1/2% of the net wealth for each month of default under section 8(1)(a) as amended on 1.4.69 by the Finance Act, 1969: Rs. 7,596/ Rs. 7,759/ The above orders levying penalties were upheld in appeal by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal, Amritsar Bench, Amritsar.
At the instance of the assessee a consolidated reference was made by the Income tax Appellate 'Tribunal to the High Court referring the above two questions for its opinion.
The High Court answered the said questions in favour of the assessee after rejecting the contention of the department that the default or failure to file the return in time was a continuing default and that the penalty had to be computed for the period prior to April 1, 1965 in accordance with section 18 as it stood prior to its amendment by the Wealth tax (Amendment) Act, 1964, for the period between April 1, 1965 to March 3], 1969 in accordance with section 18 of the Act as amended by the Wealth tax (Amendment) Act, 1964 and for the period between April 1, ]969 to March 18, 1971 (on which date the returns were filed) in accordance with sec.
18 of the Act as amended by the Finance Act, 1966.
Aggrieved by the decision of the High Court, the Department has filed these appeals under Article 136 of the Constitution .
Before dealing with the contentions of the parties, it is appropriate to set out the provisions of the Act which have a bearing on the question involved in the present appeals as they stood during the relevant periods: Prior to April 1, 1965, sub sections (1) and (3) of section 14 of the Act stood as follows: 424 "14.
Return of wealth (1) Every person whose net wealth on the valuation date was of such amount as to render him liable to wealth tax under this Act shall, before the thirtieth day of June of the corresponding assessment year, furnish to the Wealth tax officer a return in the prescribed form and verified in the prescribed manner setting forth his net wealth as on the valuation date; (2). . . (3) The Wealth tax officer may, if he is satisfied that it is necessary so to do, extend the date for the delivery of return under this section.
" After April 1, 1965: "14. (1) Every person, if his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date was of such an amount as to render him liable to wealth tax under this Act, shall, before the thirtieth day of June of the corresponding assessment year, furnish to the Wealth tax officer a return in the prescribed form and verified in the prescribed manner setting forth the net wealth as on the valuation date.
(2). . . (3) The Wealth tax officer may, if he is satisfied that it is necessary so to do, extend the date for the delivery of the return under this section.
" Section 15 of the Act which has not undergone any change since the commencement of the Act reads: "15.
Return after due date and amendment of return If any person has not furnished a return within the time allowed under section 14 or having furnished a return under that section discovers any omission or a wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made.
" The relevant parts of section 18 of the Act as they stood during the three periods referred to above read as follows: 425 Prior to April 1, 1965 "18.
(1) If the Wealth tax officer, Appellate Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person (a) has without reasonable cause failed to furnish the return of his net wealth which he is required to furnish under sub section (1) or sub section (2) of section 14 or section 17 or has without reasonable cause failed to furnish it within the time allowed and in the manner required; or (b) . (c) . . he or it may, by order in writing, direct that such person shall pay by way of penalty (i) in the case referred to in clause (a), in addition to the amount of wealth tax payable by him, a sum not exceeding one and a half times the amount of such tax, and . " Between April 1, 1965 and March 31, 1969 "18.
(1) If the Wealth tax officer, Appellate Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person (a) has without reasonable cause failed to furnish the return of his net wealth which he is required to furnish under sub section (a) of section 14 or by notice given under sub section (2) of section 14 or section 17 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub section (1) of section 14 or by such notice, as the case may be; or (b) . . (c) . . 426 he or it may, by order in writing, direct that such person shall pay by way of penalty (i) in the cases referred to in clause (a), in addition to the amount of wealth tax, if any, payable by him, a sum equal to two per cent of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent of the tax; After April 1, 1969 and as on March 18, 1971 on which date the returns were filed "18.
(1) If the Wealth tax officer, Appellate Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person (a) has without reasonable cause failed to furnish the return which he is required to furnish under sub section (1) of section 14 or by notice given under sub section (2) of section 14 or section 17, or has without reason able cause failed to furnish within the time allowed and in the manner required by sub section (1) of section 14 or by such notice, as the case may be; or (b) . . (c) . . he or it may, by order in writing, direct that such person shall pay by way of penalty (i) in the cases referred to in clause (a), in addition to the amount of wealth tax, if any, payable by him, a sum, for every month during which the default continued, equal to one half per cent of (A) the net wealth assessed under section 16, as reduced by the amount of net wealth on which in accordance with the rates of wealth tax specified in Paragraph A of Part I of the Schedule or Part II of the Schedule, the wealth tax chargeable is nil; or (B) the net wealth assessed under section 17, where assessment has been made under that section, as reduced by 427 (1) the net wealth, if any, assessed previously under section 16 or section 17 or (2) the amount of net wealth on which in accordance with the rates of wealth tax specified in Paragraph A of Part I of the Schedule or Part II of the Schedule, the wealth tax chargeable is nil, whichever is greater, but not exceeding, in the aggregate, an amount equal to the net wealth assessed under section 16, or, as the case may be, the net wealth assessed under section 17, as reduced in either case in the manner aforesaid;. . " Now let us analyse the above provisions of law.
Section 14 of the Act which has not undergone any material change from the commencement of the Act in so far as the question involved in these appeals is concerned requires a person the value of whose wealth is such as would attract the liability to pay tax to file a return of his wealth as on the valuation date in the prescribed manner before the Wealth tax Officer on or before the thirtieth of June of the assessment year or on or before any date upto which the Wealth tax officer has extended the time to file the return.
Section 15 of the Act, however, enables such a person to file a return at any time before the assessment is made.
The distinction between section 14 and section 15 of the Act lies in the fact that whereas under section 14 a duty is imposed on the assessee to file a return within the prescribed date, section 15 enables him to file a return before the assessment is made even though the last date prescribed by section 14(1) is over.
Section 18 of the Act deals with three types of penalties for certain specified acts or omissions on the part of the assessee referred to in clauses (a), (b) and (c) of sub section (1) thereof.
We are concerned in this case with the question of levy of penalty in respect of omissions referred to in clause (a) of section 18(1) of the Act.
There are four kinds of omissions referred to in that clause (i) failure to furnish the return which the assessee is required to furnish under sub section (i) of section 14; (ii) failure to furnish the return as required by a notice issued under section 14(2) or section 17, (iii) failure to furnish the return as required by section 14(1) within the time allowed and in the prescribed manner and (iv) failure to furnish the return as required by a notice issued under section 14(2) or section 17 within the time allowed and in the prescribed manner.
Each one of these omissions expose the assessee to the levy of penalty unless reasonable cause is shown for not performing 428 the duty.
In clause (i) of section 18(1) of the Act, the penalty leviable for any of the omissions referred to in section 18(1)(a) is set out but the measure of penalty imposable has varied from time to time.
Prior to April 1, 1965 the penalty imposable was a sum not exceeding one and a half times the amount of wealth tax payable by the assessee during the assessment year in question.
Within the outer limit referred to above, The officer concerned or the Tribunal as the case may be could impose any amount as penalty having regard to all the relevant circumstances of the case including perhaps the time that had elapsed from the last day allowed to file the return.
Between April 1, 1965 and March 31, 1969 the measure of penalty was regulated by section 18 of the Act as amended in 1964.
During that period the penalty imposable was a sum equivalent to two per cent of the tax for every month during which the default continued but not exceeding in the aggregate fifty per cent of the tax.
The penalty leviable during this period was less onerous than it was before April 1, 1965.
Then came the amendment made by the Finance Act of 1969.
After April 1, 1969 by reason of the amendment introduced by the Finance Act of 1969 the penalty imposable was altered to a sum for every month during which the default continued equal to one half per cent of the net wealth calculated in accordance with the amended provisions in section 18.
The penalty leviable during this period was more drastic than what it was before.
One significant difference between the law as it existed prior to April 1, 1965 and the law as it existed during the subsequent two periods is that whereas during the period prior to April I, 1965 there was no specific reference in clause (i) of section 18 (a) to the time lag between the last date on which the return had to be filed and the date on which it was actually filed, the said factor was expressly required to be taken into consideration after April 1, 1965 while determining the penalty payable by the assessee.
Another significant factor which requires to be borne in mind is that neither the Wealth tax (Amendment) Act, 1964 nor the Finance Act, 1969 by which section 18 of the Act was amended expressly stated that the amended provisions of section 18 would be applicable to an assessee who had failed to file the return in respect of any preceding assessment year and the said default had continued after the amendment came into force except using the phrase "for every month during which the default continued", in that part of section 18 which prescribed the measure of penalty.
The contention of the Department is that whatever may have been the position of law before April 1, 1965, on and after that date 429 the default committed by an assessee in not filing a return as required by section 14(1) of the Act amounted to a continuing wrong which attracted the penalty as provided by the law in force at the time when such default continued.
In other words it is contended that in this case since the assessee who had to file a return after April 1, 1965 for assessment year 1965 66 had not f led the same till March 13, 1971 penalty had to be computed for the period upto April 1, 1969 under the provisions of section 18 of the Act as it stood during that period and for the subsequent period additional penalty should be levied in accordance with section 18 as amended by the Finance Act, 1969.
Relying upon the decision of the Kerala High Court in Commissioner of Wealth tax, Kerala vs Smt.
V. Pathummabi it is argued that amendments made in 1964 and 1969 brought about a qualitative change in the nature of the default contemplated under section 18 and that what could have been a completed default before April 1, 1965 became a continuing default.
Even assuming that this argument is correct it has to be held that the decision of the High Court in so far as the default committed by the assessee in not filing the return in respect of the assessment year 1964 65 is concerned is not erroneous.
What remains to be considered is whether the decision in respect of the default committed by the assessee in not filing the return due on June 31), 1955 for the assessment year 1965 66 is liable to be interfered with.
To repeat, the relevant part of section 18 of the Act can be divided into two parts the first part contained in clause (a) of section 18(1) setting out the gist of the default and the second part prescribing the measure of penalty.
The former part has more or less remained the same from the commencement of the Act and it is only the latter part which has undergone changes.
The question is whether by reason of the changes in the latter pari, there has been a change in the nature of the wrong referred to in section 18 (1) (a) of the Act.
A liability in law ordinarily arises out of an act of commission or an act of omission.
When a person does an act which law prohibits him from doing it and attaches a penalty for doing it, he is stated to have committed an act of commission which amounts to a wrong in the eye of law.
Similarly when a person omits to do an act which is required by law to be performed by him and attaches a penalty for such omission, he is said to have 430 committed an act of omission which is also a wrong in the eye of law.
Ordinarily a wrongful act or failure to perform an act required by law to be done becomes a completed act of commission or omission, as the case may be, as soon as the wrongful act is committed in the former case and when the time prescribed by law to perform an act expires in the latter case and the liability arising therefrom gets fastened as soon as the act of commission or of omission is completed.
The extent of that liability is ordinarily measured according to the law in force at the time of such completion.
In the case of acts amounting to crimes the punishment to be imposed cannot be enhanced at all under our Constitution by any subsequent legislation by reason of Article 20 (I) of the Constitution which declares that no person shall be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
In other cases, however, even though the liability may be enhanced it can only be done by a subsequent law (of course subject to the Constitution) which either by express words or by necessary implication provides for such enhancement.
In the instant case the contention is that the wrong or the default in question has been altered into a continuing wrong or default giving rise to a liability de die in diem, that is, from day to day.
The distinctive nature of a continuing wrong is that the law that is violated makes the wrong doer continuously liable for penalty.
A wrong or default which is complete but whose effect may continue to be felt even after its completion is, however, not a continuing wrong or default.
It is reasonable to take the view that the court should not be eager to hold that an act or omission is a continuing wrong or default unless there are words in the statute concerned which make out that such was the intention of the legislature.
In the instant case whenever the question of levying penalty arises what has to be first considered is whether the assessee has failed without reasonable cause to file the return as required by law and if it is held that he has failed to do so then penalty has to be levied in accordance with the measure provided in the Act.
When the default is the filing of a delayed return the penalty may be correlated to the time lag between the last day for filing it without penalty and the day on which it is filed and the quantum of tax or wealth involved in the case for purposes of determining the quantum of penalty but the default however is only one which takes place on the expiry of the last day for filing the return without penalty and not a continuing one.
The default in question does not, however, give rise to a fresh cause of action every day.
Explaining the expression 431 'a continuing cause of action ' Lord Lindley in Hole vs Chard Union observed: "What is a continuing cause of action ? Speaking accurately, there is no such thing; but what is called a continuing cause of action is a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought." In the same decision, Lord Justice A. L. Smith who concurred with the above view said: "If once a cause of action arises, and the acts com plained of are continuously repeated, the cause of action continues and goes on de die in diem.
It seems to me that there was a connection in the present case between the series of acts before and after the action was brought; they were repeated in succession, and became a continuing cause of action.
They were an assertion of the same claim namely, a claim to continue to pour sewage into the stream and a continuance of the same alleged right.
In my opinion, there was here a continuing cause of action within the meaning of the rule.
" The distinction between a continuing offence and an offence which is not a continuing one is well brought out in the decision of the High Court of Bombay in State vs A. H. Bhiwandiwalla.
In that case, the accused respondent had been charged with two offences namely, (a) failure to apply for registration of his factory and to give notice of occupation and (b) running the factory without a licence issued under the .
The accused had a plea of limitation against the prosecution.
In that context the High Court observed: "In civil law, we often refer to a continuing or recurring cause of action.
Similarly, even in criminal law the expression "continuing offence" is frequently used.
As observed by Beaumount C. J. in 'Emperor vs Chhotalal Amarchand ', AIR 1937 Bom 1 (FB) the expression "continuing offence" is not a very happy expression.
It assumes, says the learned Chief Justice 432 ". that you can have a continuing offence in the sense in which you can have a continuing tort, or a continuing breach of contract, and I doubt, myself whether the assumption is well founded, having regard to the provisions of the Criminal Procedure Code as to the framing of charges and as to the charges which can be tried at one and the same trial.
It is quite clear that you could not charge a man with committing an offence 'de die in diem ' over a substantial period.
" Even so, this expression has acquired a well recognised meaning in criminal law.
If an act committed by an accused person constitutes an offence and if that act continues from day to day, then from day to day a fresh offence is committed by the accused so long as the act continues.
Normally and in the ordinary course an offence is committed only once.
But we may have offences which can be committed from day to day and it is offences falling in this latter category that are described as continuing offences.
" Accordingly the High Court of Bombay held in Bhiwandiwalla 's case (supra) that the failure to apply for registration of the factory under the and to give notice of occupation thereof was not a continuing offence but the running of the factory without a licence issued thereunder was a continuing offence.
Section 39 of the Indian Mines Act, 1923 which came up for consideration before the Patna High Court in The State vs Kunja Behari Chandra & Ors.
on which reliance was placed by the Revenue is a case of continuing offence.
Section 39 provided: "39.
Whoever contravenes any provision of this Act or of any regulation, rule or bye law or of any order made thereunder for the contravention of which no penalty is hereinafter provided shall be punishable with fine which may extend to one thousand rupees, and in the case of a continuing contravention, with a further fine which may extend to one hundred rupees for every day on which the offender is proved to have persisted in the contravention after the date of the first conviction.
" 433 In this case the language of the section itself made it obvious that its violation resulted in a continuing offence.
The true principle appears to be that where the wrong complained of is the omission to perform a positive duty requiring a person to do a certain act the test to determine whether such a wrong is a continuing one is whether the duty in question is one which requires him to continue to do that act.
Breach of a covenant to keep the premises in good repair, breach of a continuing guarantee, obstruction to a right of the way, obstruction to the right of a person to the unobstructed flow of water, refusal by a man to maintain his wife and children whom he ii bound to maintain under law and the carrying on of mining operations or the running of a factory without complying with the measures intended for the safety and well being of workmen may be illustrations of continuing breaches or wrongs giving rise to civil or criminal liability.
as the case my be, de die in diem.
In Balkrishna Savalram Pujari & Ors.
vs Shree Dayaneshwar Maharaj Sansthan & Ors.
Gajendragadkar, J. (as he then was) observed: "It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury.
If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue.
If, however, a wrongful act is of such a character that the injury caused by it itself continue, then the act constitutes a continuing wrong.
In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described at the effect of the said injury.
" Section 18 of the Act with which we are concerned in this case, however, does not require the assessee to file a return during every month after the last day to file it is over.
Non performance of any of the acts mentioned in section 18(1)(a) of Act gives rise to a single default and to a single penalty, the measure of which, 434 however, is geared up to the time lag between the last date on which the return has to be fled and the date on which it is filed.
The default, if any committed is committed on the last date allowed to file the return.
The default cannot be one committed every month thereafter.
The words for every month during which the default continued ' indicate only the multiplier to be adopted in determining the quantum of penalty and do not have the effect of making the default in question a continuing one.
Nor do they make the amended provisions modifying the penalty applicable to earlier defaults in the absence of necessary provisions in the amending Acts.
The principle underlying section 6 of the General Clauses Act is clearly applicable to these cases.
It may be stated here that the majority of the High Courts in India have also taken the same view.
In the result we hold that where the default complained of is one falling under section(l)(a) of the Act, the penalty has to be computed in accordance with the law in force on the last day on which the return in question had to be filed.
Neither the amendment made in 1964 nor the amendment made in 1969 has retrospective effect.
The appeals therefore fail and are dismissed with costs.
Hearing fee one set.
S.R. Appeals dismissed.
| The assessee respondent filed his Wealth Tax returns for the assessment years 1964 65 and 1965 66 on March 18, 1971, while he was required by section D 14(1) of the Act to file the return for the assessment year 1964 65 on or before June 30, 1964 and the return for the assessment year 1965 66 on or before June 30, 1965.
The Wealth Tax officer completed the assessment for the said years on March 22, 1971 and also commenced proceedings for levying penalty under section 18(1) (a) of the Act for the late submission of returns.
The Wealth Tax officer levied the penalties for different periods at different rates, as provided by the 1964 and 1969 Amendments.
treating the failure to file the return in time as a "continuing offence".
The orders levying penalties were upheld in appeal by the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar.
A consolidated reference made by the Tribunal at the instance of the assessee was answered by the High Court of Punjab in favour of the assessee after rejecting the contention of the department that the default or failure to file the return in time was a continuing default and that the penalty had to be computed for the period prior to April 1, 1965 in accordance with section 18 as it stood prior to its amendment by the Wealth tax (Amendment) Act, 1964, for the period between April 1, 1965 to March 31, 1969 in accordance with section 18 of the Act as amended by the Wealth tax (Amendment) Act, 1964 and for the period between April 1, 1969 to March 18, 1971 (on which date the returns were filed) in accordance with section 18 of the Act as amended by the Finance Act, 1969.
Aggrieved by the decision of the High Court, the Department has filed these appeals under Article 136 of the Constitution.
G Dismissing the appeals, the Court ^ HELD 1:1.
Where the default complained of is one falling under section 18(1) (a) of the Wealth Tax Act, the penalty has to be computed m accordance with the law in force on the last day on which the return in question had to be filed.
Neither the amendment made in 1964 nor the amendment made in 1969 has retrospective effect.
[434 C D] 420 1:2.
Section 18 of the Wealth Tax Act does not require the assessee to file a return during every month after the last day to file it is over.
Non performance of any of the acts mentioned in section 18(1) (a) of the Act gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time lag between the last date on which the return has to be filed and the date on which it is filed.
The default, if any committed is committed on the last date allowed to file the return.
The default cannot be one committed every month thereafter.
[433 G H, 434 A] 1:3.
The words "for every month during which the default continued" indicate only the multiplier to be adopted in determining the quantum of penalty and do not have the effect of making the default in question a continuing one.
Nor do they make the amended provisions modifying the penalty applicable to earlier defaults in the absence of necessary provisions in the amending Acts.
The principle underlying section 6 of the General Clauses Act is clearly applicable to these cases.
[434 B C] 2:1.
A liability in law ordinarily arises out of an act of commission or an act of omission.
When a person does an act which law prohibits him from doing it and attaches a penalty for doing it, he is stated to have committed an act of commission which amounts to a wrong in the eye of law.
Similarly when a person omits to do an act which is required by law to be performed by him and attaches a penalty for such omission, he is said to have committed an act of omission which is also a wrong in the eye of law.
Ordinarily a wrongful act or failure to perform an act required by law to be done becomes a completed act of commission or of omission, as the case may be, as soon as the wrongful act is committed in the former case and when the time prescribed by law to perform an act expires in the latter case and the liability arising therefore gets fastened as soon as the act of commission or of omission is completed.
The extent of that liability is ordinarily measured according to the law in force at the time of such completion.
In the case of acts amounting to crimes the punishment to be imposed cannot be enhanced at all under our Constitution by any subsequent legislation by reason of Article 20(I) of the Constitution which declares that no person shall be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
In other cases, however, even though the liability may be enhanced it can only be a subsequent law (of course subject to the Constitution which either by express words or by necessary implication provides for such enhancement.
[429 G H, 430 A D] 2:2.
The distinctive nature of a continuing wrong is that the law that is violated makes the wrongdoer continuously liable for penalty.
A wrong or default which is complete but whose effect may continue to be felt even after its completion is, however, not a continuing wrong or default.
[430 D E] 2:3.
The court should not be eager to hold that an act or omission is a continuing wrong or default unless there are words in the statute concerned which make out that such was the intention of the legislature.
In the instant case when ever the question of levying penalty arises what has to be first considered is whether the assessee has failed without reasonable cause to file the return as re 421 quired by law and if it is held that he has failed to do so then penalty has to be levied in accordance with the measure provided in the Act.
When the default is the filing of a delayed return the penalty may be correlated to the time lag between the last day for filing it without penalty and the day on which it is filed and the quantum of tax or wealth involved in the case for purposes of determining the quantum of penalty but the default however is only one which takes place on the expiry of the last day for filing the return without penalty and not a continuing one.
The default in question does not, however, give rise to a fresh cause of action every day.
[430 E H] 2:4.
Where the wrong complained of is the omission to perform a positive duty requiring a person to do a certain act the test to determine whether such a wrong is a continuing one is whether the duty in question is one which requires him to continue to do that act.
Breach or a covenant to keep the premises in good repair, breach of a continuing guarantee obstruction to a right of way, obstruction to the right of a person to the unobstructed flow of water, refusal by a man to maintain his wife and children whom he is bound to maintain under law and the carrying on of mining operations or the running of a factory without complying with the measures intended for the safety and well being of workmen may be illustrations of continuing breaches or wrongs giving rise to civil or criminal liability, as the case may be, de die in diem.
[433 A D] Hole vs Chard Union, , quoted with approval.
State vs A. Bhiwandiwalla, A. I. R. ; The State vs Kunja Behari Chandra and Ors.
A.I.R. 1954 Patna 371, approved, Balkrishna Savalram Pujari and Ors.
vs Shree Dayaneshwar Maharaj Sansthan and Ors., [1959] Supp. 2 S.C.R. 476, referred to.
|
Nos. 1694 and 1730 of 1968.
Appeals from the judgment and order dated August 11, 1967 of the Calcutta High Court in Income tax Reference Nos. 106 and 215 of 1963.
section R. Banerjee, N. N. Goswamy and section N. Mukherjee, for the appellant (in both the appeals).
V. section Desai, R. N. Sachthry and B. D. Sharma, for the respondent (in both the appeals).
A. K. Sen, T. A. Ramachandran and D. N. Gupta, for the intervener (in both the appeals).
The Judgment of the Court was delivered by Sikri C.J.
Beg J. gave a concurring but a separate opinion.
These appeals have been referred by a Division Bench of this Court 'to a larger Bench as the Division Bench felt :that the decision of this Court in Travancore Titanium Product ,Ltd. vs Commissioner of Income Tax(1) might require reconsideration.
The only point involved in these appeals is whether the Wealth Tax paid by the assesse, a 'trading company is deductible as an expenditure under section 10 ( 1 ) and section 10 (2) (xv) of the Income tax Act, 1922.
The facts in both the appeals are similar.
They relate to two separate accounting and assessment years and two assessment orders have been challenged.
We may give a few facts in one appeal The Indian Aluminium Co. Ltd., in respect of the year of assessment 1959 60 (accounting period Calendar year 1958), paid Rs. 1,59(630/ as Wealth Tax and, claimed to deduct this amount as expense from their assessable income.
Income Tax Officer allowed the deduction but the Appellate Assistant Commissioner held that the Company was not entitled to the deduction of Wealth Tax as an expense.
The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner.
On the application of the assessee, the following question was referred to the High Court : "Whether on the facts and circumstances of case the sum of Rs. 1,59,630/ paid by the assessee as wealth tax legally deductible as a business expense in computing the assessee 's income from business?" The High Court, following the decision of this Court in Travancore Titanium case(1), answered the question against the assessee.
Having obtained certificate of fitness from the High Court, the assessee has appealed to us.
Basing himself on Keshav Mills Co. Ltd. vs C.I.T.(2) it was contended by the learned counsel for the Revenue that we should not review our decision in Travancore Titanium case(1).
Gajendragadkar, C.J., speaking, for the Court, had observed in that 'case that "it is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions.
" He further observed "It would always depend upon several relevant considerations : What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based ? On the earlier occasion, did some patent aspects of the question remain unnoticed, was the attention of the Court not drawn to any relevant and material statutory provision, or was any previous decision of this Court bearing on the point not noticed ? Is the Court hearing such plea fairly unani mous that there is such an error in the, earlier view ? What would be the impact of the error 'on the general administration of law or on public good ? Has the earlier decision been followed on subsequent occasions either by this Court or by the High courts ? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief ?" (1) ; (2) 20 We are inclined to review our earlier decision 'in Travancore Titanium case(, '), because, as will presently appear, certain aspects of the question were not brought to the attention of the Court and remained unnoticed, and our decision is not likely to cause any public inconvenience, hardship or mischief.
We are all of the opinion that the decision was erroneous.
The decision will affect numerous assessees.
In the circumstances we think we should review the decision.
Section 10 (1) of the Indian Income tax Act, 1922, reads: "10(1) The tax shall be payable by an assessee under the he, id profits and gains of business, profession or vocation in respect of the profit or gains of any business, profession or vocation carried on by him." Section 10(2) provides : "Such profits or gains shall be computed after making the following allowances, namely,. " (xv) any expenditure not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive and not being, in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of such business, profession or vocation.
" The language seems to be simple enough but it has engendered judicial conflict not only in India but also in England Eminent Judges halve striven to formulate correct tests to determine whether an expenditure has been laid out or expended wholly and exclusively for the purposes of business or not, but no one has been able to find a test in the application of which differences of opinion do not arise.
It seems to us therefore essential that in each case, the Courts must always keep in mind language of the section.
One of the tests which have been laid down and applied by some of the Judges in England is whether the expenditure has been made in the capacity of a trader or an owner.
One of the earliest cases in which this test was suggested was Strong and Company of Romsey Ltd. vs Woodfield(2).
In that case the Brewing Company, which also owned licensed houses in which they carried on the business of lnnkeepers, incurred damages and costs on account of injustice caused to a visitor staying at one of their houses by the falling in of a chimney.
The House, of Lords (1) [1066] 3 S.C.R. 321 (2) ; 21 held that the damages and costs were not allowable as a deduction in computing the Company 's profits for Income Tax purposes.
The Lord Chancellor observed: "In my opinion, however, it does not follow that if a loss is in any sense connected with the trade, it must always be allowed as a deduction; for it may be only remotely connected with the trade or it may be connected with something else quite as much as or even more than with the trade.
I think only such losses can be deducted as are connected with it in the sense that they are really incidental to the trade itself.
They cannot be deducted if they are mainly incidental to some other Vocation, or fall on the trader in some character other than that of trader.
The, nature of the trade is to be considered.
To give an illustration, losses sustained by a railway company in compensating passengers for accident in travelling might be deducted.
on the other hand, if a man kept a grocer 's shop, for keeping which a house is necessary and one of the window shutters fell upon and injured a man walking.
in the street, the loss arising thereby to the grocer ought not to be deducted.
Lord Davey did not apply this test and put the matter thus: I think that the payment of these damages was not money expended "for the purpose of the trade".
These words are used in other rules, and appear to me to mean for the purpose of enabling a person to carry on and earn profits in the trade, &c.
I think the disbursements permitted are such as are made for that purpose.
It is not enough that the disbursement is made in the course of, or arises out of, or is connected with, the trade or is made out of the profits of the trade.
It must be made for the purpose of earning the p rofits."
Lord Chancellor 's observations in Woodfield 's case were not accepted by Lord Atkinson in Smith vs Lion Brewery Com pany(1).
The Brewery_ Company were the owners or lessees of a number of licensed premises which they had acquired as part of their business as brewers and as a necessary incident of its profitable exploitation.
The licensed premises were let to tenants, who were "tied" to purchase their beers from the company.
Under the Licensing Act, 1904, compensation Fund Charges were levied in respect of the excise "on" licences held by the tenants who paid the charges and recouped themselves by (1) 22 deduction from the rents which they paid to the company.
It was claimed by the company that in computing their, profits for assessment to Income Tax they should be allowed to deduct the sum of the amounts ultimately borne by them in respect of the Compensation Fund Charges.
The Court of King 's Bench held that the deduction claimed was inadmissible.
This decision was reversed in the Court of Appeal (Kennedy, L.J., dissenting), and opinions in the House of Lords being equally divided the judgment of the Court of Appeal was sustained.
Earl Halsbury, in holding in favour of the Brewery, observed that "lie (trader) must if he carries on that business or that trade pay this tax; it is the act of the Legislature which makes him pay it and it is not a thing that is open to his own will or option." Lord Atkinson observed "Again,, it is urged that the landlord pays his contribution as landlord and because of his proprietary interest in the premises and not as trader, since he would be equally liable to it whether he traded or not.
That, no doubt, is so, but in the present case the Company have become landlords and thus liable to pay the charge, for the purpose solely and exclusively of setting up the tied house system of trading.
If the Company took under lease a plot of land to enlarge their brewery or took similarly premises in which to establish a depot to sell their beer through an agent, the same criticism might be applied with equal force to the payment of the rent reserved by the lease.
They would pay it as lessees, not as brewers.
They would pay it whether they continued to brew or not.
Yet under the provisions of the very rule relied upon in this case, they would be entitled to deduct the rent from the profits earned, and that, too, utterly irrespective of whether the receiver of the rent used it to pay for his support or for his pleasure or even to set up a rival brewery.
Indeed, even in a contract made for the purchase of material such as hops or malt, the Company would have to pay for the commodity supplied, not because they are brewers, but because they were contracting parties, utterly irrespective of whether they carried on their trade or had abandoned it.
Yet it can hardly be suggested that the price paid for the hops or malt under the contract should not be deducted from the receipts.
There is, therefore, in my opinion, nothing in this ob jection."
In Usher 's Wiltshire Brewery Ltd vs Bruce(1) a brewery company were the owners or lessees of a number of licensed premises which they had acquired solely in the course of and for the purpose of their business as brewers and as a necessary incident to the more profitably carrying on of their said business.
The licensed premises were let to tenants who were "tied" to purchase their beers, etc. from the Company.
The Company claimed that in the computation of their profits for assessment under Schedule D, the following expenses incurred in connection with these tied houses should be allowed (A) repairs to tied houses; (B) differences between rents of leasehold houses or Schedule Assessment of freehold houses on the one hand and the rents received from the tied tenants on the other hand; (C) fire and licence insurance premises; (D) rates and taxes; It was held by the House of Lords that all the expenses claimed were admissible as being money wholly and exclusively laid out of expended for the purpose of the trade of the Brewery Company.
In this case, Horridge, J. held that "on the facts found the Fire and Licence insurance Premiums, the Rates and Taxes and the Gas and Water were all expenditure essential to the earning of the profits, and I think they also are governed by Smith vs The Brewery Company(1) and are proper deductions.
" The Court of Appeal, regarding Rates and Taxes, said "The next head is "D., Rates and Taxes pound 3 8 7s.
" These are sums which the tenants were under a legal obligation to pay pursuant to their covenant in the tenancy agreement.
The Company, however, did not, for the reasons stated under A in the Case enforce the tenants ' covenants to pay, and consequently paid the rates and taxes themselves.
These reasons have been stated and appear in the Case, and need not be repeated; in brief; They are commercial interest and expediency, and avoidance of inconvenience.
I am of opinion that these rates and taxes so paid are in no sense deductions which are allowable from the Company 's profits.
" (1) (2) 24 The ' House of Lords, however, allowed these items.
Lord Atkinson at page 422 of the report said "Stated broadly, I think that that doctrine amounts to this, ,hat where a trader bona fide creates in himself or acquires a particular estate or interest in premises wholly and exclusively for the purposes of using that interest to secure a better market for the commodities which it is part of his trade to vend, the money devoted by him to discharge a liability imposed by Statute on that estate or interest, or upon him as the owner of it, should be taken to have been expanded by him wholly and exclusively for the purposes of his trade;" Then regarding these items he observed: "The small items were not much contested in arguments.
I concur, however, with Mr. Justice Horridge in thinking they ought to be allowed."
Lord Parker observed: "My Lords, the Appellants claim deductions under three other heads : (1) Fire and licence insurance premiums, (2) Rates and taxes, and (3) Legal and other costs.
The Attorney General did not object to these deductions being allowed, and indeed having regard to what I have already said and to the facts ad mitted in the Supplementary Statement, p. 7, of the Appendix, it would be difficult to contend that they were not proper and necessary deductions in ascertaining the balance of profits and gains of the Appellants ' ,trade, or that they are within any of the prohibitions contained in the Rules.
" Lord Summer observed "The remaining items, rates and taxes, premiums and costs call for no special observation.
In my view, the case means to find them all to be disbursements and money "wholly and exclusively expanded for the purposes of the trade,", and that being so in fact, I ,think there is no reason why they may not be so in law.
They are accordingly covered by the decision on the rent and the repairs."
It may be mentioned 'that there was no express statutory provision for deduction of rates and taxes in the English Income Tax Act and yet they were allowed as a necessary deduction for the 'purpose of carrying on trade.
There is no doubt that in one 25 sense when rates and taxes on property are,, paid by a trader he pays them as owner or occupier because taxes are either on possession of property or on its ownership.
But when the assessee has a dual capacity, i.e., he is owner cum trader, why should it be not deductible when according to ordinary commercial principles he would be treated as paying it as trader.
Take the case of taxation on a motor vehicle.
The tax is levied under the Motor Vehicles Act on the possession or owner ship of a motor car, When a owner cum trader pays the tax in respect of a vehicle used solely for the purpose of trade, nobody doubts, and the, learned counsel for the Revenue did not contest the position, that the tax would be deductibles as an expense.
Now, why is it deductible ? The only rational explanation seems to us to be that when a person has a dual capacity, of a tradercum owner, and he pays tax in respect of property which is used for the, purpose of trade, the payment must be taken to be in the capacity of a trader according to ordinary commercial principles.
This aspect is also clearly brought out in Moffatt vs Webb(1), which was not cited before this Court then.
The taxpayer was a grazier, and during the year '1911, carried on business, and was still carrying on ' business as such in Victoria upon lands of the fee simple, of which he was during the said year and still was the owner.
The, said lands comprised 17,970 acres or thereabouts, and their unimproved value had for the purposes of the Land Tax Assessment Act 1910 of the Commonwealth of Australia been assessed at pound 44,924.
He paid Commonwealth land tax amounting to pound 3 87 on the unimproved value of the Said lands.
The taxpayer claimed to deduct this tax from his income as an outgoing incurred by him "as a disbursement" or expenditure being wholly and exclusively laid out or expanded for the purpose of his trade.
The High Court of Australia held that the tax was properly deductible either as an outgoing actually incurred by him in production of income or a disbursement of money wholly and exclusively laid out or expanded for the purpose of trade.
Griffith, C.J., summed up the argument as follows : "The, possession of land is necessarily incident to carrying on the business of a grazier the payment of land tax is it necessary consequence of the possession of land of tax, able value, whether the land is freehold or leasehold; the payment of land tax is therefore a ' necessary incident of carrying on the business of grazing.
The case therefore, seems to me to come within the exact words of the first paragrapher sec.9." (Sec. 9 is substantially similar to section 10(2) (xv) of the Indian Income Tax Act, 1922).
Barten, J., observed ". the sole use to which the appellant puts the land is for the purposes of his business as a grazier.
He needs a large area of land for that purpose, and this area of about 18,000 acres is applied to his business needs.
It seems too much 'altogether to say that he would have to pay.
the federal tax on this land if he did not carry on the grazing business.
Somebody would be wed, no doubt, but would it be the appellant ? It cannot be predicated that he would own the land at all if he carried on any other business.
It is scarcely an inference from the case to say that he hold ' the lands simply as an instrument essential to the proper conduct of his business : I think it is the fair meaning of the first paragraph at which we can arrive without inserting anything not imported by the words.
If I am right there, then is 'the land tax payment a disbursement or expense wholly and exclusively laid out or expanded for the purposes of the business ? It may not be so if the criterion is whether the business could be carried on without payment of the tax.
But I do not think that is the criterion.
Is the payment wholly and exclusively incidental to the carrying on of the business ? Well, it is only by reason of the necessity of land for his business that he holds this land, and it is only because of his holding it for his business that he necessarily pays the tax, for without the business it cannot be said that he would hold the land at all.
In view, then, of the particular facts, I think the payment is incidental to the conduct of his business, and that it is money wholly and exclusively expended for the purposes of his trade."
Issaes, J., was impressed by the reasoning of Lord Halsbury and Lord Atkinson in Smith vs Lion Brewery, Co. Ltd.(1).
He observed : "And Lord Atkinson reasons out the position and shows convincingly, to my mind that, though a tax may in I one sense be paid as owner or lessee, in another it is paid as trader.
The instance he puts as to licences are undeniable, and I cannot distinguish them from this case.
To carry the matter further : Suppose the Federal Parliament were to, lay a tax on the owners of motor cars, and carts, and guns, and dogs and sheep.
so that (1) 27 the tax was payable whether these things were employed in trade or not could it be doubted that the tax would be a real outgoing necessary for the production of the income of a business in which they were all used? The land is as necessary To the business as the personal property.
And the fallacy of the contrary doctrine consists in this; it confuses, not so much the meaning, as the application of the word "purpose".
The land tax is enacted by legislature for its own purpose, that is, to tax the owner; and when he pays it to the Crown, he pays it as the owner, it is true, but so far, not for any purpose of his.
He simply pays it because he is obliged to by law.
But when he uses the property to produce an income that is, for his business purposes, he pays the tax inseparably connected with the land also for his business purposes, namely, as an outlay necessary in the existing state of the law to obtain that income by means of that land."
The unsoundness of the test of the capacity in which payment is 'Made was commented upon in Harrods (Bueonos Aires) Ltd. vs Taylor Gooby(1) by the Court of Appeal.
The facts can be conveniently taken from the head note.
"The Appellant Company, which was incorporated and resident in the United Kingdom, carried on the business of a large retail store at Buenos Aires.
In consequence the Company was liable in Argentina to a tax known as the substitute tax, which was levied on joint stock companies incorporated in Argentine, and on companies incorporated outside, Argentine which carried on business there, as did the Appellant Com pany, through an "empress estable".
The tax was charged annually at the rate of one per cent on the Company 's capital and was payable whether or not there were profits liable to Argentine income tax.
Under Argentine law there were sanctions available to remedy non payment of the tax.
On appeal against an assessment to Income Tax under Schedule D for the year 1959 60 it was contended on behalf of the Company that it paid the substitute tax solely for the purpose of enabling it to carry on business in the Argentine since, if it had not paid it, it would have been unable to carry on its business there, and that the tax was therefore deductible as "money wholly and (1) 28 exclusively laid out or expended for the purposes of (its) trade", within the meaning of Section 137(a), Income Tax Act, 1952.
For the Crown, it was contended (inter alia) that the Company paid the tax in the capacity of taxpayer rather than trader.
" Willmer, L.J., referred to Commissioners of Inland Revenue vs Dowdall O 'Mahoney & Co. (1) and observed: "I can find no sup port whatever in this case for the proposition that the question depends on the capacity in which the taxpayer pays the taxes.
" After referring to Smith vs Lion Brewery(2) case he observed "It appears to, me that these two decisions of the House of Lords are not only quite inconsistent with the principal submission put forward on behalf of the Crown in the present case, but that the ratio decidendi of both cases, as stated by Lord Atkinson, is really decisive in favour of the Company.
" Dancwerts, L.J. observed "In Rushden Heal Co. Ltd. vs Keens(3), to which I have referred, Lord Greene, M.R., in 30 T.C. page 316 7, introduced a test of a different kind from that to which I have referred.
He seems to draw a distinction between payments made by a trader in the character of taxpayer and not, or not wholly, as trader.
I find this idea difficult to, follow and not very helpful in, discussing the subject in issue.
It seems to me very difficult to say where to draw the line between the two capacities, and not as satisfactory as the test which has been adopted in the cases to which I have referred.
Everyone who pays taxes pays because be is taxed and is a taxpayer."
Diplock, L.J., also criticized the test in these words "it is contended for the Crown that the Company Paid the tax in its capacity as a taxpayer, not in, its capacity as a trader.
But with great respect to Lord Greene, M.R. 's Judgment in the Rushden Heel Co. 's on which this Convention was mainly based, this is merely playing with words.
As pointed out by Willmer, L J., this.
ratio decidendi "was not adopted by the House (1) (3) (2) 29 of Lords in the same case and cannot, in my, view, survive Lord Atkinson 's earlier criticism of a similar argument in the Lion, Brewery case which Willmer L.J., has already cited.
You can always find some label other than "trader" to describe the capacity in which a trader makes any disbursement for the of his trade.
He pays rent for his business premises in the capacity of "tenant", rates in the capacity of "Occupier ", wages in the capacity of "employer", the price of goods in the capacity of "buyer".
But if he has become tenant or occupier of those particular pre mises, employer of those particular servants or buyer of those particular goods solely for the purposes of his trade, the money which he has expended in any of the capacities so labelled is a deductible expense in computing the profits of his trade.
The learned counsel for the Revenue did not say that these cases had been wrongly decided."
What he said was that if the real nature of wealth tax is appreciated, it is impossible to equate the "net wealth" with "land" used by the grazier in Moffatt vs Webb(1) or with "tied house in Smith vs Lion Brewery Compnay(2) or with the "Company 's Capital" in Harrods (Bueonos Aires) Ltd. vs Taylor Gooby(3).
He said that in all these cases the tax was being levied on the asset of the business which was being used for the purpose of business.
In the present case, according to him, the net wealth could not be likened to an asset owned by the trading company.
To this the learned counsel for the appellant retorted that in the case especially of a trading company all the assets are owned and liabilities incurred for the purposes of trading, as outlined in its Memorandum of Association; if, all the assets are owned and used for the purpose of the trade the net wealth would also be owned and used for the purpose of trade.
He said that it would be possible for a company to mortgage its net assets to a bank and if a company did that, it could not be said that the net wealth or net assets had not been used for the purposes of business.
If tax was levied on the capital value of assets without allowing deduction of debts it is clear that the tax would be deductible.
What difference does it make if debts are deducted from the capital value of assets.
The net wealth is as much an instrument of trade as the capital value of assets.
We find it very difficult to distinguish the case of a trading company like the assessee, on principle, from that of the grazier or the brewery company, in the cases referred to above.
(1) ; (2) (3) 30 In our view the test adopted by this Court in Travancore Titanium case(1) that "to be a permissible deduction, there must be a direct and intimate connection between the expenditure and the business, i. e., between the expenditure and the character of the assessee as a trader, and not as owner of assets, even if they are assets of the business" needs to be qualified by stating that if the expenditure is laid out by the assessee as Owner cum trader, and the expenditure is really incidental to the carrying on of his business, it must be treated to have been laid out by him as a trader and as incidental to his business.
It was pointed out by the learned counsel for the Revenue that it would be difficult to allow the deduction of wealth tax in respect of individuals who have both business assets and debts and non business assets and debts.
But the Wealth Tax Return form itself requires the assessee to show what are the business assets and liabilities and what are non business assets and liabilities.
At any rate it should not be difficult to evolve a principle or frame statutory rules to find out the proportion of the tax which is really incidental to the carrying on of the trade.
On the facts of this case it is clear that payment of wealth tax was really incidental to the carrying on, of the assessee company 's trade.
Accordingly, we hold that the appellant is entitled to succeed.
The appeals are allowed, the judgment of the High Court set aside and the question answered in favour of the assessee.
Parties will bear their own costs throughout.
Beg, J.
My lord the Chief Justice has quoted certain tests laid down by Gajendragadkar, C.J., speaking for this Court, in Keshav Mills Co. Ltd. vs Commissioner of Income Tax, Bombay North(2), which have to be satisfied before we could properly dissent from a previous decision of this Court.
In such a case, I think I should indicate my reasons for reaching a concurring conclusion, with very great respect, that an earlier, opinion of this Court, on the very question before us now, needs revision.
The error which crept into the decision of Travancore Titanium Products Ltd. vs Commissioner of Income tax, Kerala(1) could be traced to an application of the rather speciously stated criterion laid down, in the House of Lords in Strong & Co. of Romsey Ltd. vsWoodfield(3), by the Lord Chancellor who said there that expenses cannot be deducted, in computing profits, "if they are mainly incidental to some other vocation, or fall on the trader in some character other than that of trader.
The nature of the trade is to be considered".
But, Lord Davey, looking at the case from (1) ; (2) ; (3) ; 31 a somewhat different angle, "said:, "it was not enough that the bursement is made in the course of, or arises out of, or is connected with, the trade or is made out of the profits of the trade.
It must be made for the purpose of earning profits". 'The two tests were not identical.
The ratio decidendi of Strong 's case would not have been open to criticism if the noble Lords could have held there and had made it clear that they were holding nothing beyond that a tradesman who has to pay damages for injury to his customer due to his personal neglect in maintaining his premises, even though these premises are used for trade, was not entitled to deduct them in computing his profits for the purposes of paying income tax just as he Could not claim a deduction for damages he will have to pay as a wrong doer for assaulting or defaming a customer who comes into his shop.
It is no part of normal business to commit such wrongs.
Liabilities so incurred could very well be looked upon ,is outside the course of trading altogether even if they arise out of commercial activity or result from something connected with or meant to serve any commercial purpose.
Their Lordships, however, used language which could cover more than what could be attributed to the tradesman 's own purely personal wrongs.
The facts of that case show that the negligence which resulted in payment of damages, for which a deduction was claimed, was that of servants employed as an ordinary incident of trading so that the master was only vicariously liable as an inn keeper and an employer.
And, this aspect of the case made Lord James, in Strong 's case, doubt the correctness of the opinion which he, very hesitatingly, decided to accept.
In Smith vs Lion Brewery Company, Limited(1), compensation fund charges levied under statutory provisions were held, by the Court of Appeal, to be permissible deductions in computing profits on the ground that they were "wholly or exclusively laid out ' for the purpose of earning profits.
This decision had to be upheld by the House of Lords where opinion was evenly divided when the case was taken up there.
Hence, the test laid down there by the Court of Appeal was held by Farl Loreburn to he binding upon him, in Usher 's Wiltshire Brewery Ltd. vs Bruce(2), although lie had himself not accepted it in Lion Brewery 's case.
in In Rushden Heel Co. Ltd. vs Commissioner of Inland Revenue (3) Lord Greene, M.R., in disallowing deduction of expenses incurred in contesting claims for payment of Excess Profits Duty, from a computation of profits for purposes of paying Income tax, applied the test of character or capacity in which the expense was incurred.
He held that the disbursment had to be disallowed on the ground "that the expenditure was incurred by the Company primarily in its capacity as a taxpayer and for the purpose of regulating the Position as between itself as a taxpayer and the Crown.
" The House of Lords upheld the decision, following its slightly earlier pronouncement by a majority, in Smith 's Potato Estates Ltd. vs Bolland(1), but it did so on the ground that the expenses under consideration, incurred on litigation, related to a computation of Excess Profits Duty which had to take place after profits had been calculated.
In Artherton vs British Insulated and Helsby Cables Ltd.(1), however, the test in Usher 's Wiltshire Brewery case (supra) was applied to hold that even sums expended "not of necessity with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency and in order to directly facilitate the carrying on.
the business may yet be expended wholly and exclusively for the purposes of the trade".
In Mogan vs Tata & Lyle Ltd. (3), the House of Lords had used Lord Davey 's test in Strong 's case (supra) to justify deduction of sums spent on propaganda to oppose threatened nationalisation of, the Sugar Refinery industry as money spent "wholly and exclusively for the company 's trade".
The decision of the Court of Appeal, in Harroda (Buenos Aires) Ltd. vs Taylor Gooby (4), fully exposed the fallacy involved in applying, without close examination, the test of capacity, for the possession of which in a tax may be imposed, to every levy of a tax, by extending the alluringly simple formula of the Lord Chancellor, in Strong 's case, to cases for which it could not have been meant.
In Harrods ' case, deduction was claimed, in computing annual profits of a Company, of a 'Substitute Tax which had to be paid on the Company 's capital in Argentina, irrespective of the profits made on it (just like the Wealth Tax before us).
The Court of Appeal quoted passages from the opinions of the Law Lords, in Rushden Heel Co. 's case (supra) and Smith 's Potato Estates ' case (supra), to show that the ratio decidendi of these two decisions confined the principle applied there to cases where taxes, like the Income Tax and the Excess Profits Tax, had to be paid upon and after a calculation of profits and did not extend to other cases.
In other words, where profits, the net gains of business determined after making all permissible deductions, are taxed, the disbursements to meet such taxes cannot be deducted where the tax was levied, as it was in Harrods ' case, on capital or assets used for the purpose of earning these profits, it was a permissible deduction in calculating profits.
(1) 30 T.C. p. 267.
(2) 10 T. C. P. 15 5.
(3) 35 T.C. p. 367.
(4) 41 T.C. p. 450.
33 In Harrods ' case, both Willmer, L.J., and Diplock, L.J. had made use of Lord Davey 's test set out above, from Strong 's case (supra).
They held the ratio decidendi of the "tied house" cases and not Lord Loreburn 's test to be applicable to payment of taxes on assets used for trading exclusivelye.
Willmer, L.J., quoted the following passage from Lord Halsbury 's opinion in Lion Brewery case (p.466) "Again, it is urged that the landlord pays his contribution as landlord and because of his proprietary interest in the premises and, not as trader, since he would be, equally liable to it whether he traded or not.
That, no doubt, is so, but in the present case the Company have become landlords and thus liable to pay the charge, for ,the purpose solely and exclusively of setting up the tied house system of trading."
Lord Atkinson 's view, expressed in the following words in the same case, was also relied upon by the learned Judge (p.466) : "Stated broadly, I think that doctrine amounts to this, that where a trader bona fide creates in himself or acquires a particular estate or interest in premises wholly and exclusively for the purposes of using that interest to secure a better market for the commodities which it is part of his trade to vend, the money devoted by him to discharge a liability imposed by Statute on that estate or interest, or upon him as the owner of it, should be taken to have been expended by him wholly and exclusively for the purposes of his trade".
In Harrods case, the Court of Appeal, after a comprehensive survey of all the relevant English authorities, considered the proposition accepted by it, that the 'substitute tax ', levied on the company 's capital, was a permissible deduction in calculating the profits of a company for paying income tax, to be so clear and free from doubt, on the authorities then existing and applied, that it refused even leave to appeal to the House of Lords.
If there could be any doubt about the correct position of a tax like the one before us, a perusal of the opinions given by Australian Judges, in Moffat vs Webb, (1) where after a discussion of the relevant English authorities, land tax paid by a grazier on land used by him to earn income was held to be deductible in computing it for paying income tax, would lay to rest, if I may so put it , the disembodied ghost of a tradesman 's non trading character, a pure abstraction, which is sought to be used before us, by the learned Counsel for the Income tax Department, to prevent wealth tax paid on even the wholly commercial assets, (1) 16 Commonwealth Law Reports p. 120, 34 constituting a part or whole of the taxable "net wealth", used ,exclusively for purposes of trade, from being deducted as allowable expense, under Sec 10(2)(xv) of the Income tax Act, 1922.
On the earlier occasion, when Travancore Titanium Co. 's case (supra) was argued in this Court, Moffat vs Webb (supra) was not cited.
Although, there are references in the, judgment ,of this Court, in the earlier case, to the "tied house" cases and to Harrods ' case (supra), these were held to be distinguishable on facts, but, the test propounded by Lord Chancellor Loreburn, in Strong 's case, was applied to disallow deduction of wealth tax in computing profits.
After going through all the relevant authorities, I have no doubt whatsoever left in my mind that it is the ratio decidendi of "tied house" cases and Harrods ' case (supra) which is the same as that of the Australian case, that applies here and not Lord Chancellor Lorebum 's test laid down in a very different context than that of payment of a tax as a necessary precondition of earning more profits.
I do not think that the test of trading character, when incurring an expense for which a deduction is claimed, is without its uses.
There are cases where the question has arisen whether a payment was gratuitous or unnecessary or not made for a bona fide commerical purpose or connected more with some ulterior object really falling outside the normal sphere or regular course of commerce, such as the compounding of an offence even if committed while trading.
In J. K. Cotton Spinning & Weaving Mills Co. Ltd. vs Commissioner of Income Tax(1), I had occasion to consider, a case where the test of trading character or capacity in which a payment is made as well of causal connection between, the payment and a legitimately commercial purpose could, it seemed to me, be both simultaneously employed.
But, in cases of payment of taxes, a concentration on the test of capacity for which payment becomes necessary is certainly liable to mislead us.
A question which did trouble my mind was whether, in view what this Court had held in Travancore Titanium case (supra), it could be said that any "accepted commercial practice and trading principles" could exclude wealth tax from the computation of profits, with which Sec.10 sub.section (1) and (2) of the Income tax Act are concerned.
One of the grounds given by this Court, to support, its view there, was that "the nature of the expenditure of the outgoing must be adjudged in the light of accepted commercial practice and trading principles".
Speaking for myself, I was inclined to take the view that, if the earlier decision of this Court could be justified by a reference to some "commercial practice or trading principles" which could be implied by, or, read into, the very process of computation of profits with which provisions of Section (1) A.T.R. 1967 All.p. 513.35 10(1) & (2) of the income tax Act, 1922, are concerned, it must stand.
I find, however that no case, apart from the Observations mentioned above, contained in the Travancore Titanium Co. 's case was cited to support this line of reasoning.
All the other cases brought to our notice, which are discussed above, indicate that ,.commercial practice and trading principles" also warrant such deductions of a tax on assets for capital used wholly and exclusively for carrying on trade or earning profits.
They may preclude deductions of taxes on net profits but not those imposed on net assets or wealth used exclusively for making profits.
"Commercial practice and trading principles" could vary ' These terms appear to be rather vague and indefinite.
The meanings of the relevant statutory provisions seem much more fixed and definite.
All that the language of Sec.10(2)(xv) apparently requires, for claiming its benefit, is proof of a direct causal connection between an outgoing and the commercial purpose which necessitates it.
Whatever "commercial practice or trading principles" may imply or import, they could not alter the meaning of statutory pro visions or travel beyond it.
Another question which engaged my attention was whether Wealth Tax could be excluded from the purview of of Sec.10(2)(xv) simply because it was a tax on assets or "net wealth" paid by its owner so as to reduce his wealth.
This, line of thinking, however, seemed to me to bring in, through the backdoor, the misleading test of either the capacity as owner for the possession of which or the purpose for which the wealth tax may be demanded, instead of the inevitable need and the purpose of the trader in paying the tax, as relevant matters.
In Lion Brewery 's case (supra), Lord Halsbury had declared the unavoidable need to satisfy a statutory demand for the purpose of making profits as the really relevant question for consideration in such cases.
He said, about "the purpose for which the Government have exacted the tax"; "whatever that purpose may be it is immaterial".
It may be that the purpose of the tax before us could be considered in order to determine whether its nature is such as to necessarily imply that it cannot be taken into account in calculating profits or gains of business under Sec.10 sub, section (1) & (2) of the Income tax Act.
The nature of the Wealth Tax was examined by this Court in Union of India vs Harbhajan Singh Dhillon(1).
where the following passage was quoted from "Readings on Taxation in Developing Countries, by Bird & Oldman, dealing with the concept of Wealth tax : "The term 'net wealth tax ' is usually defined as a tax annually imposed on the net value of all assets less liabilities of particular tax payers especially individuals.
(1) [1971] (2) Supreme Court Cases p. 779 @ 806.
36 This definition distinguished the net wealth tax from other types of taxation of net wealth, such as death duties and a capital levy; the former are imposed only at infrequent intervals once a generation while the latter is a one time charge, usually with the primary Purpose of redeeming a war time national debt.
The net wealth tax is really intended to tax the annual yields of capital rather than the principal itself as do death ' duties or a capital levy, even though it is levied on the value of the principal.
Since it tax es net wealth, it also differs from Property taxes imposed on the gross value of property primarily real property in a number of countries.
The net wealth tax gives consideration to the tax payer 's taxable capacity through the deduction of all outstanding liabilities and personal exemptions as well as through other devices, while the property tax generally does not take these factors into account.
The net wealth tax is therefore deemed to be imposed on the person of the taxpayer, while the property tax often deemed to be imposed on an object the property itself".
It is, true that wealth tax is imposed on "net wealth" of assessees , as defined by Sec.2 sub section(c), who are all "persons".
These persons are both natural and artificial.
In the case of an artificial or juristic person like the Company before us, it seems very difficult to separate the purpose of the juristic "persona" which is certainly commercial, from the character of the "persona" itself.
Even as regards other traders, that part of tax which falls on what is used exclusively for trade could be really ascribed only to a trading character.
To the extent it is a tax on property used for earning profits, it must enter into a computation of profits from trading.
On going through the provisions of Wealth Tax Act as well as the Income tax Act it was not possible for me to infer that the payment of Wealth tax must be excluded from the computation of profits under Sec.10 sub.section (1) & (2) of the Income tax Act.
It appears to me that nothing less than express statutory provision would justify a denial of the right to a deduction which the language of Sec.10 sub.section (2) (xv) confers upon an assessee.
On looking at the position of law in America on this subject, I find that there are statutory provisions which deny deductions of certain taxes only, such as income tax, and taxes on war profits and excess profits, gifts, inheritance, legacies, and succession (See U.S. Code 1958, ed.Titles 22 26 "Internal Revenue Code", p. 4287 paragraph 164).
A general statement of the law on this subject there is that it 37 "does not prevent (a) a deduction therefor under Sec.23(a) provided it represents an ordinary and necessary expense paid or incurred during the taxable year, by a corporation or an individual in carrying on any trade or business, or, in the case of an individual, for the production or collection of income, or for the management, Conservation, or maintenance of property held for the production of income, or (b) the inclusion of such tax paid or incurred during the taxable year by a corporation or an individual as a part of the, cost of ac quisition or production in the trade or business, or, in the case of an individual, as a part of the cost of property held for the production of income with respect to which such tax is paid or incurred".
(See Jacob Mer tens Law of Federal Income Taxation: Vol 5, 1954 Cumulative Pock et Supplement, Chapter 27, paragraph 27.01).
Learned Counsel for the Department relied upon the diffi culty in separating that Dart of the tax which is levied on any part of the net wealth, used wholly and exclusively for trade,, from the rest of it.
We arc, strictly speaking, concerned only with the correct interpretation of Sec.10 sub section (2) (xv) of the Act and with the definition of "net wealth" given in Sec. 2(m) of the Wealth Tax Act on which incidence of the tax levied under Sec.3 falls.
In order to determine whether, as a matter of principle, a tax so defined and imposed would be covered by Sec.10 sub.s.(2)(xv) of the relevant Income tax Act, the difficulty which may arise in actually computing the deductible amount does not seem ,to be a material consideration.
Moreover, the fact that "net wealth" is an amount by which an aggregation of all the assets exceeds all the debts does not seem to impose any intractable difficulty in the way of calculating what part of the net wealth is used for trade or business of an assessee and what is not.
An aggregation means a collection of items added up which can be separated and not a mixture the ingredients of which become inseparable.
Assuming, however, that there is some difficulty in separating that part of the tax which is payable in respect of net ,wealth used only for trade from that part of it which is imposed on a portion of net wealth not so used, I fail to see how the principle involved or meaning of the relevant provisions, with which we are concerned here, will be affected.
Mr. Chagla, appearing for an assessee, drew our attention to the division into two heads, one of business assets and another of the "other assets", which is found in form 'A ' prescribed by the rules for the Wealth Tax return.
This means that the Wealth Tax Act itself makes that part of the net wealth separable which can be utilised wholly and exclusively for trade from the remainder of it.
If this can be, done, it is difficult to see how that part of Wealth Tax could escape 38 deduction, under Sec.10(2) (xv) of the Income tax Act, which is attributable to such portion of the net wealth as is used wholly and, exclusively for earning profits.
To lay down, as we are doing in this case, that it is the causal connection between payment of tax and that part of net wealth which is used wholly and exclusively for trade and not the mere character or capacity for the possession of which the tax is demanded, which determines whether it is an allowable deduction or not, under Sec.
10(2)(xv) of the Act, seems to me to amount to nothing more than to give effect to the plain and literal meaning of a provision of a taxing statute.
There seems no need in such a clear case, to invoke the aid of the well established cannon of construction that, where a taxing provision is reasonably capable of two equally possible constructions, the one which favours the assessee must be preferred.
of course, the burden of proving whether the whole or a part of the Wealth tax paid by an assessee is attributable wholly and exclusively to the carrying on of a trade, and, therefore, is an allowable deduction, must rest upon the assessee in each case.
The argument on behalf of the assessees, as I understand it, goes no further.
One of the tests laid down in Keshav Mills Company 's case (Supra) for deciding whether a previous erroneous view should be set right by this Court, was whether any possible advantage to the public resulting from doing so would be outweighed by the mischief or harm a revision may cause.
of course, the ultimate determination of what public good requires the law to be must take place elsewhere But, in deciding whether a previous interpretation of the law, as it exists, by this Court, even if it be erroneous in some respe ct , needs revision by it, a consideration of what public good demands undoubtedly lies within the province of our powers.
It seems to me that the Wealth Tax Act was not intended to strike at or check expansion of commercial activites by either individuals or companies.
Its underlying purpose was the removal of disparities of individual or personal wealth and not injury to trade.
It could be said to be a tax aimed at individuals whose wealth exceeds certain limits.
In so far as Ole particular interpretation which we are abandoning, because of the infirmities found in it, seemed to penalise mere expansion of business and 39 trade 'without serving the assumed underlying purpose of Wealthtax, a revision of opinion does not appear to involve any such mischief or injury to the public as could stand in the way of correcting an erroneous view.
I have, therefore, no hesitation left in my mind in holding that the view expressed by this Court in Travancore Titanium case (Supra) must be modified as indicated by My lord the Chief Justice.
V.P.S. Appeal allowed.
| The appellant was running a Octroi Clearing Agency at 'Mulund Check Post ' in the State of Maharashtra.
He used to attend to certain transactions of Montgomery Transport Co. also.
On December 16, 1968, a truck of the said transport company arrived at the Check Post with a machine to be delivered to M/s. Imperial Tobacco Co. The appellant informed the Manager of the Transport Company to arrange for the payment of Octroi which amounted to more than Rs. 8,000/ .
Accordingly, a sum of Rs. 8,196/ was handed over to the appellant in the presence of the Driver of the truck.
It was found out after investigation that the receipt for the payment of Octroi held by the Imperial Tobacco Co. was not genuine and on a complaint lodged by the Company, the appellant was arrested and committed for trial to the Court of Sessions, under section 467, 471 read with section 467 and section 420 of I.P.C.
The Trial Court convicted the appellant for an offence under section 471 read with section 467 1.
P. C. and for an offence under section 420 1.
The appeal to the High Court was dismissed in limine with the word "dismissed".
The point raised before this Court was whether the High Court was justified in dismissing the appeal in limine with one word "dismissed", without making a speaking order indicating the reasons for dismissal.
Remanding the case to the High Court for rehearing.
HELD : (i) The importance of the opinion of the High Court on arguable points requiring consideration in appeal in that Court when questions of fact or law are open to challenge by the appellant was emphasised more than 20 years ago by this Court in Mustaq Hussain vs The State of Bombay, ; Since then, in a series of decisions, this Court has consistently drawn the attention of the High Courts to the desirability of giving an indication of their views on the points raised in arguable cases in accordance with the legal position enunciated by this Court.
[552 AB.] (ii) In K. K. Jain vs State of Maharashtra, A.I.R. 1973 S.C. 243 it was reiterated that reasons before the High Court for dismissing the appeal, if recorded, would be a valuable assistance to this Court in finally dismissing of the appeal on merits.
Another advantage of recording such reasons is, that the accused appellant, who may not always be present in the court, would have the satisfaction of knowing from the judgment that the points appropriately arising for consideration in his case, were actually argued and duly considered by this High Court while dismissing his appeal.
In the prevent case, since the High Court did not record its reasons for dismissing the appeal, this court has no option but to remand the case to the High Court for rehearing and deciding the appeal after considering the points raised and recording its reasons in accordance with law.
[552 FG & 553A] 549 Mustaq Hussain vs State of Bombay, ; , and K. K. Jain vs State of Maharashtra, A.I.R. 1973 S.C. 243, referred to.
|
l Appeals Nos.
2180 to 2182 of 1968.
Appeals by Special Leave from the judgment and order dated October 6, 1967 of the Andhra Pradesh High Court in Writ Petitions Nos.
1456 of 1965, 376 and 2006 of 1966.
M. C. Chagla, P. Ramachandra Rao and B. R. Agarwala, for the appellants (in all the appeals).
P. Ram Reddy and A. V. V. Nair, for the respondents (in all the appeals).
The Judgment of the Court was delivered by Mitter, J.
These appeals are directed against the imposition of taxes under the Andhra Pradesh Motor Vehicles Taxation Act (V of 1963).
The appellant in the first two appeals is the Automotive Manufacturers (P.) Ltd., a dealer, among other automobile equipment, of motor chassis, motor vehicles etc.
received by it from manufacturers outside the State of Andhra Pradesh.
The first appeal arises out of a writ petition against the levy in respect of motor chassis delivered to it by Ashok Leyland Ltd. of Madras.
These chassis are said to be driven by transport contractors of the manufacturers themselves under temporary, certificates of registration under the Motor Vehicles Act and delivered to the appellant at Secunderabad.
The second appeal by the same appellant arises out of a writ petition challenging the levy on jeeps, jeep truck chassis, jeep station wagons of the manufacture of Mahindra & Mahindra Ltd. of Bombay, besides pick up vans, scooters etc.
from Bajaj Auto Ltd. of Poona.
The scooters are carried to Secunderabad in lorries.
The appellants in Civil Appeal No. 2182 of 1968 are Ashok Leyland Ltd. Madras who transport motor chassis by road from their factory at Encore to dealers in various parts of India, State Transport Undertakings etc.
According to their writ petition, these chassis have to traverse long distances in the State of Andhra Pradesh every month destined for delivery not only in the said State but also beyond the same.
These chassis are driven from Ennore to their respective destinations in the several States under temporary certificates of registration obtained from the 595 Madras State on payment of requisite tax in that behalf, such certificates of registration under section 28 of the Motor Vehicles Act being effective throughout India.
The appellants ' case is that the levy is illegal and unconstitutional.
The grounds urged in the writ petitions filed in the High Court inter alia are as follows : 1.
S.3 of the Act only authorises a levy of tax on a motor vehicles "used or kept for use in a public place in the State".
There can be no user or keeping for use: of the chassis of a motor vehicle as a motor vehicle unless a body is attached to it. 'In the, case of vehicles other than chassis such user or keeping for use in 'a public place can only take place when they are put to the required user or kept for use by the customers for whom the vehicles are transported in the manner contemplated by the Motor Vehicles Act.
2. section 9 of the Act exempts from payment of tax chassis of a motor vehicle "driven to another place in order that a body may be attached to it".
As the chassis are invariably driven to their respective destinations in order that bodies may be attached to them, they come directly under the notification of exemption issued by the State Government.
As the chassis or the vehicles are covered by temporary certificates of registration taken out by the manufacturers entitling transportation throughout the territory of India, the impugned levy operates as an impediment to the free trade and commerce of the petitioners in violation of article 301 of the Constitution.
The High Court turned down all the contentions.
Hence the appeals.
Before this Court Mr. Chagla for the appellants limited his first and second contentions to the cases of chassis only.
His first contention was that section 3 of the Act was not applicable to the appellants.
Sub section
(1) of that section, runs as follows : "The Government may, by notification from time to time direct that a tax shall be levied on every motor vehicle used or kept for use, in a public place in the State.
" Under sub section
(2) of section 3 the notification issued under sub section (1) is to specify the class of motor vehicles on which, the rates for the periods at which and the date from which the tax shall be levied.
A motor vehicle has not been defined in this Act but under section 2(j) of the Act it is to have, the same meaning as is assigned to it in the Motor Vehicles Act.
Under section 2(18) of the last mentioned Act, "a motor vehicle means any mechanically propelled vehicle adapt 596 ed for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises.
" The argument of learned counsel was that a chassis as such could neither be used nor kept for use in a public place, before a body was fitted to it and so long as the said step was not taken, the question of levy of tax under the Act would not arise.
We were referred to the different meanings of the word "use" in the Oxford Dictionary some of which are as follows : "To make use of as a means or instrument; To employ for a profitable end;" In our view, it is not necessary for a chassis to have a body attached to it before it can be used within the meaning of the Act inasmuch as it can be used by the man who drives it and such use of it on public roads would be enough to attract the levy.
Ordinary chassis have bodies attached to them for commercially profitable use but even without a body a chassis can be used and is actually used when it is taken over public roads.
The second submission was that the appellants qualified for exemption under the Government notification under section 9 of the Act.
Section 9 inter alia provides : "(1) The Government may, by notification (a) grant an exemption, make a reduction in the rate or order other modification not involving an enhancement in the rate, of tax payable (i) by any person or class of persons; or (ii) in respect of any motor vehicle or class of motor vehicles or motor vehicles running in any particular area; xx xx XX.
" The notification issued ran as follows: " In exercise of the powers conferred by sub section (1) of section 9 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963 (Andhra Pradesh Act 5 of 1963), the Governor of Andhra Pradesh hereby grants exemption of the tax payable in respect of motor vehicles specified in column (1) of the Table below subject to the conditions, if any, specified in column (2) thereof '.
597 Item (4) of the table reads : "Any chassis of a motor vehicle" the condition for exemption being : "When driven to any place in order that a body may be attached to it.
" It was argued that as the use of a chassis would be meaningless unless a body is attached to it and all chassis, as a matter of fact, have to have bodies attached to them, the driving of the chassis on the road without a body ' would qualify for exemption under, the above notification.
We find ourselves unable to accept this view.
Item (4) in the table of the above notification limits the exemption from the tax to the journey of the chassis for the express purpose of a body being attached to it.
The Automotive Manufacturers being dealers can and do probably deal with or dispose of the chassis as such.
There is no allegation in any of the two writ petitions tiled by these appellants that the chassis were coming from Madras or Bombay for the purpose of having bodies attached to them at the workshop of the appellant.
In so far as Ashok Leyland Ltd. is concerned, it is their positive case that the chassis were being driven through the State of Andhra Pradesh either for delivery there or in other States of India.
They were certainly being driven along the roads of Andhra Pradesh for disposal at the joumey 's end and it would be for the purchaser at the destination to have a body fixed to the chassis according to Ms own need and on the specification given by him.
Merely because bodies were going to be attached by the ultimate purchasers, it cannot be said that the running of the chassis on the roads of Andhra Pradesh would attract exemption under item (4) of the notification.
The last point urged by counsel was that inasmuch as registration of a vehicle in any State under section 28 of the Motor Vehicles Act is to be effective throughout India any tax by a State on motor vehicles be they merely chassis or otherwise would run counter to article 301 of the Constitution according to which trade, commerce and intercourse throughout the territory of India is to be free subject to the other provisions of Part XIII.
Under article 304(b) how ever it is open to the Legislative of a State to 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.
This again is subject to the proviso that no Bill or amendment for the purpose of the said cl.
(b) is to be introduced in the State Legislature without the previous sanction of the President.
Learned counsel wanted to urge that the impost was not saved by article 304(b) inter alia, on the ground that there was no previous sanction of the President in respect of the Bill as envisaged by article 304(b).
We did not allow counsel to press this point inasmuch as it had 598 not been urged in the writ petition and we hereby make it clear that we are not examining the merits of the contention urged by counsel in this regard and it will be open to his clients, if so advised, to urge it in any future proceedings they may choose to take.
These appeals were originally heard by a Bench of five Judges including section C. Roy, J. who expired a few days back.
The above judgment was concurred in by our late colleague.
We however gave a further hearing to the parties at which nothing was addressed to us to make us change our opinion already formed.
In the result, the appeals fail and are dismissed with costs.
One set of costs including hearing fee.
K. B. N. Appeals dismissed.
| The respondents were committed to trial before the Sessions Court for offences of forgery, cheating, etc.
They challenged the committal order but the High Court held that there was a prima facie case.
Thereafter, the trial judge split up the charges and this was again questioned but the High Court held that there was no illegality.
The Public Prosecutor then applied under section 494, Cr.
P.C., under instructions from the Government, for permission to withdraw from the prosecution, on the grounds, that the transaction relating to the offence arose out of a contract and was of a civil nature, that there had been enormous delay in proceeding with the trial, and that the securing the evidence of witnesses would involve heavy expense for the State as the witnesses were in far off places. 'Material judge gave the permission and the order was confirmed by the High Court.
Allowing the appeal to this Court, HELD : (1) Section 494 of the Code is not in pari materia with section 333 under which the Advocate General may enter a nolle prosequi at any stage of a trial.
It only gives power to the Public Prosecutor to withdraw from the prosecution subject to the consent of the Court.
Though the section is in general terms and does not circumscribe the powers of the Public Prosecutor the essential consideration which is implicit in the grant of the power is that it should be exercised in the interests of justice which may be, either that it may not be possible to produce sufficient evidence to sustain the charge, or that subsequent information before the prosecuting agency falsifies the prosecution evidence, or other similar circumstances depending on the facts and circumstances of each case.
The power is subject to the permission of the Court and it is the duty of the Court to see that the permission is not sought on grounds extraneous to the interests of justice or that offences against the State do not go unpunished merely because the Government as a matter of general policy or expediency unconnected with its duty to prosecute offenders directs a Public Prosecutor to withdraw from the Prosecution and the Public Prosecutor merely does so at its behest.
The court, while considering the request to grant permission, should not do so as a formality for the mere a .king.
it may grant permission only if it is satisfied on the materials placed before it that the grant of it subserves the administration of justice and that the permission was not sought covertly with an ulterior purpose unconnected with the vindication of the law.
[603 E H; 604 A D; 606 E] State of Bihar vs Ram Naresh Pandey, , followed.
Devendra Kumar Roy vs Syed Yar Bakht Chaudhury & Ors.
A.I.R. 1939 Cul. 220, The King vs Parmanand & Ors., A.I.R. 1949 Pat. 222 and Dy.
Accountant General (Admn.) Office of Accountant General, Kerala Trivandrum vs State of Kerala & Ors., , referred to.
(2) In the present case none of the grounds alleged or even their cumulative effect would justify, the withdrawal from the prosecution.
[906 G] 600 (a) It may be that the acts of the respondents may make them both liable under the civil as well as the criminal laws.
But that does not justify either the seeking of the permission to withdraw from the prosecution or the granting of it unless the matter before the criminal court is of a purely civil nature.
The committal order and the judgments of the High Court at the prior two stages show that there was a prima facie case against the accused with respect to the charges framed against them.
[906 G H; 907 G H] (b) Neither the ground of delay nor the question of expenditure involved by themselves, could be a proper ground for granting permission to the Public Prosecutor for withdrawing from the case [608 B C, F G]
|
vil Appeal No. 2 104 of 1989.
WITH C.M.P. No. 26956 of 1988.
From the Judgment and Order dated 22.4.1988 of the Punjab and Haryana High Court in C.R. No. 2875 of 1979.
Ashok K. Sen and G.K. Bansal for the Appellant.
S.M. Ashri and C.S. Ashri for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This appeal is from the judgment and order of the High Court of Punjab and Haryana dated 22nd April, 1988.
The dispute was between the two brothers.
Both the parties appointed one Shri Ajit Singh as the Arbitrator on 7th March, 1974 for settlement of the dispute about 2 1/2 Killas of land situated near Chandni Bagh, Panipat in the State of Haryana.
The said land stood in the name of the appellant.
According to the respondent, Ram Lal, it was benami in the name of the appellant.
That was the dispute.
The arbitrator gave his award on 22nd May, 1974 and moved an application on 23rd September, 1974 before the Court of Sub Judge IInd Class, Panipat, for making the award the rule of the Court.
The application was registered in the said Court and notice was issued to the appellant herein on 7th November, 1974.
Objections were filed by the appellant taking various grounds.
It was contended that the appellant had informed the sole arbitrator through registered notice and by a telegraphic notice that he had no faith in the said arbitra tor and had thus repudiated his authority to proceed with the arbitration proceedings.
It was also contended that the award was lop sided, perverse, and totally unjust and against all cannons of justice and fair play.
It was alleged that the arbitrator had acted in a partisan manner.
He never heard the claim of the appellant and never 254 called upon him to substantiate his claim and had acted as an agent of the respondent.
It was, therefore, prayed by the appellant that the award be set aside.
It may be mentioned that no point was raised that the award was bad and unforce able because it was not properly stamped nor any plea was taken that the award was an unregistered one as such could not be made the rule of the court.
Several issues were framed.
No issue was, however, framed on the ground that the award was bad because it was not properly stamped or that it was not registered.
The appellant, who was respondent No. 2 in the said proceedings before the learned Trial Judge, gave his version about the repudiation of the authority.
The learned Trial Judge had, however, held that the appellant had failed to prove that he had repudiated the authority of the arbitrator to enter upon the arbitration through registered notice or otherwise before the arbitrator announced his award.
It was further held that the award of the arbitrator was not liable to be set aside on the grounds taken.
The objections were treated as objections under section 33 of the and it was filed within the limitation period.
In that view of the matter, the learned Sub Judge IInd Class, Panipat by his order dated 28th July, 1977 dismissed the objections under Section 14 of the and made the said award the rule of the court.
Aggrieved thereby, the appellant went up in first appeal before the Additional District Judge, Karnal.
The learned Additional District Judge, while dealing with the conten tions of the appellant, held that the application was prop erly filed.
A point was taken before the first Appellate Court that the award was on an unstamped paper and as such could not be made the rule of the court.
The learned District Judge held that the award has not been properly stamped and as such could not be made the rule of the court.
It was also contended before the learned District Judge that the award was unregistered and as such it could not be made the rule of the court as it affected immovable property of more than Rs. 100.
The learned Dis trict Judge after analysing the provisions of section 17 of the (hereinafter referred as to 'the Act ') came to the conclusion that the award declared right in immovable property and since it was unregistered, it could not be made the rule of the court.
The learned Dis trict Judge, however, also came to the conclusion that the authority of the arbitrator had been repudiated.
This ground no longer survives.
In the aforesaid view of the matter, the learned District Judge allowed the appeal on the ground that the 255 award was unregistered and unstamped and as such could not be made the rule of the court and set aside the order of the learned Trial Judge.
There was a second appeal to the High Court.
The High Court upheld the award.
The High Court noted that the neces sary stamp was purchased on 8th August, 1974 before the award was filed on the 9th September, 1974.
And that being so, it could not be argued successfully that the award was unstamped.
In that view of the matter, the High Court held that the learned District Judge was in error in allowing the stamp objection to be taken.
As regards the registration, it was held by the High Court that the award did not create any right as such in immovable property; it only admitted the already existing rights between the parties and hence it did not require any registration.
In that view of the matter, the High Court was of the opinion that the first appellate Court was wrong.
The High Court was further of the view that no right was created in favour of Shri Ram Lal, the respondent herein when he was declared the owner.
Both Lachhman Das, the appellant and Ram Lal, the respondent, had claimed their ownership and, ac cording to the High Court, they had the existing rights.
The award only made, according to the High Court, it clear that the ownership would vest in one of the brothers, Ram Lal.
In the aforesaid view of the matter, the High Court was of the view that it did not require registration.
The High Court allowed the appeal and directed the restoration of the order of the learned trial court and the award be made the rule of the court.
Aggrieved thereby, the appellant has come up to this Court.
The question is Was the High Court right in the view it took? Mr. A.K. Sen, learned counsel for the appellant contend ed that the High Court was clearly in error in the facts and circumstances of this case to have made this award the rule of the court and to have looked upon this award which at all relevant and material time was unregistered.
It may be mentioned that when this matter came up before this Court on the 5th December, 1988, the matter was adjourned for two months and it was recorded "In the meantime, the parties may take steps".
Thereafter, it appears that the award was filed for registration on 19th December, 1988 before the Sub Registrar, Panipat and was registered actually on 3rd Febru ary, 1989.
Mr. Sen, contended that the registration of the award subsequently made in the manner indicated hereinbefore did not validate it retrospectively in 256 view of the relevant provisions of the Act.
The award being an unregistered one could not have been looked into by the High Court.
Mr. Sen tried to urge before us that the award was got registered by misrepresentation of the order of this Court dated 5th December, 1988.
This Court did not, on 5th December, 1988, direct that the registration could be made.
All that this Court observed was that the parties might take steps.
It may be mentioned that on or about 18th December, 1988, it appears at page 75 of the present paper book that an application was made for registration of award which was said to have been applied by Shri Ajit Singh, S/o Shri Beer Singh.
In the said letter, it was mentioned that Mr. justice J.V. Gupta of the Hon 'ble High Court of Punjab and Haryana had held in favour of the said writer and it was further stated that on the 5th December, 1988, this Court dismissed the case of Lachhman Singh, the appellant herein, copy whereof was enclosed.
The award was filed for registration on 18th December, 1988.
The statements contained in the letter were incorrect and misleading inasmuch as this Court did not dismiss the case of the appellant on 5th December, 1988.
On the other hand, this Court, as mentioned hereinbe fore on the 5th December, 1988, merely observed that the appellant would be at liberty to do what was needful.
Mr. Ashri, learned counsel for the respondent, submitted that the registration was done in view of provisions of sections 23 and 25 of the Act.
Mr. Sen, on the other hand, submitted before us that this was wholly irregular to have obtained registration by misleading the Sub Registrar and this was of no effect.
Furthermore, in any event, according to Mr. Sen, the registration having been beyond the period of four months as enjoined by the relevant provisions was wholly bad.
The first question that requires consideration in the instant case is whether the Court could have looked into the award for the purpose of pronouncing judgment upon the award.
In order to deal with this question, it is necessary to refer to Section 17 of the Act.
Section 17 deals with documents of which registration is compulsory.
Section 17 of the said Act mentions the documents which must be regis tered.
Section 17(1)(e), inter alia, provides: "non testamentary instruments transferring or assigning any decree or order of a Court or any order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extin guish, whether in present or in future, any right, title or interest, 257 whether in present or in future, any right, title or interest,, whether vested or contin gent, of the value of one hundred rupees and upwards, to or in immovable property." Section 23 of the said Act provides as under: "Subject to the provisions contained in sec tions 24, 25 and 26, no document other than will shall be accepted for registration unless presented for that purpose to the proper officer within four months from the date of its execution: Provided that a copy of a decree or order may be presented within four months from the day on which the decree or order was made, or, where it is appealable, within four months from the day on which it becomes final." Section 25 of the said Act provides as under: "If, owing to urgent necessity or unavoidable accident, any document executed, or copy of a decree or order made, in India is not present ed for registration till after the expiration of the time hereinbefore presented in that be half, the Registrar, in cases where the delay in presentation does not exceed four months, may direct that, on payment of a fine not exceeding ten times the amount of the proper registration fee, such document shall be accepted for registration." Section 49 of the said Act provides as under: "No document required by section 17 or by any provision of the , to be registered shall (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transac tion affecting such property or conferring such power, unless it has been registered." 258 The proviso to this section deals with a suit for specific performance with which we are not concerned.
Shri Ashri contended that the document in question was one which did not require registration.
He submitted that the High Court was right in the view it took.
He further submitted that the property in dispute was in the joint name of the appellant and the respondent.
The dispute was whether the half of the property held by the appellant was benami for the respondent or a declaration to that effect could be made by the arbitrator.
Mr. Ashri further submitted that it was the case of the appellant that he was the owner of the property in question.
The award in question recites that Shri Ajit Singh had been appointed as arbitrator by an agreement dated 7th March, 1974 by both the parties.
The award further recites that he was appointed arbitrator to adjudicate through arbitration "their disputes regarding property against each other".
The arbitrator thereafter recites the steps taken and the proceedings before him.
It was further stated that the appellant did not orally reply to the contentions of the respondent nor did he submit his claims in writing.
In these circumstances, the award was bad.
The award stated, inter alia, "Land of Tibbi comprising of rect.
No. 13 Kila No. 23 (3 11), 26(1 11), 16(5 15), 17(5 14), 25(4 4), 23/27 and 26/1 situated in Mauz Ugra Kheri, near Chandni Bagh, which is in the joint name of Shri Ram Lal, Party No. 1 and Shri Lachhman Dass, Party No. 2.
The half ownership of Shri Lachhman Dass shall be now owned by Shri Ram Lal in addition to his 1/2 share owned by him in these lands.
" The award gave certain other directions.
Regarding other claims, it was held that lands were allotted in the names of both the brothers and in that context Rs. 16,000 were spent by the respondent from his own sources.
The arbitrator stated that he admitted these expenses at Rs. 10,000 and awarded that an amount of Rs.5,000 equal to 1/2 share should be paid by the appellant to the respondent.
The other claims were also decided by the award with which it is not neces sary to deal in the present appeal.
The question is does this award purport or operate to create, declare or assign, limit or extinguish any right, title or interest in immova ble property? Shri Ashri submitted that as his client was the real owner and as respondent No. 1 was mere benamdar, and the arbitrator merely declared the true position and the award did not as such create, declare or assign any fight, title or interest in any immovable property by the aforesaid clause in the award.
259 The Division Bench of the Madras High Court in Ramaswamy Ayyar & Anr.
vs Thirupathi Naik, ILR XXVII Madras p. 43 has observed that the criterion for purposes of registration under the Registration Act, 1877 (III of 1877), which was in the same term as the provision of the present Act, was what was expressed on the face of the document, not what inci dents might be annexed by custom to a grant of the kind.
Therefore, we have to see not what the document intends to convey really, but what it purports to convey.
In other words, it is necessary.
to examine not so much what it intends to do but what it purports to do.
The real purpose of registration is to secure that every person dealing with the property, where such document re quires registration, may rely with confidence upon state ments contained in the register as a full and complete account of all transactions by which title may be affected.
Section 17 of the said Act being a disabling section, must be construed strictly.
Therefore, unless a document is clearly brought within the provisions of the section, its non registration would be no bar to its being admitted in evidence.
On a proper construction of the award, it does appear to us that the award did create, declare or assign a right, title and interest in the immovable property.
The award declares that 1/2 share of the ownership of Shri Lachhman Dass shall "be now owned by Shri Ram Lal, the respondent in addition to his 1/2 share owned in those lands".
Therefore, the said award declares the right of Ram Lal to the said share of the said property mentioned in that clause.
It is not in dispute that the said property is immovable property and it is not merely a declaration of the pre existing right but creation of new right of the parties.
It is significant to bear in mind that the section enjoins registration wher ever the award "purports or operates to create, declare, assign, limit or extinguish" whether in present or in future any right, title or interest of the value of Rs. 100 or upwards in immovable property.
Shri Ashri tried to submit that while reading the award reasonably and fairly, it must be construed that there was no creation or declaration of any new right in the immovable property.
What was done was only, according to Shri Ashri, a declaration of existing right, that is to say, Ram Lal 's full ownership of the property in question.
The section, however, enjoins registration in respect of any document, which purports not which intends to create a right in immov able property or declare a right in immovable property.
It is not a question of declaration of an existing right.
It is by this award that a new right was 260 being created in favour of Ram Lal, the respondent herein.
In that view of the matter, in our opinion, it cannot be contended that the award did not require registration.
This question was considered by this Court in Satish Kumar & Ors.
vs Surinder Kumar & Ors.
, There an arbi trator appointed by the appellants and the respondents partitioned their immovable property exceeding the value of Rs. 100.
The arbitrator applied under section 14 of the to the Court for making the award a rule of the Court.
On the question whether the award was admissible in evidence as it was not registered it was held that the award required registration.
It was further held by Justice Sikri, as the Chief Justice then was, and Justice Bachawat that all claims which were the subject matter of a reference to arbitration merged in the award which was pronounced in the proceedings before the arbitrator and after an award had been pronounced, the rights and liabili ties of the parties in respect of the said claims could be determined only on the basis of the said award.
After an award was pronounced, no action could be started on the original claim which had been the subject matter of the reference.
The position under the registration Act is in no way different from what it was before the Act came into force.
Therefore, the conferment of exclusive jurisdiction on a court under the did not make an award any less binding than it was under the provisions of the Second Schedule of the Code of Civil Procedure.
It was further held that the filing of an unregistered award under section 49 of the Act was not prohibited.
What was prohibit ed was that it could not be taken into evidence so as to affect immovable property falling under section 17 of the Act.
It was further reiterated that it could not be said that the registration did not in any manner add to its efficacy or give it added competence.
If an award affected immovable property above the value of Rs. 100, its registration would not rid of the disability created by section 49 of the Act.
The award in question was not a mere waste paper but had some legal effect and it plainly purported to affect or affected property within the meaning of section 17(1)(b) of the Act.
Justice Hegde gave a separate but concurring judgment.
He observed that it was one thing to say that a right was not created, it was an entirely different thing to say that the right created could not be enforced without further steps.
An award did create rights in that property but those rights could not be enforced until the award was made a decree of the Court.
For the purpose of section 17(1)(b) of the Act, all that had to be seen was whether the award in question pur ported or operated to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property.
261 It was incorrect to state that an award which could not be enforced was not an award and the same did not create any right in the property which was the subject matter of the award.
An award whether registered or unregistered, accord ing to Justice Hegde, does create rights but those rights could not be enforced until the award is made the decree of the court.
The learned Judge made it clear that for the purpose of section 17(1)(b) of the Act, all that had to be seen was whether the award in question purported or operated to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of Rs. 100 and upwards in the immovable property.
If it does, it is compulsorily registerable.
A document might validly create rights but those rights might not be enforced for various reasons.
The Court found that the award in that case created right in immovable property and it required registration.
This Court in Ratan Lal Sharma vs Purshottam Harit, ; had to consider the question of registra tion and the effect of non registration of an award.
The appellant and the respondent therein had set up a partner ship business in the year 1962.
The parties, however, there after fell out.
At the time the disputes arose, the running business had a factory and various movable and immovable properties.
On August 22, 1963, by agreement in writing, the parties referred "the disputes of our concern" to the arbi tration of two persons and gave "the arbirators full author ity to decide their dispute".
The arbitrators gave their award on September 10, 1963.
The award made an exclusive allotment of the partnership assets, including the factory, and liabilities to the appellant.
He was "absolutely enti tled to the same" in consideration of a sum of Rs. 17,000 plus half the amount of the realisable debts of the business to the respondent and of the appellants renouncement of the right to share in amounts already received by the respond ent.
The award, stipulated that the appellant should not run the factory unless he had paid the awarded consideration to the respondent.
The arbitrators filed the award in the High Court on November 8, 1963.
On September 10, 1964, the re spondent filed an application for determining the validity of the agreement and for setting aside the award.
On May 27, 1966, a learned Single Judge of the High Court dismissed the application as time barred.
But he declined the request of the appellant to proceed to pronounce judgment according to the award because in his view; (i) the award was void for uncertainty and (ii) the award, which created rights in favour of the appellant over immovable property worth over Rs. 100 required registration and was unregistered.
From this part of the order, the 262 appellant filed an appeal which was dismissed as not main tainable by the Division Bench of the High Court.
The appel lant preferred an appeal by special leave to this Court against the decision of the Single Judge declining to pro nounce judgment in accordance with the award.
He also filed a special leave petition against the judgment of the Divi sion Bench.
In the appeal before this Court, the appellant contended that the award was not void for uncertainty and that the award sought to assign the respondent 's share in the partnership to the appellant and so did not require registration and that under sec.
17 of the , the Court was bound to pronounce judgment in accordance with the award after it had dismissed the respondent 's applica tion for setting it aside.
It was held that the share of a partner in the assets of the partnership, which had also immovable properties, was movable property and the assign ment of the share did not require registration under section 17 of the Act.
But the award in the instant case, this Court observed, did not seek to assign the share of the respondent to the appellant, either in express words or by necessary implication.
The award expressly makes an exclusive allot ment of the partnership assets including the factory and liabilities to the appellant.
It went further and made him "absolutely entitled to the same", in consideration of a sum of Rs. 17,000 plus half of the amount of Rs. 1924.88 P. to the respondent and the appellant 's renouncement of the right to share in the amounts already received by the respondent.
In express words the award purported to create rights in immovable property worth above Rs. 100 in favour of the appellant.
It would require accordingly registration under section 17 of the Act.
As the award was unregistered, the court could not look into it.
The award being inadmissible in evidence for want of registration the Court could not pro nounce judgment in accordance with it.
Section 17 of the presupposes an award which could be validly looked into by the Court.
The appellant could not success fully invoke section 17.
The award is an inseparable tangle of several clauses and cannot be enforced as to the part not dealing with immovable property.
In the instant case also, it appears to us that the award affects immovable property over Rs. I00 and as such was required to be registered.
Shri Ashn, however, contended that the fact that the award was unregistered had not been taken before the learned trial judge.
Indeed, this was not urged within 30 days and the time for filing of application for setting aside an award under section 30 of the Arbitra tion Act, was 30 days and as such this not having been taken, the appellant was not entitled to take this point at a later stage.
1t is.
true that in the application for making the award a rule of the court before 263 the learned trial judge this point had not been taken.
Section 33 of the provides that: "Any party to an arbitration agreement or of any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits.
" It has been held by the majority of three learned Judges in a full Bench decision of the Calcutta High Court in the case of Saha & Co. vs Ishar Singh Kirpal Singh, AIR 1956 Cal. 321 that under the Indian , there was no distinction between an application for setting aside of an award and an application for adjudgment of the award as a nullity and all applications must be under section 30 within the time stipulated for that application.
The existence of an award and validity of the reference both have to be chal lenged in the same manner.
But the next question that arises, is, whether an unregistered award can be set aside or not.
It was submitted by Mr. Ashri that the award was otherwise invalid, under section 30(c) of the .
It is, however, not necessary for the present purpose to decide this question.
It is sufficient to emphasise that an award affecting immovable property of the value of more than Rs. 100 cannot be looked into by the Court for pronouncement upon the award on the application under section 14 of the Arbi tration Act unless the award is registered.
section 14 enjoins that when an award of an arbitrator has been filed, the Court should give notice to the parties and thereupon the court shall pronounce judgment upon the award and made it a rule of the court.
But in order to do so, the court must be competent to look into the award.
section 49 of the Act enjoins that the award cannot be received as evidence of any trans action affecting immovable property or confering power to adopt, unless it is registered.
In that view of the matter, no judgment upon the award could have been pronounced upon the unregistered award.
Mr. Ashri, however, relied on a decision of the learned Single Judge of the Calcutta High Court, in which one of us (Sabyasachi Mukharji, J) had occasion to deal with the question whether an application for determination of the validity of an award could be entertained after the lapse of 30 days time.
It was held that an application challenging an award on the ground of non registration must be by procedure under section 30 of the and the party not apply ing with in the time under section 30 was estopped from agitating the 264 question subsequently.
The relevant case law was discussed and it was held that where an adjudication was necessary as to whether registration was required or not and it was emphasised that in the instant case also an adjudication was necessary because the High Court had held that registration was not necessary, while the appellant is contending and as we are inclined to agree that registration was necessary, in such a case, it must be done by means of an application within 30 days.
It is true that where an application is made for determining the validity and effect of an award in such a case, as was the case in the application made to the Calcutta High Court for determination and admissibility of the award and for a declaration that the award was void, it is necessary that the application should be made within 30 days.
But that problem does not arise here because here under section 14 of the , a judgment is sought in favour of the award.
In order to pronounce that judgment, the award has to be looked into.
The court cannot do it when the award affects the immovable property or purports to affect the immovable property of the value of more than Rs. 100 and it is not registered and as such it cannot be looked into.
In that view of the matter, we are of the opinion that the High Court was in error in the order under appeal.
It may be appropriate in this connection to refer to the observations of Justice Vivian Bose, in the Gangaprashad vs Mt. Banaspati, AIR 1933 Nagpur 132.
In that decision Justice Bose speaking for the Nagpur High Court observed at page 134 of the report, that it was argued before him that even though it was not possible for the plaintiff to challenge the fact that there was a reference to arbitration, and an award, and that there was no misconduct, etc., he could still question its validity on the ground that it had not been registered.
But this question was barred by the rule of constructive res judicata.
He referred to Mulla that if an application was made to the court to file an unregistered award which requires registration, then the court must reject it.
It followed that this was one of the grounds which could be urged against the filing of an award.
If it was not urged, and the award was filed, then that question was as much barred in a subsequent suit as the others.
In this case, however, this point that the award is not registered and as such it could not be filed, though not taken subsequently in argument before the trial Judge, it was urged before the First Appellate Court and it was held in favour of the present respondent.
This is an appeal by special leave in subsequent decision from that decision where the filing of the award is being challenged on the ground that it 265 is unregistered.
Therefore, in our opinion, though it may not be possible to take the point that the award is bad because it is unregistered as such it could not be taken into consideration in a proceeding under section 30 or 33 of the , but can be taken in the proceedings under section 14 of the when the award is sought to be filed in the court and the court is called upon to pass a decree in accordance with the award.
As the court, as mentioned hereinbefore, could not look into the award, there is no question of the court passing a decree in accordance with the award and that point can also be taken when the award is sought to be enforced as the rule of the court.
Mr. Ashri, however, contended that the award had been subsequently registered and unless the registration was set aside the award did not suffer from any defect.
We have, however, to examine whether the High Court was fight in accepting the award and in pronouncing the judgment in terms of the award.
At the relevant time, the award was not regis tered.
If that is the position, then the subsequent regis tration of the award whether in confirmity with sections 23 and 25 of the Act or whether in breach or in violation of the same is not relevant.
It is not necessary in the view that we have taken to go into the question whether the appellant was right in getting this document registered in the manner it has been done by making certain representation, which was not correct, to the Sub Registrar.
Learned Counsel for the respondent drew our attention to certain observations of this court in Raj Kumar Dey and Others vs Tarapada Dey and Others, ; where registration was permitted by the Court after the lapse of four months as enjoined by section 23 of the Act.
But the facts and the circumstances and the grounds upon which registra tion was permitted, were entirely different from the present case.
In the premises, the observations made in the said decision are not relevant or germane for the present contro versy.
In the aforesaid view of the matter, the decision of the High Court cannot be sustained.
The appeal is, therefore, allowed.
The judgment and/or order of the High Court are set aside.
But in the facts and circumstances of the case, the parties will pay and bear their own costs.
R.P.D. Appeal allowed.
| Orissa Estates Abolition Act, 1951 was enacted to abolish all the rights in the land of intermediaries between the raiyats and the State of Orissa by whatever name known and for vesting the same in the State.
Section 3 authorises the State Government to declare by a notification any estate specified therein to have passed to and become vested in the same State, i.e., the intermediary concerned is divested of the notified interests and becomes entitled to compensation.
By an amendment section 3 A was included in the Act permitting the State Government to issue a single notification in respect of a class or classes of intermediaries in the whole or a part of the State.
By a further amendment in 1963 Chapter Il A was inserted in the Act making special provisions for public trusts.
Clause (e) of s.13 A described "trust estate".
provisions were made in Chapter II A for entertaining claims and determining the nature of the estates claimed to be trust estates and announcing the decision by notification.
The effect of such a determination was.
as mentioned in section 13 , to save the estate from vesting under a notification issued under section 3 or 3 A. A notification under section 3 of the Act was issued in respect of the estate of Lord Jagannath on 27 4 1963, and on the same date another notification under section 13 C., Chapter lI A followed declaring the estate as "trust estate".
The consequence was the diety was not divested of the estate.
In 1970 Chapter Il A was repealed.
By insertion of clause (oo) in section 2 in 1974 the said estate continued to be "trust estate." On 18.3.1974 a notification under section 3 A was issued declaring the estate of the diety to have vested in the State.
A writ petition was filed in the High Court challenging the validity of the said notification, which was dismissed.
PG NO 732 PG NO 733 In the appeal to this Court, on behalf of the appellant it was contended that as a result of the decision under chapter Il A declaring Lord Jagannath 's estate a "trust estate" the same must be deemed to have been excluded from the scope of the Act and this decision became final and continued to remain effective even after the repeal ot ' Chapter II A.
The right which was acquired under section 13 I cannot disappear on the repeal of Chapter Il A as the estate in question went completely out of the ambit of the Act.
The intention of the Legislature to include Lord Jagannath 's estate within the expression "trust estate" in cl.
(oo) in section 2 by the Amending Act 1974 was clearly to spare the said estate permanently from the mischief of the Act.
Dismissing the appeal, this Court, HELD: l.
There is no infirmity in the notification dated 18.3.1974 issue under.
3 A of the Act.[737El 2.
It is manifest from the language of section 13 l that it saves a "trust estate" so declared under section 13 G from the operation of a notification issued under section 3 or 3 A, but does not extend the benefit any further.
The provisions do not confer protection from the Act itself and cannot be interpreted to clothe it with a permanent immunity from being vested by a later notification issued under the Act.
[737A BI 3.
Sections 7 A, X A, 8 D and 8 E of the Act include special provisions for a trust estate and unmistakably indicate that "trust estates" are within the purview of the Act.
The benefit they receive from a declaration under section 13 (. is limited and referable only to a vesting notification issued earlier.
[737Dl
|
Appeals Nos. 1954 and 1955 of 1966.
Appeals from the judgment and decree dated May 30, 1963 the Punjab High Court in Regular First Appeal No,.
105 of 1957.
A.K. Sen and R.K. Aggarwal, for the appellant (in C.A. No. 1954 of 1966).
and respondents Nos. 5, 6, 8 and 9 (in C.A. No. 1955 of 1966).
Bishan Narain, B.P. Maheshwari and R.K. Gupta, for the appellants (in C.A. No. 1955 of 1966) and respondents Nos. 2 to 6 (in C.A. No. 1954 of 1966).
Sarjoo Prasad, Rameshwar Prasad and A.D. Mathur, for respondent No. 1 (in both the appeals).
S.M. Jain, for respondents Nos.
13(i) to 13(iv) (in C.A. No. 1954 of 1966) and respondents Nos.
12(i) to 12(iv) (in C.A. No. 1955 of 1966).
Hegde, J.
The question of law that arises for decision in these appeals by certificate is whether the daughters of a pre deceased son of a Hindu Woman are entitled to succeed to her stridhana ? The trial court answered the question in the affirmative but the High Court in appeal came to the conclusion that they are not fentitled to succeed to the estate in question.
The material facts of this case are few.
For a proper understanding of the facts of the case, it will be convenient to have 'before us the admitted pedigree of the family.
It is as follows: 492 The finding of the trial court that the suit properties are the stridhana properties of Barji was not contestect before the High Court.
In tins Court at one stage 'a feeble attempt was made on behalf of the appellants to contest that finding.
We did not permit that finding to be challenged as the same had not been challenged before the High Court.
Therefore we proceed on the basis of that finding.
Barji died in September 1950.
Her husband Patu Ram had predeceased her.
It appears that he died sometime in 1904.
Patu Ram 's father Bool Chand as well as Patu Ram 's brothers Tulsi Ram, Behari Lal and Hira Lal had predeceased Barji.
Patu Ram and Barji had a son by name Jugal Kishore wno had predeceased Patu Ram leaving behind him his widow Bindri wno died in 1931.
They had no children.
Radha Kishan, the adopted son of Patu Ram and Barji died about 20 years 'before the death of Barji leaving behind him his widow, defendant No. 6.
Radha Kishan had live children including defendants Nos. 1 to 3 through another wife.
His son Roshanlal had died a few months before the death of Barji.
His daughter Balwanti had predeceased Barji leaving behind her children defendants 4 and 5.
Tulsi Ram 's son Prahlad Rai had also predeceased Barji leaving behind his widow defendant No. 8 and son defendant No. 7.
By the time succession to the estate of Barji opened all the children of Behari Lal and Hizalal had died but some of them had children and grand children, as, seen from the pedigree.
After the death of Barji, her properties came to the possession of defendant No. 6.
Defendant No. 1 sued for the possession of those properties on the ground that she and her sisters are preferential heirs to the deceased Barji.
To that suit she did not make Amar Nath, the plaintiff in the present suit, a party.
Amar Nath 's application for being impleaded as a party in that suit was opposed by the 1 st defendant and the said application was ultimately rejected by the court.
The dispute in that suit was referred to arbitration.
The arbitrators upheld the claim of defendants Nos. 1 to 3.
Thereafter the present suit was brought.
the High Court as well as in the trial court there was a triangular contest.
The plaintiff claimed that he was exclusively entitled the suit properties, defendants Nos. 1 to 3 claimed that they are the nearest heirs to Barji; some of the other defendants contended that they succeeded to the suit properties as co tenants with the plaintiff.
In this Court all the contesting defendants sail together.
As mentioned earlier, the trial court 'accepted the claim of defendants Nos.
1 to 3 but the High Court held that the plaintiff was exclusively entitled to the suit properties, he being the nearest heir to the deceased.
That finding is contested both by defendants Nos.
1 to 3 as well as by the other contesting defendants.
is how the aforementioned two appeals came to be filed.
In arriving at its finding the High Court relied on the rules of succession found in paragraph 147 of Mulla 's Principles of Hindu 493 Law (13th Edn.).
It came to the conclusion that those rules are exhaustive.
On the basis of those rules, it ruled that defendants Nos. 1 to 3 were not entitled to succeed to the estate of Barji.
So far as the other defendants are concerned it rejected their claim on the ground that as between the plaintiff and themselves the former is a preferential heir as he is the nearest in degree to Barji.
It is the admitted case of the parties that the properties in question are not shulka and that Barji was married in one of the approved forms.
Therefore while pronouncing.
on the competing claims made in this case, we must be guided by the order of succession prescribed in paragraph 147, if the same is correct and exhaustive.
Paragraph 147 says: "Stridhana other than shulka passes in the following order: (1) unmarried daughter; (2) married daughter who is unprovided for; (3) married daughter who is provided for; (4) daughter 's daughter; (5) daughter 's son; (6) son; (7) son 's son.
If there be none of these, in other words, if the woman dies without leaving any issue, her stridhana, if she was married in an approved form, goes to her husband, and after him, to the husband 's heirs in order of their succession to him; on failure of the husband 's heirs, it goes to her blood relations in preference to the Government.
But if she was married in an unapproved form, it goes to her mother, then to her father, and then to the father 's heirs and then to.
the husband 's heirs in preference to the Government".
The legal position is stated in identical terms in Mayne 's treatise on Hindu Law (Eleventh Edn.
Paragrah 623, pages 744 to 746) as well as in the other text books on Hindu Law referred to at the time of the hearing.
At this stage it may be mentioned that the correctness of the order of succession mentioned in paragraph 147 till we come to item No. 7 (son 's son) was not challenged.
The same is well settled bY decided cases.
It is not necessary to refer to those cases.
The only contention advanced on behalf of some of the defendants is that after son 's sons come sons ' daughters.
Alternatively it was contended that the expression "son 's son" includes "son 'S daughter".
We have to see whether these contentions are well founded.
The rules relating to succession to stridhana enunciated in the text books are based on Yajnyawalcya 's text "her kinsmen take it, if she die without issue".
This statement is elaborated by Vijnyaneswara in Mitakshara.
The relevant portions thereof as transtated by H.T. Colebrooke are found in placita 8, 9, 10 and 11 in Section XI of his book "Mitacshara".
They read as follows: 494 "8.
A woman 's property has been thus described.
The author next propounds the distribution of it: 'Her kinsmen take it, if she die without issue '.
If a woman die 'without issue ' that is leaving no progeny; in other Words, having no daughter nor daughter 's daughter nor daughter 's son, nor son, nor son 's son; the woman 's property, as above described, shall be taken by her kinsmen; namely her husband 'and the rest, as will be (forthwith) explained.
The kinsmen have been declared generally to be competent to succeed to a woman 's property.
The author now distinguishes differec at heirs according to the diversity of the marriage ceremonies.
The property of a childless woman, married in the form denominated Brahma, or in any of the four (unblamed modes of marriage), goes to her husband: but, if she leave progeny, it will go to her (daughter 's) daughters: and, in other forms of marriage (as the Asura & c.), it goes to her father (and mother, on failure of her own issue).
Of a woman dying without issue as before stated, and who, had become a wife by any of the four modes of marriage denominated Brahma, Daiva, Arsha and Prajapatya, the (whole) property, as before described, belongs in the first place to her husband.
On failure of him, it goes to his nearest kinsmen (sapindas) allied by funeral oblations.
But, in the other forms of marriage called Asura, Gandharba, Racshasa and Paisacha; the property of 'a childless woman goes to her parents, that is, to her father and mother.
The succession devolves first (and the reason has been be,fore explained) on the mother, who is virtually( exhibited (first) in the elliptical pitrigami implying 'goes (gachhati) to both parents (pitarau;), that is to the mo ther and to the father '.
On failure of them, their next of kin take the succession.
" These passages have received interpretation at the hands of the Judicial Committee as well as the High Courts in India and the law is now settled as to the mode of succession to stridhana under Mitakshara until we reach son 's son.
The controversy now is as to who should succeed to such an estate if none of the heirs mentioned in items Nos. 1 to.
7 in paragraph 147 of Mullas Hindu Law is in existence at the time of the death of the woman concerned.
495 Mr. A.K. Sen, learned Counsel for some of the defendants contested the correctness of Colebrooke 's translation in certain respects.
He wanted us to examine the original text to find out whether the translation found in placita 9 is correct ? The parties did not place before us either an admitted translation of the original text or even an official translation.
Colebrooke is a distinguished oriental scholar.
The Judicial Committee as well as the various High Courts in this country have relied on his translation of Mitakshara in dealing with the question of inheritance.
Jogendra Nath Bhattacharya in his commentary on Hindu Law( 2nd Edn ) deals with the order of succession under Mitakshara to stridhana property in Chapter VI of that book.
His translation of the relevant commentaries accords with those made by Colebrooke.
To the same effect is the opinion expressed by Justice Chandavarkar in Bhimacharya Bin Venkappacharya vs Ramcharya Bin Bhimacharya(1).
Hence we are unable to agree with Mr. Sen that Colebrooke 's translation does not bring out accurately the meaning of the relevant passages in Mitakshara.
Colebrooke in his book 'Mitakshara ' published in 1869 sets out the order of succession to a woman 's stridhana properties at page 15 8 thus: Maiden daughter . 1 Unendowed married daughter . 2 Endowed married daughter . 3 Daughter 's daughter . 4 Daughter 's son . 5 Son . 6 Grandson . 7 Husband . 8 If the contention of defendants is correct then son 's daughter and not husband should have come after the grandson.
But that is not the case.
Mr. Bishan Narain, learned Counsel for defendants Nos. 1 to 3 contended that the list given in Mitakshra is only illustrative and not exhaustive.
He urged that Yajnyawalcya had stated that "a woman 's property would devolve on her kinsmen if she died without issue" which means that it would devolve on her progeny which expression includes son 's daughter as well.
In this connection he also relied on Vijnyaneswara 's commentary stating that the expression 'without issue ' found in Yajnyawalcya text means "leaving no progeny".
On the basis of these statements he contended that even according to Vijnyaneswara, the deceased woman 's progeny would take her stridhana in preference to her kinsmen including her husband.
On the basis of this premise he proceeded to argue that the other words used in placita 9 viz.: (1)I.L.R 33 Born.
452 496 "having no daughter nor daughter 's daughter nor daughter 's son nor son nor son 's son" should be understood as merely being illustrations of the word "progeny".
This contention is opposed to the commentaries by Narada, Gautama and the later commentators.
More than that it runs counter to the decisions rendered by the Judicial Committee and the various High Courts during the last over a century.
It is now well settled that stridhana of a Hindu woman governed by Mitakshra passes in the order mentioned in Mitakshra and the children of the deceased woman do not take the same as a body either jointly or as tenants in common.
Only the heirs belonging to a class take the properties as tenants in common.
Mr. Bishan Narain next contended that under Mitakshra propinquity is the test of inheritance.
Therefore there is no reason why the deceased woman 's husband 's brother 's son should take the properties in preference to her son 's daughters.
We do not think that in the matter of succession to stridhana propinquity was considered by the law givers as the sole or even the principal test, otherwise there is no justification for a daughter 's daughter or a daughter 's son to succeed to the estate of a woman in preference to her son.
It is true that it is not easy to find out the reason behind the rules relating to succession to stridhana.
But that is equally true of many other branches of our family laws.
These contradictions are inevitable in society religious matters particularly when our social laws were controlled by our religious beliefs and our law givers were our religious preceptorS.
It is for the legislature to step in 'and bring about harmony between the society and the laws governing it.
That is why our Parliament enacted several statutes in 1955 to amend the Hindu Law in various respects.
We are unable to accept the contention of Mr. Bishan Narain that the expression son 's son includes son 's daughter as according to the rules of interpretation the masculine includes the feminine.
That rule of interpretation is inapplicable in the present case as daughter 's daughter succeeds to the stridhana in preference to daughter 's son.
The order of succession prescribed clearly rules out the application of that rule of interpretation.
Mr. Sen in support of his contention that on a true interpretation of the relevant passages in 'Mitakshra ', defendants Nos. 1 to. 3 are preferential heirs to deceased Barji, relied on certain passages in some of the decided cases.
First he referred to the decision of the Patna High Court in Kumar Raghava Surendra Sahi vs Babui Lachmi Kuer(1).
Therein the dispute related to the succession.
to the properties left by a maiden 'and not by a married (1) Pat.
Sqo (2) L.R. 33 I.A. 176.
497 woman.
The rules relating to the succession to the stridhana of a deceased maiden are wholly different from those relating to succession to the stridhana of a married woman.
Therefore the observations made in regard to those rules have no relevance for our present purpose.
He next invited our attention to certain passages in the decision of the Judicial Committee in Bali Kesserbai vs Hunsraj Morarji and anr.(1).
Therein the dispute was between Bai Kesserbai the surviving co widow of the deceased Bachubai 's husband Koreji Haridass, Hunsraj Morarji the separated nephew of Koreji, being the son of his eldest brother, who predeceased Bachubai and Bai Monghibai, the widow of 'a younger brother of Koreji named Ranchordass Haridass.
The question for consideration by the Judicial Committee was as to the true scope of the latter part of the placing 9 in Colebrooke 's Mitakshara which says "if a woman die without issue, that is, leaving no progeny . the woman 's property . . shall be taken by her kinsmen namely her husband and the rest as will be forthwith explained".
Their Lordships observed that there can be no reasonable doubt that according to Mitakshara definition of sapinda, husband and wife are sapindas to each other and the co widow of the husband of the deceased was the nearest sapinda of the deceased woman 's husband and hence entitled to succeed to the estate in question.
This decision again does not bear on the point under consideration.
Lastly Mr. Sen contended that in view of the Hindu Woman 's Rights to Property Act (XVIII of 1937), it must be held that defendants 1 to 3 are nearer heirs to the deceased than the plaintiff.
This contention was negatived by the High Court on the basis of the rule laid down 'by this Court in Annagouda Nathgouda Patil vs Court of Wards and anr.
(2) wherein this Court dealing with Act 11 of 1929 observed: "The question is whether the provisions of this Act can at all be invoked to determine the heirs of a Hindu female in respect of her stridhan property.
The object of the Act as stated in the preamble is to alter the order in which certain heirs of a Hindu male dying intestate are entitled to succeed to his estate; and section 1 (2) expressly lays down that 'the Act applies only to persons who but for the passing of this Act would have been subject to the Law of Mitakshara in respect of the provisions herein enacted, and it applies to such persons in respect only of the property of males not held in coparcenary and not disposed of by will. ' Thus the scope of the Act is limited.
It governs succession only to the separate property of a Hindu male who dies intestate.
It does not alter the law as regards the (2) ; 498 devolution of any other kind of property owned by a Hindu male and does not purport to regulate succession to the property of a Hindu female at all.
It is to be noted that the Act ' does not make these four relations statutory heirs under the Mitakshara Law under all circumstances and for 'all purposes; it makes them heirs only when the proportion is a male and the property in respect to which it is sought to be applied is his separate property.
" Similar would be the position under the Hindu Woman 's Right to Property Act, 1937.
Section 3(1) of that Act which provides for the devolution of the property reads thus: "When a Hindu governed by the Dayabhaga School of Hindu Law dies intestate leaving any property and when a Hindu governed by any other school of Hindu law or by customary law dies intestate leaving separate property his widow or if there is more than one widow all his widows together shall, subject to the provisions of sub section (3) be entitled i,n respect of property in respect of which he dies intestate to the same share as a son . " From this provision it is clear that Hindu Women 's Right to Property Act, 1937 applies only to the separate property left by a Hindu male.
It does not apply either to the coparcenary property or to the property of a Hindu female.
For the reasons mentioned above these appeals fail and they are dismissed with costs advocates ' fee one set.
V.P.S. Appeals dismissed.
| By section 7(2) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, "the District Magistrate may require a landlord to let or not let to any person any accommodation which is or has fallen vacant" and section 16 of the Act provides that "no order made under this Act by the State Government or the District Magistrate shall be called in question in any court.
" The first appellant applied for an order in ejectment of the first respondent on the plea that he had committed default in paying rent.
The District Magistrate held that the respondent was not in occupation of the shop, declared the shop vacant and allotted it to another person.
The respondent brought an action in the civil court for a declaration that he was an allottee of the shop and was in possession in that capacity.
The trial court held that the appellant never vacated the shop, nor was his tenancy terminated, and was therefore entitled to remain in occupation of the same.
An appeal to the District Court and a second appeal to the High Court were unsuccessful.
In appeal to this Court, the appellants contended that the suit filed by the respondent was not maintainable, for the Act set up a complete machinery for determining after enquiry whether any premises governed by the Act had fallen vacant.
and that by express enactment in section 16, the order of the District Magistrate was declared final.
Rejecting the contention.
HELD: The Legislature while investing the District Magistrate with power to allot the premises to another person on the existence of a vacancy has not made his determination of the preliminary state of facts conclusive.
There is nothing in section 7 or section 7A which confers jurisdiction upon the District Magistrate to conclusively determine the facts on the existence of which his jurisdiction arises.
Whether there is a vacancy is a jurisdictional fact which could not be decided by him finally.
By reaching an erroneous decision, he cannot clothe himself with jurisdiction which he does not posses 'section It is only when the order is with jurisdiction that the order is not liable to be challenged in a civil court by virtue of section 16 of the.
[368 H 369 C] Reg vs Commissioner of Income tax, , and Ebrahim Aboobakar & Anr.
vs Custodian General of Evacuee Property, ; , referred to.
|
Civil Appeal No. 626 of 1975 etc.
From the Judgment and Order dated 28.7.
1972 of the Calcutta High Court in Civil Rule No. 2029 of 1967.
P.K. Mukherjee.
D.N. Mukherjee, N.R. Choudhary.
Ranjan Mukherjee.
Somnath Mukherjee.
for the Appellants.
Sukumar Ghosh.
D.P. Mukherjee and G.S. Chatterjee.
for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
All these cases involve a common point which has been decided by a Full Bench of the Calcutta High Court reported as Madan Mohan Ghosh vs Shishu Bala Atta, AIR 1972 Cal.
Civil Appeal No. 626/75 is a direct appeal from the judgment of the Full Bench in one of the batch of cases dealt with therein.
In the other cases, the High Court has decided the matter by following the Full Bench decision and that is the subject matter of appeal before this Court.
Basically, the question is whether the right of pre emption conferred on co sharers under the Bengal Tenancy Act, 1885 (hereinafter referred to as 'the Tenancy Act '), is available to the holders after their interests in the holding have vested in the Government under the West Bengal Estates Acquisition Act, 1953 (hereinafter referred to as 'the 1953 Act ').
This question has been answered by the Full Bench (Coram: A.K. Mukherjea, Sabyasachi Mukharji and M.M. Dutt, JJ.) in the negative and it is the correctness of this conclusion that is assailed in these proceedings.
To provide a factual background it may be sufficient to set out the brief facts in C.A. No. 626/75.
The respondent, Smt.
Gangamoni Mondal, purchased, on 29.
1963, the suit property being land measuring about 15 acres.
She excavated a portion of the land, filled up other portions of it, constructed a small structure thereon and started living there from 1964.
About three years and five months after her purchase, Ardhendu Bhusan Halder, the predecessor in inter est of the appellants, made an application for pre emption under section 26 F of the Tenancy Act.
His case was that he was a Co sharer Of the holding which comprised the land purchased by the respondent.
The holding was previously a Raiyati Mokarari interest and it had vested in the State under the provisions of the 1953 Act.
The case of the re spon 530 dent was that.
though the predecessor in interest of the appellant and her vendor were the joint holders of the property in question.
the right of pre emption available to the co sharer had ceased with the coming into force of the 1953 Act.
The pre emption.
application was allowed by the learned Munsif and his order was confirmed by the learned Additional District Judge.
The respondent moved the High Court in revision.
The matter came up for hearing before the two learned Judges of the Calcutta High Court who referred the matter to the Full Bench.
The question.
as already stated.
was answered by the Full Bench in the negative with the result that the application for preemption stood dis missed.
Hence the appeal before us.
The other appeals before us also involve the same point but there are some difference.
We shall refer to these aspects later, to the extent necessary.
The question raised lies within a very narrow compass.
The relevant statutory provisions may first be set out.
As already mentioned, the Tenancy Act provides, in section 26 F. that except in the case of a transfer to a co sharer in the tenancy whose existing interest has accrued otherwise than by purchase, one or more cosharer tenants of the hold ing, a portion or share of which is transferred.
may apply to the Court for the said portion or share to be transferred to himself of themselves.
In other words, the section con ferred, On a co sharer tenant of an occupancy holding, a right to compel another co sharer tenant to sell his share in the holding to him instead of to a stranger.
The term "co sharer" envisages that the holding must be under the ownership of more than one person.
The holding must be an OCCupanCy holding: that is.
it must be the holding of raiy ats having occupancy rights.
So long as a division of the holding does not take place in accordance with section 88 of the Tenancy Act.
the holding remains a joint holding and each co sharer will be entitled to pre empt in case of transfer of a share or portion of the holding by a co sharer to a stranger.
The 1953 Act came into force on February 12, 1954.
Sub section (1) of section 4 of the Act provides that the State Government may from time to time by notification declare that with effect from the dale mentioned in the notifica tion.
all estates and the rights of every intermediary in each such estate situate in any district or part of a dis trict specified in the notification shall vest in the State free from all incumbrances.
Pursuant to section 4(1), a notification was published, which prescribed the date of vesting as 15th April.
The term 531 "intermediary" was defined in the Act to mean "a proprietor, tenureholder.
under tenure holder or any other intermediary above a raiyat or a non agricultural tenant ' '.
Thus a raiyat was not an intermediary.
However, Chapter VI of the Act contains provisions for acquisition of interests of raiyats and under raiyats.
Under section 49, the provisions of Chapter VI were to come into force on such date and in such district or part of a district as the State Government may, by notification in the Official gazette, appoint.
The notification under section 49 was published on 9th April, 1956, by which Chapter VI was brought into force in all the districts of West Bengal with effect from April 10, 1956.
The effect of such a notification was that the provisions of the earlier Chapters of the Act became operative mutatis mundandis "to raiyats and under raiyats as if such raiyats and under raiyats were intermediaries and the land held by them were estates and a person holding under a raiyat or an under raiyat were a raiyat for the purpose of clauses (c) and (d) of section 5." Notifications were issued under section 4 by the State Government as a result of which the interests of raiyats and under raiyats vested in the State with effect from April 14, 1956.
As already mentioned, the effect of 1953 Act was to vest the rights of intermediaries (an expression subsequently extended to cover raiyats and under raiyats) in the State Government.
However, section 6 confers certain rights on the intermediaries to retain certain lands.
The relevant por tions of section 6 can be extracted for purpose of conven ient reference.
Right of intermediary to retain certain lands.
(1) Notwithstanding anything contained in sections 4 and 5, an intermediary shall, except in the cases mentioned in the proviso to sub section (2) but subject to the other provi sions of that sub section, be entitled to retain with effect from the date of vesting (a) land comprised in homesteads; (b) land comprised in or appertaining to buildings and structures, owned by the intermediary or by any person, not being a tenant, holding under him by leave or licence.
XXX XXX XXX (c) non agricultural land in his khas possession, including land held under him by any person not being a tenant, by 532 leave or licence, not exceeding fifteen acres in area, and excluding any land retained under clause (a); Provided that the total area of land retained by an interme diary under clauses (a) and (c) shall not exceed twenty acres, as may be chosen by him: Provided further that if the land retained by an intermedi ary under clause (c) or any part thereof is not utilised for a period of five consecutive years from the date of vesting, for a gainful or productive purpose, the land or the part thereof may be resumed by the State Government subject to payment of compensation determined in accordance with the principles laid down in section 23 and 24 of the Land Acqui sition Act, 1894 (Act I of 1894); (d) agricultural land in his khas possession not exceeding twenty five acres in area.
as may be chosen by him; Provided that in such portions of the district of Darjeeling as may be declared by notification by the State Government to be hilly portions, an intermediary shall be entitled to retain all agricultural land in his khas possession, or any part thereof as may be chosen by him." In other words.
broadly speaking, the intermediary was allowed to retain agricultural land upto the extent of twenty five acres and nonagricultural land to the extent of fifteen acres, leaving out the special provisions in respect of homesteads, lands on which buildings are put up and lands in the hilly areas of Darjeeling.
Section 52 while applying these provisions to raiyats and under raiyats, states: "Provided that where raiyat or an under raiyat retains.
under section 6 read with this section.
any land comprised in a holding, then notwithstanding anything to the contrary contained in sub section (2) of section 6, he shall pay : (a) in cases where he was paying rent for the land comprised in the holding and held by him immediately before the date of vesting (hereafter in this proviso referred to as the holding lands), (i) if he retains all the holding lands, the same rent as he 533 was paying therefore immediately before the date of vesting, and (ii) if the land retained by him forms part of the holding lands, such rent as bears the same proportion to the rent which he was paying for the holding lands immediately before the date of vesting as the area of the land retained by him bears to the area of all the holding lands; (b) in cases where he was liable to pay rent but was not paying any rent for the holding lands immediately before the date of vesting on the ground that the rent payable by him therefore was not assessed, such rent as may be assessed, mutatis mutandis, in accordance with the provisions of section 42; (c) in cases where he was liable to pay rent wholly in kind or partly in kind and partly in cash, then notwithstanding anything contained in clause (c) of section 5, such rent as may be assessed in accordance with the provisions of section 40, and (d) in cases where he was liable immediately before the date of vesting to pay for the holding lands a variable cash rent periodically assessed, such rent as may be assessed, mutatis mutandis in accordance with the provisions of section 42.
" By a notification dated 28.5.
1984, the Government of West Bengal framed rules called the West Bengal Estates Acquisition Rules.
1954 (hereinafter referred to as 'the rules ').
Rule 4 originally provided that: "every intermediary who retains possession of any land by virtue of the provisions of sub section (1) of section 6, shall, subject to the provisions of the Act, be deemed to hold such land from the date of vesting (a) If it is agricultural land, on the same terms and condi tions as an occupancy raiyat under the Bengal Tenancy Act, 1885; (b) If it is non agricultural land on the same terms and 534 conditions as a tenant under the West Bengal Non agricultur al Tenancy Act, 1949, holding non agricultural land for not less than 12 years without any lease in writing.
" The following rule 4 was substituted for the above rule by a notification dated 7th September, 1962: "4.
Any land retained by an intermediary under the provi sions of sub section (1) of section 6 shall, subject to the provisions of the Act be held by him from the date of vest ing on the terms and conditions specified below: XXX XXX XXX (3) if the land held by the intermediary be agricultural land, then (1) he shall hold it, mutatis mutandis, on the terms and conditions mentioned in sections 23, 23A, clause (a) of section 25, sections 26 to 26G . " The rule was again amended by a notification dated August 1, 1964 by which, for the words and figures "Sections 26 to 26G, 52 to 55", the words "sections 26, 26B, 26C, 26G, sections 52 to 55" were substituted.
In other words, the original rule 4 merely provided that in the case of agricul tural land retained by the intermediary, he shall hold it on the same terms and conditions as an occupancy raiyat under the Tenancy Act leaving it undefined as to whether these terms and conditions would also include the right of pre emption available under the Act.
The amendment of 1962 specifically included the right of preemption available under section 26 F but the reference to section 26 F was omitted by the amendment of 1964.
The provisions of these various enactments and the availability of the right of pre emption to the former joint tenants of the holding came up for consideration before a number of Benches of the Calcutta High Court.
It is not necessary to refer to the details of these decisions inas much as the matter has been considered at length by the Full Bench.
The arguments addressed in support of the survival of the right of pre emption despite these legislative changes were broadly these: (i) The 1953 Act, after Chapter VI came into force only vested the holding of the raiyats and under raiyat in the State.
The word 535 'intermediary ' in section 6 ' includes the plural 'intermedi aries '.
Hence, the previous co sharers continue to be co sharers; only instead of being tenants under an intermedi ary, they become tenants under the State.
The vesting is of the holding as a whole; its integrity is not impaired.
(ii) The Act, the rules and the forms prescribed thereunder provide for the partition, demarcation, separate determina tion of the rents for the lands so partitioned and demarcat ed and consequent modification of the record of rights; until all this is done, the holding remains single and the erstwhile co sharers continue to be such.
(iii) Rule 4(3), as it originally stood, preserved the rights of tenants to co sharers.
The 1962 amendment made this clear.
The 1964 deletion of the reference to section 26 F was not with a view to take away the right of pre emption under section 26 F.
It was only consequential to the enactment of the 1955 Act, section 8 of which provided for a pre emption right corresponding to section 26 F of the Tenancy Act.
The Full Bench, however, repelled the contentions and held that the right of pre emption did not survive.
Its reasons may be summarised thus: (1) By virtue of section 52, read with section 6, each raiyat becomes a direct tenant under the State with effect from the date of vesting in respect of the land which he is entitled to retain.
The proviso to the section provides for the apportionment of the rent among the various holders making it clear that the land retained by a raiyat of a holding becomes the subject matter of a separate tenancy.
It was, therefore, no longer possible to call them co sharers.
Each became entitled to a direct tenancy in respect of a share of the previous holding and, in regard to his inter est, the previous holders had no manner of right or title.
One raiyat could not claim to have any interest in the land comprising the holding which the others are entitled to retain or have retained.
Before vesting, each of the raiyats of a holding had an interest or share in every part of the land comprised in the holding and each was a co sharer of the other, but this is not the position after the vesting when each of the raiyats of the holding becomes a direct tenant under the State in respect of the land of the holding which he is entitled to retain under the provisions of sub section ( 1 ) of section 6. 536 (2) The expression "an intermediary" in sub section (1), (2) and (5) of section 6 cannot be read as including the plural.
If the word "intermediaries" was substituted in the place of "an intermediary" in sub section (1) of section 6 the result will be that all the intermediaries would be jointly entitled to retain only 25 acres of agricultural land in his khas possession whereas clause (d) envisages that each intermediary is entitled to retain 25 acres of agricultural land in his khas possession and to exercise his choice of retention of land within such time and in such manner as may be prescribed.
The forms prescribed under the schedule in this connection and the foot notes thereto make it clear beyond all doubt that each intermediary separately, and not the intermediaries jointly, could exercise their choice of retention.
This was clear from clauses (iii), (iv), (v) and (vi) of the foot notes appended to the form.
This Was also the only reasonable interpretation for differ ent co sharers of a holding may have other lands in their possession and unless the right of choice and the computa tion of 25 acres is separately read into the provisions it would be impossible to work the same.
(3) While it is true that on the vesting no partition of any holding is effected and the various records are also not immediately corrected, the definition of 'holding ' in the Tenancy Act clearly shows that an undivided share in land can be the subject matter of a separate tenancy and can constitute a holding of a raiyat or a under raiyat.
There fore, though the land remains undivided till it is demarcat ed by metes and bounds there is nothing wrong in saying that the undivided share for a raiyat becomes the subject matter of a separate tenancy directly under the State as from the date of vesting.
Merely because the finally published re cord of rights has not been drawn up under section 47 read with rule 31A, it cannot be said that the holding continues to be a joint holding or that the raiyats continue to be the co sharers of each other.
(4) It is true that the expression "terms and condi tions" in rule 4 includes the right of pre emption under section 26 F and section 26 F has also been specifically included within the meaning of Rule 4(3) as amended in 1962.
However, the exercise of a right of pre emption under sec tion 26 F is conditional on the person claiming to exercise the right being a co sharer of the holding a portion or share of which has been transferred to outsider.
In view of the conclusion that the individual co sharers of the holding cease to be co sharers after the vesting, there will be no scope for any application under section 26 F. This, however, does not mean that rule 4(3) as amended in section 537 26 F is redundant.
It may be that on the date of vesting there may be no co sharer in a raiyati holding.
But, where after the date of vesting, the individual holder dies and a number of co sharers come into being by devolution of his interest, the provisions of section 26 F read with rule 4(3) will come into play.
Similarly, if subsequent to the date of vesting, one of the erstwhile co sharers transfers a portion of his holding to another, that person becomes a co sharer of the holding along with his vendor.
If one of these two co sharers transfers a portion of the holding to another person, section 26 F will apply.
Thus section 26 F has a part to play even in the new scheme of things and is not rendered otiose or redundant by the findings given earlier.
(5) It is true that sub rule (3) of rule 4 was further amended on 1st August, 1964, deleting the reference to section 26 F in that sub rule.
This deletion, however, did not mean that the right of preemption has been taken away.
This amendment took place because the West Bengal Land Reforms Act, 1955, by section 8 created a right of pre emption similar to the one conferred by section 26 F.
This section came into force on 22nd October, 1963.
Initially there were some differences between section 26 F and section 8 of the West Bengal Land Reforms Act in that, under the former, the application had to be made to the Court while, under the later, it had to be made to the Revenue Officer.
After the enforcement of section 8 it became wholly unneces sary to allow section 26 F to remain in sub rule (3) of rule 4.
It took some time for this amendment to be given effect to.
Section 8 will apply regarding transfers taking place after the enforcement of section 8.
We have heard arguments on behalf of several counsel in respect of the points at issue in these appeals.
The Full Bench judgment of the Calcutta High Court has discussed all the various aspects and it has come to the conclusion for the reasons summarised above, and elaborated by it, that the right of pre emption could not survive the 1953 Act.
Counsel have been unable to persuade us to take a view different from that of the Full Bench.
We, therefore, express complete concurrence with the views of the Full Bench.
We would also like to point out that the decision of the Full Bench has been in force in the State of West Bengal since 1972.
Interests in land must have been transferred during the past eighteen years on the basis that the princi ples of the Full Bench decision would apply.
So, even if there were any force in the contention urged on behalf of the appellants and as we have already pointed out, no 538 grounds have been urged before us strong enough to persuade us to differ from the Full Bench we would have been very reluctant to alter the legal position as settled for a very long time in the State of West Bengal by the decision of the High Court.
By this observation we should not be understood to have expressed any reservations on our part in accepting the Full Bench decision as correct.
On the other hand, having considered the pros and cons urged before us, which had also been urged before the High Court, we are in full agreement with the Full Bench decision.
We, therefore, affirm the judgment of the Full Bench.
In the light of the above discussion, we may now consid er the several appeals before us: (1) C.A. 626/75 is a direct appeal from the Full Bench judgment.
It stands dismissed.
Sri Ghosh, for the respondents, also urged that the application for pre emption in the present case was made section 26 F of the Tenancy Act which had ceased to be effec tive after 1964 amendment and hence should have been reject ed.
He also contended that section 26 F could be availed of only in respect of an occupancy raiyat whereas the interest transferred in the present case was a "mokarari" interest.
These points do not appear to have been raised in the High Court.
Anyhow, it is unnecessary to go into these conten tions as we have held, even otherwise, that the application for pre emption is not maintainable.
(2) C.A. 291 of 1976 A11 the Courts have concurrently applied the Full Bench decision.
The appeal, therefore, fails and is dismissed.
(3) C.A. 2449/80 1n this matter, the land in question is nonagricultural land.
The High Court held that the Full Bench decision relates only to agricultural lands and that the interests of non agricultural tenants remains unaffected by the 1955 Act.
This point requires a little consideration.
So far as non agricultural tenancies are concerned, a right of pre emption among co sharers was conferred by section 24 of the West Bengal Non agricultural Tenancy Act, 1949.
We have earlier seen that the 1953 Act originally provided for vesting only of the interest of 'intermediaries ' in the State and the definition of 'intermediary ' took in only a holder above 'a raiyat or under raiyats ' in respect of agricultural land and above 'a non agricultural tenant '.
The rights of 539 'raiyats and under raiyats ' were brought within the purview of the vesting provisions when Chapter VI of the 1953 Act was brought into force; but there is no statutory provision that brings non agricultural tenants within the scope of the vesting provisions.
This has been pointed out by this Court in Shibasankar vs Prabartak Sangha, at p. 563 which has been followed in a number of decisions of the Calcutta High Court and applied, after the Full Bench deci sion, in Sastidas Mullick vs J.L.R.O. Parrackpore Circle and Ors., at p. 701 by a Bench comprising of Sabyasachi Mukharji and M.M Dutt.
The High Court, in our view, was right in making the distinction and upholding the right of pre emption in this case.
The appeal.
therefore.
fails and is dismissed.
(4) C.A. 825/81 This is a case for claim of pre emption under section 8 of the 1955 Act.
It is necessary to set out a few facts.
The lands in R.S. Khatian No. 331 belonged to four brothers Jadhunath, Madhusudan.
Siddeshwar and Maniklal.
Later, Madhusudhan died and his interest devolved on his father Ashutosh and his brother Mukti.
Siborani purchased plot Nos.
1947, 2199 and 363 in this khatian by a registered deed dated 28/5/68 from the holders.
The second petitioner purchased plot No. 2169 in the khatian on 19.5.69 from the holders.
The respondent Shravani Ghosh is a stranger who purchased the disputed property from Jadhunath, Siddeswar and Maniklal by a deed dated 4.5.71.
Subsequently, a deed dated 21.6.71 was executed in her favour by Maniklal and Ashutosh purportedly to rectify a defect in the earlier deed.
Thereupon, the purchasers under the earlier deeds, Siborani and another claimed a right of pre emption under section 8 of the 1955 Act.
The application was allowed by the Munsif and the District Judge but disallowed, on revision, by the High Court.
Learned counsel for the appellant contended that the present case 'fell within the exceptions outlined in the Full Bench case, under which the right of pre emption sur vives.
He relied, in support of this contention, on sub paras (2) and (3) in the following passage from the Full Bench judgment, where the High Court summed up its conclu sions: "28.
For the reasons aforesaid, we hold as follows (1) After the enforcement of Chapter VI of the Act and the vesting of interest of raiyats and under raiyats on and from April 14, 1956 corresponding to Baisakh 1, 1363 B.S. the co sharer raiyats of a holding ceased to be coshar ers and each raiyat of the holding became a direct 540 tenant under the State in respect of the land of that hold ing which he is entitled to retain under sub section (1) of section 6.
As the co sharer raiyats ceased to be co sharers on and from the date of vesting the question of exercise of the right of pre emption under section 26 F cannot arise, for, the condition precedent to the exercise of the right of pre emption under Section 26 F being that the person exercising that right must be a co sharer of the person making the transfer.
(2) When a raiyat having a separate holding or tenancy created by virtue of sub section (2) of section 6 relating to the land retained by him under sub section(1) of section 6 dies leaving more than one heir, such heirs will become co sharers of such holding and will be entitled to the right of preemption under Section 26 F. Similarly, when the raiyat of such a holding transfers a portion of the holding to another person, that person will become a co sharer of the raiyat and the right of pre emption will also be available in such a case.
(3) A transfer made by a co sharer raiyat as contemplated by CI.
(2) above before the enforcement of Section 8 of the West Bengal Land Reforms Act, 1955, may be pre empted by another co sharer in the tenancy in accordance with Section 26 F, but a transfer made after the enforcement of Section 8, the right of pre emption by a co sharer can only be exercised in the manner laid down in Section 8 of the West Bengal Land Reforms Act.
(4) The under raiyats have been elevated to the status of raiyats on the enforcement of Chapter VI.
There is no dif ference between the position of raiyats and that of under raiyats and our decision on the question as to the effect of the enforcement of Chapter VI on the right of pre emption of raiyats will also apply to under raiyats.
(5) The decisions in 68 Cal.
W.N. 574 (A.I.R. 1964 Cal.
460) and Jyotish Chandra Das vs Dhananiay Bag., [1964] 68 Cal.
W.N. 1055 in so far as they proceeded on the footing that the raiyats of a holding continued to be co sharers even after vesting, are erroneous but they have correctly inter preted the expression 'terms and conditions ' in Rule 4." 541 Learned counsel for the respondents, on the other hand, contended that, while the first instance given in sub para (2) above by the Full Bench may be correct, the second instance and its follow up in subpara (3) are not correct.
He pointed out that once each co sharer in the earlier holding is held to become an independent tenant directly under the State, any alienee from him acquires his interest pro tanto and cannot become his co sharer.
His submission was that the Full Bench has erred in considering them to be co sharers.
It is not necessary to express any views on this contention as, in our opinion, the above observations are not applicable on the facts found in the present case.
Here the "co owners" of the former R.S. Khatian 313 have sold identifiable plots under different sale deeds to different parties.
In this state of affairs, the transferees under the 1968 and 1969 deeds have acquired title to identifiable plots and are not co sharers in the original transferors.
There is no question of their claiming pre emption as against the transferees under the 1971 documents merely because all the plots at one time formed part of one inte gral holding.
We are, therefore, of opinion that the High Court was correct in holding that no right of pre emption could be exercised by the petitioners.
This appeal, there fore, fails and stands dismissed.
(5) C.A. 2231/82 This appeal has to be dismissed in view of our order upholding the Full Bench decision.
We direct accordingly.
(6) S.L.P. (Civil) 1037/74 1n this case, the High Court, following the Full Bench decision, held that the petitioner was not entitled to claim pre emption.
The peti tion has, therefore, to be dismissed.
We order accordingly.
(7) S.L.P. (Civil) 1577/74 The High Court disposed of this matter by following the Full Bench decision.
The deci sion is affirmed and this petition dismissed.
(8) S.L.P. (Civil) 9882/80 Since the High Court has only followed the Full Bench decision, there are no merits in this appeal which is dismissed.
All the appeals and SLPs, therefore, fail and are dis missed.
But in the circumstances we make no order as to costs.
R.S.S. Appeals and SLPs dismissed.
| Gangamoni Mondal, the respondent in one of the appeals, purchased on 29.1.1963 the suit property.
About three years and five months after her purchase, the prede cessor in interest of the appellants made an application for pre emption under section 26 F of the Bengal Tenancy Act, 1885 on the ground that he was a co sharer of the holding which comprised the land purchased by the respondent.
The holding was previously a Raiyati Mokarari interest which had vested in the State under the provisions of the West Bengal Estates Acquisition Act, 1953.
the defence of the respondent was that, though the predecessor in interest of the appel lant and her vendor were the joint holders of the property in question, the right of pre emption available to the co sharer had ceased with the coming into force of the Estates Acquisition Act of 1953.
The pre emption application was allowed by the learned Munsif and his order was confirmed by the learned Additional District Judge.
In revision, the Full Bench of the High Court negatived the contention of the applicant and dis missed the pre emption application.
Dismissing the appeals and SLPs, this Court, HELD: (1) The Full Bench has rightly come to the conclu sion that the right of pre emption could not survive under the West Bengal Estates Acquisition Act, 1953.
[348B] (2) Section 26 F of the Tenancy Act, 1885 conferred on a cosharer tenant of an occupancy holding, a right to compel another co 528 sharer tenant to sell his share 'in the holding to him instead of to a stranger.
The term "co sharer" envisages that the holding must be under the ownership of more than one person.
The holding must be an occupancy holding: that is, it must be the holding of raiyats having occupancy rights.
So long as a division of the holding does not take place in accordance with section 88 of the Tenancy Act, the holding remains a joint holding and each co sharer will be entitled to preemption in case of transfer of a share or portion of the holding by a co sharer to a stranger.
[340E F] (3) By virtue of the notifications issued by the State Government under section 4 of the 1953 Act from time to time the interests of raiyats and under raiyats vested in the State with effect from April 14, 1956.
[341C] (4) The effect of 1953 Act was to vest the rights of intermediaries (an expression subsequently extended to cover raiyats and under raiyats) in the State Government.
Each raiyat became a direct tenant under the State and the land retained by a raiyat of a holding became the subject matter of a separate tenancy.
It was, therefore, no longer possible to call them co sharers entitled to pre emption case of a transfer to a stranger.
[341D; 345E] (5) By a notification dated 28.5.
1954, the Government of West Bengal framed rules called the West Bengal Estates Acquisition Rules, 1954.
The original rule 4 merely provided that in the case of agricultural land retained by the inter mediary, he shall hold it on the same terms and conditions as an occupancy raiyat under the Tenancy Act, leaving it undefined as to whether these terms and conditions would also include the right of pre emption available under the Tenancy Act.
The amendment of 1962 specifically included the right of pre emption available under section 26 F but the reference to section 26 F was omitted by the amendment of 1964.
This definition, however, did not mean that the right of pre emption was taken away.
[343F; 344E F; 347F] (6) There is no statutory provision that brings non agricultural tenants within the scope of the vesting provi sions.
The High Court was right in making the distinction and upholding the right of pre emption in the case of non agricultural tenancies.
[349A B] Shibasankar vs Prabartak Sanghs, Sastidas Mullick vs J.L.R.O. Parrachpore Circle and Ors., , referred to.
|
Appeal No. 235 of 1958.
12 90 Appeal from the judgment and decree dated October 18,1956, of the former PEPSU High Court in Regular First Appeal No. 11 of 1954, arising out of the judgment and decree dated November 21, 1953, of the Additional District Judge, Patiala.
Gopal Singh and K. B. Krishnaswamy, for the appellant.
N. section Bindra and D. Gupta, for the respondent.
July 28.
The Judgment of the Court was delivered by DAS GUPTA J.
The appellant Dalip Singh entered the service of the Patiala State in 1916 and rose to the rank of Inspector General of Police of the State in June 1946.
After the formation of the State of Pepsu he was absorbed in the Police Service of the newly formed State and was appointed and confirmed as Inspector General of Police thereof.
While holding that post he proceeded on leave from October 18, 1949, till August 17, 1950.
On August 18, 1950, an order was made by the Rajpramukh of the State in these words: " His Highness the Rajpramukh is pleased to retire from service Sardar Dalip Singh, Inspector General of Police, Pepsu (on leave) for administrative reasons with effect from the 18th August, 1950.
" A copy of this order was forwarded to the appellant.
Thereupon on August 19, 1950, the appellant wrote to the Chief Secretary of the State stating that by his retirement he would be put to heavy loss, i.e., about Rs. 50,000 which he would have earned as his pay and allowances etc., during this period and that his pension was also being affected and that this decision of the Government tantamounts to his removal from service.
He requested that the Government should let him know the grounds which had impelled the Government to take this decision about his removal.
Ultimately on March 30, 1951, the Government mentioned the charges against him on the basis of which the Government had decided to retire him on administrative grounds.
After service of notice under 91 s.80 of the Code of Civil Procedure the appellant brought a suit in the Court of the District Judge, Patiala, against the State of Pepsu asking for a declaration that the orders of August 16, 1950, and August 18, 1950, whereby " the plaintiff has been removed from the post of Inspector General of Police, Pepsu, are unconstitutional, illegal, void, ultra vires and inoperative and that the plaintiff still continues to be in the service of the defendant as Inspector General of Police and is entitled to the arrears of his pay and allowances from August 18, 1950, and is also entitled to continue to draw his pay and allowances till his retirement at the age of superannuation ; and a decree for the recovery of Rs. 26,699 130 and full costs of this suit and future interest.
" The main plea on which the suit was based was that the order of August 18, 1950, amounted to his removal from service within the meaning of article 311(2) of the Constitution and the provisions of that article not having been complied with the termination of his service was void and inoperative in law.
The respondent State contended that the plaintiff had been retired from service and had not been removed from service and so article 311 of the Constitution had no application.
On this question the trial Court came to the conclusion that the order compulsorily retiring the plaintiff amounted to his removal within the meaning of article 311 of the Constitution and as the requirement of that Article had not been complied with it held that the termination of service effected by that order was void in law.
The Court accordingly decreed the suit in favour of the plaintiff declaring that the orders of the Government dated August 18, 1950, whereby the plaintiff had been remo ved from the post of Inspector General of Police, Pepsu, are unconstitutional, illegal, void and ultra vires and inoperative and that the plaintiff still continued to be in the service of the defendant as Inspector General of Police and he his entitled to the arrears of his pay and allowances from August 18, 1950 and is also entitled to continue to draw his pay and allowance 92 till his retirement at the age of superannuation and a decree for the recovery of Rs. 26,699 13 0.
On appeal by the State the Pepsu High Court disagreeing with the Trial Court held that the order of compulsory retirement did not amount to removal from service within the meaning of article 311 of the Constitution and accordingly allowed the appeal and dismissed the plaintiffs suit.
The main contention of the plaintiff before us was that the order of retirement did amount to his removal from service within the meaning of article 311 of the Constitution.
The learned counsel also wanted to argue that Rule 278 of the Patiala State Regulations under which the Government apparently made the order of compulsory retirement was no longer operative.
It appears that the Patiala State Regulations which continued to govern the members of the services of that State after they became integrated into the Pepsu State Services were revised from time to time.
It was suggested by the learned counsel that the revised rules do not contain any rules similar to Rule 278.
Rule 278 of the Patiala State Regulations was in the following words: " 278.
For all classes of pensions the pet son who desires to obtain the pension is required to submit his application before any pension is granted to him.
The State reserves to itself the right to retire any of its employees on pension on political or on other reasons.
" The learned counsel though wanting to persuade us that the Rule about the State reserving to itself the right to retire any of its employees on pension on political or on other reasons was not present in the new rules was unable to show us however that before August 18, 1950, there had been any revision of Rule 278.
It appears that revised rules for Travelling Allowance were published in 1946 as Vol.
II of the new ruler,; and Rules relating to pay and allowances were published as Vol.
I in 1947.
Thereafter in 1952 we find that the first volume of the Pepsu Service Regulations as regards pay and leave rules was published.
In the same year the third volume of the Pepsu State 93 Regulations containing rules relating to pensions was published.
In the preface to this volume we find this statement : " The Revised Edition of the Patiala State Regulations relating to pay, allowances, leave, pension and travelling allowance was published in the year 1931.
Subsequently the travelling allowance rules were revised and issued as Patiala Service Regulations, Vol.
II, in the year 1946.
Similarly the pay, allowances and leave rules were taken out from the Revised Edition (1931) and printed as Patiala Services Regulations, Volume 1, in the year 1947.
The other rules relating to pensions continued to remain in the Revis ed Edition (1931) and kept upto date by the issue of correction slips.
On the formation of the Patiala & East Punjab States Union on 20 8 48, these rules were made applicable to the entire territories of the Union by Ordinance No. 1 of 2005.
The number of copies of this publication available for official use had run out of stock and great difficulty has been experienced in Government offices for want of it for reference.
It was.
therefore found necessary to revise and reprint this publication to make it available to all offices.
" This makes it clear that upto the publication in 1952 of Volume III of the Pepsu Service Regulations the pension rules appearing in the 1931 edition of the Patiala State Regulations continued to be applicable to Pepsu.
On August 18, 1950, therefore it is reasonable to hold that Rule 278 in its entirety remained in force and was applicable to Pepsu.
It is interesting to mention that in this 1952 edition also this reservation by the Government of the " right to retire any of its employees on pension on political or on other reasons " has been maintained (Vide Chapter V, Rule 10).
The contention of the learned counsel that Rule 278 was not applicable to the case of the appellant on August 18, 1950, is therefore totally without foundation.
This brings us to the main contention in the case.
viz., that the compulsory retirement of the appellant under Rule 278 of the Patiala State Regulations was a removal from service within the meaning of article 311 of the Constitution.
The question whether the 94 termination of service by compulsory retirement in accordance with Service Rules amount to removal from service was considered by 'his Court in Shyamlal vs The State of U. P. and the Union of India (1) and again recently in State of Bombay V. Subhagchand D08hi (2).
The Court decided in Shyam Lal 's Case (1) that two tests had to be applied for ascertaining whether a termination of service by compulsory retirement amounted to removal or dismissal so as to attract the provisions of article 311 of the Constitution.
The first is whether the action is by way of punishment and to find that out the Court said that it was necessary that a charge or imputation against the officer is made the condition of the exercise of the power; the second is whether by compulsory retirement the officer is losing the benefit he has already.
earned as he does by dismissal or removal.
In that case in fact a charge sheet was drawn up against the officer and an enquiry held but ultimately the order of compulsory retirement was not based on the result of the enquiry.
The Court pointed out that the enquiry was merely to help the Government to make up its mind as to whether it was in the public interest to dispense with his services so that the imputation made in the charge sheet was not being made the condition of the exercise of the power.
These tests were applied in Doshi 's Case (2) and it was held that the provisions of compulsory retirement under Rule 165.A of the Saurashtra Civil Service Rules under which the order of retirement was made there was not violative of article 311(2).
It was pointed out that " while misconduct and inefficiency are factors that enter into the account where the order is one of dismissal or removal or of retirement, there is this difference that while in the case of retirement they merely furnish the background and the enquiry, if held and there is no duty to hold an enquiry is only for the satisfaction of the authorities who have to take action, in the case of dismissal or removal, they form the very basis on which the order is made and the enquiry thereon must be formal, and must satisfy (1) ; (2) ; 95 the rules of natural justice and the requirements of article 311(2) ".
In the case before us the order of the Rajpramukh does not purport to be passed on any charge of misconduct or inefficiency.
All it states is that the compulsory retirement is for " administrative reasons.
" It was only after the appellant 's own insistence to be supplied with the grounds which led to the decision that certain charges were communicated to him.
There is therefore no basis for saying that the order of retirement contained any imputation or charge against the officer.
The fact that considerations of misconduct or inefficiency weighed with the Government in coming to its conclusion whether any action should be taken under Rule 278 does not amount to any imputation or charge against the officer.
Applying the other test, viz., whether the officer has lost the benefit he has earned, we find that the officer has been allowed full pension.
There is no question of his having lost a benefit earned.
It may be pointed out that Rule 278 itself provides for retirement on pension.
If the provision had been for retirement without pension in accordance with the rules there might have been some reason to hold that the retirement was by way of punishment.
As however the retirement can only be on pension in accordance with the rules in the present case full pension has been granted to the officer the order of retirement is clearly not by way of punishment.
In Doshi 's Case (1) there is at p. 579 an observation which might at first sight seem to suggest that in the opinion of this Court compulsory retirement not amounting to dismissal or removal could only take place under a rule fixing an age for compulsory retirement.
We do not think that was what the Court intended to say in Doshi 's Case(2).
In Doshi 's Case(3) there was in fact a rule fixing an age for compulsory retirement, at the age of 55, and in addition another rule for compulsory retirement after an officer had completed the age of 50 or 25 years of service.
It was in that context that the Court made the above (1) ; 96 observation.
It had not in that case to deal with a rule which did provide for compulsory retirement, at any age whatsoever irrespective of the length of service put in.
It will not be proper to read the observations in D08hi 's Case referred to above as laying down the law that retirement under the rule we are considering must necessarily be regarded as dismissal or removal within the meaning of article 311.
We are therefore of opinion that the High Court was right in holding that the order of compulsory retirement made against the appellant was not removal from service so as to attract the provisions of article 311 of the Constitution and that the suit was rightly dismissed.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
| By para 4 of a notification issued under section 15 of the Police Act the Rajasthan Government exempted the Harijan and Muslim inhabitants of certain villages from payment of the cost of additional police force stationed therein.
The notification was challenged as being violative of the guarantee contained in article 15(i) of the Constitution of India.
Held, that since para 4 of the notification had discriminated against the law abiding members of other communities and in favour of the Muslims and Harijans on the grounds of caste and religion, it was directly hit by the provision of article 15(i) of the Constitution and as such must be declared to be invalid.
|
ivil Appeal No. 695 of 1975.
From the Judgment and Order dated 21.3.1974 of the Madras High Court in Civil Revision Petition No. 2598 of 1972.
G. Viswanatha lyer and N. Sudhakar for the Appellant.
360 V. Krishnamurthy for the Respondent.
The Judgment of the Court was delivered by AHMADI, J.
This appeal by special leave is filed against the judgment and order of the High Court of Madras whereby it remitted the matter to the Authorised Officer for dispos al in accordance with law and in the light of the observa tions made therein.
The facts giving rise to this appeal are as under: The appellant land owner held lands in Kanyakumari District in excess of 30 standard acres as on 6th April, 1960.
He filed a return in Form No. 2 as required by the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 (Act 58 of 1961), hereinafter called 'the Act '.
An enquiry was initiated by the Authorised Officer, Land Re forms, under Section 9(2)(b) of the Act.
The appellant raised several objections but they were overruled.
The Authorised Officer came to the conclusion that the family of the appellant could be reckoned to be of five members be tween 6th April, 1960 and 2nd October, 1962 and accordingly the land owner was entitled to 30 standard acres while his wife and daughter could hold 10 and 7.71 standard acres respectively as stridhana lands.
The appellant was directed to state which lands he wished to be included in his holding and identify the lands which fell surplus, failing which the Authorised Officer said he would be constrained to select the surplus lands.
The appellant was given five days time to make the option.
Feeling aggrieved by the decision of the Authorised Officer, the appellant preferred an appeal under Section 78(1) to the Lands Tribunal.
The appellant complained that the Authorised Officer had wrongly added the lands of his minor sons, unmarried daughter and wife gifted to them long before 1960 in his holdings for determining if his total holdings exceeded the ceiling limit fixed under Section 5(2) of the Act.
According to him the lands covered under the registered gift deed ought to have been excluded from his holding under the Explanation to Section 3(14) as a gift stood on par with a partition.
As a limb of the same argu ment the appellant contended that subsequent to the filing of the appeal, the Act was drastically amended by Tamil Nadu Land Reforms (Reduction of Ceiling on Land) Act, 1970 (Act 17 of 1970), hereinafter called 'the Amending Act ', whereby under Section 3(2), 'the date of commencement of this Act ' came to be fixed as 15th February, 1970 and the 'notified date ' came to be fixed as 2nd October, 1970 under Section 3(31) of the Act.
Consequently, argued 361 the appellant, his rights and liabilities with regard to the fixation of ceiling area were required to be worked out on the basis of the state of affairs existing on the revised date of commencement of the Act i.e. 15th February, 1970, fixed by virtue of the amendment in the Act.
He also relied on the fact that his eldest son who was a minor on th April, 1968 had attained majority on 1st January, 1970 (in the High Court judgment the date is 1st October, 1970) i.e. before the commencement of the Act on 15th February, 1970, and also before the notified date i.e. 2nd October, 1970, and hence his land could not be included in his holding as was done by the Authorised Officer.
It was also pointed out that his son had created a trust in respect of a portion of the land which would be exempt from the operation of the Act by virtue of Section 73(2)(b) of the Act.
It was, therefore, submitted that his eldest son Laxminarayanan was a necessary party and the proper course would be to set aside the im pugned order of the Authorised Officer and remand the matter for a de novo consideration after notice to his son.
The second submission made was that on 10th April, 1968 when the impugned order was made the appellant 's wife was pregnant, she had since delivered a daughter and had gifted to her 5.71 acres of Vadaseri land on 1st October, 1970 and later an additional 5.06 acres of the land from the same village, which developments had to be taken into account as subse quent events touching the determination of the appellant 's ceiling area.
Thirdly, it was pointed out that the appellant had transferred 2 acres 48 cents of section No. 2221, 0.82 cents of section No. 2208 A and 1 acre 66 cents of Vadaseri lands to a third party on 26th April, 1970 for services rendered to him.
Similarly a portion of section No. 2224 admeasuring 0.31 cents was sold to yet another third party on 23rd April, 1969 for valuable consideration and it was necessary to give effect to these transactions which were subsequent to the impugned order.
It was lastly contended by the appellant that his property bearing section Nos. 1387 A and 1363 A which was subject to mortgage had to be sold on 1st July, 1968, a development subsequent to the impugned order which too had to be noticed in fixing the ceiling area.
These transac tions, it was said, were protected by Section 21A of the Act.
It was, therefore, submitted that since an appeal was a continuation of the original proceedings it was obligatory on the part of the appellate authority to examine the impact of these subsequent developments and refix the ceiling area.
The appellant, however, contended that as third parties would have to be heard before deciding the issue, the proper course was to direct the Authorised Officer to consider the matter afresh in its entirety.
The appellate authority negatived all the contentions and dismissed the appeal with costs.
362 Thereupon, the appellant approached the High Court by way of a revision application.
Before the High Court the contention in regard to the subsequent transactions was confined to the documents executed between 15th February, 1970, the date of commencement of the Act, and 2nd October, 1970, the notified date.
That included the two settlement deeds dated 1st October, 1970 made in favour of the unmar ried daughters and the sale deed dated 26th April, 1970 executed in favour of a third party.
The contention was not pressed in respect of the transaction evidenced by the sale deed dated 23rd April, 1969 in favour of a third party.
This contention found favour with the High Court.
The High Court took the view, relying on an earlier Division Bench judgment in C.R.P. No. 1197 of 1971 (Fakir Mohmad vs The State of Tamil Nadu), that "even in respect of proceedings which commenced prior to the coming into force of the Amending Act, an affected person can take advantage of the provisions contained in Section 21A".
It was held that while Section 2 of the Amending Act reduced the ceiling area to half, bene fit was conferred by Section 2 IA and hence both the provi sions had to be read together.
It was, therefore, held that the three documents could not be ignored in fixing the ceiling area unless it is found that the documents were executed to defeat the provisions of the Act, in which case the transactions may be declared void under Section 22 of the Act.
In this view of the matter, the High Court directed the Authorised Officer to make further inquiries regarding the said three transactions and pass appropriate orders.
The High Court, however, rejected the rest of the contentions by which exclusion was sought, viz., (,i) on the conjoint reading of Section 10(8) and Section 3(14) insofar as it concerned Laxmmarayanan as a member of the appellant 's fami ly; (ii) in regard to lands which were locked in litigation; (iii) in regard to lands in the possession of mortgagees; and (iv) the lands which are covered under Section 73(vii) of the Act.
In this view that the High Court took, the matter was remitted to the Authorised Officer in regard to the aforesaid three transactions.
The appellant, feeling aggrieved by the rejection of his other contentions by the High Court, has preferred this appeal by special leave.
The main grievance of the appellant is that the High Court fell into an error in limiting the benefit of Section 21 A to three transactions only and by directing an enquiry under Section 22 overlooking the fact that it was not subject to Section 22.
He further contends that the High Court was wrong in thinking that the conten tion in regard to the sale deed dated 22nd April, 1969 was not pressed.
In brief the contention is that the High Court failed to appreciate the impact of the 363 amendments introduced by the Amending Act on the two settle ments of 1st October, 1970 and the sale deed of 26th April, 1970 and erred in holding that the relief under Section 21A must be determined after an enquiry under Section 22 of the Act.
This was the main thrust of the submissions made at the hearing of this appeal.
The Act (Act 58 of 1961) was notified on 2nd October, 1962 but the date of its commencement was fixed as 6th April, 1960.
The present proceedings had commenced under the said Act.
Th Act was amended by Act 17 of 1970 whereby the ceiling area was reduced from 30 standard acres for a family not exceeding five member to 15 standard acres and the date of commencement of the Act was shifted to 15th February, 1970 and the notified date to 2nd October, 1970.
There can be no doubt that after the passing of Act 17 of 1970 the family 's holding had to be determined with reference to the notified date i.e. 2nd October, 1970.
See: B.K.V. Radhamani Ammal vs Authorised Officer, Land Reforms, Coimbatore, The Act was enacted to provide for the fixation of ceiling on agricultural land holdings and matters connected therewith.
Section 5 fixes the ceiling area in the case of every family consisting of not more than five members at 15 standard acres after the amendment made in the provision by virtue of Section 2(2)(a) of the Amending Act.
Section 7 lays down that on and from the date of commencement of the Act, no person shall, except as otherwise provided by the Act, be entitled to hold land in excess of the ceiling area.
The family of the appellant consisted of himself, his wife, two minor sons and an unmarried daughter at the date of commencement of the Act and on the notified date as they stood before the Amending Act.
One son had become a major w.e.f.
1st January, 1970.
In the High Court judgment the date is stated to be 1st October, 1970.
That will not make any difference so far as the submission is concerned.
We may first notice Sections 21A and 22 of the Act as amended by the Amending Act.
They read as under: "21A.
Notwithstanding anything contained in Section 22 or in any other provision of this Act and in any other law for the time being in force, where, after the 15th day of February, 1970 but before the 2nd day of October, 1970.
(a) any person has effected by means of a registered instru ment a partition of his holding or part thereof; or 364 (b) any parent or grand parent has voluntarily transferred any land on account of natural love and affection to any minor son, unmarried daughter, minor grand son, or unmarried grand daughter in the male line; or (c) any person has voluntarily transferred any land (i) to any educational institution; or (ii) hospital.
of a public nature solely for the purposes of such institu tion or hospital; such partition or transfer shall be valid: Provided that in the case of transfer to such educational institution or hospital, the land transferred absolutely vests in the institution or hospital and the entire income from such land is appropriated for the insti tution or hospital." "22.
Where, on or after the date of the commencement of this Act, but before the notified date, any person has trans ferred any land held by him by sale, gift (other than gift made in contemplation of death), exchange, surrender, set tlement or in any other manner whatsoever except by bequest or has effected a partition of his holding or part thereof, the authorised officer within whose jurisdiction such land, holding or the major part thereof is situated may, after notice to such person and other persons affected by such transfer or partition and after such enquiry as he thinks fit to make, declare the transfer or partition to be void if he finds that the transfer or the partition, as the case may be, defeats any of the provisions of this Act.
" Section 21A begins with a non obstante clause and limits its application to partition or transfer mentioned in clauses (a) to (c) effected between 15th February, 1970 and 2nd October, 1970.
The settlement deeds, both dated 1st October, 1970 and the sale deed dated 26th April, 1970 fall within the two termini points fixed by Section 21A but the sale deed dated 23rd April, 1969 is clearly outside the scope of Section 21A and therefore it seems the learned counsel for the appellant in the High Court rightly did not press the claim in regard to the 365 land covered under the said document.
However, the learned counsel for the appellant before us pointed out that while the High Court rightly came to the conclusion that the appellant was entitled to the benefit of Section 21A insofar as the two settlement deeds of 1st October, 1970 and the sale deed of 26th April, 1970 are concerned, it fell into an error in holding "However, if those transfers are meant to defeat any of the provisions of the Act, then the Authorised Officer may declare the said transfers to be void under Section 22 of the Act" thereby totally overlooking the opening words of Section 2 IA which are intended to override Section 22.
The further observations of the High Court based on decision in Naganatha Ayyar vs Authorised Officer, [197 1]1 M.L.J. 274 make it clear that the High Court misread the observations of Ramanujam, J. when it said: "Ramanujam, J. pointed out that all transfers effected between the date of commencement of the Act and the notified date cannot be declared to be void as defeating the provi sions of the Act.
It has been pointed out that only if the transfers are really not transfers but sham and nominal transactions or bogus transactions, they would be defeating the provisions of the Act and that only then they can be declared to be void under Section 22 of the Act".
The above observations are somewhat confusing.
A sham, nominal or bogus document may not necessarily be one intend ed to defeat any provision of the Act.
A partition or trans fer evidenced by such a document would be of no avail to seek the benefit of Section 21A regardless of Section 22.
Section 21A, which begins with the words notwithstanding anything contained in Section 22 clearly overrides Section 22 and therefore the transactions referred to in Section 21A cannot be the subject matter of enquiry under Section 22.
Section 21A refers to only three types of transfers viz. ,(i) transfer of holding by a registered partition deed; (ii) transfer of land to specified individuals on account of natural love and affection; and (iii) transfer in favour of an educational institution or hospital of a public nature solely for the purposes of such institution or hospital provided the transferred land vests absolutely in the insti tution or hospital and the entire income from such land is appropriated for the institution or hospital.
Even though the transactions referred to in Section 21A cannot be de clared void under Section 22 as defeating any of the provi sions of the Act, the Authorised Officer would be entitled dehors Section 22 of the Act, to find out if the instruments of transfer or partition though answering the description of transactions under Section 21A, are in fact genuine 366 transactions and not sham, nominal or bogus ones.
Similarly the Authorised Officer would be entitled to determine if the instruments of transfer even if genuine answer the descrip tion of documents referred to in Section 21 A, and if not, he would be justified in invoking Section 22 of the Act.
To put it differently when any party seeks the benefit of Section 21A, he must show, if a doubt arises, that (i) the instrument on which he relies is a genuine one and not a sham, nominal or bogus one and (ii) it answers the descrip tion of the documents referred to by Section 21A.
If the document is not found to be genuine, the Authorised Officer will not act on it, if it is genuine, the Authorised Officer will determine if it is one referred to in Section 21A and if not he will resort to Section 22 of the Act.
On this consideration the sale deed dated 26th April, 1970 in favour of a third party clearly falls outside the purview of Sec tion 21A and the Authorised Officer will be entitled to embark on an enquiry under Section 22 of the Act, if the instrument is otherwise genuine.
In regard to the two set tlements in favour of unmarried daughters also the Autho rised Officer will have to consider if the settlements answer the description of the documents referred to in Section 21A even if they are genuine.
If he answers both these points in the affirmative he need not test the docu ments on the additional requirement of Section 22 but if he comes to the conclusion that the documents do not fall within Section 21A, he would be required to test their validity on the touchstone of Section 22 of the Act.
We have thought it necessary to clearly define the scope of the enquiry before the Authorised Officer on remand to clear the doubt, if any, arising from the observations of the High Court and to avoid unnecessary complications.
The next contention urged by the learned counsel for the appellant is based on the plain language of Section 10(2) read with the definition of 'family ' in Section 3(14) of the Act.
The appellant 's son Laxminarayanan is stated to have attained majority on 1st January, 1970, i.e. before the date of commencement of the Act on 15th February, 1970 and the notified date of 2nd October, 1970.
Even if the date stated by the High Court is correct, he attained majority before 2nd October, 1970.
On his attaining majority he ceased to be a member of the appellant 's family.
Under Section 10(2), the Authorised Officer has to take into account only those members of the family as are covered by the definition of Section 3(14) of the Act.
Although Laxminarayan was undoubt edly a member of the appellant 's family on the date on which the Authorised Officer first determined the ceiling area, the submission of the appellant 's counsel is that he having ceased to be a minor son, he cannot be included in the appellant 's family when 367 the Authorised Officer reconsiders the ceiling area on remand.
The High Court negatived this contention and in our opinion rightly.
The submission overlooks the provision contained in Section 3 of the Amending Act by which the date of commencement of the Act and the notified date were re vised.
Section 3 reads as under: "Saving (1) Subject to the provisions of sub section (2), any action taken (including any order made, notification issued, deci sion or direction given, proceeding taken, liability or penalty incurred and punishment awarded) under the provi sions of the Principal Act before the date of the publica tion of this Act in the Fort St. George Gazette, may be continued or enforced after the said date in accordance with the provisions of the Principal Act as if this Act had not been passed.
(2) Nothing in sub section (1) shall be deemed to entitle any person whether or not such person is a party to any proceeding mentioned in sub section (1), to hold after the 15th day of February 1970, land in excess of the ceiling area under the Principal Act as modified by Section 2 and the provisions of the Principal Act as modified by Section shall, after the said date, apply to such person.
" The proceedings in this case had started and concluded before the Authorised Officer long before the Amending Act saw the light of the day.
Under Section 3(1) of the Amending Act, any action taking (including any order made, decision or direction given, proceeding taken, etc.) under the provi sions of Act before the date of publication, of the Amending Act, can be continued and enforced after the said date in accordance with the provisions of the Act as if the Amending Act had not been passed.
This is, however, subject to sub section (2) which carves out an exception to sub section (1) insofar as the reduction of the ceiling area from 30 stand ard acres to 15 standard acres is concerned.
The High Court was, therefore, right in rejecting this contention.
Lastly, it was submitted that lands which were converted into orchards of topes before 1st July, 1959 are exempt from the provisions of the Act by virtue of Section 73(vii) of the Act.
The High Court has rejected this contention on the following finding: 368 "In the present case certain lands are claimed to be topes and exemption is claimed regarding the same.
But there is nothing to show that the said lands had been converted into topes prior to first day of July, 1959.
Since the factual foundation is not laid we cannot entertain this contention.
These were the only contentions urged before us.
In view of the above discussion we see no merit in this appeal and dismiss the same with costs.
Y. Lal Appeal dis missed.
| The appellant land owner held lands in excess of 30 standard acres as on 6.4.1960.
He filed a return as required by the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 and an enquiry was initiated by the Authorised Officer concerned under Section 9(2)(b) of the Act.
Several objections raised by the appellant were rejected and the Authorised Officer came to the conclusion that the family of the appellant could be reckoned to be of five members be tween 6.4.1960 and 2.10.1962 and thus the appellant was entitled to 30 standard acres; his wife and daughter however could hold 10 and 7.71 standard acres respectively as strid hana.
The appellant was asked to elect which lands he wished to be included in his holding and state which lands should be treated as surplus.
Feeling aggrieved by the said deter mination, the appellant preferred an appeal under Section 78(1) to the Land Tribunal.
The appellant contended (i) that the Authorised Officer had wrongly included the lands of his minor sons, unmarried daughter and wife gifted to them long before 1960; (ii) that subsequent to the filing of the appeal, the Act was amended as a consequence whereof his rights and liabilities with regard to the fixation of ceil ing area were required to be worked out on the basis of the revised date of commencement of the Act i.e. 15.2.1970; notified date being 2.10.1970.
It was also urged by the appellant that the lands of his eldest son Laxminarayanan could not be included in his holding.
On those grounds amongst others relating to the effect of subsequent transac tions the appellant prayed that the matter ought to be remanded to the Authorised Tribunal for a de novo considera tion.
The appellant authority rejected all the contentions and dismissed the appeal, whereupon the appellant preferred a revision application before the High Court.
Before the High Court his plea regarding subsequent transactions was confined to the documents executed between 15th February 1970, the date of commencement of the 359 Act, and 2nd October 1970, the notified date; contentions regarding other transactions were not pressed.
The High Court accepted this contention and took the view that even in respect of proceedings which commenced prior to the coming into force of the Amending Act, an affected person can take advantage of the provisions contained In Section 2 IA.
The High Court held that while Section 2 of the Amending Act reduced the ceiling area to half, benefit was conferred by Section 21A and hence both the provisions had to be read together.
On that reasoning the High Court opined that the three documents relating to subsequent transactions executed between the said date, could not be ignored in fixing the ceiling area unless it was found that the documents were executed to defeat the provisions of the Act, in which case the transactions may be declared void under Section 22 of the Act.
The High Court accordingly directed the Authorised Officer to make further inquiries regarding the three trans actions in question and pass appropriate orders.
The High Court rejected the other contentions.
The appellant being aggrieved with the rejection of other points raised before the High Court has preferred this appeal by special leave.
Dismissing the appeal, this Court, HELD: The proceedings in this case had started and concluded before the Authorised Officer long before the Amending Act saw the light of the day.
Under Section 3(1) of the Amending Act, any action taken (including any order made, decision or direction given, proceeding taken, etc.) under the provisions of Act before the date of publication of the Amending Act, can be continued and enforced after the said date in accordance with the provisions of the Act as if the Amending Act had not been passed.
This is however, subject to subsection (2) which carves out an exception to sub section (1) insofar as the reduction of the ceiling area from 30 standard acres to 15 standard acres is concerned.
[367E G] B.K.V. Radhamani Ammal vs Authorised Officer, Land Reforms, Coimbatore, , referred to.
|
Appeals Nos.
392 and 393 of 1954.
Appeals by special leave from the judgment and order dated March 26, 1962, of the Calcutta High Court in Civil Revision Nos. 3176 of 1958.
G.S. Chatterjee and S.C. Mazumdar, for the appellant (in C.A. No. 392/64).
N.C. Chatterjee and section (7.
Mazumdar, for the appellant (in C.A. No. 393/64).
C.K. Daphtary, Attorney General, B. Sen, S.C. Bose and P.K. Bose, for the respondents (in C.A. 392/64).
B. Sen, S.C. Bose and P.K. Bose, for the respondent (in C.A. No. 393/64).
The Judgment of the Court was delivered by Hidaytullah, J.
these two appeals the appellants seek to displace a common judgment and order of the High Court of Calcutta dated March 26, 1962 by which a Full Bench of the Court, specially constituted to hear and determine certain petitions under article 226 of the Constitution involving a common point of law, discharged the Rule issued earIier in them.
These cases were concerned with Muslim wakfs in which either the ultimate benefit to charity is postponed till after the exhaustion of the wakif 's family and descendants or the income from the wakf estate is applied for the maintenance of the family side by side with expenditure for charitable or religious purposes.
The common question which arose and still arises is whether these wakfs are affected by the passing of the West Bengal Estates Acquisition Act, 1953 (West Bengal Act I of 1954). ?hat Act, in common with similar Acts of other States in india abolished from a date notified by the State Government all intermediaries such as proprietors, tenure holders etc.
between the raiyat and the State and vested the estates and the rights of the intermediaries in the State free from all incumberances.
Section 3 of the Act provided that the Act was to have effect notwithstanding anything to the contrary contained in any other law or in any contract express or implied or in any instrument and notwithstanding any usage or custom to the contrary.
There were, however, some exceptions and one such exception was that an intermediary was entitled to retain, with effect from the date of vesting, land held in khas under a trust or endowment or other legal obligation exclusively for a purpose which was charitable or religious or both.
Notices under section 10(2) of the Act were issued by the Collectors in charge, Estate Acquisitions, to the respective Mutwallis informing them that after the notification issued on November II, 1954 under section 4 of the Act there was extinction and cesser of the estate 309 and rights of these intermediaries and their divested estates and rights vested in the State.
The Mutawallis were called upon by said notice or order to give up possession of these estates and interests within 60 days of the service of the order, to the officer empowered by the Collector in this behalf.
The orders also specified in schedules appended thereto, the details of such properties, interests and rights.
Notices of this kind were issued to Fazlul Rabbi radhan, Mutawalli of Abdul Karim Wakf Estate, who is appellant a Civil Appeal No. 392 of 1964 and to Kawsar Alam, Mutawalli of Penda Mohammad Wakf Estate, appellant in Civil Appeal No.393 of 1964.
Similar notices were issued to other mutawallis in respect of other wakfs.
The mutawallis appeared in answer to the notices and objected to them.
They claimed that they were protected by section 6(1)(i) of the Act (to which detailed reference will be made (resently) as they were holding the properties exclusively for purposes which were charitable or religious or both.
This claim was not accepted by the Collector, Estate Acquisitions, and appeals to the commissioner also failed.
The orders of the Collector and the Commissioner are dated February 24, 1956 and January 18, 1958 respectively.
The appellants after serving notices of demand for justice filed petitions in the High Court under article 226 of the Constitution.
The petitions came up for hearing before D.N. Sinha J. and were refered, on his recommendation, to a Full Bench consisting of Bachaat, D.N. Sinha and P.N. Mookerjee JJ.
These learned Judges by separate but concurring judgments held that the wakfs in question were not protected by section 6(1)(i) as they were not exclusively for purposes which were charitable or religious or both and discharged the Rule.
The cases were, however, certified under article 133(1)(a) and (c) of the Constitution and these two appeals were filed.
It is not necessary to state how the Act is constructed for the ' only question is whether the wakfs can be said to be exclusively for purposes which are religious or charitable or both and thus exempted from the operation of the Act by virtue of section 6(1)(i) which reads "6.
Rights of intermediary to retain certain lands.
(1) Notwithstanding anything contained in section 4 and 5, an intermediary shall, except in the cases mentioned in the proviso to sub section (2) but subject to the other provisions of that sub section, be entitled to retain with effect from the date of vesting (i) where the intermediary is a corporation or an institution established exclusively for a religious or a charitable purpose or both, or 310 is a person holding under a trust or an endowment or other legal obligation exclusivey for a purpose which is charitable or religious or both land held in khas by such corporation or institution, or person, for such purposes.
" Section 2(c) defines "charitable purpose" and section 2(n) "religious purpose".
These definitions are: "2(c) "charitable purpose" includes the relief of poor, medical relief or the advancement of education or of any other object of general public utility;" "2(n) "religious purpose" means a purpose connected with religious worship, teaching or service or any performance of religious rites;" If this concession is not available then the estate must vest in the State Government under sections 4 and 5 of the Act.
The former section invests power in the State Government to notify the date from which the estates and rights of every intermediary are to vest in the State free of all incumberances and the latter says that upon due publication of the notification the vesting takes place from the date notified.
This has been done.
The wakfs in these two appeals are dissimilar in their terms but both provide for application or income for the support of the wakifs and their families.
In the Abdul Karim Wakf (Civil Appeal 392 of 1964) the value of the property is shown as Rs. 1,00,000 and a ceiling of Rs. 4,500 is placed by the wakif on expenditure per year (el. 12).
The mutawalliship and the Naib mutawalliship run in the family from generation to generation first in the male line and after exhaustion of the male line in the female line.
The charities mentioned specifically or generally require a stated expenditure of Rs. 904 per year.
The wakif has.
in addition, provided for an expenditure of Rs. 2,000 at a time, for the solace of his own soul and for his burial ceremonies etc.
Rs. 25 have been ordered to be spent on Milad every year.
As regards secular expenses the deed directs that 10 per cent of the income is to be kept as d reserve fund and from savings from the income other properties are to be purchased (cl. 19).
The mutawalli and the Naib mutawalli are tO receive 8 per cent of the income in proportion of 5:3.
Then follow numerous dispositions for the benefit of the family.
They are: "15.
My wife Bibi Jainulnessa wilt get as long as she is alive, Rs. 1,200 annually at the rate of Rs. 100 per month and Bibi Taherankhatun, the widow of my eldest son, will get as long as she is alive, Rs. 480 annually (Rupees four hundred eighty only) at the rate of Rs. 40 per month.
Such monthly allowances 311 will be stopped after their death.
After their death their heirs will not get any portion of the aforesaid monthly allowances.
Each of my three sons Shriman Tojammal Hossain Prodhan, Shriman Ahmad Yasin Prodhan and Shriman Azizul Huq Prodhan, will get Rs. 24 per cent out of the net income of the wakf estates (after payment of revenue, cess etc.
which are current at present or will be levied in future and after meeting the costs of administration).
Shriman Abu Alam Prodhan, the only son born of the loins of my deceased second son will similarly get at the rate of Rs. 7 per cent out of the net income.
A fund will be created with a deposit at the rate of Rs. 3 (Rupees three only) per cent, out of the annual net income for the purpose of education of the sons of my sons, sons of my daughters, sons of the daughters of my sons and my great grandsons (in the male line).
The Mutawalli and the Naib Mutawalli in consultation with each other will render help as far as possible to the boy amongst them who will be meritorious and has zeal for education according to his standard of education.
If there be any surplus the same will be kept in deposit in the wakf estate for meeting the expenses of education of the future heirs.
If after graduation he goes to England, France, Germany, America, Japan, Australia and other progressive countries for higher education, then the Mutawalli and the Naib Mutawalli will, in consultation with each other, help him as far as possible.
, "20.
The provision made for allowances for my aforesaid three sons and my grandson Shriman Abu AIam Prodhan in Schedule (Kha) will vest, after their death in the respective sons and grandsons in the male line equally.
If any of them has no son or grandson, in that case after his death if his wife lives and continues to follow her own religion, she will get one eighth share of the aforesaid allowance as long as she is alive.
The remaining seveneighth share and in the absence of his wife, sixteen annas share will vest in the wakf estate.
Daughters born of them will not get the said allowance (in the female line).
" In the Penda Mohammad Wakf Estate (Civil Appeal 393 of 1964) the value of the property is shown as Rs. 40,000.
The expenditure on charities and religious purposes is about Rs. 3,700 per year.
312 These are specified in Schedule Kha.
The pay of the Naib Mutawalli is fixed at Rs. 300 per year.
The Mutawalliship and the Naib Mutawalliship run in the family and Mutawalli holding office can appoint his successor.
The other important clauses of the wakf namah dealing with the application of the funds are: "(9) The Mutawalli shall from the income of the wakf property pay at first revenue and other legitimate government and zamindary dues. "(10) The Mutawalli shall pay all expenses required for the maintenance of the wakf property and the Mutawalli shall get ten per cent of such expenses.
The Mutawalli shall pay Rs. 25 (Rupees twenty five only) per month to the Naib Mutawalli as his remuneration. "(12) The Mutawalli will be entitled to take as his own remuneration the balance remaining after deducting expenses under items Nos.
(9) and (10) as well expenses under Schedule (ka) and (kha) below from the income of the Wakf property and he will be entitled to spend the sum for his own work.
In Schedule Ka dispositions are made for the family and the various clauses run as follows: "(1) My grandson Jaman Ajimuddin Ahmed shall get a sum of Rs. 200 (Rupees two hundred) per month as his tankha (allowance) that is the cost of his maintenance and on his demise his heirs shall get the said tankha generation after generation and by way of succession for ever.
(2) My daughter Sreemati Hiramannessa Bibi shall get Rs. 25 (Rupees twenty five) per month for her maintenance and on her demise her heirs shall continue to get the said tankha generation after generation for ever by way of succession.
(3) My second wife Srimati Bibijannessa Bibi shall get Rs. 30 (Rupees thirty) per month during her life time as tankha that is as costs of her maintenance and on her demise none of her heirs shall get the same and it will be included in the Wakf Estate".
It was not claimed before us in these cases that the provisions about the family have become inoperative by the exhaustion of the beneficiaries and we proceed on the assumption that the families the wakifs do still enjoy the benefits.
In these circumstances, the question is whether these trusts can be described as those exclusively for religious or charitable purposes or both.
If they can be 313 so described section 6(1)(i) would exempt them from the operation of the Act; otherwise, in view of the provisions of sections 3, 4 and 5 the estates of the intermediaries vested in the State on the appointed date.
As already stated the provisions of the Act apply notwithstanding anything to the contrary contained in any other law or in any instrument and notwithstanding any usage or custom to the contrary.
The Act must, therefore, be construed on its actual words and the exemption cannot be enlarged beyond what is granted there.
The exemption is given to Corporations and institutions established exclusively for a religious or a charitable purpose or both but to this kind of eleemosynary foundations no mutawalli in either deed can lay claim.
The matter can thus only come in, if at all, within the words of the exempting clause which read: " . a person holding under a trust or endowment or other legal obligation exclusively for a purpose which is charitable or religious or both? ' The word "exclusively" limits the exemption to trusts, endowments or other legal obligations which come solely within charitable or religious purposes.
These purposes are defined by section 2(c) and (n) and the definitions have already been reproduced.
It is quite dear (and indeed the contrary was not suggested at the Bar) that the expression "religious purpose" cannot cover these two cases.
The definition is an exhaustive one and to satisfy the requirement the purpose must be connected with religious worship, teaching or service or performance of religious rites.
No religious worship, teaching or service or performance of religious rites is involved when the wakif provides for his family or himself even though a person giving maintenance to his family or himself is regarded in Mahomedan Law as giving a sadaqah.
But even if regarded as a pious act a sadaqah of this kind is not a religious worship or rite.
In our opinion, neither of the deed makes a disposition coming within the description "exclusively for religious purposes".
This leaves over for consideration whether they come within the expression "charitable purposes".
The definition of "charitable purposes" in the Act follows, though not quite, the well known definition of charity given by Lord Macnaghten in Commissioners for Special Purposes of Income Tax vs PemseI(1), where four principal divisions were said to be comprised trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community not falling under any of the preceding heads.
The definition in this Act makes one significant change when it speaks of "public utility" and this gives a guidance to the whole meaning and purpose of the exemption.
No doubt the definition is not an exhaustive one like the definition of 'religious purposes '.
It only speaks of what may be included in it besides the natural meaning of the words.
It ; 583.
314 is quite clear that the provision for the family of the wakif or for himself cannot be regarded as 'relief of poor ', 'medical relief ' or the `advancement of education '.
It cannot also be regarded as an ex penditure on an object of general public utility.
The definition as it stands cannot obviously comprehend such dispositions.
But it is contended by Mr. N.C. Chatterjee that in giving a meaning to the expression "charitable purposes" we must be guided by the notions of Mahomedan Law and he relies upon the observation of Sir George Rankin in Tribune Press Trustees, Lahore vs
I.T. Commissioner(1).
Mr. Chatterjee claims that provision for the wakif and the wakif 's family is a charitable purpose according to Mahomedan Law.
In the Tribune case the Judicial Committee was required to interpret section 4(3)(i) of the Indian Income tax Act 1922 (XI off 1922).
That section provided: "(3) This Act shall not apply to the following classes of income: (i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in case of property so held in part only for such purpose, the income applied, or finally set apart for application, thereto.
In this sub section 'charitable purpose ' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility.
" In dealing with the will of Sardar Dayal Singh who had constituted a trust to maintain the Press and the Newspaper, "keeping up the liberal policy of the said newspaper and devoting the surplus income . in improving the said newspaper . ", the question had arisen whether the running of a newspaper was an object of general public utility or whether it was to be treated as a business concern.
The High Court at Lahore was divided in its opinion.
Learned Judges in favour of granting the prayer for exemption were of the opinion that the true test was not what the Court considered to be an object of public utility, but what the testator thought to be.
The Judicial Committee pointed out that in reaching this view those learned Judges were following what Chitty J. said in In re Foveaux, etc.(2) and further that that case was dissented from in later cases.
In these latter cases it was held that though the private opinion of the Judge was immaterial, nevertheless for a charitable gift to be valid, it must be shown (1) that the gift was for public benefit, and (2) that the trust was one of which the Court could, if (1)L.R. 66 I.A. 241 at P. 252.
[1895] 2 ch.
501, 315 necessary undertake and control otherwise trusts to promote all kinds of "fantastic" objects in perpetuity would be established.
The Judicial Committee acceded to this view but pointed out further: . "It is to be observed, moreover, that under the Incometax Act the test of general public utility is applicable not only to trusts in the English sense, but is to be applied to property held under trust "or other legal obligation" a phrase which would include Moslem wakfs and Hindu endowments.
The true approach to such questions, in cases which arise in countries to which English ideas let alone English technicalities may be inapplicable, was considered by the Board in Yeap Cheah Neo vs Ong Cheng Neo(1), and it was well said by Sir Raymond West in Fatima Bibi vs Advocate General of Bombay(2); "But useful and beneficial in what sense? The Courts have to pronounce whether any particular object of a bounty falls within the definition; but they must, in general, apply the standard of customary law and common opinion amongst the community to which the parties interested belong.
" Relying on this passage Mr. Chatterjee contends that if the Mahomedan Law regards gifts for the benefit of the wakif and his family as "charity" it is not for the Courts to say that they are not and he claims exemption for the wakfs.
He relies upon the precept of the Prophet "A pious offering to one 's family, to provide against their getting into want, is more pious than giving alms to beggars.
The most excellent of sadkah is that which a man bestows upon his family '.
Now it is a matter of legal history that wakfs in which the benefits to charity or religion were either illusory or postponed indefinitely, while the property so dedicated was being enjoyed from generation to generation by the family of the wakif, were regarded as opposed to the rule against perpetuities as contained in the Indian Succession and the Transfer of Property Acts.
This was so declared in a succession of cases by the Judicial Committee and the opinion of Amir Ali expressed in his Tagore Lectures as well ' as in Meer Mahomed Israeli Khan vs Shasti Churn Ghore(3) and Bikani Mia vs Shukul Poddar(4) was not accepted.
These cases are referred to in the three opinions in the High Court and most important of them is Abul Fata Mahomed Ishak and Others vs Bussomoy Dhur Chowdry, and others(5).
In that case Lord Hobhouse, while emphasising that (1) (2) Bom.
42, 50 (3) (4) (5) 22 I.A. 76.
316 Mahomedan Law ought to govern a purely Mahomedan disposition, declined to hold that disposition in which the benefit was really intended to go to the wakif and his family could be described as charity even under that law.
Speaking of the precept above quoted by us Lord Hobhouse observed: " . it would be doing wrong to the great lawgiver to suppose that he is thereby commending gifts for which the donor exercises no self denial; in which he takes back with one hand what he appears to put away with the other; which are to form the centre of attraction for accumulations of income and further accessions of family property; which carefully protected so called managers from being called to account; which seek to give to the donors and their family the enjoyment of property free from all liability to creditors; and which do not seek the benefit of others beyond the use of empty words." Similar observations were made by Lord Hobhouse in L.R. 17 I.A. 25 and by Lord Natson in L.R. 19 I.A. 170 in earlier cases.
These cases led to agitation in India and the (VI of 1913) was passed.
It declared the rights of Mussalmans to make settlements of property by way of wakf in favour of their families, children and descendants.
For the purposes of the Validating Act the term 'wakf ' was defined to mean "the permanent dedication by a person professing the Mussalman faith of any property for any purpose recognized by the Mussalman law as religious, pious or charitable".
This gave a wider meaning to the word wakf but only for the purpose of taking them out of the validity which would have otherwise existed and which was already authoritatively stated to have so existed.
After the passage of these two Acts wakfs in which the object was the aggrandisement of families of wakifs without a pretence of charity in the ordinary sense became valid and operative.
But the intention of the Validating Act was not to give a new meaning to the word "charity" which in common parlance is a word denoting a giving to some one in necessitous circumstances and in law a giving for public good.
A private gift to one 's own self or kith and kin may be meritorious and pious but is not a charity in the legal sense and the Courts in India have never regarded such gifts as for religious, or charitable purposes even under the Mahomedan Law.
It was ruled in Syed Mohiuddin Ahmed and Ant.
vs Sofia Khatun(1) that neither the Wakf Validating Act 1913 nor the Shariat Act 1937 had the effect of aborgating the Privy Council decisions on the meaning of "charitable purpose" as such.
We do not say that the English authorities should be taken as the guide as was suggested in soms of these cases at one time.
For (1) 44 C.W.N.974.
317 one thing, the law was developed in the Chancery Courts without the assistance of any statutory definition.
The earliest statute on the subject is one of 1601 in the forty third year of the reign of Queen Elizabeth I and in its preamble it gave a list of charitable objects which came within the purview of that Act, and for another, Courts in England extended these instances to others by analogy and the subject is often rendered vague and difficult to comprehend.
A clear guide is available to us in India in the interpretation of the almost similar provisions of the Indian Income tax Act 1922 already quoted.
The observations of Sir George Rankin in the Tribune, case, on which much reliance is placed by the appellants were intended to convey the same caution about English cases which we have sounded here.
The Judicial Committee did not intend to lay down that the words of a statute so precise in its definition should be rendered nugatory by leaving room for inclusion in "charitable purposes", objects which by no means could be charity in the generally accepted legal sense.
No doubt the definition which is common is not exhaustive and leaves scope for addition but it does not make for enlargement in directions which cannot be described as "charitable".
This view of the definition was taken in respect of the analogous provision of the Indian Income tax Act.
In D.V. Arur vs Commissioner 'of Income tax(1) and in re Mercantile Bank of India (Agency) Ltd.(2)it was laid down that for satisfying the test of charitable purpose there must always be some element of public benefit.
Indeed it must be so, if family endowments which are in effect private trusts are not to pass as charities which, as was observed in Mujibunnissa and Ors.
vs Abdul Rahim and Abdul Aziz(3), it is superfluous in the present day to say, is not the law.
When the two deeds are examined and their provisions considered in the light of these principles, it is easily seen that they are not exclusively for charitable purposes.
They do provide in part for objects which are religious or charitable or both but mingled with those purposes are some which are secular and some which are family endowments very substantial in character.
If the latter benefits had ceased or the families had become extinct leaving only the charities or if the provisions were for poor and needy though belonging to the wakif 's family, other considerations might conceivably have arisen, as was stated by Bachawat J. in his opinion.
The deeds as they stand cannot, however, be said to come within the exemption claimed.
The appeals must, therefore, fail.
They are dismissed but in the circumstances we direct parties to bear their own costs.
Appeals dismissed.
(1) I,A.R. (2) (3) 21 I.A. 15 at p, 26.
| The 2nd respondent purchased on 24th December 1956, at a public auction sale held by the Divisional Forest Officer, the cut timber of a coupe and paid the first installment of the purchase price immediately.
The appellant stood surety for the payment of the remaining three instalments.
The coupe was divided into 4 sections according to the rules which were deemed to be part of the contract and the boundary certificates was furnished to the 2nd respondent on 5th February 1957.
He began operations in the 1st section on the last week of February, but defaulted in the payment of the 2nd instalment which was due on 1st March 1957, and so, on 25th April the appellant and 2nd respondent were informed by the forest authorities, that no further removal of the timber would be allowed, as the value of timber already removed exceeded the amount paid.
On 28th April a fire broke cut and the timber sold to the 2nd respondent ceased to exist.
On 3rd May 1957, the formal deed of con tract, which was signed by the 2nd respondent and the Divisional Forest Officer on 24th December, was signed by the Chief Conservator of Forests, as required by the rules.
Since the 2nd respondent had not paid the later instalments proceedings were commenced by the 1st respondent against the appellant, whereupon he filed a suit for restraining the 1st respondent from continuing the proceedings.
The suit was decreed by the trial court, but dismissed on appeal, by the High Court.
In his appeal to this Court, the appellant contended that the 2nd respondent had not been put in possession of the timber sold, except the portion in the 1st section of the coupe, that there was no transfer of property in the timber and therefore he was not liable to pay the amounts due on the other 3 instalments, the transfer of property in the timber being a condition precedent to his liability.
HELD: There was an unconditional contract for the sale of specific goods in a deliverable state, the property in the timber passed to the 2nd respondent when the contract was made on 24th December 1956 under s 20 of the , and possession was also given on 5th February 1957.
Therefore, the appellant 's suit was rightly dismissed by the High Court [391 H] The timber was sufficiently identifiable and was therefore specified goods and there was nothing in the contract postponing possession till the other instalments have been paid.
The fact that the contract was signed by the Chief Conservator, after fire had broken out has no effect on the validity of the contract, or on the question of delivery of possession or on the passing of property in the timber.
The instructions in the Forest Manual about execution of contracts plainly take into consideration the lapse of time between the execu 382 tion by the lessee and by the competent forest authority, and therefore, the date on which the Chief Conservator signed had not any real effect on the actual date on which the sale of the timber took place.
It was also within the realm of possibility that the timber might be lost on account of fire or other risk, before the contract was formally signed.
The sale of the timber to the 2nd respondent was therefore final on 24th December, the date of sale, subject to the acceptance of his bid by the competent authority.
[387 E H; A B] Williams vs North China Insurance Co., L.R. (1876)1 C.P.D. 757, applied.
Rule 8 of the Forest Contract Rules empowers the Divisional Forest Officer to stop the removal of the timber on his finding that the value of the timber already removed exceeded the amount of instalments paid.
But, that would not amount to reserving a right of disposal in the State, because, the rules provide that though Ordinarily the timber should be sold for cash payment in full, payment in instalments could be considered as payment in full, if a right in accordance with r. 8 is reserved.
When a contractor is deemed to have paid in full the price, there could be no occasion for the Government to reserve a right of disposal.
The provision in r. 8 is only in pursuance of the statutory provision in section 83 of the Forest Act.
1927, which provides that when any money is payable for or in respect of any forest produce, the amount thereof shall be a first charge on such produce, and that such produce may be taken possession of by a Forest Officer, until such amount has been paid.
[390 H 391 D]
|
No. 429 of 1974.
Under article 32 of the Constitution of India.
Shiv Pujan Singh, for the petitioner.
G. section Chatterjee, for the respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
Shri section P. Singh, appearing as amicus curiae has urged a few points in support of his submission that the petitioner detenu, very poor and not fallen into criminal company, is entitled to be set free, the order being illegal.
The obnoxious acts, with futuristic import, relating to the detention, have been set out in the grounds annexed to the order and are repeated in the affidavit of the Deputy Secretary, Home (Special) Department, Government of West Bengal, based on the records available in the Secretariat.
The District Magistrate of Purulia, nearly three long years ago, passed the order of detention against the petitioner on February 2, 1972 on receipt of materials regarding the pre judicial activities of the detenu and on being subjectively satisfied of the need for the detention under s.3 of the Maintenance of internal Security Act, 1971 (Act of 1971) (her r called the MISA, for short).
293 The two criminal adventuress of the petitioner which persuaded the District Magistrate to prognosticate about his prejudicial activities were allegedly indulged in on September 3, 1971.
The grounds of detention are that on that date, in two separate dramatic sallies, the detenu and his associates went armed with hacksaws, lathis etc., and what not, committed theft of overhead copper catenary wires and certain other items from a place between Anaka and Bagalia railway stations.
On the first occasion, which was during broad daylight, the miscreants were challenged 'by the R. section Members ' but were scared away by the petitioner and his gang repeated the theft of traction wire etc.
, at stone throw.
On the second occasion, which was at about mid night about the same spot 'When resisted by the duty RPF Rakshaks with the help Of villagers, ballasts were pelted at them by the violent in uders who made good their escape with the gains of robbery.
on these two frightful episodes, the detaining authority came to the requisite conclusion about danger to the community, which is recited in the order.
The question is whether, in the facts and circumstances of the case, the order can be impugned as colorable or exercise of power based on illusory or extraneous circumstances and therefore void.
An examination of the surrounding set of facts, serving as backdrop or basis, becomes necessary to appreciate the argument that the subjective satisfaction of the authority did not stem from any real application of his mind but as a ritualistic recital in a routine manner.
It is admitted in paragraph 6 of the counter affidavit that the two incidents were investigated as GRPS Case No. 1 and No .2.
The petitioner was arrested in connection with the said cases on September 9. 1971 and the police submitted a final report in both the cases on January 6, 1972 and February 9, 1972 respectively, 'not because there was no evidence against the petitioner but because the detenu petitioner being a dangerous person, witnesses were afraid to depose against him in open Court '.
It may be mentioned here that the petitioners name was not in the FIR but is alleged to have been gathered in the, course of the investigation.
However, be was discharged from the two cases on February 9, 1972 but was taken into custody the same day pursuant to the detention order.
Thereafter the prescribed formalities were followed and there is no quarrel about non compliance in this statutory sequence.
The crucial submission that deserves close study turns on the colorable nature or mindless manner of the impugned order.
What are the facts germane to this issue? It is seen that the petitioner 's name is not in the first information statements.
Had a court occasion to adjudge the guilt of an accused person charged with serious crime committed in the presence of quasi police officers and his name is not seen in the earliest report, to the police, that would have received adverse notice unless explained.
Likewise, the circumstance that the final report to the Court terminated the criminal proceedings may, unless other reasons are given, militate against the implication of the petitioner since section 169 Cr.
P.C. refers to two situations one of which at least nullifies possible inference of incrimination i.e., that 294 there is no 'reasonable ground of suspicion to justify the forwarding of the accused to a magistrate '.
It behoves the detaining authority to tell this Court how he reached his mental result in the face of a 'release report ' by the police.
For, the legal label that the satisfaction of the executive authority about potential prejudicial activity is 'subjective ' does not mean that it can be irrational to the point of unreality.
Subjective satisfaction is actual satisfaction, nevertheless.
The objective standards which courts apply may not be applied, the subject being more sensitive; but a sham satisfaction is no satisfaction and will fail in court when challenged under article 32 of the Constitution.
If material factors are slurred over, the formula of 'subjective, satisfaction ' cannot salvage the deprivatory order.
Statutory immunology hardly saves such invalidity.
After all, the jurisprudence of 'detention without trial is not the vanishing point of judicial review.
The area and depth of the probe, of course, is conditioned by the particular law, its purpose and language.
But our freedoms axe not wholly free unless the judiciary have a minimal look at their executive deprivation, even though under exceptional situations.
We may here refer to what a bench of five Judges of this Court observed in the vintage ruling Rameshwar Shaw(1) : "It is however necessary to emphasise in this connection that though the satisfaction of the detaining authority contemplated by section 3 (1) (a) is the subjective satisfaction of the said authority, cases may arise where the detenu may challenge the validity of his detention on the ground of mala fides and in support of the said plea urge that along with other which show, mala fides, the Court may also consider his grievance that the grounds served on him cannot possibly or rationally support the conclusion drawn against him by the detaining authority.
It is only in this incidental manner and in ' support of the plea of malafides that this question can become justiciable; otherwise the reasonableness or propriety of the said satisfaction contemplated by section 3 (1) (a) cannot be questioned before the Courts.
" Back to the facts.
Of course, the mere circumstance that the aim of the petitioner was gathered in the course of the investigation is neither here nor there and cannot help him in the tall contention that for that reason the order of detention is a make believe.
The conspectus of circumstances placed before the authority and his rational response, having regard to the duty to immobilise dangerous delinquents from molesting the community these are pertinent factors to decode the responsible reality of the satisfaction, although not the plenary rightness of the detention order.
There are a few vital facts which loom large in this context.
One is that court discharged the accused, the reason alleged in the counter being that ; , 926. 295 "The police submitted final report in those cases on 6 1 72 and 9 2 72 respectively not because there was no facts which show malafides, the Court may also consider his evidence against the petitioner but because the detenu petitioner being a dangerous person witnesses were afraid to depose against him in open court.
" What is the impact of a discharge of the accused by the criminal court based on police reports on the validity of the detention order against the same person based on the same charge in the context of a contention of a non application of the authority 's mind ? The two jurisdictions are different, the two jurisprudential principles diverge, the objects of enquiry and nature of mental search and satisfaction in the two processes vary.
The argument that detention without trial, for long spells as in this instance, is undemocratic has its limitations in modern times when criminal individuals hold the community to ran som, although vigilant check of executive abuse becomes a paramount judicial necessity.
We, as judges and citizens, must remember that, in law as in life, the dogmas of the quiet past are not adequate to the demands of the stormy present and the philosophy and strategy of preventive detention has come to stay.
We may merely observe that we are not legally impressed with counsel 's persistent point that solely or mainly because the petitioner has been discharged in the two criminal cases he is entitled to be enlarged from preventive captivity.
Even so, it does not follow that the extreme view propounded by the counsel for the State that the termination of the proceedings in a criminal case on identical facts is of no consequence is sound.
In this connection, we may draw attention to a few decisions of this Court cited at the bar.
Chandrachud J., speaking for the Court, recently observed in Srilal Shaw vs The State of West Bengal(1), dealing with a situation somewhat like the one in this case, thus): "This strikes us as a typical case in which for no apparent reason a person who could easily be prosecuted under the punitive laws is being preventively detained.
The Railway Property (Unlawful Possession) Act, 29 of 1966, confers extensive powers to bring to book persons who are found in unlawful possession of railway property.
The first offence is punishable with a sentence of five years and in the absence of special and adequate reasons to be mentioned in the judgment the imprisonment shall not be less than one year.
When a person is arrested for an offence punishable under that Act, officers of the Railway Protection Force have the power to investigate into the alleged offence and the statements recorded by them during the course of investigation do not attract the provisions of section 162, Criminal Procedure Code.
(See Criminal Appeal No. 156 of 1972 decided on 23 8 1974).
If the facts stated in the ground are true, this was an easy case to take to a successful termination.
We find it impossible of accept that the prosecution could not be proceeded with as the witnesses (1) Writ Petition No. 453 of 1974, decided on 4 12 74.
296 were afraid to depose, in the public against the petitioner.
The Sub inspector of Police who made the Panchnavna, we hope, could certainly not be afraid of giving evidence against the petitioner.
He had made the Panchnama of seizure openly and to the knowledge of the petitioner.
Besides, if the petitioner 's statement was recorded during the course of investigation under the Act of 1966, that itself could be relied upon by the prosecution in order to establish the charge that the petitioner was in unlawful possession of Rail , way property." (emphasis ours) Again, in Noorchand 's case(1) Gupta J., delivering judgment for Court, held: "We do not think it can be said that the fact that the petitioner was discharged from the criminal cases is entirely irrelevant and of no significance; it is a circumstance which the detaining authority cannot altogether disregard.
In the case of Bhut Nath Mate vs State of West Bengal ; this Court observed: ".
detention power cannot be quietly used to subvert, supplant or to substitute the punitive law of the Penal Code.
The immune expedient of throwing into a prison cell one whom the ordinary law would take care of, merely because it is irksome to undertake the inconvenience of proving guilt in court is unfair abuse.
" If as the petitioner has asserted, he was discharged because t 'here was no material against him and not because witnesses were afraid to give evidence against him, there would be apparently no rational basis for the subjective satisfaction of the detaining authority.
It is for the detaining authority to say that in spite of the discharge he was satisfied, on some valid material, about the petitioner 's complicity in the criminal acts which constitute the basis of the detention order.
But, as stated already, the District Magistrate Malda, who passed the order in this case, has not affirmed the affidavit that has been filed on behalf of the State.
" There was reference at the bar to the ruling reported as Golam Husvain vs Commissioner of Police(2) where the Court clarified that there was no bar to a detention order being made after the order of discharge by the criminal court, but emphasized the need to scan the ,order to prevent executive abuse in the following words: "Of course, we can visualise extreme cases where a Court has held a criminal case to be false and a detaining authority with that judicial pronouncement before him may not reasonably claim to be satisfied about prospective prejudicial activities based on what a Court has found to be baseless.
" (1) A.I.R. 1974 S.C. 2120.
(2) [1974]4 S.C.C. 530.
297 Maybe, we may as well refer to the, vintage ruling in Jagannath 's care(1) where Wanchoo J., (as he thn was) spoke for a unanimous Court : order of detention should show that it had acted with all due care and caution and with the sense of responsibility necessary when a citizen is deprived his liberty without trial.
We have therefore to see whether in the present case the authority concerned has acted in this manner or not.
If it has not so acted and if it appears that it did not apply its mind properly before making the order of detention the order in question would not be an order under die Rules and the person detained would be entitled to release.
" The precedential backdrop help crystallize the jurisprudence of, preventive detention, an odd but inevitable juridical phenomenon, in a suicide manner and to the extent relevant to the case.
Although.
the circumstances of each case will ultimately demarcate the callous, or colorable exercise of power from the activist or alert application of the executive 's mind in making the impugned order, some clear.
guidelines, though overlapping, help application of the law: (1) The discharge or acquittal by a criminal court is not necessarily a bar to preventive detention on the same facts for 'security ' purposes.
But if such discharge or acquittal proceeds on the footing that the charge is false or baseless, preventive detention on the same condemned facts may be vulnerable on the ground that the power under the MISA has been exercised in a malafide or colorable manner.
(2) The executive may act on subjective satisfaction and is immunised from judicial dissection of the sufficiency of the material.
(3) The satisfaction, though attenuated by 'subjectivity ' must be real and rational, not random divination, must flow from an advertence to relevant factors, not be a mock recital or mechanical chant of statutorily sanctified phrases.
(4) The executive conclusion regarding futuristic prejudicial activities of the detenu and its nexus with his past conduct is acceptable but not invulnerable.
The court can lift the verbal veil to discover the true face.
(5) One test to check upon the recolourable nature or mindless mood of the alleged satisfaction of the authority is to see if the articulate 'grounds ' are too groundless to induce credence in any reasonable man or to frivolous to be brushed aside as fictitious by a (1) ; ,138.
298 responsible instrumentality.
The court must see through mere sleights of mind played by the detaining authority. ' (6) More concretaly, if witnesses are frightened off by a desperate criminal, the court may discharge for deficient evidence but on being convinced (on police or other materials coming within his ken) that witnesses had been scared of testifying, the District Magistrate may still invoke his preventive power to protect society.
(7) But if on a rational or fair consideration of the police version or probative circumstances he would or should necessarily have rejected it, the routinisation of the satisfaction, couched in correct diction, cannot carry conviction about its reality or fidelity, as against factitious terminological conformity.
And on a charge of malafides or misuse of power being made, the court can go behind the facade and reach at the factum.
So viewed, how does the petitioner 's case stand? The petitioner 's identity and involvement must, in some manner, brought home, sufficient for the subjective satisfaction of a responsible officer not merely for his hunch or intuition.
Let us assume in favour of the officer that such material was present before him when he passed the order of detention.
This should be revealed to the court hearing the habeas corpus motion, in a proper return in the shape of an affidavit.
While we agree that the detainer 's own oath is not always insisted on as the price for sustaining the order, subjective satisfaction, being a mental fact or state is best established by the author 's affidavit, not a stranger in the Secretariat familiar with papers, but the mind of the man who realised the imperativeness of the detention.
This is not a formality when the subject matter is personal liberty and the more 'subjective ' the executive 's operation the more sensitive is procedural insistence.
Here the District Magistrate 's affidavit is unavailable.
Another obstacle in the way of the State, which has to be surmounted, consists in the circumstances that both the criminal occurrences took place in the presence of public servants, members of the para police forces attached to the railway administration.
Indeed, the case is that some of these officials were terrorized and over awed before the stolen articles were removed.
Naturally, one would expect a serious crime like railway property being removed by show of violence being the subject matter of the prosecution.
In the present case.
the District Magistrate does not swear an affidavit himself and what is stated is that he is now posted in Sikkim and is not 'presently available for affirming the affidavit '.
In a case where a personal expla nation is necessary, Sikkim is not too distant and so we have to see Whether the District Magistrate has, in the instant case, to show why, 299 when the cases were discharged by the trying magistrate, he thought there was enough material for preventive detention.
True, the Home Department official, informed by the records, has sworn that the police report for non prosecution was 'not because there was no offence against the petitioner but because the detenu petitioner being a Jangerous person witnesses were afraid to depose against him in open court '.
Maybe this is true, but the subjective satisfaction of the District Magistrate must be spoken to by him, particularly in a situation where the circumstances of the non prosecution strongly militate against the reality of the petitioner 's involvement in the occurrence.
After all, merely to allege that witnesses were panicked away from Testifying to truth cannot be swallowed gullibly when the witnesses Themselves are members of a railway protection force and the offenses against public property are of a grave, character.
The observations of Chandrachud J. in Srilal Shaw, quoted earlier, are in point.
In the case of non officials, maybe they are afraid to give evidence against dangerous characters for fear of their life but such an excuse or alibi is ordinarily unavailable where the witnesses are para police public servants.
If the District Magistrate had sworn an affidavit that he identity of the petitioner, as participant in the crime, was not known of the railway protection force and that other villagers made them out is the gang was decamping with the booty, something may be said for he plea.
There is no such averment in the counter affidavit and the pare ipse dixit of the Deputy Secretary in the Home Department that witnesses were afraid to depose is too implausible and tenuous to be acceptable even for subjective satisfaction.
After all, freedom is not bubble to be blown away by executive whif or whim.
For, as pointed put by Gajendragadkar J. (as he then was) in Rameshwar Shaw (supra) it p. 930 : "At the point of time when an order of detention is going to be served on a person, it must be patent that the said person would act prejudicially if he is not detained and that is a consideration which would be absent when the authority is dealing with a person already in detention.
" Had the statement been of the detaining authority, had the deponent furnished some fact which would or could make any reasonable man believe that the witnesses were likely to shy away from the court for far of the petitioner, bad the affidavit thrown some light on the dark lint behind the non prosecution in court due to non disclosure of evidence or to indicate that the final report of investigation was not on account of the absence of any reasonable suspicion but because of the deficiency of evidence (section 169 Cr.
P.C. contemplates both types of situations and the copy of the report was easy to produce), we might have upheld the detention.
In Dulat Roy vs The District Magistrate Burdwan(1) this question has been dealt with in some detail.
The flaw in the order flows from non explanation of how the District Magistrate has made his inference in the circumstances indicated.
(1) ; 300 Without more, we are inclined to the view that the observations of Wanchoo J. (as he than was) in Jagannath (supra), at p. 138, applies "This casualness also shows that the mind of the authority concerned was really not applied to the question of detention of the petitioner in the present case.
In this view of the matter we are of opinion that the petitioner is entitled to release as the order by which he was detained is no order under the Rules for it was passed without the application of the mind of the authority con In the present case, on account of the special reasons set out above, who are far from satisfied that the detention order is not a cloak to avoid the irksome procedure of a trial in Court.
There are two social implications of dropping prosecutions and resorting to substitutive detentions which deserve to be remembered.
Where a grievous crime against the community has been committed, the culprit must be subjected to condign punishment so that the penal law may strike a stem blow where it should.
Detention is a softer treatment than stringent sentence and there is no reason why a dangeral should get away with it by enjoying an unfree but unpaid holiday.
Secondly, if the man is innocent, the process of the law should give him a fair chance and that should not be scuttled by indiscriminate resort to easy but unreal orders of detention unbound by precise time.
That is a negation of the correctional humanism of our system and breeds bitterness, alienation and hostility within the cage.
We accordingly allow me writ petition, make the rule absolute and ' direct that the petitioner set free.
V.P.S. Petition allowed.
| On 14th April, 1973, the petitioner was alleged to have committed theft of aluminium wire and a criminal case was filed but it was ultimately dropped and the petitioner was discharged, because, the witnesses were not willing to give evidence for fear of danger to their life.
On 10th September, 1973, the District Magistrate passed an order under section 3(2)(i) of the , detaining the petitioner with a view to prevent ing him from acting in a manner prejudicial to the maintenance of supplies and services essential to the community, on his subjective satisfaction, based upon the solitary incident of the theft of aluminum wire.
The petitioner was actually detained on 23rd November, 1973.
Allowing the petition challenging the order of detention, HELD : The condition precedent for the making of the order of detention, namely the existence of a. real and genuine subjective.
satisfaction of the District Magistrate was not satisfied in the case.
and consequently, the order of detention must be quashed and set aside.
[596D E] (a) It must be assumed that the petitioner was discharged on or about 10th September, 1973, because, the District Magistrate must have made the order of detention in anticipation of the order of discharge.
If that was so, though the petitioner was available for detention, there was a delay of about two and half months in detaining the petitioner pursuant to the order of detention.
This delay, unless satisfactorily explained, would throw considerable doubt on the genuineness of the subjective satisfaction of the District Magistrate recited in the order of detention.
If the District Magistrate was really and genuinely satisfied he would have acted with greater promptitude.
But he has not offered any explanation as to why the petitioner was not detained until 23rd November, 1973, more than two months after he made the order of detention.
[595D H] (b) It is the obligation of the State or the detaining authority in making its return to the rule nisi, in cases of habeas corpus, to place all the relevant facts before the court and if there is any delay in arresting the detenu pursuant to the order of detention, which is prima facie unreasonable, the State must explain the delay.
The State cannot contend that the petitioner has not raised the contention in his petition.
[596B C] Sk.
Serajul vs State of West Bengal W.P. 2000 of 1973, decided on September 9, 1974, followed.
|
ivil Appeal Nos.
1370/74 and 1768 of 1975.
From the judgment and order dated the 29th September, 1972 of the Allahabad High Court in Income Tax Reference No. 47 of 1971.
S.T. Desai J.B. Dadachanji and K.J. John for the Appellant in C.A. 1370/74 and for Respondent in C.A. 1768/75.
V.S. Desai, Miss A. Subhashini, K.C. Dua and S.P. Nayar for the Respondent in CA.
1370/74 and for the Appellant in CA.
1768/75.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
These two appeals by certificate one by the assessee and the other by the Commissioner of Income tax, Kanpur are filed against the judgment and order dated September 29, 1972 of the High Court of Judicature at Allahabad in Income tax Reference No. 47 of 1971 under section 256(1) of the Income tax Act, 1961 (hereinafter referred to as 'the Act ') made by the Income tax Appellate Tribunal.
Allahabad Bench, Allahabad (for short 'the Tribunal ').
The two questions which were referred by the Tribunal for the opinion of the High Court were: "(1) Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the properties in dispute were capable of division in definite portions amongst the 10 coparceners as contemplated in Explanation (a) (i) to section 171 of the Income tax Act, 1961 and that even otherwise the mere severance of status was not sufficient to entitle the assessee to succeed in its claim for partial partition ? (2) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the 15 income from the properties in dispute which were accepted to have been partitioned under the Hindu law but with regard to which an order accepting the claim of partial partition was not made was liable to be included in the computation of the assessee 's income ?" The assessee is a Hindu undivided family known as M/s. Kalloomal Tapeshwari Prasad and the year of assessment is 1964.65.
The assessee is governed by the Mitakshara school of law.
The following genealogical tree represents the relationship amongst the members of the family: Phakki Lal ________________________________________________ | | | | | | Chandoolal Bishambhar Nath Sitaram (His Wife Rampiari (dies issueless (wife kripa died on 17.9.63) on 1940 wife Devi) | | | | | | | ______________ | | | | | | | Gopalji Ramji ___________________________________________ | | | | | Jagat Roop Swarup Shyam Bimal Narian Narain Narain Narian Narian During the relevant previous year, the family consisted of Chandoolal, Sitaram and his wife Kripa Devi, Jagat Narain, Roop Narain, Swarup Narain, Shyam Narain and Bimal Narain who were the five sons of Chandoolal and Gopalji and Ramji, the two Sons of Sitaram.
The assessee (Hindu undivided family) was deriving income from various sources such as income from property, income from money lending business, income from speculation business and cloth business etc.
There was a partial partition in the family in the year 1951 when a sum of Rs. 5,00,000 out of its total capital of Rs. 12,85,423 was divided amongst the coparceners at the rate of Rs. 41,666110/8 amongst members of Chandoolal 's branch and at the rate of Rs. 83,333/5/4 amongst the members of Sitaram 's branch.
Kripa Devi did not receive any share at that partition.
The said partial partition was accepted and acted upon by 16 the Income tax Department where after the cloth business was treated as the business of a firm consisting of most of the coparceners as partners.
Again on December 11, 1963 which fell within the previous year relevant for the assessment year in question i.e. 1964 65, according to the assessee, there was another partial partition orally as a result of which its eighteen immovable properties were divided amongst the ten members of the family and that they held those properties as tenants in common from that date.
It was claimed by the assessee in the course of the assessment proceedings that the members of the family had commenced to maintain separate accounts with regard to the income from the said eighteen properties and to divide the net profits amongst themselves according to their respective shares at the end of each year.
The eighteen immovable properties were situated in different places and their valuation was as follows: section No. Municipal number of Value the property 1.
75/2 1,78,875/ 2.
76/162 27,000/ 3.
76/169 45,000/ 4.
47/110 13,500/ 5. 47/26 20,700/ 6. 48/203 16,200/ 7.
55/124 90,000/ 8.
55/36} 9. 55/37} 41,400/ 10.
70/87 1,57,500/ 11.
71/150 8,100/ 12. 71/89 3,600/ 13.
71/112 19,800/ 14.
63/61 7,425/ 15.
51/68 17,100/ 16.
s 51/73 14,400/ 17.
86/37 20,520/ 18.
1/301A 45,000/ 7,26,120/ 17 When required by the Income tax Officer to explain as to why the properties were not divided in definite portions as required by section 171 of the Act, the assessee stated that physical division of the properties in question amongst the ten members was impossible and the only possible way to partition those properties was to define their respective shares and to enjoy the income from them separately.
In support of the above claim the assessee relied upon a copy of an award dated April 15, 1964 made by one S.B. Tandon which was made into a decree in Suit No. 60 of 1964 on the file of the Court of the First Civil Judge, Kanpur dated September 21, 1964.
In that award the arbitrator had stated that the properties did not admit of physical division.
The Income tax Officer did not agree with the assessee 's contention that it was not possible to divide the properties in question in definite portions.
Accordingly he rejected the claim of partial partition in respect of the eighteen immovable properties and proceeded to assess the income derived therefrom in the hands of the assessee.
Against the order of the Income tax Officer, the assessee filed an appeal before the Appellate Assistant Commissioner of Income tax.
During the pendency of that appeal the assessee appointed another arbitrator by the name Lakhsman Swaroop, a retired Chief Engineer to examine the possibility of a physical division of each of the eighteen properties into ten portions and if that was not possible to suggest any other mode or modes to divide them into ten parts in accordance with the share allotted to each of the parties to the partition.
By his award dated February 3, 1965, Lakshman Swaroop stated that the aforesaid properties were "not capable of physical division into ten shares by metes and bounds and that any practical division is that of allocation of proportionate shares in all the 18 properties in question.
" It may be mentioned here that out of the ten shares, six shares were 1/12th each and four shares were 1/8th each.
Chandoomal and his five sons had been allotted 1/12th each and Sitaram his wife and his two sons had been allotted 1/4th each.
Lakshman Swaroop was also examined as a witness before the Appellate Assistant Commissioner by the assessee and cross examined by the Income tax Officer.
The Appellate Assistant Commissioner on a consideration of the material before him including the decree of the court referred to above and the evidence of Lakshman Swaroop held that the case of the assessee that it was not possible to divide the properties physically into ten shares referred to above was not tenable and dismissed the appeal.
The assessee, thereafter took up the matter before the Tribunal in appeal.
The Tribunal also was of the view that the contention of the assessee that if the properties had 18 been divided into ten shares, they would have either been destroyed or would have lost in value was not correct.
Accordingly the claim of the assessee under section 171 of the Act that there was a partial partition was rejected.
Thereupon on an application of the assessee made under section 256(1) of the Act, the two questions set out above were referred by the Tribunal to the High Court for its opinion.
After hearing the parties, the High Court recorded its answer to the first question in the affirmative and in favour of the Department and in reaching that conclusion, it observed thus: "We have seen the evidence of the arbitrator as well as the Chief Engineer, and it is apparent there from that even though the 18 properties could not individually be divided into 10 shares without destroying their utility but after assessing the value of the properties, they could be apportioned between the ten members and the difference in the allocations could be equalised by payment of cash amounts by one to the other.
In our opinion, it cannot, in such a situation, be said that these 18 properties were incapable of physical division in 10 shares, and so, in view of clause (a) (i) of the Explanation, mere severance of status was not sufficient for recording a finding of partition.
" The High Court answered the second question in favour of the assessee holding that the income accruing from the eighteen immovable properties after December 11, 1963 was however not liable to be included in the computation of the joint Hindu family 's income.
In recording this answer, the High Court observed thus: "Sec. 171 of the 1961 Act in essence, is a re actment of Sec.
25A with the difference that it applies not only to cases of total partition but also to cases of partial partition.
There are some incidental changes as well, e.g. sec.
171 applies also for purposes of levying and collecting penalty, fine or interest and in addition requires the Income tax Officer to record a finding as to the date on which total or partial partition took place.
The fact that sec.
171 applies to a partial partition (meaning a partition which is partial as 19 regards the persons or as regards the properties of the family or both) as well shows that a finding of partial partition can be recorded and on such a finding being recorded under sub section (4) the total income of the joint family in respect of the period upto the date of partition is to be assessed as if no partition had taken place and each member of the family was to be liable, notwithstanding anything contained in clause (2) of sec.
10, jointly and severally for the tax on the income so assessed.
Thus sec.
171, like sec.
25A, seeks to nullify the effect of sec.
10 (2) under which a member was not liable to be taxed on the income received as a member of Hindu undivided family.
The section does not entitle the inclusion of income from an asset which has ceased to belong to the joint family, in the assessment of the joint Hindu family.
In the present case, on the findings, the position is that the joint Hindu family stood disrupted in relation to the 18 immovable properties as a result of the oral partition dated 11th December, 1963.
Thereafter the income of these properties belonged to the individual members and not to the joint family.
It could not be included in the assessment of the family.
" Aggrieved by the answer to the first question, the assessee has filed Civil Appeal No. 1370 of 1974 and aggrieved by the answer to the second question, the Revenue has filed Civil Appeal No. 1768 of 197.
It is necessary to refer to the history of the relevant provisions in order to decide the questions raised before us.
Under the Indian Income tax Act, 1922 (for short 'the 1922 Act ') a Hindu undivided family could be assessed on its income.
Section 3 of the 1922 Act laid down that where any Central Act enacted that income tax should be charged for any year at any rate or rates, tax at that rate or those rates should be charged for that year in accordance with and subject to the provisions of that Act in respect of total income of the previous year of every individual, Hindu undivided family etc.
But section 14 (1) of the 1922 Act provided that no tax was payable by an individual assessee in respect of any sum which he received as a member of a Hindu undivided family where such sum had been paid out of the income of the family.
Section 25 A was 20 inserted in the 1922 Act in the year 1928 providing for the machinery for assessment after partition of a Hindu undivided family.
That section immediately before the repeal of the 1922 Act read as follows: "25A. Assessment after partition of a Hindu undivided family (1) Where, at the time of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income tax Officer shall make such inquiry there into as he may think fit, and, if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect: Provided that no such order shall be recorded until notices of the inquiry have been served on all the members of the family.
(2) Where such an order has been passed, or where any person has succeeded to a business, profession or vocation formerly carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vacation, the Income tax Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition had taken place, and each member or group of members shall, in addition to any income tax for which he or it may be separately liable and notwithstanding anything contained in sub section (1) of section 14, be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it; and the Income tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of section 23: Provided that all the members and groups of members whose joint family property has been partitioned 21 shall be liable jointly has severally for the tax assessed on the total income received by or on behalf of the joint family as such.
(3) Where such an order has not been passed in respect of Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to continue to be a Hindu undivided family".
Section 25 A of the 1922 Act as it stood then (subsequent modifications in it being immaterial for the purposes of this case) came up for consideration by the Judicial Committee of the Privy Council in Sir Sunder Singh Majithia vs The Commissioner of Income tax, C.P. and U.P.
The Privy Council held that section 25 A of the 1922 Act provided that if it be found that the family property had been partitioned in definite portions, assessment might be made, notwithstanding section 14(1) on each individual or group in respect of his or its share of the profits made by the undivided family, while holding all the members jointly and severally liable for the tax.
It was further held that if, however, though the joint Hindu family had come to an end, it be found that its property had not been partitioned in definite portions then the family was to be deemed to continue that is, to be an existent Hindu family upon which assessment could be made on its gains of the previous year.
But it was of the view that section 25 A had nothing to say about any Hindu undivided family which continued in existence never having been disrupted.
Such a case was held to fall outside sub section (3) of section 25 A and in effect, it held that the said section did not apply to cases of partial partition.
In Gordhandas T. Mangaldas vs Commissioner of Income tax, Bombay, Kania, J. (as he then was) who agreed with Beaument, C.J. explained the scheme of section 25 A of the 1922 Act (as it stood then) in his concurring judgment thus: "It is material to bear in mind the scheme of the Income tax Act, in the first instance.
Under sections 2 and 3 the different units stated therein are liable to be taxed as such.
One of them is a joint Hindu family.
In order to avoid double taxation, Section 14 lays down 22 that when the individual member is being assessed, his income as member of a joint family should not be assessed again.
Then comes the stage, what happens when a family, which has once been so assessed, comes to a partition.
To meet that contingency, Section 25 A has been enacted.
In the section, as it existed before the amendment of 1939, in terms the Income tax Officer required proof, (i) that a separation of the members of the joint family had taken place and (ii) that the joint family property had been partitioned amongst the various members or groups of members in definite portions.
On being satisfied on those points he had to record an order to that effect.
The effect of such a recording was that the joint family income would be assessed and recovered in terms of sub section (2).
In the absence of such order, under sub section (3) the joint family continued to be assessed as before." The same view was followed in Waman Satwappa Kalghatgi vs Commissioner of Income tax and in M.S.M.S. Meyyappa Chettiar vs Commissioner of Income tax, Madras.
This Court had to consider the true meaning of section 25 A of the 1922 Act in Lakhmichand Baijnath vs Commissioner of Income tax, West Bengal.
Venkatarama Aiyar, J. speaking for the Court observed in the above case thus: "Now, when a claim is made under section 25 A, the points to be decided by the Income tax Officer are whether there has been a partition in the family, and if so, what the definite portions are in which the division had been made among the members or groups of members.
The question as to what the income of the family assessable to tax under section 23 (3) was would be foreign to the scope of and enquiry under section 25 A.
That section was, it should be noted, introduced by the Indian Income tax (Amendment) Act, 1928 (3 of 1928) for removing a defect which the 23 working of the Act as enacted in 1922 had disclosed.
Under the provisions of the Act as they stood prior to the amendment, when the assessee was an undivided family, no assessment could be made thereon if at the time of the assessment it had become divided, because at that point of time, there was no undivided family in existence which could be taxed, though when the income was received in the year of account the family was joint.
Nor could the individual members of the family be taxed in respect of such income as the same is exempt from tax under section 14 (1) of the Act.
The result of these provisions was that a joint family which had become divided at the time of assessment escaped tax altogether.
To remove this defect, section 25 A enacted that until an order is made under that section, the family should be deemed to continue as an undivided family.
When an order is made under that section, the family should be deemed to continue as an undivided family.
When an order is made under that section, its effect is that while the tax payable on the total income is apportioned among the divided members or groups, all of them are liable for the tax payable on the total income of the family.
What that tax is would depend on the assessment of income in proceedings taken under section 23, and an order under section 25 A would have no effect on that assessment.
" The above view was reiterated by this Court in Kalwa Devadattam and Ors.
vs Union of India and Ors.
in Additional Income tax Officer, Cuddapah vs Thimmayya and Anr.
and in Joint family of Udayan Chinubhai etc.
vs Commissioner of Income tax, Gujarat.
The substance of all these decisions was that under section 25 A of the 1922 Act a Hindu undivided family which had been assessed to tax could be treated as undivided and subjected to tax under the Act in that status unless and until an order was made under section 25 A (1) and if in the course of the assessment proceedings it is claimed by any of the members of the Hindu undivided family that there 24 has been total partition of the family property resulting in physical division thereof as it was capable of, the assessing authority should hold an enquiry and decide whether there had been such a partition or not.
If he held that such a partition had taken place, he should proceed to make an assessment of the total income of the family as if no partition had taken place and then proceed to apportion the liability as stated in section 25 A amongst the individual members of the family.
If no claim was made or if the claim where it was made was disallowed after enquiry, the Hindu undivided family would continue to be liable to be assessed as such.
This was the legal position under the 1922 Act.
The law relating to assessment of Hindu undivided family, however, underwent a change when the Act came into force.
Section 171 of the Act which corresponds to section 25 A of the 1922 Act reads thus: "171.(1) A Hindu family hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family.
(2) Where, at the time of making an assessment under section 143 or section 144, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Income tax Officer shall make an inquiry thereinto after giving notice of the inquiry to all the members of the family.
(3) On the completion of the inquiry, the Income tax Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place.
(4) Where a finding of total or partial partition has been recorded by the Income tax Officer under 25 this section, and the partition took place during the previous year: (a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding any thing contained in clause (2) of section 10, be jointly and severally liable for the tax on the income so assessed.
(5) Where a finding of total or partial partition has been recorded by the Income tax Officer under this section, and the partition took place after the expiry of the previous year, the total income of the previous year of the joint family shall be assessed as if no partition has taken place, and the provisions of clause (b) of sub section (4) shall, so far as may be, apply to the case.
(6) Notwithstanding anything contained in this section if the Income tax Officer finds after completion of the assessment of a Hindu undivided family that the family has already effected a partition, whether total or partial, the Income tax Officer shall proceed to recover the tax from every person who was a member of the family before and partition, and every such person shall be jointly and severally liable for the tax on the income so assessed.
(7) For the purposes of this section, the several liability of any member or group of members thereunder shall be computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial.
(8) The provisions of this section shall, so far as may be, apply in relation to the levy and collection of 26 any penalty, interest, fine or other sum in respect of any period up to the date of the partition, whether total or partial, of a Hindu undivided family as they apply in relation to the levy and collection of tax in respect of any such period.
Explanation In this section (a) "partition" means (i) where the property admit of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition; or (ii) where the property does not admits of a physical division then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition; (b) "partial partition" means a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both." Section 4(1) of the Act which levies the charge of income tax states that where any Central Act enacts that income tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, the Act in respect of the total income of the previous year or previous years, as the case may be, of every person.
The expression 'person ' is defined in section 2(31) of the Act as including within its meaning a Hindu undivided family.
In order to avoid double taxation of the same income under the Act, any sum received by an individual as a member of a Hindu undivided family where such sum has been paid out of the income of the family is required by section 10 (2) of the Act not to be included in computing the total income of a previous year of any person.
This requirement, however, is subject to section 64 (2) of the Act with effect from April 1, 1971.
Then follows section 171 of the Act which 27 provides for the assessment after partition of a Hindu undivided family.
Under Hindu law partition may be either total or partial.
A partial partition may be as regards persons who are members of the family or as regards properties which belong to it.
Where there has been a partition, it is presumed that it was a total one both as to the parties and property but when there is a partition between brothers, there is no presumption that there has been partition between one of them and his descendants.
It is, however, open to a party who alleges that the partition has been partial either as to persons or as to property to establish it.
The decision on that question depends on proof of what the parties intended whether they intended the partition to be partial either as to persons or as to properties or as to both.
When there is partial partition as to property, the family ceases to be undivided so far as properties in respect of which such partition has taken place but continues to be undivided with regard to the remaining family property.
After such partial partition, the rights of inheritance and alienation differ accordingly as the property in question belongs to the members in their divided or undivided capacity.
Partition can be brought about (1) by a father during his lifetime between himself and his sons by dividing properties equally amongst them, (2) by agreement or (3) by a suit or arbitration.
A declaration of intention of a coparcener to become divided brings about severance of status.
As observed by the Privy Council in Appovier vs Rama Subba Aivan" when the members of an undivided family agree among themselves with regard to a particular property, that it shall thenceforth be the subject of ownership, in certain defined shares, then the character of undivided property and joint enjoyment is taken away from the subject matter so agreed to be dealt with, and in the estate each member thenceforth a definite and certain share, which he may claim the right to receive and to enjoy in severalty, although the property itself has not been actually severed and divided".
A physical division of the property which is the subject matter of partition is not necessary to complete the process of partition in so far as that item of property is concerned under Hindu law.
The parties to the partition may enjoy the property in question as tenants in common.
In Approvier 's case (supra) the Privy Council further laid down that "if there be a conversion of the joint tenancy of an 28 undivided family into a tenancy in common of the members of that undivided family, the undivided family becomes a divided family with reference to the property that is the subject of that agreement, and that is a separation in interest and in right, although not immediately followed by de facto actual division of the subject matter.
This may, at any time, be claimed by virtue of the separate right.
" It is thus clear that Hindu law does not require that the property must in every case be partitioned by mates and bounds or physically into different portions to complete a partition.
Disruption of status can be brought about by any of the modes referred to above and it is open to the parties to enjoy their share of property as tenants in common in any manner known to law according to their desire.
But the income tax law introduces certain conditions of its own to give effect to the partition under section 171 of the Act.
Section 171 of the Act applies to a case where there is a Hindu undivided family which had been assessed as such under the Act until a claim is made under section 171(2) that there has been a partition total or partial in it.
The partition contemplated under section 171 of the Act may be either total or partial.
Here there is a departure made from section 25A of the 1922 Act which was concerned with a total partition only.
In sub sections (2) to (5) and (8) of section 171 of the Act, the word 'partition ' is qualified by words 'total or partial '.
The Explanation to section 171 of the Act to which we shall revert again also defines the expression 'partial partition ' as meaning a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both.
Subsection (2) of section 171 provides that where at the time of making an assessment under section 143 or section 144 of the Act it is claimed by or on behalf of any member of a Hindu undivided family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Income tax Officer shall make an inquiry into the said claim after giving notice to all the members of the family.
On the completion of the inquiry, the Income tax Officer is required by sub section (3) of section 171 to record a finding as to whether the claim of partition, total or partial is true or not and if there has been such a partition, the date on which it has taken place.
Sub section (4) of section 171 states that when a finding of total or partial partition has been 29 recorded by the Income tax Officer and the partition had taken place during the previous year the total income of the joint family in respect of the period upto the date of partition shall be assessed as if no partition had taken place and each member or group of members shall in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clause (2) of section 10 be jointly and severally liable to the tax on the income so assessed Where the finding recorded is that the partition had taken place after the expiry of the previous year then the joint family has to be assessed under sub section (5) of section 171 as if no partition had taken place and the tax shall be recoverable mutatis mutandis as provided in clause (b) of sub section (4) thereof.
The several liability of a member or a group of the undivided family has to be determined under sub section (7) of section 171 according to the share of family property allotted to him or to the group, as the case may be.
Sub section (8) of section 171 extends the above rules of assessment and liability to levy and collection of any penalty, interest, fine etc.
payable by the family upto the date of partition.
Sub section (6) of section 171 which contains a non obstante clause empowers the Income tax Officer to recover the tax due from a family from every member of the family before the partition even if he finds after the completion of assessment that the family has undergone a partition already.
The true effect of this provision is discussed in Govinddas & Ors.
vs Income tax Officer & Anr.
Now we come to sub section (1) of section 171 of the Act which contains a 'deeming ' provision.
It says that a Hindu family hitherto assessed as undivided shall be deemed for the purposes of the Act to continue to be a Hindu undivided family except where and in so far as a finding of partition has been recorded in respect of it under section 171.
Partition referred to here can obviously include a partial partition also either as regards the persons constituting the undivided family or the properties belonging to it or both, in view of the provisions contained in the other sub sections in and the Explanation to section 171.
Where there is no claim that a partition total or partial had taken place made or where it is made and disallowed a Hindu undivided family which is hitherto being assessed as such will have to be assessed as such notwithstanding the fact a partition had in fact taken place 30 as per Hindu law.
A finding to the effect that partition had taken place has to be recorded under section 171 by the Income tax Officer.
He can record such a finding only if the partition in question satisfies the definition of the expression 'partition ' found in Explanation to section 171.
A transaction can be recognised as a partition under section 171 only if, where the property admits of a physical division, a physical division of the property has taken place.
In such a case mere physical division of the income without a physical division of the property producing income cannot be treated as a partition.
Even where the property does not admit of a physical division then such division as the property admits of should take place to satisfy the test of a partition under section 171.
Mere proof of severance of status under Hindu law is not sufficient to treat such a transaction as a partition.
If a transaction does not satisfy the above additional conditions it cannot be treated as a partition under the Act even though under Hindu law there has been a partition total or partial.
The consequence will be that the undivided family will be continued to be assessed as such by reason of sub section (1) of section 171.
At this stage one contention urged on behalf of the assessee needs to be considered.
It is asserted on behalf of the assessee that the fiction contained in section 171(1) of the Act does not at all apply to an undivided family which continues to be in fact an undivided family even after a partial partition as regards some of its properties had taken place.
The argument is that a 'deeming ' provision can operate only where the real state of affairs is different from what the law deems as existing and it can not where the real state of affairs is the same as the one which law by a fiction treats as existing.
It is urged that since the undivided family in fact continues even after a partial partition as regards property, there is no need to enact a rule declaring that it shall be deemed to continue as an undivided family.
Hence section 171(1) of the Act cannot be construed as being applicable to such a case.
In other words, it is urged that where all the members of an undivided family continue to be members of such family owning the remaining properties which are yielding income after a partial partition as regards some properties has taken place, the undivided family is liable to be assessed as such only in respect of the income derived by it from the remaining items of property owned by it and the income derived properties which have gone out of the ownership of the family by reason of the partial partition should be excluded from the total income of the family.
Reliance is placed on the following obser 31 vations of the Privy Council in the case of Sir Sunder Singh Majithia (supra) where sub section (3) of section 25 A of the 1922 Act arose for consideration: "The section has nothing to say about the Hindu undivided family which continues in existence never having been disrupted.
Such a case is outside sub section (3) because it is not within the section at all.
No sub section is required to enable an undivided family which has never been broken up to be deemed to continue.
But it need not have the same assets or the same income in each year and it can part with an item of its property to its individual members if it takes the proper steps.
" It is not necessary to make any comment on these observations as they had held the field until the Act came into force with section 171 inserted in it.
The Parliament enacted section 171 after taking note of the above decision and several other decisions following it which had taken the view that a partial partition did not fall within the scope of section 25 A.
It expressly stated in section 171 of the Act that the said provision was applicable to both kinds of partitions total or partial, It has also defined partial partition as one which is partial as regards persons constituting the undivided family or as regards the properties belonging to the undivided family or both.
Virtually the present provision deals with all kinds of partitions the nature of which sometimes may be difficult to predicate correctly.
Take a joint family consisting of a father, his sons and grandsons as shown in the following genealogical tree: A | | | ______________________________________________ | | | | | | B C D | | | | | | ______________ ___________ ___________ | | | | | | | | | | | | E F G H I J When a partition takes place in the above family there may be a partition when all of them A, B, C, D, E, F, G, H, I and J 32 become divided each of them taking his rightful share in the family property.
In this case there is a total partition.
The second kind of partition may be amongst four groups, the first consisting of A only, the second consisting of B, E and F, the third consisting of C, G and H and the fourth consisting of D, I and J each group taking one fourth share in all the properties and the branch of B, the branch of C, and the branch of D continuing as undivided families.
The third kind of partition may be a partition where any one of the three branches the branch of B, or the branch of C, or the branch of D separates from the rest of the family taking its share thus resulting in two undivided families one family which has gone out of the family and the other consisting of the remaining members.
In these cases the partition can be called partial both as regards persons and as regards properties.
The next kind of partition may be one where all the members divide amongst themselves only some of the family properties and continue as members of an undivided family owning the remaining family properties.
This is called a partial partition as regards property.
Even here the division of the property which is subject matter of partial partition may be groupwise also.
In the case of a partial partition as regards property, one thing noticeable is that after such partition, the property which is the subject matter of partition is held by the members of the family as tenants in common and the rest of the family properties continue to be held by them as members of the undivided family.
This is the very principle which is expounded by the Privy Council in Appovier 's case (supra) in the two passages extracted above.
After a partial partition as regards property, the property divided is held by the members of the undivided family as divided members with all the incidents flowing therefrom and the property not so divided as members of an undivided family.
The fiction enacted in section 171(1) of the Act, therefore, operate in such a case also because the family which has become divided as regards the property which is the subject matter of partial partition is deemed to continue as the owner of that property and the recipient of the income derived from it except where and in so far as a finding of partition has been given under section 171.
In such a case it is obvious the real state of affairs is in fact different from what is created by the fiction and it cannot be said that there is no occasion for the fiction to operate.
That is the true meaning of section 171 (1) of the Act.
In view of the substantial changes that are brought 33 about in section 171, we find it impossible to accept the contention that the fiction in section 171 (1) of the Act does not operate in the case of partial partitions as regards property where the composition of the family has remained unchanged.
The answer to the first question referred to the High Court by the Tribunal depends upon the true construction of sub clause (i) of clause (a) of the Explanation to section 171 of the Act.
The subject matter of partial partition as mentioned earlier, consisted of eighteen items of immovable property.
The value of each of them is given in the earlier part of this judgment.
Under the partial partition in question, six persons were allotted 1/12th share each in these eighteen properties and four persons were allotted 1/8th share each.
The total value of the eighteen properties was Rs. 7,26,120.
Six of the members were, therefore, entitled to properties of the value of Rs. 60,510/ each and four of them were entitled to properties of the value of Rs. 90,765 each.
Before the Tribunal two submissions were made on behalf of the assessee in support of the plea that the arrangement entered into amongst the parties providing for division of the income of the properties in question without resorting to physical division of the properties was a partition as defined by the Explanation to section 171 of the Act.
The first submission was that the word 'property ' occurring in clause (a) (i) of the Explanation to section 171 referred to an individual item of property which is divided and not to all the properties which are divided at the partition total or partial and hence as it had been accepted by the Department that each of the eighteen items of property could not be divided conveniently into ten portion without destroying its utility it had to be held that the properties did not admit of physical division.
The second submission which was urged in the alternative was that even if it was possible to distribute the said properties equitably amongst the shares by asking them to make necessary monetary adjustment to equalise the shares as the Explanation to section 171 did not contemplate any such monetary adjustment, the assessee could not be denied under section 171 the recognition of the partial partition which had taken place as per Hindu law.
In support of this plea the assessee depended upon the opinion of the arbitrator Tandon, on the basis of whose award the decree had been passed and also the evidence of Lakshman Swaroop tendered before the Appellate Assistant Commissioner.
Taking into consideration all the material before them and having regard to the shares allotted to each of the members, the market value, situation, size and the age 34 of each of the items of the property in question, the tax payable in respect of each of them and also the fact whether an item of property is in the occupation of a tenant or not, the Tribunal came to the conclusion that it was possible to divide the properties in question physically into different lots so that each member could take his rightful share in them.
The High Court also has expressed the same opinion.
On the facts and in the circumstances of the case, we approve of the above view of the High Court.
We feel that the properties involved in this case admitted of physical division into the required number of shares and such division would not have adversely affected their utility.
It is common knowledge that in every partition under Hindu law unless the parties agree to enjoy the properties as tenants in common, the need for division of the family properties by metes and bounds arises and in that process physical division of several items of property which admit of such physical division does take place.
It is not necessary to divide each item into the number of shares to be allotted at a partition.
If a large number of items of property are there, they are usually apportioned on an equitable basis having regard to all relevant factors and if necessary by asking the parties to make payments of money to equalise the shares.
Such apportionment is also a kind of physical division of the properties contemplated in the Explanation to section 171.
Any other view will be one divorced from the realities of life.
The case before us is not a case where it was impossible to make such a division.
Nor is it shown that the members were not capable of making payment of any amount for equalisation of shares.
We are of the view that there is no material in the case showing that the assessee ever seriously attempted to make a physical division of the property as required by law.
All that was attempted was to rely upon the arbitrator 's award and Lakshman Swaroop 's evidence which were rightly held to be insufficient by the Tribunal to uphold the claim of the assessee.
The assessee cannot derive any assistance from the decision of this Court in Charandas Haridas Anr.
vs Commissioner of Income tax, Bombay North.
Kutch and Saurarhtra, Ahmedabad, and Anr.
There the item of asset which had to be partitioned was the right in certain managing agency agreements.
The Court upheld the arrangement of division of commission amongst the members among whom the said right was divided as a partition satisfying the test laid down by the income tax law as it was of the view that any physical division of that right meant the dissolution of 35 the managing agency firms and their reconstitution which was not altogether in the hands of the karta of the family.
The Court also was satisfied that the family took the fullest measure possible for dividing the joint interest into separate interests.
In the present case we are satisfied that no such attempt to divide the properties was made.
This case clearly falls under sub clause (i) of clause (a) of the Explanation to section 171 of the Act but does not satisfy the requirement of that sub clause as no physical division of the properties was made even though they could be conveniently so divided.
Sub clause (ii) thereof does not apply to this case at all.
We, therefore, agree with the answer given by the High Court to the first question in the affirmative.
The appeal of the assessee is, therefore, liable to be dismissed.
Having held that the assessee was not entitled to claim a partial partition had taken place under section 171, the High Court fell into an error in holding that the income of the properties which were the subject matter of partial partition could not be included in the total income of the assessee by relying upon the decisions which had been rendered on the basis of section 25 A of the 1922 Act which had been construed as not being applicable to partial partitions.
We have already held that section 171 of the Act applies to all partitions total and partial and that unless a finding is recorded under section 171 that a partial partition has taken place the income from the properties should be included in the total income of the family by virtue of sub section (1) of section 171 of the Act.
To put it in other words what would have been the position of a Hindu undivided family which had claimed in an assessment proceedings under the 1922 Act that a total partition had taken place and had failed to secure a finding to that effect in its favour under section 25 A thereof would be the position of a Hindu undivided family which has failed to substantiate its plea of partial partition as regards property under section 171 of the Act.
The property which is the subject matter of partial partition would continue to be treated as belonging to the family and its income would continue to be included in its total income until such a finding is recorded.
That is the true effect of section 171 (1).
It was, however, urged on the analogy of the income from a family property alienated by a karta in favour of a stranger that the income which was not actually received by the family could not be taxed and in support of 36 this plea reliance was placed on a decision of the Madras High Court in A. Kannan Chetty vs Commissioner of Income tax, Madras In that decision it is observed thus: "For instance, if the karta of a family effects an alienation or even makes a gift.
in so far as the taxing department is concerned it is the income of the members of the Hindu undivided family that can be assessed, and if by reason of an alienation, whether it is binding upon the members of the joint family or not, an item of property ceases to be in the hands of the joint family, it would not be open to the department to say that they would ignore such an alienation, notwithstanding that the possession of the properties and its income may pass into the hands of a stranger.
It may be different in cases where the joint family deals with one or more items of property or converts it into a different estate retaining both possession and income in its own hands.
That may properly be a case where the department may ignore such a transaction.
" It is significant that in the passage extracted above the Madras High Court has distinguished the case of an alienation in favour of a stranger from the case where the joint family deals with one or more items of property or converts it into a different estate retaining both possession and income in its own hands.
We do not consider that such a plea is available to the assessee because the acceptance of such a plea would lead to the nullification of the scheme of section 171 of the Act itself.
As long as a finding is not recorded under section 171 holding that a partial partition had taken place the Hindu undivided family should be deemed for the purposes of the Act to be the owner of the property which is the subject matter of partition and also the recipient of the income from such property.
The assessment should be made as such and the tax assessed can be recovered as provided in the Act.
In the circumstances, the decision of the High Court on the second question has to be reversed.
We accordingly record our answer to the second question in the affirmative and in favour of the Department.
37 In the result, Civil Appeal No. 1370 of 1974 is dismissed and Civil Appeal No. 1768 of 1975 is allowed.
The assessee shall pay the costs of the Department.
Hearing fee one set.
N.V.K. Civil Appeal 1370/1974 dismissed and Civil Appeal 1768/1975 allowed.
| After hearing the habeas corpus petitions of the respondents, who were detained under the provisions of the Maintenance of Supplies of Essential Commodities Act, 1980 the Division Bench of the High Court released the writ petitions from their list since the Court was to have holidays for over ten days immediately thereafter.
Another Division Bench, which took up the petitions for hearing, also adjourned the petitions until the reopening of the Court after holidays.
In the mean time a single Judge of the High Court, before whom the detenus made an application for bail, allowed their petitions on the ground that the Government had erred in forwarding their representations to the advisory board without considering them for itself.
On reopening of the Court, a Division Bench heard the habeas corpus petitions.
It however, allowed the detenus to be on bail till the judgment was pronounced.
In its petition for grant of special leave to appeal the State challenged the impugned order of the Single Judge releasing the detenus on bail "until the next date of hearing of the habeas corpus petitions".
Allowing the appeal ^ HELD: 1.
The single Judge erred in releasing the detenus on bail when their writ petitions were listed for hearing before a Division Bench.
Neither was there any pressing or particular reason of a unique kind such as grave illness or pressing and personal business justifying the order of release on bail for a short period.
The detenus cannot be released on bail as a matter of common practice on considerations generally applicable to cases of punitive detention.
[26 F H] In the instant case the single Judge took up on himself the decision on merits.
25 Although the Courts would be anxious to protect the individual liberty of the citizen on justiciable grounds and within the limits of their jurisdiction, it would be unwise to ignore the object which the orders of detention are intended to serve.
The reluctance of Courts to pass orders of bail in detention cases is based on the fact that they are fully conscious of the difficulties legal and constitutional and of the other risks involved in making such orders.
If an order of bail is made by the Court without a full trial of the issues involved merely on prima facie opinion formed by the High Court, such order would be open to challenge that it is the result of improper exercise of jurisdiction.
It is essential to bear in mind the distinction between the existence of jurisdiction and its proper exercise.
Improper exercise of jurisdiction in such matters must necessarily be avoided by the courts in dealing with applications of this character.
[29 A F] State of Bihar vs Rambalak Singh and others, applied.
There is no force in the argument of the detenus that by reason of the decision of the Division Bench, allowing the detenus to be on bail till the delivery of the judgment by it in their writ petitions, the special leave petition filed by the State had become infructuous because the primary order of bail was the one passed by the single Judge.
The Division Bench has allowed that order to remain in operation only because the counsel for the State was unable to say whether the Advisory Board had recommended the confirmation of detention or not.
The Division Bench postponed the delivery of the judgment for that reason and directed that the detenus would be allowed to continue on bail until further orders.
[30 A C]
|
ition No. 8911 of 1981.
(Under article 32 of the Constitution of India) Petitioner in Person K.G. Bhagat, Addl.
Gen., N.C. Talukdar and R.N. Poddar for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The petitioner in this petition under Article 32 of the Constitution is a resident of Sultanbattery area in the State of Kerala and describing himself as a commuter of the Indian Railways he has alleged violation of fundamental rights guaranteed under Articles 19 and 21 and claims reliefs of mandamus to the Union of India for implementing the reports of the Kunzru, Wanchoo and Sikri Committees, appointing a fact finding Commission to inquire and report about the numerous train accidents from 1970 onwards and for several other directions to the Union Government and the instrumentalities connected with the administration of the Railways.
As the petition which the petitioner, an allopathic doctor by profession, had himself drafted and filed was unduly long and repetitive, written submission with the assistance of counsel crystalising the issues for determination by the Court was filed, leave to amend the writ petition was granted and notice thereon was issued on August 2, 1982.
The petitioner alleged, inter alia, that the Railways in this country are owned by the Central Government and on account of failure to fulfil the constitutional, statutory and commercial obligations by the Railways, adequate safety protection to the passengers and their properties is not available.
The Indian Railways Act, 1890 ( 'Act ' for short) has prescribed several safety measures; based upon experience, the Railway Board through which apex body the administration is run and controlled has also prescribed rules and issued instructions which are not being properly implemented.
The Union Government had appointed three high powered Committees in the post independence period, namely, the Kunzru, Wanchoo and Sikri Committees to investigate into the 712 affairs of the Railways with particular reference to accidents and though detailed and useful recommendations have been made by these committees, there has been no adequate implementation thereof.
Particular reference has been made to the unmanned level crossings, increasing human error as a contributing factor to accidents, non allocation of adequate funds for improvements, improper utilisation of the assets and facilities, inefficiency in the administration at different levels, prevalence and increase of indiscipline, frequency of thefts, robberies and murders of passengers, ineffective checking and supervisory system, want of replacement of equipment and repairs to bridges as also non provision of adequate facilities to passengers.
The Joint Director (Safety) has filed a counter affidavit in answer to the Rule on behalf of the respondents.
It has been averred that the recommendations of the Accidents Enquiry Committees were examined and implemented within the limits of financial and material resources.
So far as manned level crossings are concerned there were as many as 14471 of them as on March 1, 1982; unmanned level crossings were provided mostly on roads where the volume of road and train traffic was low.
It has been further pleaded that periodic review is undertaken about manning of unmanned level crossings and opening of new level crossings in consultation with appropriate State Governments.
Initially it used to be the obligation of the respective State Governments to provide for such level crossings at their cost in view of the accepted position that at a level crossing the right of way is of the train in preference to the traffic on the road.
As that arrangement was not working well, with effect from April 1, 1966, a Railway Safety Work Fund has been set up and expenses are being met out of it.
From 1978 potentially hazardous unmanned level crossings with a volume of traffic of more than 6000 train vehicle units or poor approach visibility are being manned in a phased manner at the cost of the Railways and control at the gate is also being improved.
As on June 1, 1982, there were as many as 27233 unmanned level crossings on the Railways and if all of them are to be manned, a capital expenditure of 330 crore rupees would be necessary and similarly an annual recurring expenditure of Rs.44 crores will have to be met.
As a measure of safety, whistle boards have been fixed near unmanned level crossings requiring the engine driver to whistle while approaching such level crossings.
Most of the States have framed rules under the , making it obligatory for 713 drivers of motor vehicles to stop short of unmanned level crossings, observe and then proceed.
Speed breakers are usually provided on the road approaches to all unmanned level crossings.
With a view to educating the users of the roads wide publicity is given through newspapers, cinema slides, commercial broadcasting and the television about the hazards involved while negotiating unmanned level crossings.
It has been alleged that unmanned level crossings are gradually being replaced by manned ones and improved technical gadgets are being provided for efficient operation.
Relying on the Sikri Committee Report of 1978, it has been submitted that the State Governments appeared to be aware of their responsibilities in this matter and about 2/3 of the funds of the Safety Works had been utilised by March 31, 1982.
While admitting that in the initial period utilisation of funds was poor and finalisation of schemes for over bridges and under bridges was slow, the situation is claimed to have improved and in 1982 83 as many as 15 works in different States involving an expenditure of Rs.22 crores have been cleared.
Dealing with manpower, the counter affidavit asserts that direct recruits are given proper training required for the respective posts and only qualified people are entrusted with assignments.
Pragmatic and scientific classification of various posts has been made and suitable care is being taken in this regard.
So far as the locomotive drivers are concerned, strict vision standards have been laid down and general physical fitness is a prescribed pre requisite.
Drivers are subjected to periodical medical examination until the age of 45 at intervals of three years and thereafter until superannuation every year.
Every accident, it has been averred, is thoroughly enquired into to fix the responsibility for it and to visit the delinquent with proper punishment.
Ordinarily such enquiries are conducted by the administrative machinery.
Accidents involving loss of human life and properties estimated over one lakh are earmarked for enquiry by Commissioners of Railway Safety who as authorities appointed under section 4 of the Act function independently of the Railway Administration and are under the administrative control of the Ministry of Civil Aviation.
Enquiries by the Railway officials are stipulated to commence within three days of the accident and are intended to be over within one week of their commencement, while enquiries by Commissioners of Railway Safety are also required to start within three days and official reports are required to be made within 60 days 714 of the accident.
Adequate disciplinary control is exercised and on the findings of the enquiries, the delinquent officials are visited with necessary punishment.
Adverting to robberies and dacoities in the running trains, it has been pointed out that they are problems of law and order, maintenance of which is an obligation of the State Governments.
Government Railway Police, Civil Police and plain clothed CID officers operate for the purpose of reducing crime and for detection.
A moiety share of the cost of GRP is borne by the Railway administration.
Added to this the Railway Protection Force is maintained to protect consignments booked for transport as also Railway property.
The overall strength of the GRP stands at 6,740.
They escort passenger trains running at night by deploying armed guards, provide beat patrolling at stations and waiting halls, keep surveillance over criminals and post pickets at vulnerable points.
With reference to improvements in the rolling stock and required gadgets, it has been stated that the Sixth Plan for the Railways has been termed as 'Rehabilitation Plan '.
Overaged gadgets are intended to be withdrawn subject to availability of resources and manufacturing capacity within the country.
The Planning Commission which is an expert body is responsible for fixing of the priorities.
It has again been pleaded that there are nearly 120000 bridges on the Railways out of which 195 are important bridges and nearly 9400 are major bridges.
It is said that every bridge is annually inspected and continuous record is maintained in regard to every bridge in the bridge register.
On an average 400 to 600 bridges are annually built.
Speed restriction is imposed on old and weak bridges and at present there are 202 such bridges.
Figures of six years between 1977 and 1983 of the outlay on bridges have been provided which indicate substantial sums having been set apart for the rebuilding of bridges.
It is said that the total life of 80 years for steel work and 100 years for masonry part of the bridges stipulated in the Railway Code is for the purpose of provision in the Depreciation Reserve Fund.
The codal life does not have any direct relevance with the condition of a bridge and there is no necessity of rebuilding a bridge when its codal life is over.
There has been no instance where the work of bridge rebuilding has been postponed for lack of funds and no accident has occurred owing to structural failure of any bridge or girders.
715 Colour light signalling which is an improved device less dependent on direct visibility and where signal is pre warned by a signal in the rear, is being provided on the trunk and main routes on a graduated scale.
Automatic warning system has been introduced in Gaya, Mughalsarai and Howrah Burdwan chord line sections on the Eastern Railway.
Due to theft of aluminium track magnets the system has been found not very satisfactory.
Experiments are being made for evolving a design which would not be prone to theft.
The petitioner has filed a rejoinder pointing out that the counter affidavit clearly indicated a negative approach on the part of the respondents to the entire matter.
According to the petitioner assistance of 500 crores of rupees was to come during the year ending March 31, 1983 and from out of such funds, pressing improvements like manning the unmanned level crossings could be undertaken.
Reliance has been placed on the observations of Sikri Committee that accidents at unmanned level crossings take a heavy toll of human lives every year.
The petitioner has pleaded for abolition of overtime employment of safety category staff.
He has pointed out that though he asked for directions for providing appropriate monitoring of speed of trains particularly at accident prone spots in the track, no reply has been given thereto in the counter affidavit.
The strength of the GRP has been said to be totally inadequate keeping in view the size of the Railways and volume of the passenger traffic it handles.
The petitioner has denied the assertion in the counter affidavit that no accident has taken place on account for defective bridges and has pointed out that the accident of June 6, 1981 on a river bridge in the Bihar State was attributable to this factor only.
The petitioner has pleaded again for the introduction of the automatic warning system and has referred to a publication of the Directorate of Safety, Railway Board, entitled, "A Review of Accidents on Indian Railways 1979 80", where the introduction of automatic warning system has been suggested to be introduced to avoid accidents.
He has also pleaded for enhancing the minimum compensation in the event of loss of life of a passenger arising out of accidents to a sum of Rs. 75,000 by appropriate amendment of section 82A (2) of the Act.
The petitioner has found fault with the counter affidavit for being silent in regard to his plea for the appointment of Railway Inspectors to make periodical inspection of carriages, engines, tracks, etc.
716 The lis before us is not of the ordinary type where there are two contending parties, a claim is raised by one and denied by the other, issues are struck, evidence is led and the findings follow.
Though the petitioner is commuter of trains run by the Indian Railways, the writ petition is essentially in the nature of public interest litigation and the petitioner has attempted to voice the grievances of the community availing the services of the Indian Railways.
In view of the recent pronouncements of this Court no objection has been raised in the counter affidavit and we have not been called upon to adjudge the locus standi of the petitioner to maintain an action like this.
Railways came to India in 1853 and the first track to be laid was of a small length connecting the then city of Bombay with a suburb.
Through the decades that followed the expansion was usually for considerations of trade and commerce, troop movement and administrative convenience.
More of expansion came gradually connecting almost the entire country through a well woven net work of Railways and by the time the country became independent most of the Railways had been nationalised and Railways constituted the most important commercial activity of the Government of India.
As early as 1850 and three years before the opening of the first Railway track, Lord Dalhousie, the then Governor General of India had said in his minutes: "I trust they (the East India Company and the Government of India) will ever avoid the error of viewing Railways as private undertakings and will regard them as national works, over which the Government may justly exercise and is called upon to exercise stringent and salutary control This control should not be an arbitrary right of interference but a regulated authority defined and declared by law which is not to be needlessly or vexatiously exacted but which, in my humble judgment, is necessary at once for the interests of the State and for the protection of the public." (Minutes of Lord Dalhousie, July 4, 1850).
This regard for the public interest during the pre independence period was often subject to the limitations imposed by the British Capital and Management and by British Commercial and economic interests until the Railways were nationalised between 1925 and 1944.
717 At any rate, by 1947 when the foreign domination ended, the Railways had emerged as the main viable and stable means of transport and were providing the lifeline and link throughout the length and breadth of the country.
By 1955 the total length of all Indian Railways was 34705 miles and the capital sunk was more than 900 crore rupees.
The rise in the importance of the Railways in the national sphere has been gradual.
With the expansion of the Railways a high powered body known as the Railway Board has come to be placed at the apex of control and with the new set up following independence a Minister remained incharge to administer the affairs of the Railways through the Board.
As early as 1924 by a resolution known as the Convention Resolution of the Legislative Assembly the Railway budget had been separated from the general budget and this historical practice has been continued till today.
Today the Railways provide the most effective means of transport both for passengers also for the goods traffic.
The Railways have a great impact in holding this great country together and in promoting and running its economy.
Their contribution to the community is manifold some seen and others not apparently visible.
Briefly stated, it is a big force, the largest employer in the country and a monopoly transport agency.
Before we come to deal with the specific aspects raised in the writ petition and countered by the respondents certain general observations need be made.
The Indian Railways are a socialised public utility undertaking.
There is at present a general agreement among writers of repute that the price policy of such a public Corporation should neither make a loss nor a profit after meeting all capital charges and this is expressed by covering all costs or breaking even; and secondly, the price it charges for the services should correspond to relative costs.
Keeping the history of the growth of the Railways and their functioning in view, the commendable view to accept may be that the rates and fares should cover the total cost of service which would be equal to operational expenses, interest on investment, depreciation and payment of public obligations, if any.
We need not, however, express any opinion about it.
After independence, keeping to the ideologies that had been nurtured during the period of struggle an attempt has been made 718 for the simplification of the classes in the Railways.
Instead of first class, second class, inter class and third class, two classes only have been maintained, namely, the first class and the second class besides the air conditioned class.
In developed countries usually the classification is higher and lower; sleeping or sitting and the like.
In India 90% of the earnings in respect of passenger traffic come from the lower class commuters.
Also after independence expansion projects have been undertaken and many areas which have hitherto remained unlinked and unconnected have been joined up as part of the national lifeline.
Pandit Jawahar Lal Nehru, first Prime Minister of India had once said: "Our final aim can only be a classless society with equal economic justice and opportunity to all, a society organised on a planned basis for the raising of mankind to higher material and cultural level. .
Every thing that comes in the way will have to be removed; gently if possible, forcibly, if necessary.
And there seems to be little doubt that coercion will often be necessary.
" This approach on principle does not appear to have been abandoned.
It is proper that this is worked out also in the Railways and, as quickly as possible, classification conforming to this is introduced.
It is manifest that the Indian Constitution has definitely rejected the authoritarian form of Government and directed the State to bring about an egalitarian social order through the rule of law.
In keeping with this mandate several guiding policies are being indicated but implementation is not being made.
What Tolstoy remarked can relevantly be quoted as apt: "The abolition of slavery has gone on for a very long time.
Rome abolished slavery; America abolished it and we did, but only the words were abolished, not the thing.
" The implementing machinery has become non functional.
This is so not only in our country.
Wilfred Jenks in his address in April 1972 to the International Law Organisation had summed up the position thus: 719 "Throughout the world there is an acute crisis of confidence in integrity and fairness.
This crisis of confidence lies at the heart of political instability, economic disorder, industrial disturbance, racial and religious conflict, cultural anarchy, youth unrest and continuous international tension.
Disruptive in all these fields, it paralyses action to remove its causes.
" Burger, C.J. of the United States has said: "We are approaching the status of an imperfect society where capability of maintaining elementary security in the streets, in the schools and for the homes of our people is in doubt.
At every stage of the criminal process, the system cries out for change.
" What has been extracted above appropriately summarises the current situation all the world over.
No purpose is served by placing the blame at the doors of the Government of the day.
We must have realism and candour.
Independence has been secured at great cost and sacrifice.
It is our obligation to maintain it and create an environment in which its fruits can be harvested and shared.
Freedom brings responsibility.
There can be no rights without responsibilities.
In our country, unfortunately individual rights seem to have received disproportionate emphasis without proper stress on corresponding social obligations and responsibilities.
In a welfare State like ours the citizen is for ever encountering public officials at various levels, regulators and dispensers of social services and managers of State operated enterprises.
It is of the utmost importance that the encounters are as just and as free from arbitrariness as are the familiar encounters of the rights.
Edmund Burke spoke thus: "All persons possessing a portion of power ought to be strongly and awfully impressed with an idea that they act in trust, and they are to account for their conduct, in that trust to the one great master, author and founder of society.
" 720 Equally apt are the observations of Lord Denning in his address to the National Conference of the Law Society in 1980: "When you look upon these scientific achievements, then look back for a moment on our world today, what do you see, Crime, increasing every where; sins, disgraceful sins, corroding corruption, increasing everywhere.
When we see this, surely we recall the words of 2000 years ago what doth it profit a man if he gains the whole world and loses his own soul.
" What is, therefore, of paramount importance is that every citizen must get involved in the determined march to resurrect the society and subordinate his will and passion to the primordial necessity of order in social life.
Abraham Lincoln once told his Congress: "This country, with its institutions, belongs to the people who inhabit it." Such also is the position in our country.
Everyone in the country must realise this and be told the great truth said by Lord Wright: "The safeguard of British liberty is in the good sense of the people." Liver sidge vs Anderson ; It is useful to conclude our general observations by quoting from Robert Ingersoll: "A Government founded on anything except liberty and justice cannot stand.
All the wrecks on either side of the stream of time, all the wrecks of the great cities and all the nations that have passed away all are a warning that no nation founded upon injustice can stand.
From the sand enshrouded Egypt, from the marble wilderness of Athens, and from every fallen crumbling stone of the once mighty Rome, comes a wail as it were the cry that no nation founded on injustice can permanently stand.
" 721 Having thus cleared the way by indicating the approach, ordinarily the powers of the Court to deal with a matter such as this which prima facie appears to be wholly within the domain of the Executive, should have been examined.
Lord Simond in Shaw vs Director, Public Prosecution, has observed: "I entertain no doubt there remains in the Courts of Law a residual power to enforce the supreme and fundamental purpose of the law, to conserve not only the safety and order, but also the moral welfare of the State and that it is their duty to guard against attacks which may be more insiduous because they are novel and unprepared for.
" Mathew, J. in Murlidhar Aggarwal vs State of U.P., indicated: "Public policy does not remain static in any given community.
It may vary from generation to generation and even in the same generation.
Public policy would be almost useless if it were to remain in fixed moulds for all time.
If it is variable, if it depends on the welfare of the community at any given time, how are the courts to ascertain it ! The Judges are more to be trusted as interpreters of the law than as expounders of public policy.
However, there is no alternative under our system but to vest this power with Judges.
The difficulty of discovering what public policy is at any given moment certainly does not absolve the Judges from the duty of doing so.
In conducting an enquiry, as already stated, Judges are not hidebound by precedent.
The Judges must look beyond the narrow field of past precedents, though this still leaves open the question in which direction they must cast their gaze." The learned Judge then quoted with approval the famous statement of Cardozo (The Nature of Judicial Process): 722 "No doubt there is no assurance that Judges will interpret the mores of their day more wisely and truly than other men.
But this is beside the point.
The point is rather that this power must be lodged somewhere and under our Constitution and laws, it has been lodged in the Judges and if they have to fulfil their function as Judges, it would hardly be lodged elsewhere.
" The petitioner has grounded his petition on Articles 19 and 21 of the Constitution.
Article 19, inter alia, guarantees freedom of movement throughout the territory of India and to practice any profession, to carry on any occupation, trade or business, and Article 21 guarantees that no person shall be deprived of his life and personal liberty except according to procedure prescribed by law.
The petitioner has maintained that he, may every citizen of this country for the matter of that, is entitled to demand that the State shall provide adequate facilities and create and maintain an environment in which the right to move freely and carry on any business or profession would both be practicable and feasible.
Since the State maintains the Railways which provide the link and make working out of both these rights possible, it is contended, such facilities should be in good shape, adequate, prompt, efficient, economic and within the reach of the common man, free from danger or apprehension of life.
Similarly, this service must operate efficiently for transport of goods to facilitate business and practice of profession and trade by citizens.
There is hardly any scope to doubt that the guarantees provided in Part III of the Constitution are fundamental and it is the paramount obligation of the State to ensure availability of situations, circumstances and environments in which every citizen can effectively exercise and enjoy those rights.
The right to life has recently been held by this Court to connote not merely animal existence but to have a much wider meaning to include the finer graces of human civilization.
If these rights of the citizens are to be ensured, it is undoubtedly the obligation of the Union of India and its instrumentalities to improve the established means of communication in this country.
Here again, however, we need not express any opinion as we do not propose to give any directions to the opposite parties.
No dispute regarding maintainability having been raised, that question also did not arise for consideration.
We have said earlier that the Railways are a public utility service run on monopoly basis.
Since it is a public utility, there is 723 no justification to run it merely as a commercial venture with a view to making profits.
We do not know at any rate it does not fall for consideration here if a monopoly based public utility should ever be a commercial venture geared to support the general revenue of the State but there is not an iota of hesitation in us to say that the common man 's mode of transport closely connected with the free play of this fundamental right should not be.
We agree that the Union Government should be free to collect the entire operational cost which would include the interest on the capital outlay out of the national exchequer.
Small marginal profits cannot be ruled out.
The massive operation will require a margin of adjustment and, therefore, marginal profits should be admissible.
It is of paramount importance that the services should be prompt, efficient and dignified.
The quality of the service should improve.
Travel comforts should be ensured.
Facilities in running trains should be ensured.
Quality of accommodation and availability thereof should be ensured.
The administration should remain always alive to the position that every bona fide passenger is a guest of the service.
Ticketless travelling has to be totally wiped out.
We are of the view that it is this class of passengers which is a menace to the system.
Without any payment these law breakers disturb the administration and genuine passengers.
Stringent laws should be made and strictly enforced to free the Railways from this deep rooted evil.
Security both to the travelling public as also to the non travelling citizens must be provided and this means that accidents have to be avoided, attack on the persons of the passengers and prying on their property has to stop.
Scientific improvements made in other countries and suitable to the system in our country must be briskly adopted.
The obligations cast by the Railways Act and the Rules under it must be complied with.
It is relevant to point out here that in the counter affidavit the respondents have denied some of the assertions of the petitioner, yet no dispute has been generally raised to the stand taken in the writ petition.
We are alive to the fact that Government have limitations, both of resources and capacity, yet we hope that the Government and the Administration would rise to the necessity of the occasion and take it as a challenge to improve this great public utility in an effective way and with an adequate sense of urgency.
If necessary, it shall set up a high powered body to quickly handle the many faced problems standing in the way.
Giving directions in a matter like this where availability of resources has a material bearing, policy regarding 724 priorities is involved, expertise is very much in issue, is not prudent and we do not, therefore, propose to issue directions.
We, however, do hope and believe that early steps shall be taken to implement in a phased manner the improvements referred to in the counter affidavit and in our decision.
We think it proper to conclude our decision by remembering the famous saying of Henry Peter Broughan with certain adaptations: "It was the boast of Augustus that he found Rome of bricks and left it of marble.
But how noble will be the boast of the citizens of free India of today when they shall have it to say that they found law dear and left it cheaper; found it a sealed book and left it a living letter; found it the patrimony of the rich and left it the inheritance of the poor; found it the two edged sword of craft and oppression and left it the staff of honesty and the shield of innocence.
" It is only in a country of that order that the common man will have his voice heard.
The dream can become a reality if every citizen becomes aware of his duty and before asking for enforcement of his right, volunteers to perform his obligation.
And before we part, we must record our appreciation of the performance of the petitioner.
He has taken great pains to highlight his stand collected a lot of relevant material and argued his case quite well a doctor by profession though.
As this was a public interest litigation, we direct that he shall be entitled to consolidated cost of Rs. 5,000 recoverable from the Railway Ministry of the Union Government unless paid within two months hence.
| The appellant was the Chairman of an autonomous cooperative society under the control and supervision of the State Government.
On receipt of complaints about the financial management of the Society, the Registrar of Cooperative Societies appointed a special auditor to audit the Society 's accounts.
On the basis of the audit report a charge sheet was filed against all the accused for entering into a conspiracy to commit criminal breach of trust.
The conspiracy charge having failed, all the accused except one were acquitted by the Sessions Judge.
On appeal by the State, the High Court convicted the appellant in respect of three items, namely, purchase of fertilisers involving two transactions and missing of certain oil engines, on the ground that as Chairman of the Managing Committee he must be held to be vicariously liable for any order given or misappropriation committed by the other accused.
In appeal to this Court it was contended on behalf of the appellant that no case of defalcation had been made out against the appellant.
Allowing the appeal, ^ HELD: 1.
There was no justification for the High Court to interfere with the appellant 's acquittal.
The case against the appellant had not been proved beyond reasonable doubt and he was wrongly convicted by the High Court.
[802 D E] 798 2.
In a case where there was serious defalcation of the properties, unless the prosecution proved that there was a close cohesion and collusion between all the accused which formed the subject matter of a conspiracy, it would be difficult to prove the charges against the appellant.
The charge of conspiracy having failed, the most material and integral part of the prosecution story against the appellant disappeared.
[801 B C] 3.
In a criminal case of such serious nature mens rea cannot be excluded.
Once the charge of conspiracy has failed the onus lay on the prosecution to prove affirmatively that the appellant was directly and personally connected with acts or omissions pertaining to the items purchased.
[801 E] 4.
In the absence of a charge of conspiracy the mere fact that the appellant happened to be the Chairman of the Committee would not make him liable in a vicarious sense.
There is no evidence either direct or circumstantial to show that apart from approving the purchase of fertilisers he knew that the firms from which the fertilisers were purchased did not exist.
If the Chairman was to be made liable then all members of the Committee, viz Tehsildar and other nominated members would be equally liable because all of them participated in the deliberation of the meetings of the Committee.
The appellant as Chairman of the Sangh, had to deal with a large variety of matters and it would not be humanly possible for him to analyse and go into the details or every small matter in order to find out whether there has been any criminal breach of trust.
[801 G H; 802 A B]
|
etition No. 252 of 1956.
Petition under Article 32 of the Constitution for the enforcement of fundamental rights.
Veda Vyasa, section K. Kapur and Ganpat Rai, for the petitioner.
G. C. Mathur and C. P. Lal, for the respondent.
April 5.
The Judgment of the Court was delivered by DAS C.J.
This is a petition filed under article 32 of the Constitution of India praying for a declaration that section 295A of the Indian Penal Code is ultra vires and unconstitutional and for a writ in the nature of certiorari quashing the petitioner 's conviction under that section and for ancillary reliefs.
The material facts lie within a narrow compass.
The petitioner is the editor, printer and publisher of a monthly magazine called Gaurakshak.
The magazine is devoted to cow protection.
In July or August, 1954, a Hindi Daily newspaper named 'Amrit Patrika ' of Allahabad printed and published an article or a cartoon about a donkey on which an agitation was started by the muslims of Uttar Pradesh.
The editor and printer and publisher of 'Amrit Patrika ' were prosecuted by the State, but they have been eventually acquitted by the High Court of Allahabad.
In the meantime, in its issue for the month of Kartik Samvat 2009, corresponding to November, 1952, an article was published in the petitioner 's magazine 'Gaurakshak. ' On December 12, 1952, the State Government ordered the prosecution of the petitioner on the basis of the said article.
Accordingly on June 8, 1953,acomplaint was filed in the court of the District Magistrate, Kanpur, 111 862 by the Senior Superintendent of Police, Kanpur, against the petitioner for offences under sections 153A and 295A of the Indian Penal Code.
The Magistrate by his order dated August 5, 1953, charged the petitioner under sections 153A and 295A and committed the petitioner to the Sessions Court of Kanpur for trial.
The petitioner pleaded not guilty.
The learned Sessions Judge, by his judgment dated November 16, 1953, acquitted the petitioner of the charge under section 153 Abut convicted him under section 295A and sentenced him to 18 months rigorous imprisonment and a fine of Rs. 2,000 and, in default of payment of the fine, to further rigorous imprisonment of 4 months.
The petitioner filed an appeal to the High Court at Allahabad.
The learned Single Judge, by his judgment dated October 25, 1956, held that the article was published with the deliberate and malicious intention of outraging the religious feelings of muslims and that the petitioner was guilty under section 295A of the Indian Penal Code.
The learned Judge, however, reduced the sentence of imprisonment to 12 months and the fine from Rs. 2,000 to Rs. 250 only.
An application for certificate to appeal to this Court under articles 132 and 134 having been rejected by the High Court on October 30, 1956, the petitioner moved this Court for special leave to appeal from the judgment of the Allahabad High Court dated October 25, 1956.
The petitioner also on December 5, 1956, presented the present petition under article 32 for the reliefs mentioned above.
The petitioner also made an application in this Court along with the writ petition for stay of the sentence passed on him.
On December 18, 1956, both the stay application and the petition for special leave were dismissed by this Court.
The petition under article 32 has now come up for hearing.
Presumably the petitioner has surrendered and is undergoing the sentence of imprisonment.
Learned counsel appearing in support of this petition urges that section 295A of the Indian Penal Code is ultra vires and void inasmuch as it interferes with the petitioner 's right to freedom of speech and expression guaranteed to him as a citizen of India by article 19(1)(a) of our Constitution.
The contention is that this section 863 cannot be supported as a law imposing reasonable restrictions on the exercise of the right conferred by article 19(1)(a) as provided in cl.
(2) of the said Article.
Learned counsel says that the interest of public order is the only thing in cl.
(2) which may possibly be relied upon by the State as affording a justification for its claim for the validity of the impugned section.
A law interfering with the freedom of speech and expression and imposing a punishment for its breach may, says counsel, be "in the interests of public order" only if the likelihood of public disorder is made an ingredient of the offence and the prevention of public disorder is a matter of proximate and not remote consideration.
Learned counsel points out that insulting the religion or the religious beliefs of a class of citizens of India may not lead to public disorder in all cases although it may do so in some case.
Therefore, where a law purports, as the impugned section does, to authorise the imposition of restriction on the exercise of the fundamental right to freedom of speech and expression in language wide enough to cover restrictions both within and without the limitation of constitutionally permissible legislative action affecting such right, the court should not uphold it even in so far as it may be applied within the constitutionally permissible limits as it is not severable.
So long as the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out it must, according to learned counsel, be held to be wholly unconstitutional and void.
Reference has been made to the cases of Romesh Thappar vs The St ate of Madras(1) and Brij Bushan vs The State of Delhi (2).
In Romesh Thappar 's case, in exercise of powers conferred on him by section 9(1 A) of the Madras Maintenance of Public Order Act, 1949, the Governor of Madras, being satisfied that for the purpose of securing public safety and the maintenance of public order it war,.
necessary so to do, prohibited the entry into or the circulation, sale or distribution in the State of Madras or any part thereof of the newspaper entitled 'Cross Roads ', an English Weekly published at Bombay.
(1) ; (2) ; 864 The impugned section section
9(1 A) was a law enacted for the purpose of securing the public safety and the maintenance of public order. 'Public order ' was said to be an expression of wide connotation and to signify that state of tranquillity which prevailed among the members of a political society as a result of the internal regulation enforced by the Government which they had established. 'Public safety ' used in that section was taken as part of the wider concept of 'public order '.
Clause (2) of article 19, as it stood then, protected a law relating, inter alia, to a matter which undermined the security of or tended to overthrow the State.
Some breach of public safety or public order may conceivably undermine the security of or tend to overthrow the State, but equally conceivably many breaches of public safety or public order may not have that tendency.
Therefore, a law which imposes restrictions on the freedom of speech and expression for preventing a breach of public safety or public order which may not undermine the security of the State or tend to overthrow the State cannot claim the protection of cl.
(2) of article 19.
Section 9(1 A) was challenged as it embraced both species of activities referred to above and as the section was not severable, the whole section was held to be bad.
In Brij Bushan 's case (supra) the validity of section 7(1)(c) of the East Punjab Public Safety Act, 1949, as extended to the Province of Delhi, came.
up for consideration.
That section provided that "the Provincial Government or any authority authorised by it in this behalf, if satisfied that such action is necessary for preventing or combating any activity prejudicial to the public safety or the maintenance of public order, may, by order in writing addressed to the printer, publisher or editor, require that any matter relating to a particular subject or class of subjects shall before publication be submitted for scrutiny".
It was held by this Court (Fazl Ali J. dissenting) that inasmuch as the section authorised the imposition of restrictions on the fundamental right to freedom of speech and expression guaranteed by article 19(1)(a) for the purposes of preventing activities prejudicial to 865 public safety and maintenance of public order, it was not a law solely relating to a matter which undermined the security of or tended to overthrow the State within the meaning Of Cl.
(2) of article 19 as it then stood.
The principles laid down in Romesh Thappar 's case were applied to this case and the law was held to be void.
The case of Chintaman Rao vs The State of Madhya Pradesh (1) has also been relied upon in support of the contention that where the language employed in the Statute is wide enough to cover restrictions on a fundamental right both within and without the limits of constitutionally permissible legislative action affecting the right and the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out, the law must be held to be wholly void.
After this Court decided the cases of Romesh Thappar (supra) and Brij Bushan (supra), cl.
(2) of article 19 of the Constitution was amended.
Clause (2), as amended, protects a law in so far as such law imposes reasonable restrictions on the exercise of the right conferred by sub cl.
(a) of cl.
(1) of article 19 "in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence." The question for our consideration is whether the impugned section can be properly said to be a law imposing reasonable restrictions on the exercise of the fundamental right to freedom of speech and expression in the interests of public order.
It will be noticed that the language employed in the amended clause is "in the interests of" and not "for the maintenance of".
As one of us pointed out in Debi Soron vs The State of Bihar(2), the expression "in the interests of" makes the ambit of the protection very wide.
A law may not have been designed to directly maintain public order and yet it may have been enacted in the interests of public order.
It is pointed out that section 295A has been included in chapter XV of the Indian Penal Code which deals with offences relating to religion and not in chapter VIII (1) ; (2) A.I.R. (1954) Patna 254.
866 which deals with offences against the public tranquillity and from this circumstance it is faintly sought to be urged, therefore, that offences relating to religion have no bearing on the maintenance of public order, or tranquillity and, consequently, a law creating an offence relating to religion and imposing restrictions on the right to freedom of speech and expression cannot claim the protection of el.
(2) of article 19.
A reference to articles 25 and 26 of the Constitution, which guarantee the right to freedom of religion, will show that the argument is utterly untenable.
The right to freedom of religion assured by those Articles is expressly made subject to public order, morality and health.
Therefore, it cannot be predicated that freedom of religion can have no bearing whatever on the maintenance of public order or that a law creating an offence relating to religion cannot under any circumstances be said to have been enacted in the interests of public order.
These two Articles in terms contemplate that restrictions may be imposed on the rights guaranteed by them in the interests of public order.
Learned counsel then shifted his ground and formulated his objection in a slightly different way.
Insults to the religion or the religious beliefs of a class of citizens of India may, says learned counsel, lead to public disorders in some cases, but in many cases they may not do so and,, therefore, a law which imposes restrictions on the citizens ' freedom of speech and expression by simply making insult to religion an offence will cover both varieties of insults, i.e., those which may lead to public disorders as well as.those which may not.
The law in so far as it covers the first variety may be said to have been enacted in the interests of public order within the meaning of el.
(2) of article 19, but in so far as it covers the remaining variety will not fall within that clause.
The argument then concludes that so long as the possibility of the law being applied for purposes not sanctioned by the Constitution cannot be ruled out, the entire law should be held to be unconstitutional and void.
We are unable, in view of the language used in the impugned section, 867 to accede to this argument.
In the first place el.
(2) of article 19 protects a law imposing reasonable restrictions on the exercise of the right to freedom of speech and expression "in the interests of" public order, which is much wider than "for maintenance of" public order.
If, therefore, certain activities have a tendency to cause public disorder, a law penalising such activities as an offence cannot but be held to be a law imposing reasonable restriction "in the interests of public order" although in some cases those activities may not actually lead to a breach of public order.
In the next place section 295A does not penalise any and every act of insult to or attempt to insult the religion or the religious beliefs of a class of citizens but it penalises only those acts of insults to or those varieties of attempts to insult the religion or the religious beliefs of a class of citizens, which are perpetrated with the deliberate and malicious intention of outraging the religious feelings of that class.
Insults to religion offered unwittingly or carelessly or without any deli.
berate or malicious intention to outrage the religious feelings of that class do not come within the section.
It only Punishes the aggravated form of insult to religion when it is perpetrated with the deliberate and malicious intention of outraging the religious feelings of that class.
The calculated tendency of this aggravated form of insult is clearly to disrupt the public order and the section, which penalises such activities, is well within the protection of cl.
(2) of article 19 as being a law imposing reasonable restrictions on the exercise of the right to freedom of speech and expression guaranteed by article 19(1)(a).
Having regard to the ingredients of the offence created by the impugned section, there cannot, in our opinion, be any possibility of this law being applied for purposes not sanctioned by the Constitution.
In other words, the language employed in the section is not wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting the fundamental right guaranteed by article 19(1)(s) and consequently, the question of severability does not 868 arise and the decisions relied upon by learned counsel for the petitioner have no application to this case.
For the reasons stated above, the impugned section falls well within the protection of el.
(2) of article 19 and this application must, therefore, be dismissed.
Application dismissed.
| A combined notification under ss.4 and 17 and a declaration under section 6 of the Land Acquisition Act, 1894 which were published in the official Gazette in regard to the acquisition of certain lands were challenged in a writ petition before the High Court on two grounds: (1) that there was delay of 29 days in giving public notice of the substance of notification in the locality after the publication of the notification under section 4 in the Gazette and that delay was fatal to the notification itself, and (2) that since the matter was under correspondence between various departments of the Government for nearly eight years before the notification and the declaration were published in the Gazette, that showed that there was no urgency necessitating invocation of section 17(4) of the Act to dispense with the enquiry under section 5 A.
The High Court dismissed the writ petition in limine.
The present special leave petitions were directed against dismissal of the writ petition.
Dismissing the special leave petitions, ^ HELD: Section 4(1) of the Land Acquisition Act does not pres 589 cribe that public notice of the substance of the notification should be given in the locality simultaneously with the publication of the notification in the official Gazetter or immediately thereafter.
Publication in the official Gazette and public notice in the locality are two vital steps required to be taken under s.4(1) before proceeding to take the next step of entering upon the land under section 4(2).
The time factor is not the vital element of section 4(1) and there is no warrant for reading the words `simultaneously ' or `immediately thereafter ' into section 4(1), But since the steps contemplated by section 4(2) cannot be undertaken unless publication is made and public notice given as contemplated by section 4(1), it is implicit that the publication and the public notice must be contemporaneous though not simultaneous or immediately after one another.
Naturally contemporeneity may involve a gap of time and by the very nature of the things, the publication in the official Gazette and the public notice in the locality must necessarily be separated by a gap of time.
This does not mean that the publication and the public notice may be separated by a long interval of time.
What is necessary, is that the continuity of action should not appear to be broken by a deep gap.
If there is publication in the Gazette and if there is public notice in the locality, the requirements of section 4(1) must be held to be satisfied unless the two are unlinked from each other by a gap of time so large as may lead one to the prima facie conclusion of lack of bona fides in the proceedings for acquisition.
If the notification and the public notice are separated by such a large gap of time it may become necessary to probe further to discover if there is any cause for the delay and that if the delay has caused prejudice to any one.
[592 H and 593 A.B] The submission that if the publication of the notification in the Gazette is not immediately followed by public notice in the locality, it may lead to a denial to the person interested of an opportunity to object to the acquisition under section 5 A, has no force.
Section 5.A provides that any person interested in any land which has been notified under section 4(1) may object to the acquisition of the land or of any land in the locality within 30 days after the issue of the notification.
The section does not refer either to the date of publication in the official Gazette or the date of public notice of the substance of the notification in the locality.
It speaks of `the issue of the notification which, in the context, can only signify the completion of the prescribed process rather the twin process of notifying the interested public of the proposed acquisition in the manner provided for by section 4(1), that is by publication in the official Gazette and giving public notice in the locality.
Therefore, the period of 30 days may be reckoned from either the date of publication in the Gazette or the date of public notice of the substance of the notification in the locality, whichever is later.
[593C.G] Khub Chand vs State of Rajasthan, ; , Narinderjit Singh v State of.
Uttar Pradesh, AIR 1973 S.C. 552, State of Mysore vs Abdul Rajak, ; and Anjuman Ahmediyya, Muslim Mission vs State AIR 1980 A.P. 246, referred to.
Sanjivaiah Nagar Depressed and Backward Classes Sangh vs District 590 Collector, Hyderabad, AIR 1983 A.P. 142 and Smt.
Shahnaz Salima vs Govt.
of A.P., W.P. No. 3353/76 decided by a Full Bench of Andhra Pradesh High Court on Sept. 26, 1978, approved.
Satish Kapur vs State of Haryana, AIR 1982 P. and H 276, Rattan Singh v State, AIR 1976 Pand H 279 (F.B.), C. Suryanarayana vs Govt.
of Andhra Pradesh, AIR 1983 A P. 17 and Mohammad Khawaza vs Govt.
of Andhra Pradesh, AIR 1982 N.O.C. 270 (A.P), overruled.
It is not possible to agree with the submission that mere pre notification delay would render the invocation of the urgency provisions void.
Very often persons interested in the land proposed to be acquired make various representations to the concerned authorities against the proposed acquisition.
This is bound to result in a multiplicity of enquiries, communications and discussions leading invariably to delay in the execution of even urgent projects.
Very often the delay makes the problem more and mere acute and increases the urgency of the necessity for acquisition.
[596H; 597A and 596G H] Jaga Ram vs State of Haryana, ; and Kashi Reddy Papaiah vs Govt of Andhra Pradesh.
AIR 1975 A.P. 269, referred to.
|
Appeal No. 510/ 1963.
Appeal by special leave from the judgment and order dated January 22, 1960 of the Madhya Pradesh High Court in Misc.
Petition No. 35 of 1959.
B. Sen and I. N. Shroff, for the appellant.
K. N. Rajagopal Sastri and A. G. Ratnaparkhi, for the respondent.
April 22, 1964.
The judgment of the Court was delivered by SUBBA RAO, J.
This appeal by special leave raises the question whether the expression "income tax" in cl.
(c) of sub r.
(2) of r. 2 of Schedule I to the Madhya Pradesh Abolition of Proprietary Rights (Estate, Mahals, Alienated Lands) Act, 1950 (M.P. Act No. 1 of 1951), hereinafter cal led the Act, includes super tax.
The facts are as follows: The respondent was the zamindar of Bhadra Estate in Balaghat District of Madhya Pradesh.
His estate was known as Bahela Zamindari consisting of 78 villages.
The Act came into force on January 26, 1951.
Under the Act the proprietary rights of the zamindari vested in the State and he became entitled to compensation in respect of the said rights in the said villages under section 8 ,of the Act.
The compensation was to be determined in ac cordance with the rules contained in Schedule I to the Act.
Under r. 8 of Schedule I the zamindar would be entitled to ,compensation at 10 times the net income.
The net income would be calculated by deducting from the gross income, inter alia, the average of the income tax paid in respect of the income from big forest during 30 agricultural years preceding March 31, 1951.
On November 30, 1951, the Com pensation Officer determined the compensation payable to the respondent at Rs. 2,21,330 12 6.
In arriving at that figure he deducted not only the income tax payable by the respon dent but also the super tax and surcharge payable by him.
The average of the income tax paid by him during the mateI 30 years was only Rs. 3,760 2 9, but if the average of ,the super tax and surcharge was included, the average came 840 to Rs. 7,070 8 0.
The result was that the net yearly income of the estate was reduced by Rs. 3,310 5 3 and compensation was paid to him on the basis of the amount so reduced.
The respondent moved the Settlement Commissioner under section 15 of the Act for enhancement of the compensation, but the Commissioner confirmed the order of the Compensation Officer.
Thereafter, the respondent filed an application in the High Court under articles 226 and 227 of the Constitution for quashing the order of the Compensation Officer.
The High Court held, on a construction of the relevant provisions.
of the Act, that super tax should not be taken into account while calculating the compensation payable to the respondent.
The State of Madhya Pradesh has filed the present appeal against the order of the High Court.
Mr. Sen, learned counsel for the State, contends that the object of r. 2(2)(c) is to provide a method for ascertaining the net income of an estate, that in that context there cannot be any justifiable distinction between income tax and super tax, for both of them have, inter alia, to be deducted from the gross income to arrive at the net income, and that the Legislature used the word "income tax" in its comprehensive sense so as to take in super tax.
He adds that under the Income tax Act super tax is only an additional duty of income tax and, therefore, a part of it.
Mr. Rajagopala Sastri, learned counsel for the respondent assessee, argues that in construing a provision of an ex proprietary Act, the Court will have to construe such a pro vision strictly and if so construed, super tax cannot be in cluded in the expression "income tax".
He took us through the relevant provisions of the Income tax Act to support his contention that super tax is different in its origin, description, scope, incidents and collection from the income tax.
The question turns upon the correct interpretation of r. 2(2)(c) of the rules of Schedule I to the Act.
The relevant provisions of the Act and the rule read: Section 8(1) of the Act: "The State Government shall pay to every proprietor, who is divested of proprietary rights, compensation determined in accordance with the rules contained in Schedule 1.
" Schedule I to the Act Rule 2.
The net income of an estate or mahal in the Central Provinces shall be calculated by deducting from the gross income the sums under the following heads, namely: (c) the average of the income tax paid in respect of the income received from big forest during 841 the period of thirty agricultural years preceding the agricultural year in which the relevant date falls; * * * * * * * Rule 8.
(1) The amount of compensation in the Central Provinces and in Berar shall be ten times the net income determined in accordance with the rules herein contained.
The combined effect of the said provisions is that for the purpose of ascertaining the net income of an estate one of the deductible items is the average of the income tax paid in respect of the income received from the big forest.
That .average is ascertained on the basis of the income tax paid during the 30 agricultural years preceding the agricultural .year in which the relevant date falls.
The compensation payable is ten times the net income ascertained under the rules.
The relevant date for the purpose of ascertaining the average is the date specified by notification by the State Government under section 3 of the Act: for instance, if the relevant date falls in the year 1951, the income tax paid during the years 1921 to 1951 will afford the basis for arriving at the average.
To appreciate the distinction between the concepts of income tax and super tax a brief history of their incidents will not be inappropriate.
Under the Income tax Act of 1886 the total income from various sources was not the criterion for assessment but the different sources alone were the basis for it.
For the first time the 1918 Act introduced the scheme of total income for the purpose of determining the rate of tax.
Under that Act several heads were enumerated, under which the income of an assessee fell to be charged.
The 1922 Act went further and enacted that loss under one head of "income" can be set off against the profit under another head.
Till the 1922 Act super tax was separately levied.
It was first introduced by the Super tax Act of 1917 and then it was replaced by the 1920 Act.
Only in 1922, for the first time, it was incorporated in the Income tax Act.
Though both the taxes are dealt with by the same Act, their distinctive features are maintained.
As regards income tax, in the words of a learned author, "section 3 charges the total income, section 4 define its range, section 6 qualifies it and sections 7 to 12 quantify it.
" There are various other sections which provide the machinery for the ascertainment of the total income for assessment and recovery of tax.
As regards super tax, a separate chapter viz., Ch.
IX, deals with it; it comprises sections 55 to 58.
Section 55 is the charging section for the purpose of super tax; under that section, "In addition to the income tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income of the 842 previous year. . . an additional duty of income tax (in this Act referred to as super tax) at the rate or rates laid down for that year by a Central Act".
Section 56 says that for the purpose of super tax, except in specified cases, the total income shall be the total income as assessed for the purpose of income tax.
Section 56A exempts from super tax certain dividends.
Section 58(1) applies by reference to supertax certain provisions of the Act relating to the charge, assessment, collection and recovery of income tax.
It would be seen from this Chapter that though super tax is described as an additional duty of income tax it is not incorporated in the income tax , its identity is maintained.
A self contained chapter deals with the charge, assessment, collection and recovery of super tax.
There are essential differences between the two taxes emanating not only from the express provisions contained in Ch.
IX but also from the omission to apply the specified sections of the Act to the said tax.
Successive Finance Acts also made a distinction between the two taxes.
This is not the occasion to notice in detail the differences between the two taxes.
It is enough to state that there are pronounced differences between the incidents of the twotaxes.
But two relevant differences may be noticed, namely,(i) though both the taxes are assessed on the total income ofa person, the total income for the purpose of income tax is computed on the basis of income classified and chargeable under the different heads mentioned in section 6 of the Act, whereas super tax is not concerned with the different heads, but is payable on the total income so ascertained , and (ii) while super tax, except in a few cases, is payable by the assessee direct, the income tax is payable by him direct as well as by deduction.
While in the case of income tax by reversing the process the tax attributable to a particular source can be ascertained, in the case of super tax no such process is possible as the said liability springs into legal existence only after the total income is ascertained.
The only possible method by which the said tax may be split up is by working out the proportion of the tax payable by the assessee in respect of an income from a particular source on the basis of the ratio the said income bears to the total income.
But this method is not sanctioned by the Act.
It is not legally possible to predicate what particular part of the super tax is attributable to an income from a particular source, for, unlike in the case of income tax, total income alone is the criterion and the income from different sources is not relevant.
To illustrate: super tax is now levied on income over certain level at present Rs. 25,000/ .
If "A 's" total income is Rs. 35.000/ made up of Rs. 20,000/ from big forest and Rs. 15,000/ from other sources, what is the super tax attributable to the income from the big forest? The answer is, it is not possible to do so.
843 With this background let us give a close look to the provisions of r. 2(2)(c) of Schedule I to the Act.
The legislative intention is manifest from the express language used and also by internal evidence.
With the knowledge that under the Income tax Act two separate duties, namely, in come tax and super tax, are imposed, the Legislature has used the expression "income tax".
If the intention was to refer to both the taxes, it would have stated "income tax and super tax".
The mention of the one and the omission of the other is a sure indication of its intention.
The qualification that income tax paid should have been in respect of the income received from the big forest neces sarily excludes super tax, for under the Income tax Act no super tax is payable in respect of the income received from big forest, but only in respect of the total income.
As we have pointed out earlier, it is not legally possible to disintegrate and allocate a portion of the super tax to the income attributable to the big forest.
It is not paid in respect of the income from the big forest, but is paid only in respect of the total income.
If the contention of the appellant prevails, though the income from big forest falls below the taxable income, it will be deducted if, in combination with the income from other sources, the income goes up to the taxable level.
In that event super tax not payable in respect of the income from big forest will have to be deducted.
That apart, the rules made under the Act do not provide for any machinery for allocating the super tax payable on the total income among the different sources.
It is said that the same difficulties are present even in the case of income tax.
Though income tax is also a tax on the total income of an assessee, the Act, as we have indicated earlier, provides for computing the income under different heads and, therefore, it is not inappropriate to describe a particular tax as attributable to an income from a particular head, but it would wholly be inappropriate to describe that a part of the super tax is payable in respect of an income from a particular source.
The argument of Mr. Rajagopala Sastri, learned counsel for the respondent, that the 30 years mentioned in the rule takes us back to a period when there was no super tax appears to be not sound, for, as we have stated earlier, supertax was payable in one form or other from the year 1917.
That apart, if the income tax takes in super tax, the nonexistence of super tax in a particular year does not make any difference in ascertaining the average, for the income tax for that year will be the income tax without the addition of super tax.
This circumstance is not, therefore, of much relevance and we exclude it from our consideration.
844 The argument that if the Legislature intended not to exclude super tax from the gross income, it would have expressly stated so in the rule is an attempt to put the shoe on the wrong foot.
The proper approach, particularly in the case of an exproprietary statute, is to ask the question why the Legislature did not expressly mention super tax, if it in tended to do so.
The use of one of the two well understood expressions is, on the other hand, an indication that the Legislature provided for the deduction of the one used and not of the other omitted.
The reason for the rule, if it is, legitimate to speculate, appears to be that as it is concerned with the calculation of the net income from the estate after making certain deductions, only those deductions, which have a direct relation to that income are allowed.
If the other construction prevails, speculation would take the place of certainty and super tax not paid factually in respect of the income from big forest would have to be deducted.
Such a construction defeats the purpose of the rule.
Some of the decisions cited at the Bar may now be noticed.
Lord Sumner pithily remarks in Brooks vs The Commissioner of Inland Revenue(1): ". for super tax tax is another and a new tax none the less, though it is an additional duty of Income Tax.
" In Bates, In re: Selmes vs Bates(2), a testator gave to his wife by his will "such a sum in every year as after deduction of the income tax for the time being payable in respect thereof will leave a clear sum of pound 2000.
" It was held that the wife was entitled to the pound 2000 free of income tax only and was not entitled to payment of any sum in respect of super tax.
There the trustees were directed to pay the annuity after deducting the income tax in respect of that annuity.
Rejecting the argument advanced on behalf of the wife that the said annuity should be free from super tax also, Russell.
J., observed: "Now super tax was not a charge in respect of any particular annuity or sum, but was a charge in respect of the recipient 's whole income and was not a matter with which the trustees would be charged or concerned at all, and, in his opinion, what the testator had done was to give the widow the yearly sum of pound 2500 clear of all deductions, for which the trustees were accountable, but that did not include super tax, which she must pay herself." (1)(19l4) 7 T. C. 2 3 6, 2 5 section 2 , 159 160, 161, 845 The learned Judge proceeded to state: "No super tax is really payable 'in respect of ' this sum.
" It is true that the said judgment turned upon the provisions of a particular will, but the reasoning is helpful.
There, income tax was deductible in respect of the sum bequeathed, here income tax is deductible in respect of the income re ceived from big forest.
As super tax is not a charge in respect of the income from big forest, on the parity of reasoning it shall be held that the word "income tax" used in cl.
(c) of r. 2(2) of Schedule I to the Act excludes super tax.
In Reckitt, In re: Reckitt vs Reckitt(1), a fund was bequeathed to trustees upon trust for investment and to pay out of the income of the investments "the annual sum of pound 5000 free of income tax" during the life of the annuitant.
The Court of Appeal held that the annuitant was entitled to have the sum paid to her without deduction on account of super tax and that the trustees must pay the super tax payable in respect of that sum out of the income of the fund.
The conclusion turned upon the provisions of the will.
Lord Hanworth, M.R., distinguished the decision in Bates, In re: Selmes vs Bates(2) on the ground that Russell, J., founded his judgment upon the reference to deductions and also upon the direction to, the trustees that specified sum should be paid after deduction of income tax in respect thereof and proceeded to observe that in the case before them no reference was made to, the system, or the power of the trustees to make deductions .
and that it was simply that a total sum in each year was to be paid free of income tax.
That decision may be right or wrong on the construction of the will before the Court of Appeal, but the features which distinguished Bates case from the decision in Reckitt 's case are also present in the case before us now.
Here also the rule empowers the prescribed authority to deduct from the gross income incometax paid in respect of the income received from big forest.
The earlier decision is more in point to the present case than the later.
Be that as it may, the English decisions on the construction of will are not of much help in construing the express provisions of r. 2(2)(c) of Schedule I to the Act: they shall be construed on their own terms.
Having regard to the terms of the rule, we have come to the conclusion that in come tax does not take in super tax.
In the result, the appeal fails and is dismised with costs Appeal dismissed.
| The appellant, who was a Matadhipati, moved the High Court for a writ quashing the notice served on him in 1952 by the Executive Officer to band ever to the latter the administration and the properties 253 of the Mutt in enforcement of a scheme framed in 1939 under section 63 of the Madras Act 11 of 1927.
The predecessor of the appellant had filed a suit in the District Judge 's Court to set aside that scheme.
The suit failed and the scheme was confirmed subject to minor modifications.
In 1951 the Madras Hindu Religious and Charitable Endowments Act, 1951, repealed and replaced the Madras Act 11 of 1927.
It was urged on behalf of the appellant in the High Court that the scheme contravened his fundamental rights guaranteed by the Constitution.
The single Judge who heard the matter found in his favour and held that the scheme contravened article 19(1)(f) of the Constitution.
On appeal by the respondent, the Division Bench reversed the decision of the Single Judge.
The High Court granted certificate to the appellant to appeal to this Court.
It was contended that although the scheme was valid as framed tinder the earlier Act, it incumbent under section 103(d) of the Act of 1951 that the validity of the all the provisions of the scheme must be tested in the light of its provisions.
Held:Section 103(d) of the Madras Hindu Religious and Charitable Endowments Act, 1951, properly construed, merely meant that earlier schemes framed under Madras Act It of 1927 would be operative as though they were framed under the Act of 1951.
It was not intended by the section that those schemes must be examined and reframed in the light of the relevant provisions of the Act.
Section 62(3)(a) of the Act which provided for the modification of such schemes made this amply clear.
Unless the schemes could be modified under that section they must be deemed to have been validly made under the Act of 1951 and enforced as such.
East End Dwellings Co. Ltd. vs Finsbury Borough Council, , considered.
Although the scheme in question had not been completely implemented before the Constitution, that was no ground for examining its provision in the light of article 19 of the Constitution.
The fundamental rights conferred by the Constitution are not retrospective in operation and the observation made by this Court in Seth Shanti Sarup vs Union of India, are not applicable to the present case.
Seth Shanti Sarup vs Union of India, A.I.R. 1955 S.C. 624, explained and distinguished.
|
: Civil Appeal No. 789 of 1975.
(Appeal by Special Leave from the Judgment and Order dated 25.2.1975 of the Allahabad High Court in Civil Misc.
Writ No. 3756 of 1971).
E.C. Agarwala, for the Appellant.
B. Datta, for Respondent No. 2.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by special leave involves a pure question of law regarding inheritance to the proper ty of one Karua.
Briefly put, the case of the appellant was that the disputed Khata was recorded in the name of Karua the son of Madhua who died leaving behind his widow Kasturi and his son Karua.
He had two brothers Khushi Ram and Lekhraj who claimed to be the next reversioners.
It is obvious that on the death of Madhua, Kasturi as the widow got half share in the property and the other half went to Karua.
The dispute seems to have arisen on the death of Karua when two rival claims were put forward, one by Kasturi who contended that she was entitled to inherit as mother of Karua, whereas Khushi Ram averred that as Kasturi had married Lekhraj she should be divested of her interest and excluded from inheritance as a result of which the property would pass on to Khushi Ram and Lekhraj in equal shares 26 as next reversioners.
The appellant also denied the fact that Kasturi had remarried Lekhraj.
The first Court of the Consolidation Officer negatived the claim of Kasturi and directed mutation to be made in the name of Khushi Ram under the provisions of the U.P. Consolidation of Holdings Act.
The present appellant filed an appeal before the Settlement Officer, Etah Camp, at Aligrah, against the decision of the Consolidation Officer who reversed the finding of the Consolidation Officer and held that as the re marriage of Kasturi with Lekhraj had not been proved, the appellant Kasturi was entitled to be recorded in the revenue papers.
Against this decision there was a revision by Khushi Ram before the Deputy Director of Consolidation who set aside the order of the Settlement Officer and restored that of the Consolidation Officer.
The Deputy Direct.
or of Consolidation held that there was abundant evidence to prove that Kasturi had re married Lekhraj and therefore, in law she would be excluded from inheriting the property and was not entitled to be mutated in respect of the Khata in question.
The appellant thereupon unsuccessfully filed a writ petition before the High Court and hence this appeal before this Court.
Learned counsel for the appellant has argued this appeal on the basis of the facts proved in this case.
He has not, and could not, assail the finding of fact arrived at by the Deputy Director of Consolidation which was the last revi sional court in this case.
Before proceeding to determine the point in controversy, it may be necessary to state the admitted facts.
In the first place it is not disputed that the claim of Kasturi was made after the death of Karua.
By that time Kasturi as the widow of Madhua had already inherited half the share.
So the dispute centered round the share of Karua alone.
The finding of fact arrived at by the Deputy Director of Consolidation that Kasturi had remar ried Lekhraj cannot be disturbed.
In fact there was some controversy regarding the dates of the death of Madhua or the re marriage of Kasturi with Lekhraj.
The position however, seems to have been set at rest by the evidence of the respondent himself who deposed that Madhua died about 10 years from the date of deposition which would take us to the year 1960.
The witness further admits that Kasturi remarried Lekhraj 2 or 3 years after Madhua 's death which would take us to 1963.
The respondent further deposes that Karua died 11/2 years from the date of deposition which fixes the death of Karua in the year 1970.
These dates are important to show that inheritance of both Karua and Kasturi would be governed by the provisions of the Hindu Succession Act which had come into force even during the lifetime of Madhua.
We may now examine the contentions raised by counsel for the appellant.
Counsel submitted that assuming that Kasturi had remarried Lekhraj she had acquired an absolute interest in the property and no question of divestment of the property could arise in view of the provisions of the Hindu Succession Act.
Secondly, it was argued that Kasturi in the instant case put forward her claim for inheritance not as widow of Madhua but as mother of Karua,.
because it was the property of Karua which was in dispute.
In the view that we take in the present appeal, it is not necessary at all to 27 decide as to whether or not Kasturi would be disinherited or divested of the property even after having acquired an absolute interest under the Hindu Law.
This is a moot question and not free from difficulty.
We will, however, assume for the sake of argument that as wife of Madhua Kasturi might be divested of her interest on her remarriage with Lekhraj.
It is plain, however, in this case that the dispute arises over the property of Karua and qua Karuna 's property, Kasturi claimed inheritance not as a widow of her husband Madhua but as the mother of Karua.
The Deputy Director off Consolidation seemed to think that the bar of inheritance would apply to a mother as such as to a widow and on this ground he refused to accept the claim of the appellant.
Learned counsel for the respondents supported the stand taken by the Deputy Director of Consolidation.
We are, however, unable to agree with the view taken by the Deputy Director of Consolidation which appears to be contrary to the written text of the Hindu Law.
Mulla in his 'Hindu Law ', 14th Edn, while describing the incidents of a mother regarding inheritance under clause (iii) ob served at p. 116 as follows: "(iii) Unchastity and remarriage Unchastity of a mother is no bar to her succeeding as heir to her son, nor does remarriage constitute any such bar.
" A large number of authorities have been cited in support of this view.
We find ourselves entirely in agreement with this view.
Our attention has not been invited to any text of the Hindu Law under which a mother could be divested of her interest in the property either on the ground of unchas tity or re marriage.
We feel that the application of bar of inheritance to the Hindu widow is based on the special and peculiar, sacred and spiritual relationship of the wife and the husband.
After the marriage, the wife becomes an absolute partner and an integral part of her husband and the principle on which she is excluded from inheritance on re marriage is that when she relinquishes her link with her husband even though he is dead and enters a new family, she is not entitled to retain the property inherited by her.
The same, however, cannot be said of a mother.
The mother is in an absolutely different position and that is why the Hindu Law did not provide that even the mother would be disinherited if the remarried.
In these circumstances we are satisfied that the view of the Deputy Director of Consolidation is legally erroneous.
The High Court erred in not interfering with it even though a pure question of law was involved and has failed to exercise jurisdiction vested in it by law.
As the case is a very old one and does not require any further investiga tion, we do not propose to remand the case to the High Court.
For these reasons, therefore, the appeal is allowed, the orders of the High Court and the Deputy Director of Consoli dation are set aside, and the order of the Settlement Officer directing the mutation of the name of Kasturi is restored.
In the circumstances of this case, there will be no order as to costs.
M.R. Appeal allowed.
| Regulations 31 and 32.1 of the Punjab University Calendar, 1973, Volume II are as under: "31.
The Syndicate shall appoint annually a standing committee to deal with cases of the alleged misconduct and use of unfair means in connection with examinations; 32.1.
When the committee is unanimous, its decision shall be final except as provided in S.32.2.
If the Committee is not unanimous, the matter shall be referred to the Vice Chancellor who shall either decide the matter himself or refer it to the Syndicate for decision".
By virtue of the powers vested in the syndicate, the Punjab University appointed a standing committee under Regulation 31 consisting of a retired high court judge, an Advocate who was formerly a minister of State of Punjab & the Registrar of the University.
It also resolved, by its Resolution dated 17th August 1971, that two members shall form the quorum for the meetings of the standing committee appointed under Regulation 31.
For adopting unfair practices in the examination, respondents were disqualified by the Committee, in all the sittings of which, only two out of the three members were present.
The respondents contended by their writ petitions that the decisions of the Standing Committee were without jurisdiction in as much as all the three members of the Standing Committee had not taken part the meetings in which the decisions to disqualify them were taken.
By a majority of 2 to 1, the High Court set aside the decisions taking the view that despite the circumstance that two members of the committee formed the quorum, the impugned decisions were vitiated by the fact that only 2 and not all the 3 members of the committee participated in the proceedings.
Allowing the appeals by certificate, the Court, ^ HELD: (1) The Constitution of the Standing Committee is indisputably within the powers of the Syndicate under Regulation 31.
The Syndicate which had the power to appoint the Standing Committee had the incidental power to fix the quorum for the meetings of the Standing Committee. 'Quorum ' denotes the minimum number of members of any body of persons whose presence is necessary in order to enable that body to transact its business validly so that its acts may be lawful.
It is wholly inappropriate to draw on the Constitution of judicial tribunals as a parallel.
In the instant case, the syndicate by nominating 3 persons to be members of the Standing Committee, but by resolving that 2 of them would validly constitute the standing committee, did no more than provide that though the Standing Committee may be composed of 3 persons, any 2 of them could validly and effectively transact the business of and on behalf of the Committee.
[70 E F, 71 A C] (ii) By the quorum, a minimum number of members of the committee must be present in order that its proceedings may be lawful, but that does not mean that more than the minimum are denied an opportunity to participate in the deliberations and the decision of the committee.
There is no 68 warrant for the hypothesis that had the third member attended the meetings he would have dissented from the decision of the 2 other members so as to necessitate a reference to the Vice Chancellor under Regulation 32.1.
[71 F G 72 AB] (iii) When Regulation 32.1 speaks of the committee being unanimous, it refers to the unanimity of the members who for the time being are sitting on the committee and who, by forming the quorum can validly and lawfully discharge the functions of the Committee.
The fixation of quorum neither makes Regulation 32.1 a dead letter nor does it affect its application or utility.
The fixation of quorum by the Syndicate violates neither the letter nor the spirit of that Regulation.
[72 C D, E, F] (iv) Regulation 32.1 is aimed at conferring finality on decisions of the committee if they are unanimous and at leaving the validity and priority of a dissenting decision to the judgment of the Vice Chancellor who can deal with the matter himself or refer it to the decision of the Syndicate.
Regulation 32.1 does not even remotely attempt to fix the quorum.
That is not its purpose, and it sounds strange that the Regulation, by a circuitous method, should fix the quorum at the full complement of members.
Quorums are seldom so fixed and were it intended that the entire committee must decide every case, Regulation 31 could appropriately have said so.
[72 G H, 73 A] It is quite true that judicial consistency is not the highest state of legal bliss.
Law must grow, it cannot afford to a static and therefore, judges ought to employ an intelligent technique in the use of precedents.
But the language of the Regulations called for no review of established precedents.
Nor indeed is there any fear of unfairness if only 2 members decided the cases of students accused of adopting unfair practices in the examinations.
In such cases, it is so much better that the law is certain.
[73 C D, E] Bharat Indu vs The Punjab University & Anr.
ILR [1967] 2 Punjab & Haryana 198; Miss Manjinder Kaur vs The Punjab University (Civil Writ No. 3516/72 dt.
30 3 1973 decided by the Punjab High Court (approved).
|
Civil Appeal No. 793 of 1966.
Appeal by special leave from the judgment and order dated August 21, 1964 of the Bombay High Court, Nagpur Bench in Special Civil Application No. 353 of 1963.
M.N. Phadke, Naunit Lal and B.P. Singh, for the appellant.
D.D. Verma and Ganpat Rai, for respondent No. 1.
The Judgment of the Court was delivered by Shelat, J.
This appeal, by special leave, is directed against the order of the High Court of Bombay (Nagpur Bench) which set aside the orders of the Assistant Commissioner of Labour and the Industrial Court, Nagpur and remanded the case to the Assistant Commissioner.
The appellant firm conducts a number of bidi factories at various places in Vidharba including the one at Kamptee.
Its head office is also situate there.
The factory at Kamptee and the head office have always been treated as separate entities though owned by the same firm.
Consequently, the head office was registered under the Central Provinces & Berar Shops and Establishment Act, 1947 and the factory at Kamptee was registered under the Factories Act.
The factory has also its own standing orders certified under the Central Provinces & Berar Industrial Disputes Settlement Act, 1947.
Respondent 1 was originally employed in the factory at Kamptee.
Two or three years thereafter he was directed to work at the head office and worked therein for about six years prior to the impugned order of dismissal passed against him by the munim of the head office.
Aggrieved by the order he flied 274 an application under section 16 of the C.P. & Berar Industrial Disputes Settlement Act alleging that the said order was incompetent and illegal.
The appellant firm contended that at the material time Respondent 1 was employed as a clerk in the head office, that the head office was a separate entity, that the dismissal order had not been passed 'by the appellant firm as the owner of the said factory, that the firm, as such owner, was wrongly impleaded and that the application was misconceived.
The Assistant Commissioner dismissed the application holding that Respondent 1 at the material time was not the employee in the factory, but was employed in the firm 's head office.
He relied on the fact that the head office and the factory had separate rules, that Respondent 1 used to sign his attendance in the register of the head office, that he was being paid his salary by the head office, and lastly, that his name was not on the muster roll of the factory.
He also found that whereas the staff of the head office was governed by the C.P. & Berar Shops & Establishments Act, the factory was governed by the C.P. & Berar Industrial Disputes Settlement Act.
Against the dismissal of his ,application, Respondent 1 filed a revision application before the Industrial Court, Nagpur.
The Industrial dismissed the application holding that the only question raised before it was whether Respondent 1 was the employee of the head office and that that being purely a question of fact, he could not interfere with the finding of fact arrived at by the Assistant Commissioner.
Respondent 1 thereafter filed a writ petition in the High Court challenging the said orders.
The High Court held that it was possible in law for an employer to have various establishments where different kinds of work would be done, in which case an employee in one establishment would be liable to be transferred to another establishment.
But the High Court observed that unless it was established that the employment of Respondent 1 in the factory was legally terminated it could not be assumed, merely because he was directed to work in the head office, that his employment was changed and the head office was substituted as his employer in place of the said factory.
As the order passed by the Assistant Commissioner was not clear on this question, the High Court remanded the case for disposal according to law.
Mr. Phadke for the appellants, raised the following contentions against the High Court 's order: (1) that the High Court made out a new case for Respondent 1, in that Respondent 1 had never challenged the validity of the order of dismissal on the ground that there was no change of employment, and that therefore, the head office was incompetent to order his dismissal, (2) that the facts of the case justified the conclusion that Respondent 1 had ceased to be the employee of the factory, and (3) that in any event he must be held to have given an implied consent to 275 his being treated as the employee of the head office.
In support of these contentions he relied upon the fact that Respondent 1 had worked at the.
head office for the last six years without any protest, that his name was on the attendance register of the head office, that it was the head office which paid his salary, and lastly, that he worked in the head office under the direction and control of the munim of that office.
As to the first contention, it would not be correct to say that the High Court made out a new case for the first time for Respondent 1 which was not pleaded by him before the Assistant Commissioner.
In para 1 of his application he had expressly averred that about three years after his employment in the factory he had been ordered to work in the head office.
In reply to the application the appellants conceded that though Respondent 1 was first employed in the factory and had worked there for about three years, he had thereafter been transferred to and been working as a clerk in the head office.
There was, however, no averment in that reply that the contract of service of Respondent 1 with the said factory was at any time put an end to or that when he was directed to work in the head office a fresh contract of service was entered into.
between.
him and the head office.
The Assistant Commissioner in his said order held that the head office and the factory were two separate establishments registered under two different Acts, and, therefore, subject to different provisions of law.
He further held that since Respondent 1 was not actually working in the factory and his name did not figure in the factory 's muster roll and was not paid his wages by the factory, the applicant could not be said to be an employee of the said factory.
In his revision application before the Industrial Court, Respondent 1 made an express plea that when he was directed to work in the head office, he had received no notice from the factory that his services were terminated there or that he had henceforth become the employee of the head office.
It is clear from these pleadings that it was not for the first time in the High Court that Respondent 1 contended as to the incompetence of the head office to take disciplinary action against him and to pass the order of dismissal.
The first contention of Mr. Phadke, therefore, cannot be accepted.
As regards the second and the third contentions, there is no dispute that though the head office and the said factory belong to the same proprietors, they were always treated as two distinct entities registered under two different Acts, that Respondent 1 was employed first in the factory where he worked for 2 or 3 years and was thereafter ordered to work at the head office where admittedly he worked for about six years before the impugned order terminating his services was passed.
The question, therefore, which the Assistant Commissioner and the Industrial Court had to decide, in view of the pleadings of the parties, was whether 276 Respondent 1 had ceased to be the employee of the factory and was in the employment of the head office at the time when the impugned order was passed, or whether his services were simply lent to the head office and he continued all along to be the employee of the factory ? The general rule in respect of relationship of master and servant is that a subsisting contract of service with one master is a bar to service with any other master unless the contract otherwise provides or the master consents.
A contract of employment involving personal service is incapable of transfer.
Thus, where a businessman joins a partnership firm and takes his personal staff with him into the firm, his staff cannot be made the staff of the firm without the consent of the other partners.
Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd.(1).
In certain cases, however, it is.
possible to say that an employee has different .employers, as when the employer, in pursuance of a contract between him and a third party, lends or hires out the services of his employee to that third party for a particular work.
Such an arrangement, however, does not effect a transfer of the contract of service between the employer and his employee, but only amounts to a transfer of the benefit of his services.
Century Insurance Co. Ltd. vs Northern Ireland Road Transport Board(").
In such cases where a third party engages another person 's employee it is the general employer who is normally liable for the tortuous acts committed by the employee and his liability is not affected by the existence of a contract between him and the third party under which the services of the employee are lent or hired out for a temporary period to such third party.
In order to absolve the employer from the liability and to make the person who.
temporarily engages the employee or hires his services it is necessary to prove that the relationship of master and servant was temporarily constituted between such third party and the employee, and that it existed at the time when the tortuous act was committed by the employee.
There is, however, a presumption against there being such a transfer of an employee as to make the hirer or the person on whose behalf the employee is temporarily working and a heavy burden rests on the party seeking to establish that the relationship of master and servant has been constituted pro hac vice between the temporary employer and the employee of.
Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd.(1).
In cases where an employer has hired out or lent the services of his employee for a specific work and such an employee has caused damage to another person by his tortuous act, the question often arises as to who of the two, i.e. the employer or the person to whom such services are hired out or lent, is ; at 17.
(2) ; 277 vicariously responsible for such damage.
In cases commonly known as cranes and carriage cases, courts in England evolved the rule of the employee being temporarily the employee of such third party to impose the responsibility on him if it was established that in the matter of the act, in the performance of which the tortuous act was committed, such third party had exercised control and direction over the performance of the act in question and the manner in which it was to be performed.
The classic case commonly cited and in which this rule was applied is Quarman V. Burnett (1) of.
also Jones vs Scullard(2) where Lord Russel applied the test of the power to, direct and control the act in performance of which damage was caused to another person.
The position in law is, therefore, clear that except in the case of a statutory provision to the contrary, a right to the service of an employee cannot be the subject matter of a transfer by an employer to a third party without the employee 's consent.
Thus, in Nokes vs Doncaster Amalgamated Collieries, Ltd. (3) where an order was made under section 154 of the Companies Act, 1929 transferring all the assets and liabilities of a company to another company.
Viscount Simon held that such an order did not mean that contracts of service between the appellant and the transferer company also stood transferred.
The principle that even in cases where the services of an employee are lent to a third party temporarily for a particular work, the employee still remains the employee of the employer is illustrated in Denham vs Midland Employees Mutual Assurance Ltd.(4).
There Eastwoods Ltd. employed Le Grands to make test borings on their property.
Le Grands provided two skilled drillers with plant and tackle to carry out the borings and Eastwoods Ltd. agreed to provide one of the labourers, one Clegg to assist those skilled men free of charge to Le Grands.
While the said work .was being carried out, Clegg was killed in circumstances in which Le Grands were liable to pay damages to his widow on the ground that his death was caused on account of the negligence of Le Grands or their servants.
Le Grands sought to be indemnified by their insurers against their said liability.
They were covered by two policies, one with the Midland Employers Mutual Assurance Ltd. in respect of their liability to the employees and the other with Lloyds in respect of their liability to the public in general.
The policy issued by the Midland Employers Mutual Assurance Ltd. provided that if any person "under a contract of service" with the insured were to sustain any personal injury by accident caused during the period of employment, and if the insured became liable to pay damages for such injury the association would indemnify the insured against all sums for which he would be so liable.
The policy issued by the Lloyds indemnified Le Grands for any sums for which they might become liable to (1) ; (2) (3) [1940] 3 All England Law Reports 549.
(4) [1955] 2 Q.B.437.
278 pay in respect of death or accidental bodily injury to persons and loss or damage to.
property arising in or out of the business of borings carried out by Le Grands.
The question was whether at the time of his death Clegg was the servant of Le Grands and under "a contract of service" with them as provided in their policy with the Midland Assurance Ltd. Dealing with that question, Denning, L.J. observed that the difficulty which surrounded such a subject arose because of the concept that a servant of a general employer may be transferred to a temporary employer so as to become for the time being his .servant.
Such a concept was, he said, a very useful device to place liability on the shoulders of the one who should properly bear it, but did not affect the contract of service itself.
No contract of service can be transferred from one employer to another without the servant 's consent and such consent is not to be raised by operation of law but only by the real consent in fact of the man express or implied.
He further observed: "In none of the transfer cases which has been cited to us had the consent of the man been sought or obtained.
The general employer has simply told him to go and do some particular work for the temporary employer and he has gone.
The supposed transfer, when it takes place, is nothing more than a device a very convenient and just device, mark you to put liability on to the temporary employer; and even this device has in recent years been very much restricted in its operation.
It only applies when the servant is transferred so completely that the temporary employer has the right to.
dictate, not only what the servant is to do, but also how he is to do it.
" Applying these principles to the facts before him, he observed that he had no doubt that if a third person had been injured by the negligence of Clegg in the course of his work, Le Grands and not Eastwoods would be liable to such third person.
also, when Clegg himself was killed, Le Grands were liable to his widow on the same footing that they were his masters and not merely invitors.
These results were achieved in law by holding that Clegg became the temporary servant of Le Grands.
He further observed that there was no harm in thus describing him so long as it was remembered that it was a device designed to cast liability on the temporary employer.
However, on the question whether Clegg was "under a contract of service" with Le Grands, he held that he was not, for his contract of service was with Eastwoods.
They had selected him and paid his wages and they alone could suspend or dismiss him.
Clegg was never asked to consent to a transfer of the contract of service and he never did so.
If he was not paid his wages or if he was wrongfully dismissed from 279 the work, he could sue Eastwoods for the breach of contract and no one else.
If he failed to turn up for work, Eastwoods alone 'could sue him.
He could, therefore, see no trace of a contract of service with Le Grands except the artificial transfer raised by law so as to make Le Grands liable to others for his faults or liable to him for their own faults and that the artificial transfer so raised cannot be said to be a contract of service within the said policy of assurance.
Le Grands, therefore, were not entitled to 'be indemnified by the Midland Assurance Company under the employers ' liability policy but were entitled to be indemnified by Lloyds under their public liability policy.
A contract of service being thus incapable of transfer unilaterally, such a transfer of service from one employer to another can only be affected by a tripartite agreement between the employer, the employee and the third party, the effect of which would be to terminate the original contract of service by mutual consent and to make a new contract between the employee and the third party.
Therefore, so long as the contract of service is not terminated, a new contract is not made as aforesaid and the employee continues to be in the employment of the employer.
Therefore, when an employer orders him to do a certain work for another person the employee still continues to be in his employment.
The only thing that happens in such a case is that he carries out the orders of his master.
The employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired.
It may be that such third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer.
That does not preclude the employee from claiming his wages from the employer.
The hirer may also exercise control and direction in the doing of the thing for which he is hired or even the manner in which it is to be done.
But if the employee fails to carry out his directions he cannot dismiss him and can only complain to the employer.
The right of dismissal vests in the employer.
Such being the position in law, it is of the utmost importance in the present case that the appellants at no time took the plea that the contract of employment with the factory was ever terminated or that the respondent gave his consent, express or implied, to his contract of service being transferred to the head office, or that there was a fresh contract of employment so brought about between him and the head office.
Unless, therefore, it is held from the circumstances relied upon by Mr. Phadke that there was a transfer of the contract of service or that Respondent 1 gave his consent, express or implied, to such a transfer, Respondent 1 would continue to be the servant of the factory.
Since the case has been remanded to the Assistant Commissioner, we refrain from making any observations as regards the effect of the admissions 280 said to have been made by Respondent 1 and relied on by the Assistant Commissioner.
Mr. Phadke, however, relied on Jestamani Gulabrai Dholkia vs The Scindia Steam Navigation Company(1) in support of his contention that there was a transfer of the contract of employment and that it was not a mere transfer of the benefit of the services of Respondent 1.
In that case the appellants were originally in the service of the Scindia Steam Navigation Company.
In 1937 Air Services of India Ltd. was incorporated.
In 1943, the Scindias purchased the ASI and by 1946 ASI became a full fledged subsidiary of the Scindias.
Between 1946 to 1951 the Scindias transferred several of their employees including the appellants to the ASI.
The Scindias had a number of such subsidiary companies and it was usual for them to transfer their employees to such companies and also to recall them whenever necessary.
In 1953, the Government of India decided to nationalise the airlines operating in India with effect from June 1953.
On April 6, 1953 the appellants wrote to the Scindias to recall them to their original posts but the Scindias refused to do so as they were not in a position to absorb them.
They pointed out that a Bill, called the Air Corporation Bill, 1953, was pending before Parliament, that under cl. 20 thereof persons working with ASI on the appointed day would become the employees of the Corporation, that under that clause they had the option to resign if they did not wish to join the Corporation and that if the appellants exercised that option.
the Scindias would treat them as having resigned from their service.
The Act was passed on May 28, of the Act provided that every employee of an existing air company employed by such company prior to July 1, 1952 and still in its employment immediately before the appointed day, shall, in so far as such employee is employed in connection with the undertaking which has vested in the Corporation by virtue of the Act, become, as from the appointed date, the employee of the Corporation in which the undertaking has vested.
On june 8, 1953 the appellants made a demand that if the Corporation were to retrench any persons from the staff loaned to ASI within the first five years, the Scindias should take them back.
The Scindias refused.
None of the appellants had exercised the option provided by section 20 (1 ).
On August 1, 1953 ASI became vested in the Corporation and section 20( 1 ) came into force as from that date.
The appellants contended inter alia that the contract of service between them and the Scindias was not transferable.
The contention was rejected on the ground that by reason of section 20(1) the contract of service of the appellants stood transferred to the Corporation and that though the appellants were not originally recruited by ASI and were transferred by the Scindias to the said company, (1) ; 281 they were the employees of ASI and were such employees on the appointed day and since they had not exercised the option under section 20( 1 ) they became the employees of the Corporation by operation of that provision.
The Scindias, therefore, were no longer concerned with them.
It is true that the appellants were transferred to ASI on condition that they would receive the same remuneration and other benefits as they were getting in the Scindias and further that it was possible to contend that Scindias alone could dismiss them.
But the learned Judges explained that these were special terms applicable to the appellants.
But in spite of them they still had become the employees of the ASI and were such employees on the appointed day.
It seems that this conclusion was reached on the footing that since ASI was the subsidiary company of the Scindias like several other subsidiary companies, and it was.
usual for the Scindias to transfer any of their employees to such subsidiary companies, the appellants on their transfer were deemed to have consented to become the employees of ASI in spite of the right of the Scindias to recall them whenever necessary and further that the appellants continued to be and were the employees of the ASI on the appointed day and were, therefore, governed by section 20(1 ) if the Act.
It is clear that this was a case of employees becoming the employees of the Corporation by virtue if the operation of a statute.
The decision, therefore, is not an authority for the proposition that an employer can transfer his employee to a third party without the consent of such employee or ' without terminating the contract of employment with him.
That being the position, the case of Jestamani vs The Scindia Steam Navigation(x) cannot assist Mr. Phadke.
In our view the High Court was, right in setting aside the order of the Assistant Commissioner and the Industrial Court on the ground that unless a finding was reached on the facts of the case that the contract of service with the said factory came to an end and a fresh contract with the head office came into being Respondent 1 continued to be in the employment of the factory and the head office, therefore, was not competent to dismiss him.
The appeal, therefore, fails and is dismissed with costs.
G.C. Appeal dismissed.
| The appellant firm had a number of factories including one at Kamptee in Vidharba.
Its head office was also situated there,.
The factory at Kamptee and the head office were treated as separate establishment.
the factory being registered under the Factories Act and the Head Office under the C.P. and Berar Shops and Establishments Act, 1947.
Respondent No. 1 was originally employed at the aforesaid factory but later he was directed to work at the head office.
When the Head Office dismissed him from service he challenged the order of dismissal by an application under section 16 of the C.P. & Berar Industrial Disputes settlement Act.
The Assistant Commissioner dismissed the application holding that Respondent No. 1 at the material time was not an employee of the factory but was employed in the Head Office.
The Industrial Court refused, in revision, to interfere with the Assistant Commissioner 's order.
Respondent No. 1 filed a writ petition under article 226 of the Constitution.
The High Court observed that unless it was established that the employment of Respondent No. 1 in the factory was legally terminated it could be assumed merely because he was direct to work in the head office, that his employment was changed and the head office was substituted as his.
employer in place of the said factory.
, As the order passed by the Assistant Commissioner was not clear on this question the High Court remanded the case for disposal according to law.
The firm appealed to this Court.
HELD: (i) A contract for service is incapable of transfer unilaterally.
Such a transfer of service from one employer to another can only be effected by a tripartite agreement between the employer, the employee and the third party, the effect of which would be to terminate the original contract of service by mutual consent and to.
make a new contract between the employee and the third party.
So long as the contract of service is not terminated, a new contract is not made as aforesaid, and the employee continues to be in the employment of the employer.
Therefore, when an employer orders him to: do certain work for another person the employee still continues to be i.n his employment.
The only thing that happens in such a case is that he carries out the orders of his master.
employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired.
It may be that such a third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer.
that does not preclude the employee from claiming his wages from the employer.
the hirer may also.
exercise control and direction in the doing of the thing for which he is hired or even the manner in which it is to be done.
But if the employee fails to.
carry out his direction he cannot 273 dismiss him and can only complain to the employee.
The 'right of dismissal vests with the employer.
[279 &F] Such being the position in law, in the present case the High Court was right in setting aside the order of the Assistant Commissioner and the Industrial Court on the ground that unless a finding was reached on the facts of the case that the contract of service with the said factory came to an end and a fresh contract with the head office came into being, Respondent No. 1 continued to be in the employment of the factory and the head office therefore was not competent to dismiss him.
[281 F] Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd. ; at 17, Century Insurance Co. Ltd. vs Northern Ireland Road Transport Board, [1942] A.C. 509, Quarman vs Burnett, ; , Jones vs Scullard, , Nokes vs Doncaster Amalgamated Collieries, Ltd. [1940] 3 All England Law Reports 549 and Denham vs Midland Employees Mutual Assurance Ltd., , referred to.
Jestamani Gulabrai Dholkia vs The Scindia Steam Navigation Company ; , distinguished.
|
Special Leave Petition (Civil) Nos.
1731 and 927 of 1978.
From the Judgment and order dated 3 11 76 of the Allahabad High Court (Lucknow Bench) in W.P. 116 of 1971 and from the Judgment and order dated 5 8 77 of the Allahabad High Court (Lucknow Bench) in Revision Application No. 29/77 respectively.
R. K. Garg, Madan Mohan and V. J. Francis for the Petitioner.
The order of the Court was delivered by KRISHNA IYER, J.
For around 50 years, a man and a woman, as the facts in this case unfold, lived as husband and wife.
An adventurist challenge to the factum of marriage between the two, by the petitioner in this special leave petition, has been negatived by the High Court.
A strong presumption arises in favour of wed lock where the partners have lived together for a long spell as husband and wife.
Although the presumption is rebuttable, a heavy burden lies on him who seeks to deprive the relationship of legal origin.
Law leans in favour of legitimacy and frowns upon bastardy.
In this view, the contention of Shri Garg, for the petitioner, that long after the alleged marriage, evidence has not been produced to sustain its ceremonial process by examining the priest or other witnesses, deserves no consideration.
If man and woman who live as husband and wife in society are compelled to prove, half a century later, by eye witness evidence that they were validly married, few will succeed.
The contention deserves to be negatived and we do so without hesitation.
The special leave petitions are dismissed.
S.R. Petitions dismissed.
| The appellant paid the correct court fee under Section 37(2) of the Madras Court Fees and Suits Valuation Act clearly alleging in para 14 of the plaint that she is in joint possession and is seeking partition and separate possession of her half share in the suit properties as heir of deceased Paramayee.
The preliminary objection as to the correct court fee payable raised and taken up resulted in the final appeal before this court.
Allowing the appeal by Special Leave, the Court ^ HELD: (a) Courts should be anxious to grapple with the real issues and not spend their energies on peripheral ones.
[68H, 69A] (b) Court fee, if it seriously restricts the right of a person to seek his remedies in Courts of justice should be strictly construed.
Since access to justice is the basis of the legal system, where there is a doubt, reasonable of course, the benefit must go to him who says that the lesser court fee alone be paid.
[69A] In the instant case, the court fee that is payable is under s.37(2) of the State Act, which corresponds to article 17 D of the Court Fees & Suits Valuation Central Act, which is the predecessor legislation on the subject.
|
ivil Appeal No. 3195 of 1979 etc.
From the Judgment and Order dated 20th June, 1979 of the Kerala High Court in Writ Appeal No. 302 of 1978.
F.S. Nariman, M. Chandrasekharan, K.R. Nambiar, C.V. Subba Rao, Ms. A. Subhashini, A.K. Ganguli, Mrs. R. Rangas wamy, Hemant Sharma, K. Swamy and Ms. section Relan for the appearing parties.
The Judgment of the Court was delivered by BHAGWATI CJ.
1.
The above cases are involving a company known as Madras Rubber Factory Ltd. (popularly known as MRF Ltd.) MRE has four factories; Kottayam (Kerala), Madras (Tamil Nadu), Arkonam (Tamil Nadu) and Goa (Union Territory) engaged in 852 the manufacture of automotive tyres, tubes and other rubber factory products.
Each of these factories are under juris diction of different Assistant Collectors.
The four proceed ings arising for our consideration are as under: (i) Civil Appeal No. 3195 of 1979 is an appeal by certifi cate filed by the Union of India through the Assistant Collector of Central Excise, Kottayam against the Judgment dated 20th June 1979 of the Division Bench of the High Court of Kerala from Writ Appeal No. 302 of 1978 allowing post manufacturing expenses under the new Section 4 of the Excise Act.
This relates to the Kottayam factory.
(ii) Civil Appeals Nos.
4731 32 of 1984 are appeals filed by Union of India through the Superintendent of Central Excise, Kottayam against the Judgment dated 1st April 1976 of the Division Bench of the High Court of Kerala allowing post manufacturing expenses under the old Section 4 of the Excise Act.
(iii) SLP (Civil) No. 10108 of 1980 is another appeal of the Union of India against the Judgment of the Additional Judi cial Commissioner, Goa, Daman and Diu allowing post manufac turing expenses under the old Section 4 of the Excise Act in respect of the factory at Goa.
In respect of new Section 4, the Union of India and MRF were agreed that the decision in Writ Appeal No. 302 of 1978 being the subject matter of Civil Appeal 3195 of 1979 would be applicable to the factory at Goa.
(iv) Civil Appeal No. 793 of 1981 is MRF 's Appeal under Section 35L of the Central Excise and Salt Act (as amended) ' against the order and decision dated 1st February 1984 of the Tribunal (CEGAT) deciding that the sale of tyres and other rubber products through their 42 Depots throughout India were not retail sales but were in the nature of whole sale sales and MRF was not entitled to deductions under Rule 6A of the Central Excise (Valuation) Rules, 1975 (hereinaf ter referred to as the "Valuation Rules").
These proceedings are now arising for our considera tion after the pronouncement of the Judgment by this Court in the case of Union of India & Others vs Bombay Tyres International Ltd., [1983] Vol.
14 Excise Law Times 1896) decided on the 7th October 1983 and the clarificatory order passed by this Court in the same case of Union of 853 India & Others vs Bombay Tyres International Ltd., reported in This clarification was given by the Supreme Court on 14th and 15th November 1983.
Pursuant to hearings held in this Court in several cases relating to post manu facturing expenses and after the latter clarificatory order in the case of Union of India & Others vs Bombay Tyres International Ltd. (supra), the Tribunal (CEGAT) decided the Review Notice and set aside the order of the Appellate Collector on 1st February 1984 and on 9th February 1984 the Civil Appeal No. 793 of 1984 was admitted.
Format orders were passed by this Court in the pending appeals relating to post manufacturing expenses.
Even in the present matters format orders were passed on or around 3rd May, 1984.
Format orders were also passed in the pending Writ Appeal No. 590 of 1979 pending before the High Court at Madras.
In accord ance with the format orders and within the timeframe stipu lated, amendments to price lists were to be filed by MRF Ltd. The present Appeals are now to consider the various deductions claimed by MRF Ltd. and/or disallowed and/or not allowed by the Assistant Collector, or allowed by the As sistant Collector, in the various jurisdictions qua the factories of MRF Ltd. in the cross Appeals of the Union of India and the MRF Ltd. 3.
For the sake of convenience, the deductions arising for consideration of this Court can be summarised as under: (i) TAC/Warranty discount (ii) Product discounts (iii) Interest on finished goods and stocks carried by the manufacturer after clearance (iv) Over riding commission to Hindustan Petroleum Corpora tion (v) Cost of distribution incurred at duty paid Sales Depots (vi) Interest on receivables (vii) 1% turnover discount allowed to RCS Dealers (viii) Secondary packing cost on tread rubber (ix) Discount to Government and other Departments 854 4.
The Appeals further also raise the issue of whether the price to the Defence Department Ex factory gate (ex factory) is to be considered as the wholesale cash price under old Section 4 as this was disallowed by the Assistant Collector, and further the issue as to the method of compu tation of assessable value where the selling price is a cum duty price.
This issue involves the consideration as to how excise duty has to be deducted, whether after deducting permissible deductions or otherwise.
We propose to deal with the issues as follows.
For the purpose of this Judgment we are not repeating and setting out the text of the un amended Section 4 and the amended Section 4 as the same are exten sively quoted in our Judgment in Union of India vs Bombay Tyres International Ltd., Recapitulating our Judgment in Union of India & Others vs Bombay Tyres International Ltd. (supra) we held that: "broadly speaking both the old s.4(a) and the new s.4(1) (a) speak of the price for sale in the course of wholesale trade of an article for delivery at the time and place of removal, namely, the factory gate.
Where the price contemplated under the old s.4(a) or under the new s.4(1) (a) is not ascertain able, the price is determined under the old s.4(b) or the new s.4(1)(b).
Now, the price of an article is related to its value (using this term in a general sense), and into that value are poured several components, including those which have enriched its value and given to the article its marketability in the trade.
Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included.
Consequent ly, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on ac count of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted.
It will be noted that advertisement expenses, marketing and selling organisation expenses and after sales service promote the marketability of the article and enter its value in the trade.
Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by 855 the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted.
But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold.
The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery.
In the clarificatory order in Union of India & Ors.
vs Bombay Tyres International Ltd., reported in 1984 Vol.
17 ELT 329 we clarified that discounts allowed in the trade (by whatever name called) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice.
The allowance and the nature of dis count should be known at or prior to the removal of the goods and shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price.
In relation to the first head of deduction, namely TAC/ Warranty discount, the petitioners contend that deduc tion on account of TAC/Warranty discount ought to be permit ted as a deduction for determining the assessable value.
It is submitted by them that this discount relates to the claims of the customers on account of any defect in the tyre already sold and assessed to duty.
Such claims are scruti nised by a committee of technical personnel of the assessee.
The Committee decides as to what amount of money should be refunded to the customers on account of the defect in the manufactured tyre already sold to the customers by which defect the tyre does not get its full life tenure.
Instead of refunding the amount in cash the customers are permitted to buy a new tyre, the price of which new tyre would be reduced by the amount refundable to customers as per deci sion of the committee. '17he petitioners contend that the TAC/Warranty discount satisfied all the criteria of a trade discount stipulated in our order dated 14th/15th November 1983 in that it is a discount established by practice since 1943, it is a discount given to the consumer of a MRF tyre in respect of a tyre purchased earlier, the factum of allow ance is known is trade prior to removal, the nature of the discount is not arbitrary or ad hoc and easily determinable.
The Revenue disputes this claim on the ground that it does not come within Section 4(4)(d)(ii) of the Act since the claim is not in accordance with the normal practice of the wholesale trade at the time 856 of removal of the goods in respect to which the claim is made and also on the ground that this is not normally claim able as trade discount.
We are inclined to accept the contention of the department.
Even though the giving of TAC/Warranty is estab lished by practice or capable of being decided, what is really relevant is the nature of the transaction.
The war ranty is not a discount on the tyre already sold, but relate to the goods which are being subsequently sold to the same customers.
It cannot be strictly called as discount on the tyre being sold.
It is in the nature of a benefit given to the customers by way of compensation for the loss suffered by them in the previous sale.
In our order dated 14 th/15th November 1983 we have said that trade discounts of any nature should be allowed to be deducted provided, however, the discount is known at or prior to the removal of the goods.
In the present case this condition precedent is not satisfied as the Committee de cides the claim subsequent to the removal of the tyre.
The Petitioners have further contended that the Excise Act and the Rules framed thereunder contemplate such an allowance and an abatement of duty on defective tyres.
Counsel for the Petitioners has drawn an attention to Rule 96 which reads as follows: "Rule 96.
Abatement of duty on defective tyres: If a manu facturer desires that certain tyres should, in consequence of damage sustained during the course of manufacture, be assessed on a value less than the standard selling price he shall declare in writing on the application for clearance of the goods, that such damage has been sustained and each such tyre shall be clearly legibly embossed or indelibly stamped with the word "Second", "Clearance" or "Defective".
There is, however, a distinction between a compensa tion in the nature of warranty allowance on a defective tyre after it has been sold and removed from the factory gate and selling a defective tyre as a "seconds" or "defective".
In our view the analogy of Rule 96 is not applicable.
A tyre being sold as a "seconds or "defective" would be sold at a discount, such discount being known before the goods were removed/cleared, thereby also satisfying the pre condition of section 4(4)(d)(ii) of the Excise Act.
The assessable value and price list submitted would be one relating to "seconds" tyres.
We, therefore, 857 disallow the claim in respect of TAC/Warranty discount.
The next head of deductions arising for our consid eration is in respect of product discounts.
This head com prises of 3 tyres of discounts: (1) Prompt Payment Discount (2) Year Ending Discount (3) Campaign Discount 13.
We deal with each of the heads individually as under: (i) Under the prompt payment discount scheme MRF in relation to up country Non RCS Bills in the replacement market except Government and DGS & D accounts, a rate of 0.75% on the total value of the invoice including sales tax, surcharge, etc.
is offered if the bill is cleared/paid for within 26 days from the date of invoice.
The Union of India disputes this claim on the ground that it is limited to only certain varieties of products as explained in the scheme document and is only for a limited period.
We are not in clined to accept the contention of the Union of India in this regard.
A prompt payment discount is a trade discount given to the dealers by MRF.
It is established under the terms of sale or by established practice and is known at or prior to the removal of the goods.
It squarely falls within our order of clarification in the case of Union of India & Ors.
vs Bombay Tyres International Ltd. (supra).
The MRF is entitled to deduction on this account.
(ii) In the Special year end Bonus to Dealers MRF pro poses and claims this deduction as a year end discount.
This Bonus of Rs.50 per tyre is for certain specific tyres and is receivable only on those invoices where payments are actual ly receivable within 45 days from the date of the invoice.
Under this scheme a declaration is to be received dealerwise and thereafter provision is to be made at the head office of MRF for the Bonus.
The allowance of the discount is not known at or prior to the removal of the goods.
The calcula tions are made at the end of the year and the Bonus at the said rate is granted only to a particular class of Dealers.
This is computed after taking stock of the accounts between MRF and its dealers.
It is not in the nature of a discount but is in the nature of a Bonus or an incentive much after the invoice is 858 raised and the removal of the goods is complete.
In the circumstances, we are of the opinion that MRF is not enti tled to deduction under this head.
(iii) MRF proposed "Superlug Piggy back campaign Bonus" in March/April 1983 for invoices during a particular period whereby bonus of Rs.50 per tyre for every Superlug tyre and/or any other particular variety of tyres is given.
The bonus was again applicable only on invoices for which pay ments were received within 45 days.
Details of bonus earn ings per dealer were to be computed after taking stock of the accounts between MRF and its dealers and the bonus amount was to be credited after June 1983 or mid July 1983.
On the same reasoning as the year ending discount/bonus scheme, the campaign bonus cannot be a permitted deduction to MRF.
The allowance of the discount is not known at or prior to the removal of the goods.
The quantum is unascer tained at the point of removal.
The discount is not on the wholesale cash price of the articles sold but is based on the total sales effected of a particular variety of tyre calculated after the removal.
We accordingly reject this claim of MRF.
Interest on finished goods from the date the stocks are cleared till the date of the sale was disallowed by the Assistant Collector, Kottayam.
This head has again been urged for our consideration as a proper deduction for deter mination of the assessable value.
As quoted in our judgment in Union of India and Ors.
vs Bombay Tyres International Ltd. (supra), we have held that expenses incurred on account of several factors which have contributed to its value upto the date of sale which apparently would be the date of delivery at the factory gate are liable to be included.
The interest on the finished goods until the goods are sold and delivered at the factory gate would therefore necessarily, according to the judgment in Bombay Tyres International case (supra) have to be included but interest on finished goods from the date of delivery at the factory gate up to the date of delivery from the sales depot would be an expense in curred after the date of removal from the factory gate and it would therefore, according to the judgment in Bombay Tyres International case (supra) not be liable to be includ ed since it would add to the value of the goods after the date of removal from the factory gate.
We would therefore have to allow the claim of MRF Ltd. as above.
859 15.
The next head of deduction relates to over riding commission to the Hindustan Petroleum Corporation which was disallowed.
MRF entered into a contract with Hindustan Petroleum Corporation Ltd. for sale of their products through HPC dealer network.
An overriding commission was agreed to, in consideration of HPC not agreeing to entering upon agreement with any other tyre manufacturing company vis a vis by reason of MRF undertaking not to enter upon any agreement with any other oil company.
The discount proposed was as a percentage of sale effected through the HPC dealers on half yearly basis.
On the face of it, the over riding commission payable to HPC is a commission for sales.
It is a compensation granted for the sale of MRF products through HPC dealers and is a commission for services rendered by the agent.
It is not a discount known at or prior to the removal of the goods and we accordingly reject this claim of MRF Ltd. 16.
Another head of deduction disallowed to MRF relates to interest on receivables (sundry debtors for sales).
MRF has represented that this cost is inbuilt in the price and is incurred on account of the time factor between the time the goods are delivered and the time the moneys are rea lised.
The cost is incurred only where credit terms are given in case of up country and other buyers where payment is made much after the sales are effected.
They contend that it is nothing but an extension of the principle underlying Rule 4 of the Central Excise (Valuation) Rules.
They contend that this is an adjustment in value required to be made to take into account and provide for the difference in the time of delivery and the realisation of the sale value.
As stated in our judgment in Union of India & Ors.
vs Bombay Tyres International Ltd. (supra), it is only those expenses incurred on account of factors which have contributed to its value upto the date of sale or the date of delivery which are liable to be included in the assessable value.
The interest cost and expenses on sundry debtors or interest on receivables is an expense subsequent to the date of sale and removal or delivery of goods and in our opinion MRF Ltd. would be eligible to claim deduction on this account.
The next head which was urged for our consideration relates to the cost of distribution incurred at the duty paid sales depots.
In our judgment in Union of India and Others vs Duphar Interfram Ltd. (Civil Appeal No. 569 of 1981) reported in 1984 Excise and Customs Reporter at page 1443, we have held that the cost of distribution is not to be included in the assessable value in case the wholesale dealers take delivery of the goods from outside duty paid godown.
The 860 wholesale dealers having taken delivery of the goods manu factured by MRF.
Ltd. and there being a removal of the goods from the factory gate, the cost of distribution at duty paid sales depots cannot be taken into account for the purpose of determining the assessable value of the goods.
The next head of deduction disallowed to MRF relates to discount to Government and other Departments.
In our view the Assistant Collector, Goa has rightly rejected the claim of MRF though the Assistant Collector, Kottayam allowed the claim of MRF.
MRF Ltd. sells its products at a lower price as per contract with the Government or its Departments.
Separate price lists for the Government and other Depart ments were filed by MRF distinct and different from the price lists in relation to dealers.
The position that dif ferent price lists for different classes of dealers or different classes of buyers is specifically recognised under section 4(1), proviso (i), of the Excise Act.
Different prices can be declared with reference to different classes of buyers and each price is deemed to be a normal price of such goods.
In this view of the matter, merely because the product is sold at a lower price to the Government and its Departments does not enable the MRF to contend that the difference in price with reference to an ordinary dealer and the Government is a discount to the Government.
The differ ence in price is not a discount but constitutes a normal price for the Government as a class of buyer and no deduc tion on this head is liable to MRF Ltd. 19.
The next question which arises for our consideration relates to special secondary packaging charges for tread rubber.
It has been the contention of the MRF that their case is covered by the judgment in Union of India & Ors.
vs Godfrey Philips India Ltd., reported in 1985 Vol.
The majority judgment in Godfrey Philips India Ltd. (Supra) holds that "on a proper construction of Sec.
4(4)(d)(i) of the Act read with the Explanation, the second ary packaging done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade cannot be included in the value for the purpose of assessment of excise duty.
If a packaging is not necessary for the sale of the product in the wholesale market at the factory gate, the same cannot be included in the value for the purpose of assessment of excise duty.
" It has been brought to our notice that in a Judgment delivered by the Bombay High Court in Misc.
Petition No. 1534 of 1979 (Judgment dated 7th January 1986) Bharucha J. of Bombay High Court in Bombay Tyres International Ltd. vs Union of India & Ors., has considered the Judgment in 861 Godfrey Philips India Ltd. (supra) with specific reference to the question of secondary packaging for tread rubber.
It has been brought to our notice that such packaging consists of cardboard cartons or wooden cases.
In that case the tread rubber as packed was produced before Bharucha J. He has described that the tread rubber is a strip of rubber approx imately 6 ' ' wide and about 1 ' ' thick which is tightly wound into a roll.
Each roll weighs between 15 Kgs and 40 Kgs.
The roll is not held together by any means.
The roll is inserted into a loose and open polythene bag.
That bag also cannot hold the roll together.
The bag is placed in a cardboard carton or a wooden case.
The cardboard carton is held to gether by rubber bands.
The wooden case is nailed together.
Though, it was contended that the cardboard cartons and wooden cases were in the nature of secondary packaging whose cost was not includable in the value of tread rubber, Bharu cha J. held that a roll of tread rubber cannot be sold without the cardboard carton or the wooden case.
It is further stated that the secondary packing in which tread rubber is sold is in the course of wholesale trade.
The secondary packing is not employed merely for the purpose of facilitating transport or smooth transit and is necessary for selling the tread rubber in the wholesale trade.
Bharu cha J. refused to remand the matter to the authorities as the tread rubber as packed had been produced before him and he was of the firm view that the cardboard cartons and the wooden cases are not such secondary packing materials as can be excluded in computing the assessable value of the Peti tioner 's tread rubber.
In the circumstances that this very issue has been decided on a visual personal inspection of Bharucha J. in the case of Bombay Tyres International Ltd. (supra) pronounced after the decision in Godfrey Philips India Ltd. (supra) we are of the view that the cost of cardboard cartons and wooden cases or any other special secondary packing charges incurred by the MRF on tread rubber should not be excluded from the assessable value.
Tread rubber is a product which if even slightly damaged becomes unfit or un usable.
The vital element "cushion compound" which is applied to the bottom of the tread rubber and which helps the tread rubber to stick to the buffed surface of the old tyre which is to be retreaded is very delicate.
A polythene sheet is put over the layer of the compound before the same is rolled and put into another polythene bag to avoid sticking to the outer side of the tread rubber and getting contaminated by dust.
It is stated that such production cannot be marketed without the poly thene bags and/or cardboard boxes.
These are the findings of the Assistant Collector, Goa and in the light of the cumula tive decisions of the Assistant Collector, Goa and of the Bombay High Court, we are of the view that the secondary special packing charges for tread rubber 862 cannot be deducted from the assessable value of tread rub ber.
In relation to the determination of wholesale price of tyres on the basis of the ex factory price for Defence supplies, with reference to the old Section 4 in view of our Judgment in Union of India vs Bombay Tyres International Ltd. (supra) also reported in ; at 376E, this Court has held that "in the new Section 4 in supersession of the old Section 4, no material departure was intended from the basic scheme for determining value of excisable arti cles.
" It has been contended by the Union of India that even after our format orders referred to above, MRF has not submitted any statement of deductions/amendments in respect of price lists filed nor submitted any fresh prices.
It claims several deductions on percentage basis by furnishing calculations vis a vis the entire company but did not fur nish item wise or factory wise break up of such claims.
Having held that there is no material departure in the basic scheme for determining the value of excisable articles in the old Section 4 and the new Section 4, there is nothing in the unamended Section 4 to justify an inference that the wholesale cash price of articles of similar description sold cannot be different for different classes of buyers in wholesale.
Different prices can be normal prices for the purposes of determination of the assessable value of the article.
We accordingly reject the contention of the MRF.
Even though the MRF has not filed a separate price list for the factory gate clearances to Defence Department under the old Section 4, in view of our now holding that there is no material schematic difference between old Section 4 and new Section 4, we permit MRF Ltd. to file revised price lists with reference to the class of buyers namely, Defence on a different basis for a different normal price and avail of all the necessary reliefs with reference to lower assessable value, if the same has not already been filed.
In so far as the deductions claimed towards excise duty paid on processed tyre cord, the contention of the MRF has been upheld by the Goa Bench in Special Civil Appeal No. 28 of 1983 and the claim has been allowed to MRF for deduc tion from selling price of excise duty on processed tyre cord.
This is in accordance with Section 4(4) (d)(ii) of the new Section 4 and we accordingly confirm that MRF is eligi ble to this deduction.
The last important issue relates to the method of computation of assessable value in a cum duty price at a factory gate sale.
The issue is whether excise duty should be first deducted or the permissible deduction should be first deducted from the selling price for the re 863 assessments before the Assistant Collectors.
The assessment of excise duty both in relation to Section 4 and in relation to the Valuation Rules is now subject to the definition contained in Section 4(4)(d) of the Excise Act.
The value as defined thereunder is to be arrived at after the cost of packaging of a durable nature or a returnable nature as also amounts of duty of excise, sales tax and other taxes and trade discount allowed in accordance with the normal prac tice of wholesale trade is determined.
It is thus implicit that no excise duty is payable on an element of excise duty in the price.
The value as contemplated under Section 4 cannot include a component of excise duty.
In the circum stances, where the computation of an assessable value has to be made from the factory gate sale price which is a cum duty price, the first question which will have to be addressed is what are the exclusions and permissible deductions from such a sale price.
The petitioners have contended that their cum duty price was arrived at after calculating and adding excise duty payable i.e., before actual duty was paid.
They contend that their price list for several articles is ap proved much in advance of the removal from the factory.
They contend that when the assessable value is to be arrived at, the same amount of excise duty which was pre determined and added to the factory price is naturally to be deducted first and only thereafter the permissible deductions should be deducted to arrive at the value.
For the purposes of argu ment, MRF submitted the following example for consideration: They suggested that their selling price should be con sidered (cum duty selling price) as Rs. 3200.
They further submitted that the permissible deductions whether on account of trade discount or on account of cost of secondary packag ing or sales tax or other taxes, packaging or sales tax or other taxes should hypothetically be considered at Rs.200.
The rate of excise duty chargeable is 60% ad valorem for automotive tyres.
Assuming for the sake of argument that the value of the product is actually Rs.2075.
In accordance with the provisions of Section 4(4)(d) permissible deductions are made.
The assessable value would be Rs. 1875 being the difference of Rs.2075 and Rs.200.
The excise duty at the rate of 60% would thereafter be computed on the sum of Rs. 1875 and would aggregate Rs. 1125.
The selling price which is a cum duty price would be the sum total of the assessable value, the permissible deductions and the excise duty.
Putting this as a mathematical formula the selling price (cum duty price) is equal to assessable value plus permissi ble deductions plus excise duty.
Cumduty Paid Selling Price = Assessable Value + Excise Duty + Permissible deductions.
Again excise duty is computed as a ratio of the assessable value where duty is ad valorem.
For the purposes of ascer 864 taining the assessable value, if three of the components namely, the cum duty selling price, the quantum of permissi ble deductions and the rate of excise duty are known, the proper and appropriate method of determining the assessable value would be the following formula: Assessable value = cum duty selling price permissible deductions divided by ( 1 + Rate of excise duty) Thus in the instant case working backward, if the cum duty selling price is known to be Rs.3200 and the permissi ble deductions are known to be Rs.200 and the rate of excise duty is known to be 60% the assessable value is computed aS under: Selling price permissible deductions = Rs.3200=RS.200 = Rs.3000 Assessable value is equal to difference in selling price and permissible deductions divided by 1 plus 60/100 which is equal to 3000/1.6 which is equal to Rs. 1875.
The excise duty at 60% ad valorem rate would be Rs. 1125 on the assessable value of Rs. 1875.
The mathematical formula enumerated above balances.
For example, if the cum duty paid selling price is equal to Rs.3200, the assessable value is Rs. 1875, excise duty is Rs. 1125 and permissible deductions is Rs.200, the aggregate of the assessable value, the permissible deductions and the excise duty is equal to the selling price (cum duty paid).
Any other method of computation of excise duty or assessable value is erroneous.
The Petitioner 's basis that the assessable value is to be arrived at by taking into consideration the same amount of excise duty which was hypothetically pre determined and added to the factory price and that this element in an attempt to compute the assessa ble value should naturally be deducted first, is putting the cart before the horse.
The excise duty is only known as a ratio of the assessable value when an ad valorem duty is included in the cum duty paid selling price.
The quantum of excise duty cannot be pre deducted or predetermined till the assessable value is known.
It is only the permissible deduc tions in concrete monetary terms and amount which are 865 known.
The cum duty paid sale price being available for computation and a known value of deductions permitted being also known, the assessable value and the excise duty as a ratio of the assessable value can be only decided by first deducting the permissible deductions, from the cum duty paid selling price and thereafter computing the value in accord ance with the equation mentioned above.
This has both a legal and a mathematical basis.
If the pre determined amount of excise duty as per the illustration given by MRF Ltd. is first deducted, the equation will not tally.
For example, if from a hypothetical cumduty price of Rs. 150 (comprised of the value of the product at Rs. 100 and ad valorem excise duty@ 50% at Rs.50) if the excise duty of Rs.50 is first deducted and thereafter the permissible deduction of Rs.5 is deducted, the assessable value arrived at would be Rs.95.
The rate of excise duty is 50% and the excise duty @50% of the assessable value of Rs.95 would be Rs.47.50 and not Rs.50 as earlier deducted.
There would be a constant differ ence of Rs.2.50 in the computation.
It is, therefore, an incorrect method of evaluating the assessable value in instances of cum duty selling price.
This interpretation is borne out by the definition contained in Section 4(4)(d) of the Excise Act.
MRF 's contention that the excise duty should be deducted first and then the permissible deductions is incorrect.
In ordinary cases where the factory price is not a cum duty price, the first step in arriving at the assessa ble value is to deduct the permissible deductions and there after to compute the excise on an ad valorem basis.
The excise duty cannot be computed unless the permissible deduc tions are first made.
The assessable value is arrived at only after the permissible deductions are made.
Excise duty is a ratio of the assessable value.
Ad valorem excise duty is computed only on assessable value after arriving at such assessable value by making proper permissible deductions.
Excise duty cannot be computed without proper determination of the assessable value, namely assessable value exclusive of permissible deductions.
Even in the cum duty sale price, the same principle must be followed to arrive at the assess able value.
To compute an excise duty as a pre determined amount without making the permissible deductions for reduc ing the cum duty selling price is a fallacy both legally and mathematically as demonstrated above.
The ad valorem excise duty can only be computed after reducing the assessable value by permissible deductions and then applying the tariff rate to the assessable value.
To reverse this sequence is to mis interpret the scheme and mode of levy of excise duty on the assessable value.
In the light of our aforesaid discussions and keep ing in line with our previous format orders, we direct the assessing authorities to 866 quantify and re determine the permissible deductions in accordance with our present Judgment.
The assessee, MRF Ltd. already having been required to file the permissible deduc tions/amendments to the price lists within a period of one month in the last instance in May 1984 is once again re quired by us to file fresh price lists in the light of our present Judgment within one month for all the periods under consideration.
The assessing authorities after hearing the assessee would quantify the correct assessable value in the light of our Judgment.
In making the assessments for each of the periods, the authorities would include the set off in respect of further refunds, if any, allowable on account of fresh deductions permitted and/or already allowed to the assessee.
MRF would be at liberty to obtain suitable direc tions in the pending Writ Appeal No. 590 of 1979 in the High Court of Madras in accordance with our Judgment.
We leave the parties to bear their own costs.
ORDER In respect of items claimed by the assessee which have been allowed by us in this judgment or where the allowance by Assistant Collector has been upheld the quantum will be adjusted by giving appropriate credit in the personal Ledger Accounts.
P.S.S. Appeals dis posed of.
| In Union of India vs Bombay Tyres International Ltd., ; , this Court held that under s.4 of the Central Excise and Salt Act, 1944, only those expenses which were incurred on account of factors contributing to the product 's value upto the date of sale or the date of deliv ery at the factory.
gate were liable to be included in the assessable value.
On November 14/15, 1983 the Court made a clarificatory order wherein it was stated that discounts allowed in the trade (by whatever name called) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice, and that such allowance and the nature of discount should be known at or prior to the removal of the goods and should not be disallowed only because they were not payable at the time of each invoice or deducted from the invoice price.
The respondent Rubber Factory claimed various deductions of the nature of post manufacturing expenses for determining the assessable value of their products under s.4 of the Act which were disallowed 847 by the Excise authorities.
Its writ petitions were, however, allowed by the High Court.
In appeals by the Union of India for setting aside the High Court judgment it was contended for the respondent: (a) that the TAC/ Warranty discount, which was sought to be deducted for determining the assessable value, satisfied all the criteria of a trade discount stipulated in the clarifi catory order; (b) that the claim for deduction of product discounts prompt payment discount, year ending discount and campaign discount was justified on the same reasoning; (c) that the interest on finished goods from the date the stocks were cleared till the date of sale was a proper deduction for determination of the assessable value; (d) that the claim for deduction of interest on receivables (sundry debtors for sales) was justified on the ground that this cost was inbuilt in the price and was incurred on account of the time factor between the delivery of goods and realisa tion of moneys; (e) that the overriding commission allowed to the Hindustan Petroleum Corporation for exclusive sale of company 's products through their dealer net work was also of the nature of a discount; (f) that the cost of distribution at the duty paid sales depot was a proper deduction; (g) that the difference between the lower price at which the product was sold to the Government and the price charged from ordinary dealer was of the nature of a discount; (h) that the claim for deduction of special secondary packaging charges squarely falls within s.4(4)(d)(i) of the Act, and (i) that the company was entitled to the deduction of excise duty paid on processed typecord under s.4(4)(d)(ii).
The respondents also disputed the method of computation of 'assessable value ' in a cure duty price at a factory gate sale and contended that such value was to be arrived at by first deducting the predetermined excise duty added to the factory price and only thereafter the permissible deductions were to be deducted.
Disposing of the appeals, the Court, HELD: 1.1 The respondent company is not entitled to the deduction of TAC/Warranty discount for determining assessa ble value of tyres since it does not come within s.4(4)(d)(ii) of the Central Excise and Salt Act, 1944.
[856H, 857A, 855H] 1.2 Even though giving of TAC/Warranty is established by practice for the wholesale trade or capable of being decid ed, what is really relevant is the nature of the traction.
It is not a discount on the 848 tyres already sold, but relate to the goods which are being subsequently sold to the same customers.
It is in the nature of a benefit given to the customers by way of compensation for the loss suffered by them in the previous sale.
[8S6B] 1.3 A trade discount of any nature could be allowed to be deducted provided it is known at or prior to the removal of the goods.
In the instant case, this condition precedent is not satisfied as the committee decided the claim for TAC/Warranty subsequent to the removal of the tyre.
[856C] 1.4 The analogy of Rule 96 of the Central Excise Rules, 1944 relating to abatement of duty of defective tyres cannot be made applicable to justify the claim for deduction of the TAC/Warranty discount.
A tyre being sold as a "seconds" or "defective" would be sold at a discount, such discount being known before the goods were removed/cleared, thereby also satisfying the pre condition of s.4(4)(d,(ii) of the Excise Act.
The assessable vase and price list submitted would be one relating the 'seconds ' tyres.
[856G] Union of India vs Bombay Tyres International Ltd., [1984] 17 ELT 329, referred to.
2.1 The respondent is entitled to deduction of 'prompt payment discount ' which is a 'trade discount ' given to the dealers by the company.
It is established under the terms of sale or by established practice and is known at or prior to the removal of the goods [857E F] 2.2 The company is not entitled to deduction of the 'year ending discount '.
The allowance of the discount is not known at or prior to the removal of the goods.
The calcula tions are made at the end of the year and the bonus at the said rate is granted only to a particular class of dealers.
This is computed after taking stock of the accounts between the company and its dealers.
It is not in the nature of a discount but in the nature of a bonus or an incentive much after the invoice is raised and the removal of the goods is complete.
[857G 858A] 2.3 The campaign bonus cannot be a permitted deduction to the company.
The allowance of the discount is not known at or prior to the removal of the goods.
The qnantum is unascertained at the point of removal.
The discount is not on the wholesale cash price of the articles sold but is based an the total sales effected of a particular variety of tyre calculated after the removal.
[858D] 849 3.1 Expenses incurred on account of several factors which have contributed to the product 's value upto the date of sale, which apparently would he the date of delivery at the factory gate, are liable to he included in the assessa ble value.
[858F] 3.2 The company was justified in claiming deduction of interest an finished goods until they were sold and deliv ered at the factory gate.
But interest on finished goods from the date of delivery at the factory gate up to the date of delivery from the sales depot would be an expense in curred after the date of removal from the factory gate and it would, therefore, not he liable to he included since it would add to the value of the goods after the date of remov al from the factory gate.
[858G H] Union of India vs Bombay Tyres International Ltd., ; , referred to.
The interest cost and expenses on sundry debtors or interest on receivables is an expense subsequent to the date of sale and removal or delivery of goods and, therefore, the company would not he eligible to claim deduction on this account.
[859H] 5.
The overriding commission paid by the company to the Hindustan Petroleum Corporation for sale of their products exclusively through HPC dealer network is not deductible.
It was agreed to in consideration of the COrporation not agree ing to enter upon agreement with any other tyre manufactur ing company vis a vis by reason of the respondent undertaking not to enter upon any agreement with any other oil company.
It is a compensation granted for the sale of company 's products through HPC dealers and is a commission for services rendered by the agent.
It is not a discount known at or prior to the removal of the goods.
[859A C] 6.
The cost of distribution incurred at the duty paid sales depots is not to he included in the assessable value in case the wholesale dealers take delivery of the goods from outside such godown.
The wholesale dealers having taken delivery of the goods manufactured by the company and there being a removal of the goods from the factory gate, the cost of distribution at duty paid sales depots cannot he taken into account for the purpose of determining the assessable value of the goods.
[859H 860A] Union of India & Ors.
vs Duphar Interfram Ltd., , referred to.
850 7.
Merely because the product is sold at a lower price to the Government it cannot be said that the difference in price with reference to an ordinary dealer and the Govern ment is a discount to the Government.
The position that there can be different price lists of articles of similar description sold to different classes of dealers or differ ent classes of buyers in wholesale is specifically recog nised under s.4(1)(a), proviso (1) of the Act.
The lower price for the Government constitutes a normal price for it as a class of buyer and no deduction on this head is liable to the company for the purpose of determination of the assessable value of the article.
[860D, C, E] 8.1 Section 4(4)(d)(i) of the Act read with the Explana tion thereto makes it apparent that the 'secondary packag ing ' done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade cannot be included in the value for the purpose of assessment of excise duty.
If a packaging is not necessary for the sale of the product in the wholesale market at the factory gate, the same cannot be included in the value for the purpose of assessment of excise duty.
[860 FG] 8.2 In the instant case, the secondary packaging for tread rubber consists of cardboard cartons and wooden cases.
This secondary packing is not employed merely for the pur pose of facilitating transport or smooth transit but is necessary for selling the tread rubber in the wholesale trade.
The cost of these cardboard cartons and wooden cases or any other special secondary charges incurred by the company on tread rubber could not, therefore, be excluded from its assessable value.
[861A, D, E F] Union of India & Ors.
vs Godfrey Philips India Ltd., and Bombay Tyres International Ltd. vs Union of India & Ors., Bombay High Court M.P. No. 1534 of 1979 decided an January 7, 1986, referred to.
The company is eligible for deduction from selling price of tyre of excise duty paid on processed tyre cord.
This is in accord with s.4(4)(d)(ii) of new s.4 of the Act.
[862F G] 10.1 The assessment of excise duty both in relation to s.4 and in relation to the Valuation Rules is now subject to the definition contained in s.4(4)(d) of the Act.
The 'va lue ' as defined thereunder is to be arrived at after the cost of packaging of a durable nature or a returnable nature as also amounts of duty of excise, sales tax and other taxes and trade 851 discount allowed in accordance with the normal practice of wholesale trade is determined.
It is implicit that no excise duty is payable on an element of excise duty in the price.
The value as contemplated under s.4 cannot include a compo nent of excise duty.
[863AB] 10.2 The aggregate of the assessable value, the permis sible deduction and the excise duty is equal to the selling price (cure duty paid).
The excise duty is only known as a ratio of the assessable value when an ad valorem duty is included in the cure duty paid selling price.
The quantum of excise duty cannot be pre deducted or pre determined till the assessable value is known.
It is only the permissible deductions in concrete monetary terms and amount which are known.
The cum duty paid sale price being available for computation and the value of deduction permitted being also known, the assessable value and the excise duty as a ratio of the assessable value can be only found by first deducting the permissible deductions from the cum duty paid selling price and thereafter computing the value by dividing the difference by (1 +rate of excise duty).
This method has both a legal and mathematical basis.
To reverse this sequence is to mis interpret the scheme and the mode of levy of excise duty on the assessable value.
[864E G, 865B, 865G] 10.3 Where the factory price is not a cure duty price, the first step in arriving at the assessable value is to deduct the permissible deductions and thereafter to compute the excise on an ad valorem basis by applying the tariff rate to the assessable value.
[865D]
|
Appeal No. 2177 of1966.
Appeal by special leave from the judgment and order dated July 12, 1963 of the Mysore High Court in Writ Petition No. 1076 of 1962.
Veda Vyasa, R. Ganapathy Iyer, R. N. Sachthey and section P. Nayar, for the appellant.
R. Gopalakrishnan, for the respondent.
The Judgment of the Court was delivered by Shah, J.
The respondents a Hindu undivided family were assessed for the assessment year 1949 50 to tax under s ' 23 of the Mysore Income tax Act on a total income of Rs. 10,100/ The Second Additional Income tax Officer (Urban Circle), Bangalore, commenced a proceeding under section 34 of the Mysore Income tax Act for re assessment of the income of the respondents for the 7 assessment year 1949 50, and served a notice in that behalf on March 6, 1951.
On May 21, 1954 the Income tax Officer determined the respondents ' total income at Rs. 75,957/ .
In appeal against the order, the Appellate Assistant Commissioner of Income tax. 'A ' Range, Bangalore, by order dated November 4, 1961, set aside the order and directed the Income tax Officer to make a fresh assessment after making inquiries on certain matters specified in the order.
At the request of the respondents under section 66(2) of the Mysore Income tax Act, the Commissioner of Income tax, Mysore, referred the following questions to the High Court of Mysore: "1.
On the facts and in the circumstances of the assessee 's case whether within the meaning of section 34 of the Mysore Income tax Act, if a notice under that section is issued within the prescribed period, whether the Income tax Officer can proceed to assess or re assess such escaped income after four years from the close of the assessment year? 2.
On the facts and in the circumstances of the case, whether the Appellate Assistant Commissioner of Incometax is competent to set aside and give directions to the Income tax Officer to re do the assessment in the manner the Appellate Assistant Commissioner of Income tax has done?" At the hearing of the reference, the respondents did not press the first question, and the High Court answered the second question in the affirmative.
The Income tax Officer commenced inquiry directed by the Appellate Assistant Commissioner.
The respondent , then applied to the High Court of Mysore for issue of a writ of prohibition restraining the Income tax Officer from continuing the assessment proceeding for the year 1949 50 on the plea that the proceeding was because of expiry of the period of limitation barred.
The High Court of Mysore upheld the contention of the respondents and allowed the petition.
In the view of the High Court the provisions of section 34 of the Mysore Income tax Act were "more or less similar to Rule 34 of the Mysore Sales Tax Act, 1948.
Hence the present case clearly comes within the rule laid down by this Court in M/s K. section Subbarayappa and Sons vs State of Mysore [(1952)] Mysore L. J. 2341 which means that the present proceedings are barred".
The Commissioner of Income tax has appealed to this Court with special leave.
The question arising in this appeal must, it is common ground, be determined in the light of the provisions of the Mysore Incometax Act, 1923.
Even after the merger of the State of Mysore with 8 the Union of India a proceeding for assessment of income tax relating to the assessment year 1949 50 has to be heard and disposed of under the Mysore Act.
Section 34 of the Mysore Incometax Act reads as follows "If for any reason, profits or gains chargeable to income tax have escaped assessment in any year, or have been assessed at too low a rate, the Income tax Officer may, at any time within four years of the end of that year, serve on the person liable to 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 re assess such income, profits or gains and the provision of this Act shall, so far as may be, apply according as if the notice were a notice issued under that sub section".
A proceeding for re assessment under section 34 of the Mysore Act may be commenced if two conditions co exist: (i)that the profits and gains chargeable to income tax have escaped assessment or have been assessed at too low a rate, and (ii) the notice is served within four years of the end of the year of assessment.
But if a proper notice is served within the period provided by the section, the proceeding may be completed even after the expiry of four years from the close of the assessment year, for the Act prescribes no period for completion of the proceeding.
A notice for re assessment was in fact served on the respon dents on March 6, 1951 under section 34 of the Mysore Act.
That notice was served within four years of the end of the year of assessment 1949 50, and the Income tax Officer was of the view that tie profits or gains chargeable to income tax had escaped assessment in the year 1949 50.
It is true that the Appellate Assistant Commissioner vacated the order of assessment dated May 21, 1954, but he did not set aside the notice served upon the respondents.
He merely remanded the case for further inquiry to be made in the light of the directions given by him.
It is difficult to appreciate the grounds on which it could be held that the proceeding for re assessment to tax the income which had escaped assessment in the year 1949 50 commenced after due notice served on March 1951 was barred.
The High Court was, in our judgment, plainly in error in holding that the proceeding for re assessment was barred.
It must also be remembered that the respondents had under an order of the Commissioner obtained a reference on the first question set out hereinbefore.
That question was not pressed before the High Court, and it must be deemed to have been answered 9 against the respondents.
That question could not thereafter be reagitated by the respondents in a petition for the issue of a writ under article 226 of the Constitution.
The appeal is allowed.
The order passed by the High Court is set aside.
The respondents will pay the costs of the Commissioner in this Court and in the High Court.
Appeal dismissed.
| The Karta of a Hindu undivided family was assessed to Incometax from year to year until the assessment year 1953 54 either as an individual or as the Karta.
But later, the Income Tax Officer issued notices to him under section 34(1) of the Income tax Act, 1922, for the assessment years 1951 52 to 1953 54 and under section 22(2) for the years 1954 55 to 1956 57 for assessment of the income as having been received by an association of persons consisting of the Karta and his minor son in 1951 52, and the Karta, his minor son and a firm in the years 1952 53 to 1956 57, and assessed the income received as income and associations of persons.
The Appellate Assistant Commissioner and the Tribunal, in appeals filed before them, substantially confirmed the order of the Income tax Officer.
The High Court, upon a reference.
held that the income for the assessment year 1951 52 did E not accrue to an association of persons, but confirmed the view taken by the Income tax Officer in respect of the income for the year 1952 53 to 1956 57.
The Karta then moved the High Court under article 226 of the Constitution and contended that section 3 of the Income tax Act, 1922, invested the Income tax Officer with arbitrary and unguided power to assess the income of an association of persons in the hands either of the association or of the persons constituting that association and it therefore offended article 14 of the Constitution.
The High Court rejected the petitions.
In appeals to this Court against the decisions of the High Court in the writ petition and the reference under section 66 of the Income tax Act.
HELD:(i) section 3 of the Income tax Act, 1922, was not violative of article 14 of the Constitution.
The duty of the Income tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately ,due to the State.
Though an executive Officer engaged in the administration of the Act.
the function of the Income tax Officer is fundamentally quasi judicial.
His decision to bring to tax either the income of the association collectively or the shares of the members of the association separately is not final: it is subject to appeal to the Appellate Assistant Commissioner and to the Tribunal.
The nature of the authority exercised by the Income tax Officer in a proceeding to assess to tax income, and his duty to prevent evasion or escapement of liability to pay tax legitimately due to the State, con stitute adequate enuciation of Principles and policy for the guidance of the Income tax Officer.
[72B H] 66 Suraj Mall Mohta & Co. vs A. V. Visvanatha Sastri and Anr. , distinguished.
Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar and Ors.
; , Jyoti Pershad vs The Administrator for the Union Territory of Delhi. ; and Commissioner of Income tax U.P. vs Kanpur Coal Syndicate, referred to, There is no force in the contention that section 23A of the Income tax Act, as it was incorporated by Act 21 of 1930 laid down certain principles for the guidance of the Income Tax Officer in exercising his option, but since the repeal of that section by Act 7 of 1939, the discretion vested in the Income tax Officer to select either the income of the association or the individual member is unfettered.
By the repeal of section 23A(1) the essential nature of the power of the Incometax Officer was not altered.
He remained as before under a duty to administer the Act, for the benefit of public revenue, but his powers were to be exercised judicially and so as to avoid double taxation of the same income.
[73A B; 74F G] (ii) There was abundant material on the record to prove that the Karta, his minor son and the firm formed an association in the years 1952 53 to 1956 57.
Under section 2(9) of the Income tax Act, 1922, read with el.
(42) of 3 of the General Clauses Act, a firm is a person within the meaning of the Income tax Act and a firm and an individual or group of individuals may form an association of persons within the meaning of section 3 of the Income tax Act.
[75F, G] There is nothing in the Act to indicate that a minor cannot become a member of an association of persons for the purposes of the Act.
In any event the High Court had rightly held that the mother and guardian of the minor son must, on the facts, be deemed to have given her implied consent to the participation of the minor in the association of persons.
[75H] Commissioner of Income tax, Bombay vs Laxmidas & Anr.
and Commissioner of Income tax, Bombay North, Kutch Saurashtra vs Indira Balkrishna, , referred to.
(iii)The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year.
The assessment and the facts found are conclusive only in the year of assessment: the finding on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year but they are not binding and conclusive.
The finding recorded by the High Court that in the year 1951 52 there was no association of persons constituted by the Karta and his minor son did not in 'the present case have any effect on the finding of the Tribunal that in year 1952 53 and the subsequent years such an association existed.
Furthermore, the association of persons which traded in 1952 53 and the subsequent years was different from the association in 1951 52 because in 1952 an association was formed of the Karta, his son and a firm.
[75B C] (iv)If the person described as a principal officer of an.
association is duly served with a notice under section 23(2) in the manner prescribed by section 23(2), an adjudication of his status as the principal officer, before assessment proceedings may take place, is not obligatory.
The order assessing the association containing a finding that the per.
son served is the principal officer is sufficient compliance with the 67 requirements of the statute.
It is open to the association to challenge the finding of the Income tax Officer in appeal before the Appellate Assistant Commissioner and in further appeal to the Appellate Tribunal.
But the order declaring him as the principal officer of an association of persons will not be deemed to be void merely because the proceeding for assessment was not preceded by a declaration of his status as the principal officer.
[80G 81B] Commissioner of Income tax, Punjab & N.W.F.P. vs Nawal Kishore Kharaiti Lal, (1938) 6 I.T.R. 61, referred to.
|
Civil Appeals Nos.
1573/88, 3954/87 and 3370 of 1988.
From the Judgment and Order dated 1.2.1988, 10.6.1987 and 28:4.1988 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. C/1373/85 C Order No. 87.,88 C, 1704/83 D Order No. 463/87 D and Appeal No. C 605 1986(C) in Order No. 429/88 C respectively.
A.K. Ganguli, P. Parmeshwaran, T.V.S.N. Chari and Mrs. Sushma Suri for the Appellant.
section Ganesh, K.J. John and San jay Grover for the Respondent.
The Judgment of the Court was delivered by RANGANATHAN, J.
These three appeals under Section 130 E(b) of the raise the same issue.
They are therefore disposed of by a common order.
The respondent M/s.
K. Mohan & Co. imported, from Japan, "metallised poIyester films" under an import licence dated 14.6.1978.
The goods were admittedly in the shape of film rolls several metres long.
They were cleared on payment of customs duty leviable under the (CA) as well as the additional duty of customs (or countervailing duty) leviable under section 3 of the Customs Tariff Act, 1976 (CTA).
Subsequently, the respondent firm made three applica tions for the refund of the amount of the additional duty of customs paid by it.
The claim for refund was based on the terms of a notification of exemption issued under section 25(1) of the CA.
Under notification No. 228/76 dated 2.8.1976, an exemption from the customs duty payable under section 3 of the CTA was granted in respect of "articles made of plastics, all sorts, but excluding those specified in the table an nexed hereto and falling within Chapter 39 of the First Schedule to the (51 of 1975)".
The annexed table 234 excepted the following items from the purview of the exemp tion: "Tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible including tubings and polyvinyl chloride sheets".
Notification No. 443 dated 29.11.76 omitted the words of notification No. 228 which have been underlined above but left the main notification otherwise untouched.
The assesses ' claim for refund was accepted by the Tribunal.
The Tribunal held that the goods imported by the respondent were articles made of plastics.
But they were 'films ' and not one of the categories of articles enumerated in the table.
In reaching its conclusion, the Tribunal followed the decisions, of the Madras High Court in Precise Impex P. Ltd. vs Collector, , of the Calcut ta High Court in Continental Marketing P. Ltd. vs Union, and of the Bombay High Court in A.V. Jain vs Union, WP 2136 of 1986, decided on 30.1. 1987.
The Tribu nal also referred to its own earlier decisions in Export India Corpn.
P. Ltd. vs Collector and Collector vs Fancy Dyeing and Printing works, Bombay.
The Collector of Customs is aggrieved by the orders of the Tribunal and hence these appeals.
There are three appeals as there were three appli cations for refund by the assessee in respect of different periods.
There is no dispute before us that the goods in question are articles made of plastics.
This being so, the assessee is entitled to the exemption conferred by the notification unless the goods answer the description of one or other of the specific items set out in the table.
The onus of showing this is clearly on the Revenue.
The department contends that the goods are "sheets" or "foils" or "other rectangular or profile shapes" and hence liable to duty.
On the other hand the assesses ' case is that they are "films", a specie of plastic articles different from any mentioned in the table.
It is alternatively contended that, even if they are treated only as thin sheets of plastic material, they can be more accurately described only as "sheetings" and not "sheets".
It is pointed out that the goods are in the form of large rolls containing films several metres long.
Such huge lengths can only be called "sheetings" for the expression "sheets", it is said, connotes only smaller lengths or bits cut out from "sheetings" which mean sheets of immense lengths.
Also, being in the form of rolls, they cannot be said to be articles of "rectangular shape" merely because, when cut into segments, they may fall into rectangular pieces.
235 After giving the matter our careful consideration, we are of opinion that the view taken by the three High Courts and the Tribunal that "films" made of plastic fall in a category of their own and do not fall within the categories of articles excepted by the table is correct.
We have come to this conclusion because there are various statutory indications and other material which support such a conclu sion: (1) Duty under the CTA in respect of artificial resins, plastic materials of various types and articles thereof is leviable under section 3 read with Chapter 39, containing heading nos.
39.01/06 and 39.01/07 in section VII of the First Schedule to the CTA.
This aspect found a reference in the original notification No. 228 but was omitted, apparently as being redundant, by the amendment of 29.11.1976.
In Note 3 at the commencement of the said Chapter 39, clause (c) talks of "seamless tubes, rods, sticks and profile shape while clause (d) refers to "plates, sheets, films, foils and strips".
This indicates that plates, sheets, films, foils, etc.
are categories of plastic articles distinct from one another.
(2) Notification No. 228 contains a reference to the tariff schedule under the Central Excises & Salt Act, 1944 (CESA).
The CESA, read with item 15A of its First Schedule, provides for the levy of an ad valorem duty of excise on all "artificial or synthetic resins and plastic materials and cellulose esters and ethers and articles thereof" described in greater detail in sub items (1) to (4) thereunder.
Of these, sub item (2) reads: (2) Articles made of plastics all sorts, including tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexi ble, including lay flat tubings and polyvinyl chloride sheets, not otherwise specified"; and Explanation I appended to item 15A clari fies: "For the purpose of sub section (2), "plas tics" means the various artificial or synthet ic resins or plastic materials or cellulose esters and ethers included in sub item (1)" Comparing item 15A of the CESA tariff with the notification under consideration, it will be seen that the intention was to exempt, from countervailing duty, "articles made of plastics, all sorts" (the expression "plastic" having the very wide meaning given to it in Explanation 236 I of the CESA tariff) and falling within the main part of sub item (2) of item 15A and to deny exemption to goods which fall under the second (inclusive) part of the said sub item.
In this context it is of some interest to refer to item 15A as substituted by the Finance Act, 1982.
This item describes in greater detail than before various "artificial and synthetic resins and plastic materials" liable to duty.
of these item (2) reads: "Article of materials described in sub item (1) including the following, namely: Boards, sheeting, sheets and films, whether lacquered or metallised or laminated or not: lay flat tubings not containing any textile material.
This item, it will be seen, does not stick to the classifi cation made earlier in sub item (2).
However, it does make a distinction between "sheeting, sheets and films".
(3) There are a number of exemption notifications issued under rule 8(1) of the Central Excise Rules in respect of items falling under Item No. 15A of the CESA Tariff which make a pointed reference to 'films ' and draw a similar distinction as above.
Notification No. 68 of 1971 dated 29.5.
1971 exempts articles made of plastics, all sorts, falling under sub item (2) of Item No. 15A except (i) rigid plastic boards, sheeting, sheets and films, whether laminat ed or not; and (ii) flexible polyvinyl chloride sheeting, sheets, films and lay flat tubings not containing any tex tile material.
Notification No.69 of 1971, dated 29.5.1971, read with notification No. 7417 and 107/73, exempts articles made of polyurethane foam except, inter alia, sheets and sheetings.
Notification No. 70 of 1971, of the same date, restricts the duty on rigid polyvinyl chloride boards, sheeting, sheets and films.
Notification No. 71 of 1971, also of the same date, grants limited exemption, subject to certain conditions to rigid plastic boards, sheeting, sheets and films, whether laminated or not, other than those manu factured from polyvinyl chloride.
Notification No.72 of 1971 of the same date limits the excise duty in respect of flexi ble polyvinyl chloride sheeting, sheets, films and lay flat tubings, not containing any textile material and falling under sub item (2) of Item No. 15A to 25 per cent (amended later to 30%) ad valorem, subject to certain conditions.
Notification No. 39 of 1973 dated 1.3.
1973, exempts rigid and flexible polyvinyl chloride films of thickness below 0.25 mm as well as polyvinyl chloride lay flat tubings in certain circumstances.
By notifi 237 cation No. 151 of 1975 dated 31.5.1975 exemption was granted in respect of cellulose tri acetate, when intended for use in the manufacture of cine films, X ray films or photograph ic films.
Item 15B talks of "film or sheet" of cellulose and a notification of 1981 specifically added item 15BB to the Tariff under CESA dealing with polyster films as a separate item, though this entry was subsequently omitted by the Finance Act of 1982.
All these indicate that 'film ' is a well known, distinct and independent category of plastic article known to commerce.
(4) There is a like distinction maintained even by the notifications issued under section 25 of the in regard to items falling within chapter 39 of the First Schedule to CETA.
Notification No. 227 dated 2.8.1976 limits the rate of duty on various items, two of which are "film scrap" and "cellulose nitrate sheets and cellulose nitrate films".
We then have notification No. 223 of the same date, which falls for interpretation now and which omits a refer ence to "films" while enumerating various other categories of plastic articles.
Notification No. 229, also of 2nd August, 1976, restricted the customs duty on metallised or plain plastic films imported for certain specified purposes to 60%.
Notification Nos. 230 dated 2nd August, 1976 and 36 of 1.3.
1978, also granted limited exemption to other types of polyster films.
(We must, however, point out that these last two notifications are somewhat ambiguous for our present purposes as they also specifically provide for an exemption to the said articles from the additional duty which, on the argument of the assessee before us, would be really unnecessary.
The Revenue 's stand is that the articles in question may be films in a generic sense but that, in this particular case, they are either 'foils ' or 'sheets '.
For this purpose our attention is drawn to the discussions contained in the Bombay case where the issue was decided on the basis of evidence produced by both parties.
This shows that according to the glossary of terms used in the plastic industry issued by the Indian Standards Institution (IS 2828 1954, as well as in 1979), a film is "a sheeting having nominal thickness not greater than 0.25 mm".
A report of the Chief Chemist of the Customs Department as well as extracts from certain text books were produced to show that 'foil ' is the term "applied to materials which are made in continuous rolls and are less than 1/1000th of an inch thick (0.254 mm).
In the present case, the film rolls were of thickness varying between 0.025 mm to 0.501 mm.
It is, therefore, submitted that to the extent the material was less than .0254 mm in thickness it would constitute 'foils ' and to the extent 238 it exceeded 0.25 mm in thickness it will be a 'sheet '.
It is urged that since 'sheets ' and 'foils ' are specifically mentioned in the entry in question, the imported goods, at least to the extent indicated above, cannot qualify for exemption.
The answer given by the Bombay High Court to the conten tion that the goods were 'foils ' was that while it may be that, technically and scientifically speaking, the articles in question may be capable of being characterised as 'foils ', one is concerned in a customs or excise matter not so much with the technical or scientific definitions of these terms but rather with commercial usage.
One has to see how the trade understands the expression "films" and one should also bear in mind in this connection that the expres sions set out in the table are applicable not merely to the articles with which we are at present concerned but also to various other types of articles of plastics with varied commercial use.
The question is whether the trade under stands the article presently in question as a 'film ' or whether there is a distinction in trade usage also between 'foils ' and 'films '.
It has been pointed out by the Bombay High Court, on the basis of the evidence before it, that in the understanding of those who are in this particular trade, metallised polyester films are referred to as 'films '.
Reference has been made to the classification made by the only manufacturer of polyester films in India for purposes of CEA.
Reference has also been made to the brochures brought out by the Japanese manufacturers of the goods in question which show that metallised polyester 'films ' could consist of films of the thickness of even 12 to 25 microns.
It has been pointed out that, under the Import Export Policy of India for 1984 85, reference has been made to metallised polyester 'films ' having thickness of even less than 6 microns which are used in the electronic industry.
In the light of the above material and the absence of any additional material led in the present case, we agree with the view of the Bombay High Court that, though for certain purposes there is a distinction between 'films ', 'foils ' and 'sheets ', so far as the article presently in question is concerned it is recognised in trade only as 'film '.
It is difficult to imagine any person going to the market and asking for these films by describing them either as 'foils ' or as 'sheets '.
We are therefore of opinion that the goods under consideration cannot be described either as 'foils ' or as 'sheets '.
There is also another reason why the articles in the present case, to the extent they have thickness of more than 0.25 mm cannot be described as 'sheets '.
Shri Ganesh for the assessee contended and we 239 think rightly that a film roll of indefinite length and not in the form of individual cut pieces can be more appropri ately described as 'sheetings ' rather than 'sheets '.
The Indian Standard Institution also defines 'sheets ' as a piece of plastic 'sheeting ' produced as an individual piece rather than in a continuous length or cut as an individual piece from a continuous length.
We have also earlier pointed out that there are various items in various notifications making distinct reference to sheets and sheetings.
Actually, we also think that there is a factual confusion on this aspect.
While One of the Collectors has referred to the goods as being of thickness varying between 0.025 mm and 0.501 mm, it is seen from another of the orders that the goods are 3000 metres in length, 0.501 mm in width and 0.025 mm in thick ness.
If the latter is the correct version and all the goods are only 0.025 mm in thickness, the question now posed will not at all arise.
However, as indicated above, there is force in the contention of Shri Ganesh that if the articles be held not to be 'films ', because they exceed 0.25 mm in thickness, they would be 'sheetings ' rather than 'sheets ' and would therefore not fall within the meaning of the expression "sheets" in the table.
We would also like to add that the expression 'other rectangular or profile shapes ' in the table is also not appropriate to bring in the items in question.
For one thing, the articles have a distinct name in the market as 'films ' and therefore they are outside the table as already pointed out.
For the same reasons as we have mentioned in the context of 'foils ' and 'sheets '; it will not be possible to accept the contention that articles which have a clear commercial identity as 'films ' should be brought within the wide and vague expression "other rectangular or profile shapes", because, if the film is cut into small pieces, each piece will be rectangular in shape, The items imported do not come in a rectangular shape; they are imported as rolls of polyester films.
They are not articles of rectangular shape.
Nor would it be possible to treat them as of other 'profile ' shapes.
We are unable to attribute any precise meaning to the expression 'profile ' shape but it cannot be taken to be comprehensive enough to take in any shape what ever, as is contended for.
If we give the expression 'rec tangular or other profile shapes ' in the table such wide and unrestricted interpretation as is suggested, then practical ly any article of plastic can be brought within the meaning of one or other of the expressions used in the table and thus the entire exemption can be altogether deprived of any content.
For the above reasons, we are of opinion that the articles are 240 'films ' and, as this expression does not find specific mention in the table, the assessee is entitled to exemption under the main part of the notification.
The conclusion arrived at by the Tribunal is therefore upheld and these appeals are dismissed with no orders as to costs.
Y. Lal Appeals dis missed.
| The respondent, employed as Yard Master in the South Central Railway, was on duty between 14.00 and 22.00 hours on 23rd February '86.
In the absence of a reliever, he was to continue his duty till 8.00 hours on 24th February '86.
He allowed his staff to take meals and since they did not return within a reasonable time, he went towards the cabin where the staff usually took their meals.
The Divisional Safety Officer who was coming down from the cabin, enquired of the respondent 's identity.
The respondent in turn asked for the identity of the said officer.
The officer was an noyed at this and threatened the respondent with dire conse quences.
Immediately thereafter the respondent was placed under suspension.
Further suspension followed and the re spondent was visited with the order of premature retirement under Rule 2046 of Indian Railway Establishment Code.
Respondent challenged the said order before the Central Administrative Tribunal and the Tribunal, relying on its decision in Shri Gafoor Mia & Ors.
vs Director, DMRL, AISLJ held that the Divisional Railway Manager who passed the impugned order of premature retirement was not competent to make such an order, and set aside the order.
This appeal, by special leave, is against the Tribunal 's order.
Though under sub clause (ii) of rule 2046(h), a class III employee cannot be retired prematurely after he has attained the age of 55 years, (unlike officers of class I & II) this clause was invoked in the case of respondent who was admittedly in class III service and did not attain the age of 55 years.
Appellant relied on para 620(ii) of the Railway Pension 457 Manual which gives the authority power to remove from serv ice a railway servant after he completed 30 years service.
On behalf of Respondent, it was contended that the appellant had been shifting its stand and trying to support the order on an extraneous ground which did not find a place in the order viz. unsatisfactory service record of the respondent; and there is no basis for it in view of the promotionS secured by the respondent, the last of which was just before the premature retirement.
Dismissing the appeal, this Court, HELD: 1.1 The order was passed under Rule 2046(h)(ii) of the Indian Railway Establishment Code without verifying whether or not the incumbent had attained the age of fifty five years.
Since the respondent was indisputably in class III service at the time the 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.
According to the respondent he was running 54th year on that date.
That obviously took his case out of the purview of the said rule.
Even if the order was intended to he under Rule 2(2) of the Liberalised Pension Rules, 1950, this require ment had to be satisfied.
The immediate and proximate reason for passing the impugned order was undoubtedly the unfortu nate incident of 23/24th February, 1986.
BUt for that inci dent 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 Asstt.
Yard Master an 22nd August, 1984 and later to the post of Yard Master on 31st January, 1986.
The order of premature retire ment is punitive in nature and having been passed in fla grant violation of the principles of natural justice, cannot be allowed to stand.
[426G H; 460F G; 463A B] 1.2 F.R. 56(j) of the Fundamental Rules is substantially the same as Rule 2046(h)(ii) of the Railway Establishment Code and Rule 2(2) of the Liberalised Pension Rules, 1950 is substantially the same as paragraph 620 of Railway Pension Manual.
Since Rule 2(2) has been struck down as violative of Article 14 of the Constitution, paragraph 620(ii) would meet the same fate.
Apart from the competence of the Divisional Railway Manager to pass the order, the order cannot also he supported under paragraph 620(ii).
[462B D] 458 Senior Superintendent of Post Office & Ors., vs Izhar Hussain, ; , relied on.
Union of India vs R. Narasimhan, ; , referred to.
The authorities concerned will do well to amend Rule 2(2) of the Liberalised Pension Rules, 1950, and paragraph 620(ii) of the Railway Pension Manual, so as to incorporate therein the requirement of public interest, making it clear that premature retirement on completion of qualifying serv ice of thirty years can be ordered in public interest only.
[463C D]
|
ivil Appeal Nos.
372 382 of 1969.
Appeals by Special Leave from the Judgment and order dated 10 10 1968 of the Rajasthan High Court in C.S.A. Nos. 18 and 29, 27, 28.
30 35 of 1960 and 54 and 58 of 1961.
section N. Jain and section K. Jain for the Appellants.
B. P. Maheshwari and Suresh Sethi for the Respondent.
The Judgment af the Court was delivered by SHINGHAL, J., These appeals by special leave arise out of a common judgment of the Rajasthan High Court dated October 10, 1968, by which the suits which were filed by the present appellants were dismissed in pursuance of the earlier judgment of the same court dated November 9, 1964, on the ground that they were governed by section 179(2) of the Rajasthan Town Municipalities Act, 1951, hereinafter referred to as the Act, and were barred by limitation.
The facts giving rise to the appeals were different in details, but they were examined in the High Court with reference to the common questions of law which arose in all of them and formed the basis of that Court 's, decision against the plaintiffs.
We have heard these as companion appeals, and will decide them by a common judgment.
It is not necessary to give the detailed facts of all the cases as it will be enough to refer to the suit which was filed by M/s Surajmal Banshidhar and the developments connected with it, in order to appreciate the controversy.
The plaintiff firm referred to above carried on business in "pakka arat" and exported goods of various kinds from Ganganagar.
The Municipal Board of Ganganagar realist "export duty", by way of ter 171 minal tax, on the exported goods.
The plaintiff therefore raised a suit on October 19, 1957, challenging the Board 's right to "impose or to reales" any export duty during the period June 5, 1954 to March 10 1957, amounting to Rs. 10,729/ .
It however confined the suit to the recovery of Rs. 10,000/ alongwith interest and gave up the balance.
The Board denied the claim in the suit and pleaded, inter alia, that the levy of the terminal tax was in accordance with the law and the suit was barred by limitation.
The trial court rejected the defence and decreed the suit, and its decree was upheld by the District Judge on appeal.
Similar decrees were passed in the other suits, for various sums of money.
The Board took the matter to the High Court in second appeals.
The appeals were heard by a Single Judge who, while deciding that the suits were governed by section 179(2) of the Act, referred the question on the legality of the levy to a larger Bench.
A Full Bench of the High Court held that the levy of the terminal tax was illegal, and sent the cases back to the Single Judge who allowed the appeals only for those amounts which were found to be within limitation under section 179(2) of the Act and dismissed the other suits.
The plaintiffs obtained special leave and have come up to this Court in these circumstances.
The question which arises for consideration is whether the suits fall within the purview of section 179(2) of the Act.
The first two subsection of section 179 which bear on the controversy read as follows, "179.
Limitation of suits, etc.
(1) No suit shall be instituted against any municipal board, president, member, officer, servant or any person acting under the direction of such municipal board, chairman, member, officer or servant for anything done or purporting to be done under this Act, until the expiration of two months next after notice in writing, stating the cause of action, the name and place of abode of the intending plaintiff and the relief which he claims, has been, in the case of a municipal board, delivered or left at its office, and, in case of a chairman, member, officer, or servant, or person as aforesaid, delivered to him or left at his office or usual place of abode; and the plaint shall contain a statement that such notice has been so delivered or left.
(2) Every such suit shall, unless it is a suit for the recovery of immovable property or for a declaration of title thereto, be dismissed if it is not instituted within six months after the accrual of the alleged cause of action.
" The question therefore is whether the illegal levy of terminal tax (assuming that it was illegal as held by the High Court) could be said to 172 be a thing "done or purporting to be done" under the Act.
A similar question arose for the consideration of this Court ill Poona City Municipal Corporation vs Dattatraya Nagesh Deodhar(l) with reference to the provision in section 127 (4) of the Bombay Provincial Municipal Corporation Act, 1949, and it was held that if the levy of a tax was prohibited by the Act concerned and was not in pursuance of it, it 'could not be said to be 'purported to be done in pursuance of execution or in tended execution of the Act '.
" It was observed that what was plainly prohibited by the Act could not be "claimed to be purported to be done in pursuance or intended execution of the Act.
" It was therefore held that the suit was outside the purview of the section 127(4) and was not barred by limitation.
We are in respectful agreement with that view, and we have no hesitation in holding, in the circumstances of the pre sent cases, which are governed by a provision similar to section 127(4) or the Poona City Municipal Corporation Act, that the suits did not fall within the purview of section 179 of the Act and were not barred by limitation.
It may be mentioned that it has not been argued before us, and is nobody 's case, that the suits would be barred by limitation even if they did not fall within the purview of section 179(2) of the Act.
The decision of the High Court to the contrary is not correct and will have to be set aside.
It has however been argued on behalf of the respondents that the High Court erred in taking the view that the levy of the terminal tax was illegal, and our attention has been invited to the relevant provisions of the law including the Bikaner State Municipal Act, 1923, article 277 of the Constitution and section 2 of the Act.
It is not in controversy before us that the Bikaner State Municipal Act, 1923, authorised the levy of terminal tax and such a tax was levied by the Ganganagar Municipal Board under the authority of that law upto January 26, 1950, when the Constitution came into force.
On and from that date, the power to levy export duty vested in the Parliament but article 277 saved that and some other taxes as follows, "277.
Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being law fully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, not withstanding 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. ' (1) ; 173 it was therefore permissible for the Municipal Board to continue to levy A the terminal tax until provision to the contrary was made by Parliament by law.
But it so happened that the Bikaner Municipal Act, 1923 was repealed and the Act was brought into force with effect from December 22, 1951.
Section 2(b) of the Act, which dealt with the repeal of the Bikaner Act and the saving of some of its provisions, expressly provided that on the coming into force of the Act, the laws and enactments specified in the First Schedule of the Act shall be repealed in so far as they relate to the Town Municipalities covered by the Act.
So as the Bikaner State Municipal Act, 1923, was included in the first Schedule, it was repealed by the aforesaid section 2.
That section however contained a proviso, clause (b) whereof was to the following effect, "(b) all town municipalities constituted under the said laws or enactments, and members appointed or elected, committees established, limits defined, appointments, rules, orders and bye laws made, notifications and notices issued, taxes imposed, contracts entered into, and suits and other proceedings instituted, under the said laws or enactments or under and laws or enactments thereby repealed shall, so far as may be and so far as they relate to town municipalities be deemed, unless the Government directs otherwise, to have been respectively constituted, appointed, elected, establish ed" defined, made, issued, imposed, entered into and instituted under this Act.
" The repeal did not therefore affect the validity of those taxes which had already been imposed and which could be "deemed" to have been imposed under the Act, unless there was a direction to the contrary by the State Government.
It is quite clear from the provisions af the Act, and is in fact not disputed before us, that the terminal tax in question could not be imposed under any of the provisions of the Act.
Its, levy could not therefore be saved by clause (b) of the proviso to section (2) of the Act.
On the other hand, it could be said with justification that the State Legislature had decided to discontinue the levy by excluding it from the purview of the saving clause.
The further levy of the tax therefore became illegal and it was not permissible to continue it any longer under article 277 which merely gave the authority concerned the option to continue the levy if it so desired.
So as the levy of the tax after December 22, 1951, was illegal, there is nothing wrong with the view taken by the High Court that the amounts 174 paid by the plaintiffs by way of terminal tax were recoverable by the suits which have given rise to these appeals, and there is no force in the argument to the contrary.
The appeals are allowed with costs, the decrees of the High Court are set aside and those of the lower appellate court restored.
P.B.R. Appeals allowed.
| The respondent Board realised terminal tax on goods experted by the appellants.
In suits filed by the appellants for refund of the amounts which they claimed were collected without authority of law, the respondent Board pleaded that the levy was in accordance with law and that the suits where barred by limitation.
The trial court decreed the suits and on appeal the District Judge affirmed the trial Court 's decrees.
In second appeal the High Court held that the levy was illegal.
The High Court, however, allowed the appeals in respect of those amounts which were found to be within limitation under section 179(2) of the Act and dismissed the others.
On the question whether the levy could be said to be a thing done or purported to be done under the Act.
Allowing the appeal, ^ HELD: The suits did not fall within the purview of section 179 of the Act and were not barred by limitation.
[172 D] 1.
(a) It is well established that if levy of a tax is prohibited by an Act and is not in pursuance of it, it could not be said to be purported to be done in pursuance of the execution or intended execution of the Act.
[172 B] Poona City Municipal Corporation vs Dattatraya Nagesh Deodhar, ; followed.
(b) The terminal tax could not be imposed under any of The provisions of the Act.
The High Court was right in holding that the amounts ` paid by the appellants by way of terminal tax were recoverable by the suits.
[173 F G 174 Al 2.
The Bikaner State Municipal Act, 1923 (which was the predecessor of the present Act) authorised the levy of terminal tax and the Board accordingly levied the tax until January 26, 1950.
With the coming into force 12 SCI/78 170 of the Constitution, by virtue of article 277 it was permissible for the Board to continue to levy the terminal tax until provision to the contrary was made by Parliament by law.
But with effect from December 22, 1951 the Bikaner Act was repealed and the present Act was brought into force.
the repeal, however, did not affect the validity of those taxes which had already been imposed and which could be "deemed` ' to have been imposed under the Act.
But the provisions of the Act the clear that the terminal tax in question could not be imposed thereunder.
The levy could not, therefore, be saved by cl.
(b) of the proviso to section 2.
on the other hand it is clear that the State Legislature had decided to discontinue the levy by excluding it from the purview of the saving clauses.
The further levy of the tax, therefore, became illegal and it was not permissible to continue it any longer under article 277 which merely gave the authority concerned the option to continue to levy if it so desired.
[173A, F G]
|
l Appeal No. 1613 of 1966.
Appeal from the judgment and decree dated August 19, 1963 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 50 D of 1960.
V.A. Seyid Muhammad, S.P. Nayar and B.D. Sharma ', for the appellants.
S.T. Desai, K.L.Arora, Bishambar Lal and H.K. Puri, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate from the judgment of the Division Bench of the Punjab High Court dated August 19, 1963 in Letters Patent Appeal No. 50 D of 1960.
An auction was held for the sale of licence of country liquor shop in Bela Road for the year 1949 50 on March 23, 1949.
The auction took place in pursuance of the conditions of "Auction of Excise Shops in Delhi for the year Clauses 31 and 33 of the conditions were to the following effect: "31.
The Chief Commissioner is under no obligation to grant any license until he is assured of financial status of the bidder.
At the conclusion of the auction an enquiry will be made into the financial position of any bidder not known to the excise staff and any such bidder shall if necessary be called upon to furnish security for the observance of the terms of his licence as required by sub section (2) of section 34 of the Punjab Excise Act 1 of 1914, as extended to Delhi Province.
596 33.
All final bids will be made subject to the confirmation by the Chief Commissioner who may reject any bid without assigning any reasons.
If no bid is accepted for any shop,_ the Chief Commissioner reserves the right to dispose.
it off by tender or otherwise as he thinks The respondent offered the highest bid of Rs. 4,01,000/ for the shop.
Under the Excise Rules the bidder had to deposit one sixth of the purchase price within seven days of the auction but the deposit was not made by the respondent.
In these circumstances the Chief Commissioner did not confirm the bid of the respondent and resale of the Excise Shop was ordered.
On May 3, 1949 the shop was again auctioned when Messrs Daulat Ram Amar Singh offered the highest bid of Rs. 2,20,000/ which was confirmed by the Chief Commissioner, on July 7, 1949.
Holding the respondent liable for the loss of Rs. 1,81,000 being the difference between the bid of the respondent and of Messrs Daulat Ram Amar Snigh the Collector of Delhi started proceedings for the recovery of Rs. 1,81,000,./. On July 22, 1949 the respondent filed a suit in the court of Senior Subordinate Judge, Delhi praying for a permanent injunction restraining the appellants from taking any proceedings to recover the amount.
The trial judge decreed the suit holding that the sale was subject to confirmation by the Chief Commissioner under cl. 33 and since the auction in favour of the respondent was not accepted by him there was no binding obligation between the parties.
The decree of the trial court was upheld by the lower appellate court.
In second appeal False, J., took the view that cl. 3 3 was not in consonance with the statutory rules and the contract came into existence when the bidding was closed in favour of the respondent on March 23, 1949.
The respondent was therefore held liable to make good the loss which the Government sustained in resorting to the resale of the excise shop.
The resportdent preferred an appeal under Letters Patent.
The Division Bench allowed the appeal reversing the decision of the single Judge and restored that of the trial court.
Clause 21 of rule 5.34 states: "A person to whom a shop has been sold shall pay one sixth of the annual fee within seven days of the auction (any deposits already made shall be credited to this sum, and any excess shall be either returned to him or credited to future payments).
By the 7th of the month in which he begins his business under his license and by the 7th of every subsequent month the licensee shall pay one twelfth of the annual fee till the whole fee is paid.
But he may at any time pay the whole amount due if he wishes.
If the total amount due is less than Rs. 100 it shall be payable in one sum unless the Collector for 597 special reasons, allows payment to be made in instalments.
If any person whose bid has been accepted by the officer presiding at the auction fails to make the deposit of one sixth of the annual fee, or if he refuses to accept the license, the Collector may resell the license, either by public auction or by private contract, and any deficiency in price and all expenses of such resale or attempted resale shall be recoverable from the defaulting bidder in the manner laid down in section 60 of the Punjab Excise Act, 1 of 1914, as applied to the Delhi Province.
Rule 22 states: "When a license has been cancelled, the Collector may resell it by public auction or by private contract and any deficiency in price and all expenses of such resale or attempted resale shall be recoverable from the defaulting licensee in the manner laid down in section 60 of the Excise Act as applied .to the Delhi Province.
" On behalf of the appellants it was contended by Dr. Seyid Muhammad that the respondent was under a legal obligation to pay one sixth of the annual fee within seven days of the auction under cl. 21 of r. 5.34 and it.
was due to his default that a resale of the excise shep was ordered.
Under cl. 22 of r. 5.34 the respondent was liable for the deficiency in price and all expenses of such resale* which was caused by his default.
We are unable to accept this argument.
The first portion of cl. 21 requires the "person to whom the shop has been sold" to deposit one sixth of the total annual fee within seven days.
But the sale is deemed to have been made in favour of the highest bidder only on the completion of the formalities before the conclusion of the sale.
Clause 16 of r. 5.34 states that "all sales are open to revision by the Chief Commissioner".
Under cl. 18, the Collector has to make a report to the Chief Commissioner where in his discretion he is accepting a lower bid.
Clause 33 of the Conditions, exhibit D 28, states that "all final bids will be made subject to the confirmation by the Chief Commissioner who may reject any bid without assigning any reasons.
" It is, therefore, clear that the contract of sale was not complete till the bid was confirmed by the Chief Commissioner and till such confirmation the person whose bid has been provisionally accepted is entitled to withdraw his bid.
When the bid is so withdrawn before the confirmation of the Chief Commissioner the bidder will not be liable for damages on account of any breach of contract or for the shortfall on the resale.
An acceptance of an offer may be either absolute or conditional.
If the acceptance is conditional the offer can be withdrawn at any moment until absolute acceptance has taken place.
This view is borne out by the 598 decision of the Court of Appeal in Hussey vs HornePayne(1).
In that case V offered land to P and P accepted 'subject to the title being approved by my solicitors '.
V later refused to go on with the contract and the Court of Appeal held that the acceptance was conditional and there was no binding contract and that V could withdraw at any time Until P 's solicitors had approved the title.
Jessel, M.R. observed at p. 626 of the report as follows: "The offer made to the Plaintiff of the estate at that price was a simple offer containing no reference whatever to title.
The alleged acceptance was an acceptance of the offer, so far as price was concerned, 'subject to the title being approved by our solicitors '.
There was no acceptance of that additional term, and the only question which we are called upon to decide is, whether that additional term so expressed amounts in law to an additional term or whether it amounts, as was very fairly admitted by the counsel for the Respondents, to nothing at that is, whether it merely expresses what the law would otherwise have implied.
The expression 'subject to the title being approved by our solicitors ' appears to me to be plainly an additional term.
The law does not give a right to the purchaser to say that the title shall be approved by any one, either by his solicitor or his conveyancing counsel, or any one else.
All that he is entitled to require is what is called a marketable title, or, as it is sometimes called, a good title.
Therefore, when he puts in 'subject to the title being approved by our solicitors ', he must be taken to mean what he says, that is, to make a condition that solicitors of his own selection shall approve of the title.
" It was submitted on behalf of the appellant that the phrase "person to whom a shop has been sold" in cl.
21 of r. 5.34 means a " 'person whose bid has been provisionally accepted".
It is not possible to accept this argument.
As we have already shown the first part of cl.
21 deals with a completed sale and the second part deals with a situation where the auction is conducted by an officer lower in rank than the Collector.
In the latter case the rule makes it clear that if any person whose bid has been accepted by the officer presiding at the auction fails to make the deposit of one sixth of the annual fee, or if he refuses to accept the licence, the Collector may resell the licenee, either by public auction or by private contract and any deficiency in price and all expenses of such resale shall be recoverable from the defaulting bidder.
In the present case the first part of cl. 21 applies.
It is not disputed that the (1) at 676.
599 Chief Commissioner has disapproved the bid offered by the respondent.
If the Chief Commissioner had granted sanction under cl. 33 of exhibit D 23 the auction sale in favour of the respondent would have been a completed transaction and he would have been liable for any shortfall on the resale.
As the essential pre requisites of a completed sale are missing in this case there is no liability imposed on the respondent for payment of the deficiency in the price.
For these reasons we hold that the judgment of the Punjab High Court dated August 19, 1963 in L.P.A. No. 50 D of 1960 is correct and this appeal must be dismissed with costs.
G.C. Appeal dismissed.
| In an application under section 15 of the the respondents claimed that they were workers within the meaning of section 2(1) of the .
The Additional District Judge found that some of the respondents were time keepers who maintained attendance of the staff.
job card particulars of the various jobs under operation and the time sheets of the staff working on various shops dealing with the production of Railway spare parts and repairs etc.
and that other respondents were head time keepers entrusted with the task of supervising the work of other respondents.
He, therefore, came to the conclusion that the work done by the respondents was "incidental to" or "connected with" the manufacturing process.
The High Court in revision affirmed this order.
On the question whether the respondents fell within the purview of the definition of "worker" in section 2(1) of the .
HELD : (ii) The conclusion of the Additional District Judge on the nature of the work of the respondents being one of fact must be held to be binding on the High Court on revision and also not open to reassessment on the merits in this Court on special leave appeal from the order of the High Court.
(ii) The definition in section 2(1) is fairly wide because it takes within its sweep not only persons employed in manufacturing process but also in cleaning any part of the machinery or premises used for a manufacturing process and goes far beyond the direct connection with the manufacturing process by extending it to other kinds of work which may either be incidental to or connected with not only the manufacturing process itself but also the subject of the manufacturing process.
The definition therefore does not exclude those employees who were entrusted solely with clerical duties, if they otherwise fell within the definition of the word " worker".
All legislation in a welfare state is enacted with the object of promoting general welfare, but certain types of enactments are more responsive to some urgent social demands and also have more immediate and visible impact on social vices by operating more directly to achieve social reforms.
The belongs to this category and, therefore.
demands an interpretation liberal enough to achieve the legislative purpose, without doing violence to the language.
[728 C D; 731 B D]
|
No. 2330 of 1968 (From the Judgment and Order dated the 12th March, 1968 of the Jammu & Kashmir High Court in Civil First Appeal No. 9 of 1966.) G.B. Pai, S.K. Bagga and Mrs. section Bagga; for the appel lants.
402 O. P. Malhotra, K.J. John and Shri Narain for the respond ent.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal is preferred by the defendant in the suit on a certificate of fitness granted by the High Court of Jammu & Kashmir under Article 133 of the Constitu tion.
The respondent, Ishroo Devi, filed a suit for a decree for possession of all the three items of property mentioned in the plaint and for future mesne profits.
It was al leged that the three items of property mentioned in the ' plaint were the self acquired properties of one Purohit Mani Ram.
He executed a will on 25th May, 1959, out of his own free will in favour of the respondent.
The origi nal will was attached to the plaint.
Purohit Mani Ram died on 24th March, 1960, at Jammu and the respondent claimed to be the sole owner of the properties.
The first appellant is the son, the second appellant is the wife and the third appellant is the grand daughter of Purohit Mani Ram.
In the plaint it is alleged that the first appellant after the death of Purohit Mani Ram got rent deed executed in his favour and also recorded mutations in his name and dispossessed the respondent.
The respond ent also claimed that the three items of property were the separate properties of Purohit Mani Ram and that he was entitled to dispose of them under a will.
In the written statement the appellants averred that the properties be longed to the joint family of which the first appellant and his father, Purohit Mani Ram, were members and as the properties were joint family properties, they cannot be disposed of by will.
It was further alleged that the will was a forged one and is fictitious.
The respondent examined Janak Lal Sehgal, an advocate of the Supreme Court, and the scribe of the will one Bodh Raj.
P.W. 1, the advocate, stated that Mani Ram executed the will on 25th May, 1959, in favour of the respondent.
He saw Mani Ram affix his signature on the will the words (in vernacular) under which Janak Lal had signed as wit ness, were under the words (in vernacular) where Purohit Mani Ram had signed.
Janak Lal had given the date with his own hand where he had signed as witness.
The witness also testified that the mental condition of Purohit Mani Ram was good and he executed the will of his own free will and no pressure or fraud was played on him.
P.W. 2 Bodh Raj, is the scribe of the will.
He stated that he wrote the will at the instance of Mani Ram and after reading the.
will and explaining it to the testator, the testator affixed his signature and admitted it to be correct.
According to the witness the will was executed on 25th May, 1959, and on the same date the signature of the testator and those of the witnesses were affixed.
At the time of the examination the witness stated that the physical and the mental condition of the testator was good and he read out the will at the house of Janak Lal Sehgal and obtained the signatures of Mani Ram and that of P.W. 1, the advocate.
P.W. 3, Lodra Mani, stated that Mani Ram was the A.D.C. of Maharaja Pratap Singh and was in service for Maharaja 's Puja, and that the Maharaja was giving 403 lot of money to Purohit Mani Ram as present.
The witness also stated that item 1 of the properties was constructed by Mani Ram with his own income.
On behalf of the appellants a handwriting expert, Philip Hardless, and three witnesses were examined in addition to the first appellant.
The trial court accepted the evidence of P.W. 1, the advocate, and P.W. 2, the scribe and held that the will was proved.
Holding that items 1 (b) and 2 of the plaint schedule properties were ancestral properties found that Mani Ram had no authority to dispose of these two items of properties by will.
Therefore while decreeing the suit as regards item No. (1)(a) of the plaint schedule properties dismissed the claim as regards items 1 (b).and 2.
On appeal by the appellants a Bench of the Jammu & Kashmir High Court agreeing with the finding of the trial court and accepting the testimony of P.W. 1, the advocate, and P.W. 2, the scribe of the will, found it to be genuine and executed by Mani Ram.
The appellate court also con firmed the finding of the trial court that the item l(a) of the property is self acquired property of Mani Ram while items l(b) and 2 are the ancestral properties.
While confirming the decree of the trial court as regards item l(a) it allowed the respondent 's claim regarding items 1 (b) and 2 to the extent of one.half share holding that under section 27 of the Jammu & Kashmir , Mani Ram was entitled to dispose of his interest in the joint family property by will.
Aggrieved by the decision of the Bench of the Jammu & Kashmir High Court the appel lants have preferred this appeal.
Though the Concurrent finding of both the courts below is that the will was a valid one and was executed by Mani Ram of his own free will and when possessed of all his faculties Mr. Pai, the Counsel for the appellants, strenous ly contended that the finding should not be accepted.
He submitted that a look at the signature of Mani Ram in the will and his signatures in admitted documents would prove that the signature in the will is not that of Mani Ram.
He next contended that the will was antedated in order to escape the prohibition against alienation introduced by an Ordinance which came into force in July, 1959, Thirdly, he submitted that the will is a most unnatural one as it had not provided for the son, or the wife ' or near relatives but had given the entire property to a distant relation.
Fourthly, he submitted that in a suit which was filed by the son for partition against Mani Ram, the latter gave an undertaking not to alienate his properties and taking into account the proceedings it is most unlikely that he would have executed the will at time which it purports to be as he would have mentioned about his execution of the will in the proceedings.
We have examined all these points very care fully and we find that there is no substance in any one of them.
The plea that the will was executed after July, 1959, when there was a prohibition against the alienation and it was pre dated is without any substance.
The will is dated 25th May, 1959, and a contemporaneous record of the sub stance of the will is made by P.W. 2 404 in one of his regularly kept books.
We see no need for predating of the will and the basis of the argument that the will was not executed on the day on which it purports to be is without substance.
Regarding the next contention that the will is an unnat ural one it has to be seen that the son had filed a suit for partition and in the written statement the father had gone so far as to disown his paternity.
It is common ground that the relationship between Mani Ram and his son was greatly strained and it is not surprising that he has disowned him, in unmistakable terms in the will.
The submission that the will would not have been executed in mid 1959 is based on the plea that he had made a statement in December, 1959, that he had not alienated any property.
The son in the suit prayed for an order against Mani Ram restraining him from alienating the joint family properties except with the permission of the court.
A consent order was passed di recting Mani Ram not to alienate joint family properties.
There was no need for Mani Ram to mention about the will for it is not an alienation and in any event the will ac cording to Mani Ram did not relate to joint family proper ties.
The nondisclosure of the execution of the will is understandable because Mani Ram did not want anyone particu larly his son to know about his dispossessing of the proper ty by will.
This ground also is without substance.
The main ground of attack was that on the face of it, it is apparent that the signature is not that of Mani Ram.
The appellate court has found that Mani Ram was an illiter ate person and that he had no standard signature.
His signature is not well formed, but his signature in the Vakalatnama and in the will bear striking, resemblance as found by the Bench of the High Court.
Though there are certain dissimilarities between the signature in the will and in those of admitted documents we are unable to say that the signature in the will is not that of Mani Ram.
In this connection we have examined the evidence of the handwriting expert who gave evidence on behalf of the appellants.
We feel that his qualifications are not such as to accept him as a handwriting expert.
He has hardly done any work as an expert after 1950 and we find in his deposition that he has exceeded the limits as an expert and supported the appellants in matters which were not within his province.
We have no hesitation in agreeing with the High Court and rejecting his testimony.
A comment was made on the fact that the date and endorsement in the will is in a different ink and probably was not written at the same time.
In this connection a discrepancy in the evidence of the scribe, P.W. 2, as to where actually the date was noted whether it was in his house or that of the lawyer 's was made much of.
We do not think that this discrepancy would affect the.
truth of the matter.
It is seen that P.W. 2 in his record entered summary of the will on the same day.
It is significant that in the cross examination no question was asked challenging the genuineness.
The entry with regard to the will was made by P.W. 2 in the Register which is a public register and on examination we find there is nothing suspicious about it.
It 405 may also be noted that the first appellant, the son of Mani Ram, has not stated that the signature found in the will is not that of his father.
Apart from all these circumstances we find the evidence of P.W. 1 a respectable advocate, who speaks of his advising in the preparation of the will, his seeing the executant sign the will in his presence can be safely accepted.
Excepting that a statement which he made as a witness was rebutted by a District Judge nothing else has been suggested against him.
We have no hesitation in accepting the evidence of these two witnesses, as the two lower courts have done.
There is no ground at all for rejecting the evidence of P.W. 2, the scribe, whose evidence has been accepted by both the courts.
The scribe had immediately noted the gist of the will in one of his regu larly kept records which has not been challenged.
We have, therefore, no hesitation in accepting the finding of the two lower courts that the will is a genuine one.
and was execut ed by Mani Ram of his own free will.
Mr. Pai, counsel for the appellants, submitted that the High Court was in error in holding that item 1 (a) of the properties is the self acquired property of Mani Ram.
According to the learned counsel the hereditary profession of Mani Ram was that of a priest and whatever he earned while practising that profession and all his acquisisions should be held to be joint family property.
The evidence is that Main Ram was not only a priest but worked in three posts.
He was a priest and at the same time was in the private office of the Maharaja and was also an A.D.C. of the Maharaja and the Maharaja used to give presents to him.
It is in evidence that the Maharaja had given.
the land and himself constructed the Kothi before giving it to Mani Ram.
In support of the contention that the income derived from practice of a hereditary profession should be construed as ancestral property, the learned counsel re ferred us to two decisions in Ghelabhai Gavrishankar vs Hargowan Ramit & Others(1), and Hanso Pathak vs Harmandil Pathak and Another.(2).
Neither of the cases support the contention of the learned counsel.
In the first case the question that arose for consideration was about the nature of the office of a hereditary priest.
It was held that the hereditary right of the priest is immovable property.
Chandavarkar J. pointed out that hereditary priesthood vested in particular families is regarded as vritti or immoveable property but we do not find any support for the contention that the income of the hereditary priest will also be hereditary property.
In fact in Hanso Pathak vs Harmandil Pathak and Anr.
(supra) it has been made clear that in the United Provinces the income received as amounts paid by Yajamans at their discretion either by way of chari ty or by way of remuneration for personal services rendered by the priest, cannot be claimed as of right, and cannot amount to a family property.
Chief Justice Sulaiman ex pressed his view that the income received as amounts paid by people at their discretion either by way of charity or by way of remuneration for personal services rendered cannot be claimed as of right amount to family property.
Mukerji, J.in a concurring judgment after distinguishing Bom.
94. 2.
A.I.R. 1934.
All. 351. 406 Ghelabhai Gavrishankar vs Hargowan RamIi & Others (supra) held that the income is "Vidyadhana" which is the same thing as "gains of science" or what has been acquired by exercise of learning cannot be divided by partition.
We agree with the view thus expressed by the Allahabad High Court and find that the income from the practice of a hereditary profession will not be joint family property.
Mani Ram was getting Rs. 100 as A.D.C. and was in addi tion drawing a salary of Rs. 140 a month as an employee in the private Department of the Maharaja.
Thus he had ample means to acquire item 1 (a) of the property from his self acquisition.
On the other hand there is hardly any evi dence to prove that he had any ancestral nucleus.
It is stated that the family had some jewels and cash which were kept in the safe of the Maharaja and there is nothing to indicate that any thing out of the cash or jewellery was used in purchasing item 1 (a) of the property.
I was also contended that the property that belonged to Mani Ram was only the house and not the land attached to the house.
We have no hesitation in rejecting this desperate plea.
The result is we confirm the findings of the courts below that item 1 (a) of the property is the self acquisition and the decree of the appellate court so far as item 1 (a) is concerned is confirmed.
Regarding items 1 (b) and 2 the appellate court has found that they are joint family properties.
It is admit ted by both the parties that under section 27 of the Jammu & Kashmir , the interest of the coparacener in a joint Hindu family property can be disposed of by will.
Section 27 provides that any Hindu may dispose of by will any property which is capable of being disposed by him in law.
The EXplanation to the section makes it clear that the interest of a male Hindu in a Mitak shara coparacenary property be deemed to be property capa ble of being disposed of by him within the meaning of the sub section.
As the joint family consisted of Mani Ram and his son, the first appellant, the appellate court gave a decree in favour of the respondent so far as one half share of items 1 (b) and 2 of the properties are concerned.
The counsel for the appellant submitted that the appellate court was in error in determining the interest of the testator as one half share in the two items of joint family property.
He submitted that according to Mitakshara law except in Madras when there is a partition between the son and his father, mother is entitled to a share equal to that of the son.
In support of his contention the learned counsel referred to Mulla 's Hindu Law, 14th Ed., p.403, paragraph 315, where it is stated that while the wife cannot demand a partition, but if a partition does take place between her husband and his sons, she is entitled to receive a share equal to that of a son and to hold and enjoy that share separately even from her husband.
To the same effect is the passage in Mayne 's Hindu Law, 11th Ed., p. 534, paragraph 434, where it is stated "According to the Mitakshara law, the mother or the.
grandmother is entitled to a share when sons or grandsons divide the family estate between them selves, but she cannot be recognised as the owner of such share until the division is actually made, as she has no pre existing right in the estate except a right of mainte nance.
" Reference 407 was also made to the decisions reported in Dular Koeri vs Dwarkanath Misser(1), where it was held that under the Mitakshara law when partition of joint family property takes place during the father 's lifetime at the,instance of the son, the mother of the son is entitled to a share equal to that of her husband and her son and she is entitled o have the share separately allotted and to enjoy that share when so allotted.
In Sumrun Thakoor vs Chunder Mun Misser & Others ,(2) it was held that under the Mitakshara law where a paration takes place between a father and a son, the wife of the father is entitled to a share.
In Hosbanna Devanna Naik vs Devenna Sannappa Naik and Others(3), it was held that a step mother is entitled to a share on parti tion between the father and his sons.
In Partap Singh vs Dalip Singh, (4) in a partition between a Hindu father and his son it was held that the wife of the .father has a right to a share equal to that of the father or the sons.
In Madras, though Mitakshara law is applicable it has been held that on a partition between the sons and the father, the mother is not entitled to any share.
(Mulla 's Hindu Law, 14th Ed., p.403 "Madras State.
In Southern India the practice of allotting shares upon partition to females has long since become obsolete.").
So far as Jammu & Kashmir is concerned there is no decisions regarding the interest of a male Hindu in property.
This question as.
to what is the interest of Mani Ram in the joint family property at the time of his death was not, raised before the High Court.
In fact, the case first appellant was that the joint family consisted of himself and his father alone, though in the partition suit filed by him he claimed onethird share con ceding that his father and mother are entitled to the other two third share.
Though the question was not raised in any of the courts below, we feel that being a pure question of law, interests of justice require that the question be decided.
The High Court will decide the interest which Mani Ram had in the joint family property at the time of his death which he could dispose of by his will.
In remitting this question to the High Court, we decree he suit of the respondent in respect of item 1 (a) one third share in items 1 (b) and 2 of the plaint schedule properties as to that extent her share is not questioned.
The question as to what is the extent of the interest as regards items 1 (b) and 2 of the plaint schedule properties which can be bequeathed by Mani Ram in favour of the respondent is remitted to the High Court for its determination.
If the High Court finds that the respondent is entitled to one third share it will decide accordingly.
If it comes to the conclusion that Mani Ram was.
entitled to bequeath a greater share it will grant a decree accordingly.
There will be no order as to costs appeal disposed of accordingly.
S.R. Decree granted.
(1) I.L.R. (2)I.L.R. (3) I.L.R. (4)I.L.R. 52 All.
| The apellants are accused Nos. 10, 13, 14, 15 and 17 to 20 before the Sessions Court for trial under various offences, viz., . 324, 326, and 307 read with section 34 of the Penal Code.
While discharging accused Nos. 11, 12 and 16 u/s 227 of the Criminal Procedure Code 1973, on 8.8.1975, the learned Sessions Judge observed that there was "some materi al to hold that the remaining accused have had something to do with the incident which occurred on 6.12.1973 in I.T.I. Colony, Banglore" and adjourned the case to September 1, 1975, "for framing specific charges as made out from the material on record against the rest of the accused person .
Two revision petitions were filed against this order, one by accussed Nos. 10, 13, 14 and 15 and the other by accused Nos.
17 to 20.
These petitions were allowed by the High Court on the view that there was no sufficient ground for proceeding against the petitioners before it.
The High Court accordingly quashed the the proceedings in regard to them.
In appeal by Special Leave, the appellant State contended: (1) The High Court ought not to have exercised its power to quash the proceedings against the respondent without giving to the Sessions Court, which was seized of the case, an opportunity to consider whether there was sufficient material on the record on which to frame charges against the respondents.
(ii) In any event the High Court could not take upon itself the task of assessing or appreci ating the weight of material on the record in order to find whether any charges could be legitimately framed against the respondents.
Dismissing the appeal, the Court HELD: (1) The High Court was justified in holding that for meeting the ends of justice the proceedings against the respondents ought to be quashed.
It would be a sheer waste of public time and money to permit the proceedings to continue against the respondent, when there is no material on the record on which any tribunal could reasonably convict them for any offence connected with the assault on the com plainant.
This is one of these cases in which a charge of conspiracy is hit upon for the mere reason that evidence of direct involvement of the accused is lacking.
[118 A, D E] (2) The saving of the High Court 's inherent powers, both in civil and criminal matters, is designed to achieve a Salutary public purpose which is that a Court proceedings ought not to be permitted to degenerate into a weapon of harassment or persecution.
In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the pro ceeding in the interest of justice.
[117 F G] (3) Considerations justifying the exercise of inherent powers for securing the ends of justice vary from case to case and a jurisdiction as wholesome as the one conferred by section 482 ought not to be encased within the strait jacket of a rigid formula.
The three instances ' cited in the Judgment to when the High Court would be justified in exercising its inherent jurisdiction are only illustrative and can in the very nature of things not be regarded as exhaustive.
[118 F H, 119 A] 114 R.P. Kapur vs State of Punjab explained. (4) It is wrong to say that at the stage of framing charges the Court cannot apply its judicial mind to the consideration whether or not there is any ground for presum ing the commission of the offence.
[119 B] (5) While considering whether there is sufficient ground for proceeding against an accused.
the court pos sesses a comparatively wider discretion in the exercise of which it can determine the question whether the material on the record.
if unrebutted, is such on the basis of which a conviction can be said reasonably to be possible.
[119 B E] Vadilal Panchal vs D. D. Ghadigaonkar ; ; Century Spinning & Manufacturing, Co. vs State of Maharashtra applied.
(6) In the instant case the High Court is right in its view that the materials on which the prosecution proposed to rely against the respondents is wholly inadequate to sustain the charge that they are in any manner connected with the assault on the complainant.
[119 E F] (7) The grievance that the High Court interfered with the Sessions ' Court 's order prematurely is not justified.
The case was adjourned by the Sessions Judge not for deciding whether any charge at all could be framed against the remaining accused, but for the purpose of deciding as to which charge or charges could appropriately be framed on the basis of the material before him.
[116 G H] (8) The object of section 227 of the Code of Criminal Procedure, Act 2 of 1974, is to enable the superior Court to examine the correctness of the reasons for which the Sessions Judge has held that there is not sufficient ground for proceed ing against the accused.
[117 C D] (9) The High Court is entitled to go into the reasons given by the Sessions Judge in support of his order and to determine for itself whether the order is justified by the facts and circumstances of the case.
[117 D E] .
(10) In the exercise of the wholesome power u/s 482 of the Act 2 of 1974 (section 561 of 1898 Code), the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed.
[117 E F] Observations: The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature.
Without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction.
[117 G H]
|
Appeal No. 361 of 1958.
Appeal by special leave from the judgment and order dated December 11, 1957, of the Mysore High Court in Civil Revision No. 702 of 1956, against the judgment and order dated August 10, 1956, of the Court of the Second Extra Assistant Judge, Belgaum, in Misc.
Appeal No. 36 of 1955, arising out of the order dated September 1, 1955, of the 1st Joint Civil Judge, Junior Division, Belgaum, in Regular Civil Suit No. 197 of 1955.
M. M. Gharekhan and I. N. Shroff, for the appellant.
D. D. Chawla and G. Gopalakrishnan, for the respondent.
B. Sen and T. M. Sen, for the intervener (Attorney General of India).
February 13.
The Judgment of the Court was delivered by SARKAR, J.
This is an appeal from the judgment passed by the High Court at Bangalore on a petition in revision.
The question is whether a certain suit should be stayed under section 34 of the . 214 The appellant carries on business as a supplier of electrical energy in Belgaum.
It obtained a licence from the Government under section 3 of the , authorising it to supply the energy in that area.
The respondent, who is the plaintiff in the suit, obtained supply of electricity from the appellant.
The respondent felt that he was being overcharged by the appellant for the electricity so supplied.
He thereupon filed a suit in the Court of the Civil Judge, Belgaum, on or about the 8th of June, 1955, claiming a refund of the amount paid in excess of what he thought was the legitimate charge.
The appellant then applied under section 34 of the for a stay of the suit on the ground that the matter was referable to arbitration under the provisions of the .
The application was dismissed by the Civil Judge and his decision was confirmed by the Extra Assistant Sessions Judge on appeal and lastly, by the High Court in revision.
The appellant has now come to this Court.
The appellant contends that this matter is referable to arbitration under the provision contained in cl.
XVI of the Sixth Schedule of the Act of 1948.
A few of the provisions of these Acts will now have to be referred to.
Under the Act of 1910 the business of supplying electrical energy can be carried on only with the sanction of the Government.
Section 3 of that Act makes provision for the grant of a licence for supplying electrical energy.
The appellant obtained a licence in 1932.
A form of the licence is set out in the rules framed under the Act of 1910 and that form prescribes the maximum limit which a licensee is entitled to charge a consumer for the electrical energy supplied.
The Act of 1948 made a somewhat different provision with regard to these charges.
It provided by section 57 as follows: "section 57.
(1) The provisions of the Sixth Schedule and the Table appended to the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority, from the date of the commencement of the licensee 's next succeeding 215 year of account, and from such date the licensee shall comply therewith accordingly and any provisions of, such licence or of the , or ' any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of this section and the said schedule and Table.
(2). . . . . . . . . .
This section had therefore the effect of incorporating in the licence the terms of these two Schedules and provided that they would prevail over the terms of any previously granted licence or the provisions of the Act of 1910, or any other law, agreement or instrument inconsistent with these Schedules.
The Sixth Schedule made new provisions about the charges that a licensee was entitled to realise for the current supplied.
Clause XVI of that Schedule contains a provision for arbitration and it is on that that the appellant relies.
That clause is in these terms: Any dispute or difference as to the interpretation or any matter arising out of the provisions of this Schedule shall be referred to the arbitration of the Authority.
" The appellant contends that the dispute covered by the respondent 's suit is one of the kind mentioned in this clause and therefore must be referred to arbitration under its terms.
We will assume that the dispute is of the kind mentioned in cl.
XVI of the Sixth Schedule.
We are however unable to see that it is a dispute which is referable to arbitration under that clause.
It is not the appellant 's case that el.
XVI is a clause in any contract between it and the respondent.
That being so, the only other way in which it is possible for the appellant to contend that the respondent is bound to refer the dispute to arbitration under this clause is by showing that it is a statutory provision for arbitration.
No doubt if it were so, then in view of the provisions of section 46 of the the 'appellant would be entitled to apply for a stay of the suit under section 34 of that Act.
We are however wholly unable to agree that cl.
XVI is such a statutory provision.
The only 216 statutory provision that we find on the subject is that contained in section 57 and its effect is that the terms of cl.
XVI and the other clauses in the Sixth Schedule are to be deemed incorporated in a licence granted by the Government under section 3 of the Act of 1910 and the licensee is to comply with the terms of that Schedule.
Therefore all that we get is that the licence which is granted by the Government to a supplier of electricity, like the appellant, is to contain a clause that certain disputes would be referred to arbitration.
The licence is an 'engagement between the Government and the licensee, binding the parties to it to its provisions.
It is unnecessary to decide whether this engagement is contractual or statutory, for, in either case it is between the two of them only.
An arbitration clause in an instrument like this can only be in respect of disputes between the parties to it.
Such an arbitration clause does not contemplate a dispute between a party to the instrument and one who is not such a party.
We are unable to read section 57 as making cl.
XVI in the Sixth Schedule a statutory provision by which certain disputes between any and every person have to be referred to arbitration.
It was said on behalf of the appellant that the licence is a statutory document ' That, in our view, is a loose way of putting the thing.
By that the utmost that can be meant is that it is issued under the terms of a statutory provision and must comply with the provisions thereof.
But that cannot convert it into a statutory provision for reference to arbitration of disputes irrespective of the parties between whom the disputes may exist.
In our view, therefore, cl.
XVI of the Sixth Schedule of the Act of 1948 contains no provision for arbitration, statutory or otherwise, for reference of the dispute of the nature we have before us, between a licensed supplier of electricity and a consumer of it from him.
In the result, this appeal fails and is dismissed with costs.
Appeal dismissed.
| The arbitration clause incorporated by section 57(1) of the , in a licence granted by the Government for the supply of electrical energy to the consumers is not available for adjudicating upon a dispute between the licensee and the consumer, for the licence is an engagement between the licensee and the Government and the arbitration clause in it refers only to disputes between them.
Section 57(1) does not make the arbitration clause a statutory provision by virtue of which disputes between any and every person may be referred to arbitration.
|
Appeal No. 250 of 1953, Appeal from the judgment and decree dated July 14, 1948 of the Chief Court of Audh, Lucknow in Second Appeal No. 365 of 1945 arising out of the decree dated May 30, 1945 of the Court of District Judge, Sitapur in Appeal No. 4 of 1945 against the decree dated November 25, 1944 of the Court of Additional Civil Judge, Sitapur in Regular Civil Suit No. 14 of 1944.
A. D. Mathur, for the appellant.
Jagdish, Chandra, for respondent No. 1. 758 1956.
October 4.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The point for decision in this appeal is whether a Thakurdwara of Sri Radhakrishnaji in the village of Bhadesia in the District of Sitapur is a private temple or a public one in which all the Hindus are entitled to worship.
One Sheo Ghulam, a pious Hindu and a resident of the said village, had the Thakurdwara constructed during the years 1914 1916, and the idol of Shri Radhakrishnaji ceremoniously installed therein.
He was himself in management of the temple and its affairs till 1928 when he died without any issue.
On March 6, 1919, he had executed a will whereby he bequeathed all his lands to the Thakur.
The provisions of the will, in so far as they are material, will presently be referred to.
The testator had two wives one of whom Ram Kuar, had predeceased him and the surviving widow, Raj Kuar, succeeded him as Mutawalli in terms of the will and was in management.
till her death in 1933.
Then the first defendant who is the nephew of Sheo Ghulam, got into posses sion of the properties as manager of the endowment in accordance with the provisions of the will.
The appellant is a distant agnate of Sheo Ghulam, and on the allegation that the first defendant bad been mismanaging the temple and denyinng the rightg of the public therein, he moved the District Court of Sitapur for relief under the Religious and Charitable Endowments Act XIV of 1920, but the court declined to interfere on the ground that the endowment was private.
An application to the Advocate General for sanction to institute a suit under section '92 of the Code of Civil Procedure was also refused for the same reason.
The appellant then filed the suit, out of which the present appeal arises, for a declaration that the Thakurdwara is a public temple in which all the Hindus have a right to worship.
The first defendant contested the suit, and claimed that "the Thakurdwara an d the idols were private", and that "the general public had no right to make any interference".
759 The Additional Civil Judge, Sitapur, who tried the suit was of the opinion that the Thakurdwara had been built by Sheo Ghulam "for worship by his family", and that it was a private temple.
He accordingly dismissed the suit.
This judgment was affirmed on appeal by the District Judge, Sitapur, whose decision again was affirmed by the Chief Court of Oudh in second appeal.
The learned Judges, however, granted a ' certificate under section 109(c) of the Code of Civil Procedure that the question involved was one of great importance, and that is how the appeal comes before Us.
The question that arises for decision in this appeal whether the Thakurdwara of Sri Radhakrishnaji at Bhadesia is a public endowment or a private one is one of mixed law and fact.
In Lakshmidhar Misra vs Rang alal(1), in which the question was whether certain lands had been dedicated as cremation ground, it was observed by the Privy Council that it was "essentially a mixed question of law and fact", and that while the findings of fact of the lower appellate court must be accepted as binding, its "actual conclusion that there has been a dedication or lost grant is more properly regarded as a proposition of law derived from those facts than as a finding of fact itself".
In the present case, it was admitted that there was a formal dedication; and the controversy is only as to the scope of the dedication, and that is also a mixed question of law and fact, the decision of which must depend on the application of legal concepts of a public and a private endowment to the facts found, and that is open to consideration in this appeal.
It will be convenient first to consider the principles of law applicable to a determination of the question whether an endowment is public or private, and then to examine, in the light of those principles, the facts found or established.
The distinction between a private and a public trust is that whereas in the former the beneficiaries are specific individuals, in the latter they are the general public or a class thereof.
While in the former the beneficiaries are persons who are (1) [1949] L.R. 76 I.A. 271.
761 laid down in the Sanskrit Texts.
Thus, in his Bhashya on the Purva Mimamsa, Adhyaya 9, Pada 1, Sahara Swami has the following: "Words such as 'village of the Gods 'land of the Gods ' are used in a figurative sense.
That is property which can be said to belong to a person, which he can make use of as he desires.
God however does not make use of the village or lands, according to its desires.
Therefore nobody makes a gift (to Gods).
Whatever property is abandoned for Gods, brings prosperity to those who serve Gods".
Likewise, Medhathithi in commenting on the expression "Devaswam" in Manu, Chapter XI, Verse 26 writes: "Property of the Gods, Devaswam, means whatever is abandoned for Gods, for purposes of sacrifice and the like, because ownership in the primary sense, as showing the relationship between the owner and the property owned, is impossible of application to Gods.
For the Gods do not make use of the property according to their desire nor are they seen ' to act for protecting the same".
Thus, according to the texts, the Gods have no beneficial enjoyment of the properties, and they can be described as their owners only in a figurative sense (Gainartha), and the true purpose of a gift of properties to the idol is not to confer any benefit on God, but to acquire spiritual benefit by providing opportunities and facilities for those who desire to worship.
762 In Bhupati Nath Smritititha vs Ram Lal Maitra(1), it was held on a consideration of these and other texts that a gift to an idol was not to be judged by the rules applicable to a transfer to a 'sentient being ', and that dedication of properties to an idol consisted in the abandonment by the owner of his dominion over them for the purpose of their being appropriated for the purposes which he intends.
Thus, it was observed by Sir Lawrence Jenkins C. J. at p. 138 that "the pious purpose is still the legate, the establishment of the image is merely the mode in which the pious purpose is to be effected" and that "the dedication to a deity" may be "a compendious expression of the pious purposes for which the dedication is designed".
Vide also the observations of Sir Ashutosh Mookerjee at p. 155.
In Hindu Religious Endowments Board vs Yeeraraghavachariar(2), Varadachariar J. dealing with this question, referred to the decision in Bhupati Nath Smrititirtha vs Ram Lal Maitra (supra) and observed: "As explained in that case, the purpose of making a gift to a temple is not to confer a benefit on God but to confer a benefit on those who worship in that temple, by making it possible for them to have the worship conducted in a proper and impressive manner.
This is the sense in which a temple and its endowments are regarded as a public trust".
When once it is understood that the true beneficiaries of religious endowments are not the idols but the worshippers, and that the purpose of the endowment is the maintenance of that worship for the benefit of the worshippers, the question whether an endowment is private or public presents no difficulty.
The cardinal point to be decided is whether it was the intention of the founder that specified individuals are to have the right of worship at the shrine, or the general public or any specified portion thereof.
In accordance with this theory, it has been held that when property is dedicated for the worship of a family idol, it is a private and not a public endowment, as the persons who are entitled to worship at the shrine of the deity can only be the members of the family, (1) Cal.
(2) A.I.R. 1937 Macl.
763 and that is an ascertained group of individuals.
But where the beneficiaries are not members of a family or a specified individual, then the endowment can only be regarded as public, intended to benefit the general body of worshippers.
In the light of these principles, we must examine the facts of this case.
The materials bearing on the question whether the Thakurdwara is a public temple or a private one may be considered under four heads:(1) the will of Sheo Ghulam, Exhibit A 1, (2) user of the temple by the public, (3) ceremonies relating to the dedication of the Thakurdwara and the installation of the idol with special reference to Sankalpa and Uthsarga, and (4) other facts relating to the character of the temple.
(1) The will, Exhibit A 1, is the most important evidence on record as to the intention of the testator and the scope of the dedication.
Its provisions, so far as they are material, may now be noticed.
The will begins with the recital that the testator has two wives and no male issue, that he has constructed a Thakurdwara and installed the idol of Sri Radhakrishnaji therein, and that he is making a disposition of the properties with a view to avoid disputes.
Clause I of Exhibit A 1 provides that after the death of the testator "in the absence of male issue, the entire immovable property given below existing at present or which may come into being hereafter shall stand endowed in the name of Sri Radhakrisbnan, and mutation of names shall be effected in favour of Sri Radhakrishnan in the Government papers and my wives Mst.
Raj Kuer and Mst.
Ram kuer shall be the Muta wallis of the waqf".
Half the income from the properties is to be taken by the two wives for their maintenance during their lifetime, and the remaining half was to "continue to be spent for the expenses of the Thakurdwara".
It is implicit in this provision that after the lifetime of the wives, the whole of the income is to be utilised for the purpose of the Thakurdwara.
Clause 4 provides that if a son is born to the testator, then the properties are to be divided between the son and the Thakurdwara in a specified 764 proportion; but as no son was born, this clause never came into operation.
Clause 5 provides that the Mutawallis are to have no power to sell or mortgage the property, that they are to maintain accounts, that the surplus money after meeting the expenses should be deposited in a safe bank and when funds permit, property should be purchased in the name of Sri Radhakrishnaji.
Clause 2 appoints a committee of four persons to look after the , management of the temple and its properties, and of these, two are not relations of the testator and belong to a different caste.
It is further provided in that clause that after the death of the two wives the committee "may appoint my nephew Murlidhar as Mutawalli by their unanimous opinion".
This Murlidhar is a divided nephew of the testator and he is the first defendant in this action.
Clause 3 provides for filling up of vacancies in the committee.
Then finally there is cl. 6, which runs as follows: "If any person alleging himself to be my near or remote heir files a claim in respect of whole or part of the waqf property his suit shall be improper on the face of this deed".
The question is whether the provisions of the will disclose an intention on the part of the testator that the Thakurdwara should be a private endowment, or that it should be public.
The learned Judges of the Chief Court in affirming the decisions of the courts below that the temple was built for the benefit of the members of the family, observed that there was nothing in the will pointing "to a conclusion that the trust was a public one", and that its provisions were not "inconsistent with the property being a private endowment".
We are unable to endorse this opinion.
We think that the will read as a whole indubitably reveals an intention on the part of the testator to dedicate the Thakurdwara to the public and not merely to the members of his family.
The testator begins by stating that he had no male issue.
In Nabi Shirazi vs Province of Bengal (supra), the question was whether a wakf created by a deed of the year 1806 was a public or a private 765 endowment.
Referring to a recital in the deed that the settlor had no children, Khundkar J. observed at p. 217: "The deed recites that the founder has neither children nor grandchildren, a circumstance which in itself suggests that the imambara was not to remain a private or family institution".
Vide also the observations of Mitter J. at p. 228.
The reasoning on which the above view is based is, obviously, that the word 'family ' in its popular sense means children, and when the settlor recites that he has no children, that is an indication that the dedication is not for the benefit of the family but for the public.
Then we have clause 2, under which the testator constitutes a committee of management consisting of four persons, two of whom were wholly unrelated to him.
Clause 3 confers on the committee power to fill up vacancies; but there is no restriction therein on the persons who could be appointed under that clause, and conceivably, even all the four members might be strangers to the family.
It is difficult to believe that if Sheo Ghulam intended to restrict the right of worship in the temple to his relations, he would have entrusted the management thereof to a body consisting of strangers.
Lastly, there is clause 6, which shows that the relationship between Sheo Ghulam and his kinsmen was not particularly cordial, and it is noteworthy that under clause 2, even the appointment of the first defendant as manager of the endowment is left to the option of the committee.
It is inconceivable that with such scant solicitude for his relations, Sheo Ghulam would have endowed a temple for their benefit.
And if he did not intend them to be beneficiaries under the endowment, who are the members of the, family who could take the benefit thereunder after the lifetime of his two wives? If we are to hold that the endowment was in favour of the members of the family, then the result will be that on the death of the two wives, it must fail for want of objects.
But it is clear from the provisions of the will that the testator contemplated the continuance 766 of the endowment beyond the lifetime of his wives.
He directed that the properties should be endowed in the name of the deity, and that lands are to be purchased in future in the name of the deity.
He also provides for the management of the trust after the lifetime of his wives.
And to effectuate this intention, it is necessary to hold that the Thakurdwara was dedicated for worship by members of the public, and not merely of his family.
In deciding that the endowment was a private one, the learned Judges of the Chief Court failed to advert to these aspects, and we are unable to accept their decision as correct.
In the absence of a deed of endowment constituting the Thakurdwara, the plaintiff sought to establish the true scope of the dedication from the user of the temple by the public.
The witnesses examined on his behalf deposed that the villagers were worshipping in the temple freely and without any interference, and indeed, it was even stated that the Thakurdwara was built by Sheo Ghulam at the instance of the villagers, as there was no temple in the village.
The trial Judge did not discard this evidence as unworthy of credence, but he held that the proper inference to be drawn from the evidence of P.W. 2 was that the public were admitted into the temple not as a matter of right but as a matter of grace.
P.W. 2 was a pujari in the temple, and be deposed that while Sheo Ghulam 's wife was doing puja within the temple, he stopped outsiders in whose presence she used to observe purdah, from going inside.
We are of opinion that this fact does not afford sufficient ground for the conclusion that the villagers did not worship at the temple as a matter of right.
It is nothing unusual even in well known public temples for the puja hall being cleared of the public when a high dignitary comes for worship, and the act of the pujari in stopping the public is expression of the regard which the entire villagers must have had for the wife of the founder, who was a pardanashin lady, when she came in for worship, and cannot be construed as a denial of their rights.
The learned Judges of the Chief Court also relied on the decision 767 of the Privy Council in Babu Bhagwan Din vs Gir Har Saroon(1) as an authority for the position that "the mere fact that the public is allowed to visit a temple or thakurdwara cannot necessarily indicate that the trust is public as opposed to private".
In that case, certain properties were granted not in favour of an idol or temple but in favour of one Daryao Gir, who was maintaining a temple and to his heirs in perpetuity.
The contention of the public was that subsequent to the grant, the family of Daryao Gir must be held to have dedicated the temple to the public for purpose of worship, and the circumstance that members of the public were allowed to worship at the temple and make offerings was relied on in proof of such dedication.
In repelling this contention, the Privy Council observed that as the grant was initially to an individual, a plea that it was subsequently dedicated by the family to the public required to be clearly made out, and it was not made out merely by showing that the public was allowed to worship at the temple "since it would not in general be consonant with Hindu sentiments or practice that worshippers should be turned away".
But, in the present case, the endowment was in favour of the idol itself, and the point for decision is whether it was a private or public endowment.
And in such circumstances, proof of user by the public without interference would be cogent evidence that the dedication was in favour of the public.
In Mundancheri Koman vs Achuthan(2), which was referred to and followed in Babu Bhagwan Din v Gir Har Saroon(1), the distinction between user in respect of an institution which is initially proved to have been private and one which is not, is thus expressed: "Had there been any sufficient reason for holding that these temples and their endowment were originally dedicated for the tarwad, and so were private trusts, their Lordships would have been slow to hold that the admission of the public in later times possibly owing to altered conditions, would affect the private character of the trusts.
As it is, they are of (1) [1939] L.R. 67 I.A. 1.
(2) [1984] L.R. 61 I.A. 405.
768 opinion that the learned Judges of the High Court were justified in presuming from the evidence as to public user which is all one way that the temples and their endowment were public religious trusts".
We are accordingly of opinion that the user of the temple such as is established by the evidence is more consistent with its being a public endowment.
It is settled law that an endowment can validly be created in favour of an idol or temple without the performance of any particular ceremonies, provided the settlor has clearly and unambiguously expressed his intention in that behalf.
Where it is proved that ceremonies were performed, that would be valuable evidence of endowment, but absence of such proof would not be conclusive against it.
In the present case, it is common ground that the consecration of the temple and the installation of the idol of Sri Radhakrishnaji were made with great solemnity and in accordance with the Sastras.
P. W. 10, who officiated as Acharya at the function has deposed that it lasted for seven days, and that all the ceremonies commencing with Kalasa Puja and ending with Sthapana or Prathista were duly performed and the idols of Sri Radhakrishnaji, Sri Shivji and Sri Hanumanji were installed as ordained in the Prathista Mayukha.
Not much turns on this evidence, as the defendants admit both the dedication and the ceremonies, but dispute only that the dedication was to the public.
In the court below, the appellant raised the contention that the performance of Uthsarga ceremony at the time of the consecration was conclusive to show that the dedication was to the public, and that as P. W. 10 stated that Prasadothsarga was performed, the endowment must be held to be public.
The learned Judges considered that this was a substantial question calling for an authoritative decision, and for that reason granted a certificate under section, 109(c) of the Code of Civil Procedure.
We have ourselves read the Sanskrit texts bearing on this question, and we are of opinion that the contention of the appellant proceeds on a misapprehension.
The ceremonies relating to dedication are Sankalpa, Uthsarga and Pra 769 thista.
Sankalpa means determination, and is really formal declaration by the settlor of his intention to dedicate the property.
Uthsarga is the formal renunciation by the founder of his ownership in the property, the result whereof being that it becomes impressed with the trust for which he dedicates it.
Vide The Hindu Law of Religious and Charitable Trust by B. K. Mukherea, 1952 Edition, p. 36.
The formulae to be adopted in Sankalpa and Uthsarga are set out in Kane 's History of Dharmasastras, Volume 11, p. 892.
It will be seen therefrom that while the Sankalpa states the objects for the realisation of which the dedication is made, it is the Uthsarga that in terms dedicates the properties to the public (Sarvabhutebyah).
It would therefore follow that if Uthsarga is proved to have been performed, the dedication must be held to have been to the public.
But the difficulty in the way of the appellant is that the formula which according to P. W. IO was recited on the occasion of the foundation was not Uthsarga but Prasadoasarga, which is something totally different.
Prasada ' is the 'mandira ', wherein the deity is placed before the final installation or Prathista takes placer ' and the Prathista Mayukha prescribes the ceremonies that have to be performed when the idol is installed in the Prasada.
Prasadothsarga is the formula to be used on that occasion, and the text relating to it as given in the Mayukha runs as follows: It will be seen that this is merely the Sankalpa without the Uthsarga, and there are no words therein showing that the dedication is to the public.
Indeed, according to the texts, Uthsarga is to be performed only for charitable endowments, like construction of tanks, rearing of gardens and the like, and not for religious foundations.
It is observed by Mr. Mandlik in the Vyavahara Mayukha, Part 11, Appendix II, II,p.
339 770 that "there is no utsarga of a temple except in the case of repair of old temples".
In the, History of Dharmasastras, Volume II, Part II, p. 893, it is pointed out by Mr. Kane that in the case of temples the proper word to use is Prathista and not Uthsarga.
Therefore, the question of inferring a dedication to the public by reason of the performance of the Uthsarga ceremony cannot arise in the case of temples.
The appellant is correct in his contention that if Uthsarga is performed the dedication is to the public, but the fallacy in his argument lies in equating Prasadothsarga with Uthsarga.
But it is also clear from the texts that Prathista takes the place of Uthsarga in dedication of temples, and that there was Prathista of Sri Radhakrishnaji as spoken to by P.W. 10, is not in dispute.
In our opinion, this establishes that the dedication was to the public.
(4)We may now refer to certain facts admitted or established in the evidence, which indicate that the endowment is to the public.
Firstly, there is the fact that the idol was installed not within the precincts of residential quarters but in.
a separate building constructed for that very purpose on a vacant site.
And as pointed out in Delroos Banoo Begum vs Nawab Syud Ashgur Ally Khan(1), it is a factor to be taken into account in deciding whether an endowment is private or public, whether the place of worship is located inside a private house or a public building.
Secondly, it is admitted that some of the idols are permanently installed on a pedestal within the temple precincts.
That is more consistent with the endowment being public rather than private.
Thirdly, the puja in the 'temple is performed by an archaka appointed from time to time.
And lastly, there is the fact that there was no temple in the village, and there is evidence on the side of the plaintiff that the Thakurdwara was built at the instance of the villagers for providing a place of worship for them.
This evidence has not been considered by the courts below, and if it is true, that will be decisive to prove that the endowment is public.
(1) [1875] 16 Ben.
L.R. 167,186.
771 It should be observed in this connection that though the plaintiff expressly pleaded that the temple was dedicated "for the worship of the general public", the first defendant in his written statement merely pleaded that the Thakurdwara and the idols were 'private.
He did not aver that the temple was founded for the benefit of the members of the family.
At the trial, while the witnesses for the plaintiff deposed that the temple was built with the object of providing a place of worship for all the Hindus, the witnesses examined by the defendants merely deposed that Sheo Ghulam built the Thakurdwara for his own use and "for his puja only".
The view of the lower court that the temple must be taken to have been dedicated to the members of the family goes beyond the pleading, and is not supported by the evidence in the case.
Having considered all the aspects, we are of opinion that the Thakurdwara of Sri Radhakrishnaji in Bhadesia is a public temple.
In the result, the appeal is allowed, the decrees of the courts below are set aside, and a declaration granted in terms of para 17 (a) of the plaint.
The costs of the appellant in all the courts will come out of the trust properties.
The first defendant will himself bear his own costs throughout.
Appeal allowed.
| The issue whether a religious endowment is a public or a private one is a mixed question of law and fact the decision of which must depend on the application of legal concepts of a public and a private endowment to the facts found and is open to consideration by the Supreme Court.
Lakshmidhar Misra vs Bangalal ([1949] L.R. 76 I.A. 271), re ferred to.
The distinction between a private and a public endowment is that whereas in the former the beneficiaries are specific individuals, in the latter they are the general public or a class thereof.
757 Though under Hindu law an idol is a juristic person capable of holding property, and the properties endowed for the temple vest in it, it can have no beneficial interest in the endowment, and the true beneficiaries are the worshippers, as the real purpose of a gift of properties to an idol is not to confer any benefit on God, but the acquisition of spiritual benefit by providing opportunities and facilities for those who desire to worship.
Prosunno Kumari Debya vs Golab Chand Baboo ([1875] L.R. 2 I A. 145), Maharaja Jagadindra Nath Boy Bahadur vs Bani Hemanta Kumari Debi ([1904] L.R. 31 I.A. 203), Pramatha Nath Mullik vs Pradhyumna Kumar Mullik ([1924] L.R. 52 I.A. 245) and Bhupati Nath Smrititirtha vs Bam Lal Maitra ([1910] I.L.R. , referred to.
A pious Hindu who was childless constructed a temple and was in management of it till his death.
He executed a will whereby he bequeathed all his lands to the temple and made provision for its proper management.
The question was whether the provisions of the will disclosed an intention on the part of the testator to dedicate the temple to the public or merely to the members of the family.
Hold that the recital in the will that the testator had no sons coupled with provisions for the management of the trust by strangers was an indication that the dedication was to the public.
Nabi Shirazi vs Province of Bengal (I.L.R. [1942] 1 Cal. 211), referred to.
Held further, that the performance of ceremonies at the con secration of the temple (Prathista), the user of the temple and other evidence in the case showed that the dedication was for worship by the general public.
|
Appeal No. 579 of 1965.
Appeal from the judgment and decree dated April 20, 28, 1960 of the Bombay High Court (Now Gujarat High Court) in Appeal No. 172 of 1956 from Original Decree.
N.S. Bindra, M.S.K. Sastri and S.P. Nayar, for the appellant.
S.T. Desai, Y.S. Chitale and D.N. Misra.
for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
In January 1948 in view of the imminent constitutional changes in the Baroda State, it was considered likely that the services of the Diwan Sri Sudhalkar, the appellant and Sri Gaekwad, the three official members of the Executive Council of the State would be prematurely terminated.
The respondent was then 'drawing a salary of Rs. 2,000/ per month and was to retire on February 14, 1952 on reaching the superannuation age of 56 years.
On January 28, 1948 His Highness the Maharaja of Baroda enhanced the respondents salary to Rs. 2,500/ per month.
By separate orders the salaries of other official member 's also were enhanced.
By a Huzur order dated February 8, 1948 the Maharaja fixed the pension and other retirement benefits of the respondent and Sri Gaekwad.
The order was in these terms : "His Highness the Maharaja Saheb has been pleased to order that in the event of premature retirement of the Government Members, Messrs. D.V. Gaekwad and Chandrachud, they will get forthwith as compensation an amount equivalent to the total ,amount they would have received had they continued in service up to.
the date of retirement and a full pension of Rs. 500 per month from the date of the premature retirement.
Mr. D.V. Gaekwad 's salary is raised to Rs. 2,000/ from the date of his confirmation as Naib Dewan.
" On the same date the Maharaja by a separate order fixed the pension and retirement benefits of Sri Sudhalkar.
On May 18, 1948, the Maharaja directed the compulsory retirement of the respondent with effect from June 1, 1948.
Soon thereafter the respondent drew from the State Treasury Rs. 95,196/4/ on account of compensation allowance.
On June 1, 1948 he retired 758 from service.
On the same date Dr. Jivraj Mehta became the Diwan and President of the Executive Council in place of Sri Sudhalkar.
On the representations of Dr. Jivraj Mehta the Maharaja passed another Huzur order on July 22, 1948 modifying his previous orders and directing that the respondent and the other officials would draw pension only as and when they would reach the age of retirement and that the respondent would in addition draw the salary to which he might be eligible under the Account Rules.
In October 1948 there was correspondence touching the Huzur Orders between the Maharaja and Dr. Jivraj Mehta.
On April 22, 1949 the Executive Council of the State of Baroda headed by Dr. Jivraj Mehta purported to review and set ,aside the Huzur Orders with respect to payment of compensation to the retiring officials and directed that (1 ) the respondent would get 4 months ' privilege leave salary and as from April 1, 1949 the pension of Rs. 500/ per month sanctioned by the Maharaja, (2) the amount received by the respondent as compensation be forfeited to the State and returned by him to the Treasury; (3) Rs. 77,416/consequently due from him after taking into account his salary and pension up to March 31, 1949 be recovered from him under section 148 of the Baroda Land Revenue Code.
Pursuant .to thistle the respondent 's properties were attached on April 26, 1949.
The respondent was compelled to refund to the State Treasury Rs. 55,000/ on April 27, 1949 and Rs. 10,000/on April 29, 1949.
On March 14, 1952 the Collector of Baroda sent a notice to the respondent demanding payment of the balance of Rs. 12,416/ .
The respondent continued to draw pension at the rate of Rs. 500/per month from April 1, 1949.
On April 17, 1952 he gave notice of his intention to file the present suit under section 80 of the Code of Civil Procedure.
On June 23, 1952 he instituted the suit against the State of Bombay asking for a declaration that the Huzur order dated FebrUary 8, 1948 ,as modified by the Huzur order dated July 22, 1948 was valid and binding on the defendant, a declaration that the order of the Executive Council dated April 22, 1949 was invalid, an injunction restraining the defendant from recovering Rs. 12,416/ and a decree for Rs. 65,000/ and interest thereon totaling Rs. 77,300/ , future interest and costs.
On August 31, 1955, the Trial Court decreed the suit.
On appeal, the High Court held that the respondent was entitled to recover Rs. 65 '000/ 'only without interest and was liable to refund Rs. 17,250/ drawn on account of pension from April 1.
1949 up.
to February 14, 1952.
Consequently, the High Court reduced the money decree to Rs. 47,750/ give proportionate costs and confirmed the rest of the decree.
The present appeal has been filed by the State of Gujarat after obtaining a certificate from the High Court.
It is necessary at this stage to refer to the constitutional and political changes culminating in the merger of Baroda State in the 759 Province of Bombay.
The Maharaja of Baroda enjoyed internal.
sovereignty in the State under the suzerainty of the British crown.
In 1940 the Maharaja enacted the Government of Baroda Act 1940, (Act No. VI of 1940).
Section 3 provided that Baroda would continue to be governed by the Maharaja and that all rights, authority and jurisdiction appertaining to its government was exercisable by him except as provided in the Act or "as may be otherwise directed by His Highness.
" Section 4 preserved all the Maharaja 's powers, legislative, executive and judicial, in relation to the State and its government and his right and prerogative to make laws, and issue proclamations, orders and ordinances by virtue of his inherent authority.
Section 5 vested the executive ' authority of the State in an Executive Council consisting of the Dewan and other members chosen by the Maharaja and holding office during his pleasure subject to the other provisions of the Act and the directions given by the Maharaja.
Section 18(d) provided that no Bill affecting any order passed by the Maharaja in exercise of his prerogative could be moved in the Dhara Sabha without the previous sanction of the Maharaja.
Section 32(f) provided that pensions and gratuities sanctioned by the Maharaja would be expenditure charged on the revenues of the State.
On August 15, 1947 the Indian Independence Act, 1947 was passed and the paramountcy of the British crown lapsed.
On the same date the State of Baroda acceded to the Dominion of India.
Under the Instrument of Accession the Maharaja of Baroda ceded to the Dominion legislature the power to legislate for the State of Baroda with respect of defence, external affairs and communications.
The advent of independence in India gave momentum to the popular movement for transfer of power from the Maharaja to the people and for formation of a responsible government in the State.
On January 9, 1948 the Maharaja issued a proclamation directing the formation of a body elected on the basis of ,adult franchise frame a Constitution for the State subject to certain reservations and announcing his intention to appoint popular representatives, to the Executive Council.
By another proclamation dated August 25, 1948 the Maharaja announced that (1) the Constitution framing assembly would have full and unrestricted authority to frame a Constitution for the State in respect of all matters and subjects; (2) the entire executive authority of the State would immediately vest in the Executive Council, the Government of Baroda Act would stand amended ,accordingly and the words "or as may be ' otherwise directed by His Highness" occurring in section 3 and the whole of section 4 of the Act would be deemed to be omitted; On September 16, 1948 the Maharaja promulgated the Baroda State Executive Rules.
Rule 6 provided that "the Executive Council shall have the entire executive authority in regard to the administration of the State in ,all matters without any reservation.
" On March 21, 1949 the Maharaja executed the Baroda Merger Agreement whereby ' 760 he ceded to the Dominion Government full authority, jurisdiction and powers for and in relation to the governance of the State and agreed to transfer the administration of the State to the Dominion Government on May 1, 1949.
On May 1, 1949 the administration of the State was made over to the Dominion Government.
As from that date, all sovereign powers of the Maharaja of Baroda ceased and the Dominion Government acquired full and exclusive extra provincial jurisdiction for and in relation to the governance of the State of Baroda.
By a notification No. 101 P dated May 1, 1949 the Central Government in exercise of its powers under section 3(2) of the Extra Provincial Jurisdiction Act, 1947 delegated to the Provincial Government of Bombay its aforesaid extra provincial jurisdiction including the powers conferred by section 4 of that Act to make orders for the exercise of the jurisdiction.
By notification No. 4530/46F of the same date, the Government of Bombay in exercise of the powers conferred by section 4 of the Extra Provincial Jurisdiction Act, 1947 repealed the provisions of the 'Government of Baroda Act excepting sections 1, 2 and 36 to 45 with immediate effect.
On the same date the Government of Bombay promulgated the Administration of the Baroda State Order Paragraph 3 of the Order vested the executive authority of the State in a special commissioner, subject to the supervision and control of the Bombay Government.
Paragraph 4(i)(b) provided for the continuance of (a) of any law, or (b) of any notification, order, scheme, rule, form or bye law issued, made or prescribed under any law as were in force immediately before May 1, 1949 in the Baroda State.
On July 23, 1949 the Government of Bombay promulgated the Bombay State (Application of Laws) Order 1949.
Paragraph 3 of the Order provided for the extension and continuance of certain laws to the Baroda State.
Paragraph 5 repealed sections 1, 2, and 36 to 45 of the Government of Baroda Act and certain other enactments.
Paragraph 5(iii)(a) provided 'that the repeal would not affect any right, title, obligation or liability already acquired, accrued or incurred, or any remedy or proceeding in respect thereof.
On July 27, 1949 the Governor General in exercise of his powers under section 290A of the Government of India Act, 1935 promulgated the States ' Merger (Governors Provinces) Order 1949.
Paragraph 3 of the Order provided that Baroda would be merged in the province of Bombay and administered in all respects as if it formed 'part of that Province.
Paragraph 4 provided for the continuance of laws then in force in the merged State.
Paragraph 7 (1 ) provided that all liabilities in respect of such loans, guarantees and other financial obligations of the Dominion Government as arose out of the governance of a merged State, would as from August 1, 1949 be liabilities of the absorbing Province, unless the loan, guarantee or other financial obligation was relatable to central purposes.
Paragraph 9 provided that any proceedings which if the order had not been passed 761 night lawfully have been brought in the merged State against the Dominion might in the case of any liability arising before August 1, 1949 be brought (a) against the Dominion if the proceedings could have been brought against the Dominion had the liability arisen after that date and (b) otherwise against the absorbing Province.
The questions arising for determination in this appeal are as follows : (1 ) Was the order of the Executive Council dated April 22, 1949 ultra vires its powers and invalid and not binding on the respondent; (2) Was the Government of Baroda liable to pay the sum of Rs. 65,000/ to the respondent; and (3) if so, has the liability devolved upon the State of Gujarat.
The Executive Council Rules made by the Maharaja of Baroda on September 16, 1948 vested in the Executive Council the entire executive authority in regard to the administration of the Baroda State in all matters without any reservation.
The Executive Council had very wide powers, but, in our opinion, they had no authority to override and rescind the Huzur orders passed by the Maharaja himself.
The prerogative and inherent powers of the Maharaja was not delegated to the Executive Council.
The Maharaja was still the sovereign ruler.
The members of the Executive Council were responsible to him and held office during his pleasure.
No appeal lay from his order to the Executive Council On the contrary under Rule 46 of the Privy Council Rules promulgated on December 18, 1947 an appeal lay to the Maharaja from an order passed by the Executive Council.
In view of section 18(d) of the Baroda Constitution Act 1940 even a legislative bill affecting an order passed by the Maharaja in the exercise of his prerogative rights could not be moved in the Dhara Sabha without his previous sanction.
Under section 32(f) pensions and gratuities sanctioned by the Maharaja were charged on the revenues of the State.
The Fluzur order was passed by the Maharaja on February 8, 1948 in the exercise of his prerogative and inherent powers.
The order was executed and the monies were paid under it to the respondent.
The Executive Council had no authority to revoke the Huzur order and to forfeit the monies.
We hold that the order of the Executive Council dated April 22, 1949 was ultra vires its powers and was illegal and not binding upon the respondent.
It is now conceded that the direction in the order dated April 22, 1949 for the recovery of monies under section 148 of the Baroda Land Revenue Code was illegal.
That section did not allow recovery of moneys payable under an order of the Executive 762 Council.
The attachment levied on the respondent 's properties was unlawful.
The recovery of Rs. 65,000/ from the respondent, under the invalid order of the Executive Council cannot be justified as an act of State.
The Courts below rightly found that the respondent was compelled to pay Rs. 65,000/ under coercion.
The result of the illegal recovery was that to the extent of Rs. 65,000/ the Ii, ability of the Baroda Government under the Huzur Order dated February 8, 1948 remained outstanding.
The main question arising in the appeal is whether the liability the Baroda Government under the Huzur order dated February 8, 1948 devolved upon the successor governments after the merger of the Baroda State on May 1, 1949.
The view which currently prevails in this Court is that in cases where the Government of India has acquired the territory of a sovereign Indian State either by conquest, treaty, cession or otherwise the privileges and rights obtained from the predecessor State cannot be enforced by action against the Government of India, see M/s. Dalmia Dadri Cement Co. vs The Commissioner of Income tax(1) (cession of Jind), pema Chibar vs Union of India(a) (conquest of Daman), nor can it be sued in the municipal courts for the debts 'and contractual liabilities of the predecessor, see jagannath Agarwala vs State of Orissa(3) (Cession of Mayrbhunj), Firm Bansidhar Premsukhdeo vs State of Rajasthan(4) (Bharatpur), unless it has chosen, to recognise the right, privilege, debt or liability by legislation, agreement, or otherwise.
The rule extends to the acts of the predecessor State after its accession to the Dominion of India on August 15, 1947 and before its complete merger in the Dominion.
In State of Gujarat vs Fiddali(5) the Ruler of Sant State issued a resolution or Tharao granting certain forest rights on March 12, 1948 after the accession of the State to the Dominion.
On June 10, 1948 he transferred the administration of the State to the Dominion under a merger ,agreement dated March 19, 1948.
The Court held that the Tharao was not binding upon the successor government.
It was said that the Rulers of the Indian States parted with their sovereignty in successive stages, firstly on accession, and finally on merger.
As a result of accession, the Dominion of India acquired power to legislate for the territories of the acceding state in respect of defence, external affairs, and communications.
Under section 5 of the Indian Independence Act the Dominion was as from August 15, 1947 a union comprising the acceding State.
But the acceding State continued to retain its separate existence and individual sovereignty until its complete merger in 'the Dominion.
(1) [1959] S.C.R. 729.
(2) ; (3) ; (4) ; (5) ; 763 The question then is whether the successor governments recognized the rights and liabilities under the Huzur order dated February 8, 1948.
The onus of proving the recognition is upon the respondent, see Valesinghji Joravarsingji vs Secretary of State for India(1).
The recognition "may be either express or may be implied from circumstances and evidence appearing from the mode of dealing with those rights of the new sovereign," see State Gularat vs Fiddali(2).
On behalf of the respondent it was argued that the Huzur Order dated February 8, 1948 was a law and as such was recognised and continued in force by the Government of India.
We axe unable to accept this contention.
A grant made by the Ruler of an Indian State is not a law, see State of Gujarat vs Fiddali(2), 461 (grant of forest rights), R.N. Pratap Singh Deo vs State of Orissa(a) (grant of khorposh allowance), Union of India vs Gwalior Rayon Silk Manufacturing (Weaving) Co.(4) (grant of exemption from taxation), State of Madhya Pradesh vs Lal Bhargavendra Singh(5) (grant of maintenance allowance), nor is an agreement executed by the Ruler a law, see Maharaja Shri Umaid Mills Ltd. vs Union of India(6).
Accordingly, it was held in State of Madhya Pradesh vs Col.
Ram Pal(7) that an order granting retirement pension in relaxation of the State Pension and Gratuity Rules was not a law.
The Huzur order dated February 8, 1948 did not lay down a rule conduct for the official members of the Executive Council generally.
It fixed the retirement benefits of the respondent and of Gaekwad and enhanced Gaekwad 's salary.
A separate order fixed the retirement benefits of Sudhalkar, the other official member.
The order concerning the respondent was an executive act and had none of the characteristics of law unlike other laws it was not published in the Adhya Patrika or the official gazette of Baroda State.
We hold that the order was not a law.
The next question is whether the Baroda merger agreement dated March 21, 1949 recognised the rights and liabilities under the Huzur Order dated February 8, 1948.
Now the Articles of the merger agreement may furnish valuable evidence of the affirmance of rights conferred by the predecessor State, see M/s. Dab mia Dadri Cement Co. Ltd. vs The Commissioner of Income tax(s).
In the State of Madhya Pradesh vs Shyam Lal(9) a recognition of those rights was inferred from articles in merger agreements providing for the continuance of the laws of the merging State and for the taking over its assets and the liabilities by the new State.
In the present case article VIII of the merger agreement (1) (1924) L.R. 51 I.A. 357, 361.
(2) ; at p. 510.
(3) ; (4) ; (5) ; (6) [1963] Supp. 2 S.C.R. 515.
(7) ; (8) [1959] S C.R. 729 at p. 748.
(9) 764 dated March 21, 1951 provided : (1 ) The Government of India hereby guarantees either the continuance in service of the permanent members of the Public Services of Baroda on conditions which will be less advantageous than those on which they were serving before the date on which the administration of Baroda is made over to the Government of India or the payment of reasonable compensation.
(2) The Government of India further guarantees the continuance of pensions and leave salaries sanctioned by His Highness the Maharaja to the members of the public services of the State who have retired or proceeded on leave preparatory to retirement, before the date on which the administration of Baroda is made over to the Government of India.
Clause (2) of article VIII applies to the respondent.
.He was member of the public services of the Baroda State, and he retired before the date of the merger.
It guarantees the continuance of the pension and ' leave salary sanctioned to him by the Maharaja.
Now what does the word "pension" in clause (2) of article VIII mean? Ordinarily the word "pension" means a periodical allowance of money granted by the Government in consideration or recognition of meritorious services.
The word "pension" in the , section 60(1)(g) of the Code of Civil Procedure,1908 and section 6(g) of the implies periodical payments of money by Government to the pensioner, see Nawab Bahadur of Murshidabad vs Karnani Industrial Bank Ltd.(1) Pension, gratuity and provident fund are three distinct types of retirement benefits.
But the word "pension" (pensionem, payment) in its widest etymological sense can be construed as including all payments of every kind and description to a retiring government servant, see Secretary of State vs Khemchand jeychand(2).
The term "pension" is frequently, particularly in recent years, used in the broad sense of retirement allowance or adjusted compensation for services rendered, see Corpus Juris Secundum, Vol. 67, page 331; Vol. 70, page 425.
It has received the wider connotation in the definition sections of many modern statutes.
To give a few illustrations, the word "pension" includes "any payment of a lump sum in respect of a person 's employment", see Fatal Accidents Act, 1959 (7 & 8 Eliz, 2c.
65) section 2(2), "a superannuation allowance", see Midwives Act, 1936 (26 Geo.
5 & 1 Edw.
40) section 2(6), a "gratuity" and a return of contributions to a pension fund with or without interest thereon or any other addition thereto, see Transport Act, 1947, (10 & 11 Geo.
49) section 125(1), Gas Act, 1948 (11 & 12 Geo. 6c.
67) section 74(1).
(1) L.R. (1931) 58 I.A. 215, 219 20.
(2) I.L.R. , 436.
765 Now clause (1 ) of article VIII of the merger agreement guarantees payment of reasonable compensation to officials whose services are dispensed with by the new Government.
Clause 2 guarantees the continuance of pensions and leave salaries sanctioned by the Maharaja to officers who had retired before the date of the merger.
Considering that the object of article VIII is to guarantee payment of retirement benefits to retired public servants of the merged State, we are not inclined to give the word "pensions" a narrow interpretation.
In our opinion, the word "pensions" in clause 2 of article VIII includes the lump sum payable to the respondent as compensation under the Huzur order dated February 8, 1948 as modified by the Huzur order dated July 22, 1948.
In substance, the Huzur order directed that the respondent would get his full salary as his pension from the date of his premature retirement up to the completion of his superannuation age and allowed him to draw immediately the entire allowance for the period in one lump sum.
The allowance so payable to the respondent, a retiring government servant, in recognition of his past services is "pension" within the meaning of cl. 2 of article VIII of the merger agreement.
Article VIII of the merger agreement thus furnishes strong evidence of recognition by the Government of India of the liability to pay retirement compensation under the Huzur order dated February 8, 1948.
We have also noticed that the successor governments continued the old laws of the Baroda State until they were repealed or altered.
The successor governments resisted the respondent 's claim on the ground that the order of forfeiture passed by the Executive Council on April 22, 1949 was lawful.
There was no question of their disclaiming liability under the Huzur order of February 8, 1948 in case it was found that the order of the Executive Council dated April 22, 1949 was invalid.
In the 'circumstances, we hold that the successor governments recognized and took over the liability under the Huzur order dated February 8, 1958.
If so, it is not disputed that the liability has now devolved on the State of Gujarat.
It follows that the Courts below rightly decreed the suit.
This conclusion is sufficient to dispose of the appeal and we express no opinion whether the liability was also recognized by paragraph 4(i)(b) of the Administration of Baroda State Order, paragraph 5(iii)(a) of the Baroda State (Application of Laws) Order, 1949 or paragraph 7 (1 ) of the States ' Merger (Governors ' Provinces) Order, 1949.
In the result, the appeal is dismissed.
There will be no order as to costs in this Court.
R.K.P.S. Appeal dismissed.
| The respondents, who were Hindus filed a suit against the appellants who were Muslims, for a declaration that the Hindu residents of their villages had the right to take out religious and non religious processions.
with appropriate music along the roads and public highways in the: villages, including those by the side of two mosques in the villages.
The appellants contended that in 1931, in proceedings under section 107, Criminal Procedure Code, there was a compromise between the Hindus and the Muslims of the two villages, whereby it was agreed that Hindus would not play music between two land marks near the mosques, and that such a restriction was necessary to enable them to say their prayers in the. mosques.
The trial court held the respondents were bound by the compromise.
The first appellate court also held that the respondents were bound by the compromise, but that the respondents could take the processions between the landmarks with 'music in a low sound except drumbeating.
Both parties appealed to the High Court.
The High Court held, that the respondents were not bound by the compromise, that no restriction could be imposed on the right of the respondents ' community (Hindus) to take out processions with appropriate music, and that the restrictive order of the first appellate court that only low sound music could be played should be set aside.
In appeal to this Court.
HELD: (1) As the compromise was not arrived at in a suit fought.
in a respresentative capacity, it did not debar the parties from asserting, their legal rights in a civil court.
[567 D] Babu Ram Singh vs Subban Mochi, A.I.R. 1929 All. 519, explained.
(2) The respondents have the right to take out both religious and ' non religious processions with accompaniment of music on the roads and highways subject only to (a) an.y order of the local authorities regulating the traffic; (b) any directions of the Magistrate under any law fOE the time being in force; and (c) the rights of the public.
[568 G] Manzur Hasan vs Muhammad Zaman, (1924) 52 I.A.61, applied.
|
Civil Appeal No. 2999 of 1980.
From the judgment and order dated the 22nd April, 1980 of the High Court of Delhi at New Delhi in C.R. Petition No. 336 of 1979.
G.L. Sanghi, Mr. A.K. Verma and section Kashwa for the appellant.
D.D. Thakur, P.H. Parekh, P.K. Menon and R.K. Sharma for the respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The landlord whose application for eviction of the tenant, respondent before us, was rejected by the High Court by reversing the order of the eviction passed by the Additional Rent Controller has come before this Court on obtaining special leave and the short point arising for consideration is as to the true meaning of a clause in the rent deed.
The respondent was admitted into tenancy of the premises in question under a lease deed dated 5th January, 1968.
Clause 12 thereof provided: "That the lessee shall use the premises for the purpose of Residential/Personal office only and Not for commercial purposes".
(underlinings are our own) The landlord, appellant before us, applied to the Controller on March 14, 1972, for eviction of the respondent under Section 14 (1) (e) of the Delhi Rent Control Act, 1958 ( 'the Act ' for short).
The tenant obtained leave to contest and pleaded, inter alia, that the premises were let out both for residential as also office and the composite purpose of the tenancy took the premises out of the purview of residential accommodation.
The Controller did not accept the defence and passed an order for eviction.
Thereupon, the tenant carried a revision to the Delhi High Court and reiterated his defence that the tenancy was not for residential purpose.
The High Court found that there was no infirmity in the finding about the bona fide requirement but adverting to the conclusion on the letting purpose held: "It is well known that premises may be let out for residence only, for use as an office, for use as a shop and for other com 54 mercial purpose.
Once any of the latter purposes is combined with the purpose of use as residence, the premises let out for a composite purpose and for residence only.
The meaning of the word 'office ', not defined in the Act, in the Chamber 's dictionary is a place where business is carried oh.
Office is certainly not residence and a letting purpose which includes office must be understood to include a purpose other than residence only".
And ultimately concluded by saying: "Clause (e) of Section 14(1) is available as a ground to seek eviction of tenants only, among other requirements, if the premises were let out for residence only and once the letting purpose is shown to be composite, an eviction petition under Section 14(1) (e), without more, must fail.
" The High Court rejected the landlord 's submission that the use of the word 'personal ' before 'office ' was intended to convey the idea that the tenancy was not for the purpose of accommodating a place of business.
Counsel for the appellant took us to the terms of clause 12 of the lease agreement and emphasised on the feature that commercial purposes were clearly kept out and the lease was for residence and authorised the location of a personal office.
He also relied upon the description of the premises as residential in the application made by the tenant to the controller for fixation of fair rent in respect of the very premises.
The word 'office ' is used in different senses and in each case that meaning must be assigned to it which conforms with the language used.
In Volume 67, Corpus Juris Secundum at page 96, the following statement appears: "The term 'office ' is one which is employed to convey various meanings, and no one definition thereof can be relied on for all purposes and occasions".
This Court has approved the observation of Lord Wright in Macmillan vs Guest, 1 where it was stated: "The word 'office ' is of indefinite content.
Its various meanings 55 cover four columns of the New English Dictionary. " See Smt.
Kanta Kathuria vs Manak Chand Surana(1).
In this view of the position the High Court was not right in picking one of the meanings given to the word in the Chamber 's dictionary and proceeding to the conclusion that 'office ' is certainly not residence and a letting purpose which includes office must be understood to include a purpose other than residence only.
Section 2(i) of the Act defines 'premises ' to mean "any building or part of a building which is, or is intended to be, let separately for use as a residence or for commercial use or for any other purpose . ." Respondent 's counsel has argued that tenancy under the Act can be for three purpose; (1) residential, (2) commercial and (3) for any other purposes depending upon the use for which the premises are let out.
Conceding that the definition is capable of such an argument being built up, a reference to the pleadings in this case shows that the permission in the rent deed of locating a personal office had been stated to be a commercial purpose.
Great care seems to have been taken by the landlord while inducting the tenant under the rent deed to put a total prohibition to commercial user of the premises.
That is why in clause 12 it has been specifically stated that it is "not for commercial purposes".
In the back drop of such a provision in the lease agreement, the true meaning of the words 'personal office ' has to be found out.
Law is fairly settled that in construing a document the ordinary rule is to give effect to the normal and natural meaning of the words employed in the document itself.
See Krishna Biharilal vs Gulabchand and Ors.
(2) This Court in D.D.A. vs D.C. Kaushish(3) observed: "There (at pages 28 29) 'Construction of Deeds and Statutes ' by Odger 's (5th ed.
1967) the First General Rule of Interpretation formulated is: 'the meaning of the document or of a particular part of it is therefore to be sought for in the document itself '.
That is, undoubtedly, the primary rule of construction to which Sections 90 to 94 of the Indian Evidence Act give statutory recognition and effect.
Of course, 'the document ' means 'the document ' read as a whole and not piecemeal.
56 The rule stated above follows logically from the Literal Rule of Construction which, unless its application produces absurd results must be resorted to first.
This is clear from the following passages cited in Odgers ' short book under the First Rule of Interpretation set out above : Lord Wensleydale in Monypenny vs Monypenny 1 said: "the question is not what the parties to a deed may have intended to do by entering into that deed, but what is the meaning of the words used in that deed; a most important distinction in all cases of construction and the disregards of which often leads to erroneous conclusions".
Brett, L.J. in Re Meredith, ex parte Chick 2 observed : "I am disposed to follow the rule of construction which was laid down by Lord Denman and Baron Parke.
They said that in construing instruments you must have regard not to the presumed intention of the parties, but to the meaning of the words which they have used.
" Since we agree with this exposition of the law reference to the oral evidence or even to the tenant 's documents would be wholly out of place.
The terms of the document if they make any good meaning must be given effect to.
All the provisions of the lease deed have to be read and in fact with the assistance of counsel we have read the same more than once during the hearing.
The parties to the document were anxious enough and took proper care in order to keep the user of the premises confined to residential purpose; that is why it was expressly stipulated in the lease to prohibit commercial user.
Even while permitting an office to be located, equal care was taken to put the word 'personal ' before 'office ' to convey the idea that the tenant would not be entitled to transact official business connected with his avocation.
Although ordinarily an office would mean the place where official business is transacted a personal office in contradistinction to an office simpliciter or a commercial office would be a place where an outsider would not normally 57 be admitted; commercial transactions would not take place; there would be no fixity of the location and the tenant would be entitled to use any portion of the premises as his personal office and the like.
Such a place if referred to as personal office would essentially be residential and obviously while entering into the present lease deed, the parties were not trying to create a lease of premises for any other purposes as now contended by Mr. Thakur for the respondent.
The High Court, therefore, went wrong in reversing the decision of the Rent Controller by merely relying upon clause 12 of the lease deed.
It is relevant to note the description of the premises as given in the lease deed itself.
Paragraph 2 of the document described the premises thus : "The lessor hereby leases to the lessee the following described premises of the entire house built on plot No. 125.
Greater Kailash I, New Delhi comprising of three bed rooms with two bath rooms, drawing cum dining room, one kitchen one front and central veranda, front and back lawn, garage, servant quarter, above garage, a servant W.C. and terrace.
" There was no description of any existing office room and available for such use to the tenant.
nor was space earmarked for any personal office out of this accommodation.
As indicated above it was in the discretion of the lessee to use any part as a personal office.
Every lessee, or for the matter of that every person maintaining an acceptable standard of living does set apart a portion of the accommodation available to him which can answer the description of a personal office.
Mr. Thakur placed reliance on another clause of the lease deed which reads as follows: "That the lessor shall pay all the taxes of any kind whatsoever including house tax, ground rent as are of may hereinafter be assessed on the demised premises by the municipality or any other authority whatsoever provided the premises are used for residence only.
" We do not think the terms of this clause support the stand of the lessee.
As contemplated under the Transfer or Property Act a document of lease normally provides the rights and obligations of both the 58 lessor and the lesses.
In stipulating the rent payable for the use and occupation of the premises the lessor had undertaken the liability of payment of taxes as described therein as long as the premises were used for residence only.
This clause necessarily means that what had been stipulated was only residential user.
It is appropriate to take note of the admission of Mr. Thakur that the lessor had been paying the taxes and the lessee has not been called upon to share the burden.
This clause is an added provision to clinch the point in dispute against the tenant.
We are, therefore, of the view that the High Court clearly erred in law in reversing the decision of the Controller allowing the eviction.
The appeal is allowed and the order of the High Court is set aside and the order of the Additional Rent Controller is restored.
Parties are directed to bear their respective cost throughout.
This is a litigation which began in 1970.
The tenant has been in occupation and continuing for about 14 years now after the application for eviction had been filed.
Ordinarily we would not have allowed any time to the tenant keeping this aspect in view.
But Mr. Thakur has urged upon us to take judicial notice of the fact that these days an alternative premises would be very difficult to find.
We allow time to the tenant until 30th December, 1984 to vacate the premises subject to furnishing usual undertaking within four weeks from today.
In the absence of the undertaking the tenant becomes liable to eviction after four weeks.
S.R. Appeal allowed.
| Prem Chand Sharma was admitted into tenancy of the suit premises under a lease deed dated 5th January, 1968, clause 12, thereof provided.
"That the lessee shall use the premises for the purpose of Residential Personal office only and not for commercial purposes.
" The landlord, appellant, applied to the Rent Controller on March 4, 1972, for eviction of the Respondent under section 14(1) (e) of the Delhi Rent Control Act, 1958.
The respondent tenant obtained leave to contest and pleaded inter alia that the premises were let out both for residential as also for office and the composite purpose of the tenancy took the premises out of the purview of residential accommodation.
The Controller did not accept the defence and passed an order for eviction.
In revision, however, the High Court rejected the land lord 's submission holding that the use of the word "personal" before "office" was intended to convey the idea that the tenancy was not for the purpose of accommodating a place of business and reversed the decision of eviction.
Hence the appeal by the landlord, after obtaining special leave of the Court.
Allowing the appeal, the Court ^ HELD: (1) The word "office" is used in different senses and in each case that meaning must be assigned to it which conforms with the language used.
Therefore, in the instant case, the High Court was not right in picking one of the meanings given in the chamber 's dictionary and proceeding to the conclusion that "office" is certainly "not residence" and a letting purpose which includes office must be understood to include a purpose other than residence only.
[54 A, 55A B] Macmillan vs Guest ; Smt.
Kanta Kathuria vs Manak Chand Surana, , referred to.
52 2:1.
Law is fairly settled that in construing a document the ordinary rule is to give effect to the normal and natural meaning of the words employed in the document itself.
[55 D E] Krishna Biharilal vs Gulab Chand and Others, [1971] Supp.
S.C.R. 27; D.D.A. vs D.C. Kaushish, (1974) 1 S.C.R. 535; Monypenny vs Monypenny, ; ; In re: Meredith, ex parte Chick, , referred to.
In the instant case it is clear that the parties to the document were anxious enough and took proper care in order to keep the user of the premises confined to residential purpose; that is why it was expressly stipulated in the lease to prohibit commercial user.
Even while permitting an office to be located, equal care was taken to put the word 'personal ' before 'Office ' to convey the idea that the tenant would not be entitled to transact official business connected with his avocation.
Although ordinarily an office would mean the place where official business is transacted, a personal office in contradistinction to an office simpliciter or a commercial office would be a place where an outsider would not normally be admitted; commercial transactions would not take place; there would be no fixity of the location and the tenant would be entitled to use any portion of the premises as his personal office and the like.
Such a place is referred to as personal office would essentially be residential and obviously while entering into the present lease deed, the parties were not trying to create a lease of premises for any other purposes.
In para 2 of the document, there was no description of any existing office room and available for such use to the tenant, nor was space earmarked for any personal office out of this accommodation.
It was in the discretion of the lessee to use any part as a personal office.
Every lessee, or for the matter of that every person maintaining an acceptable standard of living does set apart a portion of the accommodation available to him which can answer the description of a personal office.
Even the clause relating to payment of tax by the lessor do not support the stand of the lessee.
As contemplated under the Transfer of Property Act a document of lease normally provides the rights and obligations of both the lessor and the lessee.
In stipulating the rent payable for the use and occupation of the premises the lessor had undertaken the liability of payment of taxes as described therein as long as the premises were used for residence only.
This clause necessarily means that what had been stipulated was only residential user.
In fact, the lessor had been paying the taxes and the lessee had not been called upon to share the burden.
This clause is an added provision to clinch the point in dispute against the tenant.
Therefore the High Court, went wrong in reversing the decision of the Rent Controller by merely relying upon clause 12 of the lease deed.
[55C, 56F G, 57A B, D E, GH, 58 A B] 3.
Though the fact that the tenant has been in occupation for more than 14 years after the litigation began will disentitle him to any further time to vacate, taking judicial notice of the fact that these days an alternative premises would be very difficult to find, the Court considered it appropriate to grant time to the Respondent to vacate the premises upto 31st December, 1984 subject to furnishing usual undertaking within four weeks or to face eviction after four weeks.
|
ivil Appeal Nos.
437 437 and 1460 of 1970.
Appeals by Special Leave from the Judgments and orders dated 24 3 1969 & 10 11 1969 of the Kerala High Court in Writ Appeal Nos, 451/79, 630/69 & 807/69.
A. B. Divan, M. Vellapally and T. M. Ansari for the Appellant in CA 437/70.
M. Vellapally and T. M. Ansari for the Appellant in C.A. 438/ 70.
Kapil Sibal, M. Vellapally and T. M. Ansari for the Appellant in C.A. 438/70.
Kapil Sibal, M. Vellapally and T.M. Ansari for the Appellant in 1460/70.
K. T. Harindranath and K. M. K. Nair for the Respondents in all the appeals.
The Judgment of the Court was delivered by KAILASAM, J.
These three appeals are by special leave granted by this Court against the judgment and order of the High Court of Kerala in Writ Appeals Nos. 451, 630 and 807 of 1969 respectively.
The questions that arise for consideration in all the three appeals and the same and can be dealt with together.
As the facts so far as they are necessary for decision in these appeals are similar, we will confine the judgment to the facts in Civil Appeal No. 437 of 1970.
The appellant in Civil Appeal No. 437 of 1970 is Travancore tea Estates Co. Ltd. Vandiperiyar in Kerala State.
The 1st respondent is the State of Kerala and respondents nos.
2 and 4 are the authorities functioning under the Kerala Motor Vehicles taxation Act (Act 24 of 1963) which will hereafter be referred to as the Act, was brought into force on 1 7 1963.
The Act provides that "a tax at the rates fixed by the Government by notification in the Gazette not exceeding the maximum rates specified i the First Schedule shall be levied on all Motor Vehicles used or kept for use in the State.
" The appellant company owned 17 motor Vehicles, tractors, trailers and lorries all of which are registered in the company 's name under the .
The company alleged that the vehicles were purchased by it solely and exclusively for use in the estates and intended to be used only for agricultural purpose and were not used nor kept for use in the State as contemplated under section 3 of the Act.
The company is a tea plantation having eight estates which lie contiguous to each other and have an extent of 1391 9422.44 acres in the aggregate.
The company for the purpose af plantation are maintaining roads fit for vehicular traffic in the eight estates covering a length of 131 miles in the aggregate on 23rd September, 1964 a Bedford Lorry owned by the company and bearing registration No. KLK 1540 was seized by the police and taken into custody under section 13 of the Act.
According to the appellant the seizure was effected in Tengamullay Estate which is one of the eight estates owned by the company.
The company wrote to the Department on 28 12 1964 stating that the vehicle was being used for agricultural purpose on private roads in the Estates and the company is not liable to pay tax and asked for the release of the vehicle.
On the company paying a sum of Rs. 3,150/ as tax under protest for the period between 1 7 63 to 31 12 94, the vehicle was released.
The department proceeded to prosecute the appellant in the Peermade 1st Class Magistrate 's Court and the case is still pending, The appellant company filed o. P. No. 199/65 before the High Court of Kerala claim in that they were not liable to pay any tax on the motor vehicles.
The High Court by its judgment dt.
3rd March, 1966 directed the Regional Transport officer, Kottayam 2nd respondent herein, to examine the question raised in the writ petition and to pass final orders.
It also directed that if the petitioner was aggrieved with the order he was at liberty to approach the High Court.
In the meanwhile it directed stay of prosecution and collection of tax the matter was taken up for consideration by the 2nd respondent.
The 2nd respondent rejected the pleas of the appellant and by his order dt.
12 4 68 held that the 13 vehicles mentioned in the original Petition were liable to pay was under they act.
The appellant filed a petition before the High Court for appropriate relief.
The High Court disposed of the petition o. P. No. 2173/68 along with o. P No. 2081/68 filed by Peermade Tea Co. who are the appellants in C.A. 438/70 in this Court, by a common order dt.
19th December, 1968.
The learned Judge held that the language in section 3 of the Act showed that there is a departure from the legislative policy of restricting the tax liability only to vehicles using pubic roads.
It held that the tax is imposed by section 3 on alt the motor vehicles used or kept for use in the State irrespective of any question as to whether they are used or kept for G use on pubic roads or not.
It rejected the contention on behalf of the appellant that legislature must be taken to have intended to levy such tax only on motor vehicles using or kept for use on public roads.
The learned Judge also held that the Act is not beyond the competence of the legislative powers of the State as the tax is leviable by the State in respect of all motor vehicles are used or kept for use in the State quite irrespective of any question as whether or not such vehicles are used on public roads.
1392 Aggrieved by the decision of the single Judge the appellant took the matter up on Letters Patent Appeal.
The main contention raised on behalf off the appellant was that the learned single Judge was in error in holding that all motor vehicles used or kept for use in the State quite irrespective of any question as to whether or not they are used on public roads, is erroneous in so far as it related to motor vehicles used or kept exclusively for use in private estate and not used or kept for use on the public roads of the State.
The Letters Patent Bench affirmed the decision of the single Judge and rejected the appeal.
The constitutional validity of the Act was not questioned before the Bench.
Holding that the legislative Entry 57 if the State list only required that the vehicles should be suitable for use on roads and the charging section only provided that the vehicle should be used or kept for use in the State the required conditions were satisfied and there would be no justification for reading into the statute words that and not there, and restricting the levy only on vehicles using public roads.
While not contesting the correctness of the observation of the Bench of the Kerala High Court that the levy cannot be restricted to vehicles using the public roads, it was submitted that the words in section 3 cl.
(1) of he Act "shall be levied on all motor vehicles used or kept for use in the State" should be confined to vehicles used or kept for use on the public roads of the State, and not to vehicles that arc intended to be confined within the premises of the Estate.
In other words the controversy between the parties before the R.T.O. the single Judge of the High Court and the Bench of the High Court can be stated by extracting the question at issue as framed by the R.T.O. "I understand that the roads used by these vehicles (even those within the estates) come under the definition of "Public Roads and Public Place" since at present I have .
not afforded opportunity to the company to refute the basis on which that fact is to be found.
I make it clear that I am not relying on that matter as a basis for this order and I reserve my right to investigate that matter if needed be later.
I assume for argument sake (without conceding) that the estate roads are private roads.
Even in that case, I am of .
the view that the company 's vehicles are liable to pay tax.
It is not in dispute that the vehicles are used and are kept for use within the State (The company roads arc within the Kerala State).
It is also not disputed that the vehicles are registered and their registration certificates are current and they are usable motor vehicles.
The tax levied under the K.M.V.T. Act is a tax on the possession of usable motor 1393 vehicle and it is realised for the propose of State Revenue.
Such being the nature of the levy according to me, I feel that irrespective of the question whether the road on which the vehicle is intended to be used is private or public, the tax is attracted.
" The question that falls for decision is whether on the assumption that the motor vehicles are used or kept for use within the estate, and not intended to be used on public roads of the State; the tax is leviable? In order to appreciate the question raised, it is necessary to refer to the relevant entry in the Constitution, the provisions of the Act and the and the decision relating to the question rendered by this Court.
(Entry 57 in List II of the Constitution relates to taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III.
This entry enables the State Government to levy a tax on all vehicles whether mechanically propelled or not, suitable for use on roads.) (emphasis supplied).
There is no dispute that the vehicles are mechanically propelled and suitable for use on roads.
Section 3 of the impugned Act (Kerala Motor Vehicles Taxation Act (Act 24 of 1963) provides that a tax "shall be levied on all motor vehicles used or kept for use in the State.
" The levy is within the competence of the State legislature as entry 57 in List II authorises by on vehicles suitable for use on roads.
It has been laid down by this Court in "Bolani Ores Ltd. vs Orissa," that under Entry 57 of List II, the power of taxation cannot exceed compensatory nature which must have some nexus with the vehicles using the roads i.e. public roads.
If the vehicles do not use the roads, notwithstanding that they are registered under the Act, they cannot be taxed.
If the words used or kept for use in the State is construed as used or kept for use on the public roads of the State, the Act would be in conformity with the powers conferred on the State legislature under Entry 57 of List II.
If the vehicle are suitable for use on public roads they are liable to be taxed.
In order to levy a tax on vehicles used or kept for use on public roads of the State and at the same time to avoid evasion of tax the legislature has prescribed the procedure.
Sub section 2 of sec.
3 provides that the registered owner or any person having possession of or control of a motor vehicle of which a certificate of registration is current shall for the purpose of this Act be deemed to use or kept such vehicles for use 1394 in the State except during any period for which the Regional Transport Authority has certified in the prescribed manner that the motor vehicle has not been used or kept for use.
Under this sub section there is a presumption that a motor vehicle for which the certificate of registration is current shall be deemed to be used or kept for use in the State.
This provision safeguards the revenue of the State by relieving it from the burden of proving that the vehicle was used or kept for use on the public roads of the State.
At the same time the interest of the bonafide owner is safeguarded by enabling him to claim and obtain a certificate of non user from the prescribed authority.
In order to enable the owner of the vehicle or the person who is in possession or being in control of the motor vehicle of which the certificate of registration is current to claim exempting from tax he should get a certificate in the prescribed manner from the Regional Transport Officer.
Section 5 of the Act provides for exemption from payment of tax under certain circumstances.
It enables the registered owner or the person having possession or control of such vehicle to give previous intimation in writing to the R.T.O. that the vehicle would not be used for such period and at the same time surrender certificate of registration and permit of the vehicle.
Section 6 enables the registered owner or a person in possession or control of such a vehicle to get refund of tax if conditions specified in section 6 are satisfied.
Thus in order to enable the registered owner or person in possession or control of a vehicle to get exemption of tax, advance intimation of the R.T.O. along with the surrender of certificate of registration is necessary.
The provision of section 3, sub sec.
(2) as well as 6. 5 and section 6 are meant to prevent evasion of tax and to provide for exemption from tax in proper cases.
Though the purpose of the Act is to tax vehicles that are used or kept for use on the public roads of the State, the State is entitled for the purpose of safeguarding the revenues of the state and to prevent evasion of the tax, to enact provision like provision as in section 3 raising ' a presumption that the vehicle is used or kept for use in the Situate without any further proof unless exemption is claimed under section 3(2), section 5 and s.6.
It may be observed that reading sections 3, 5 and 6 it is clear that a levy of tax is contemplated only on the vehicles.
that are used or kept for use on the public roads of the state.
`While we agree with the contentions of the learned counsel for the appellant that the tax is only eligible on vehicles used or kept for use on public roads, we must deserve that in order to claim exemption from payment of tax requirements of section 3(2) or sections 5 and 6 should be satisfied.
Surrender of the registration certificate 1395 contemplated under section 5 is for making sure that the motor vehicle is not being put to any use and does not have the effect of annulling the certificate of registration.
If the requirement contemplated under the Act is not satisfied the registered owner or person m possession or control of the vehicle would not be entitled to claim any exemption from payment of tax '.
It remains for consideration as to what is the appropriate order that should be passed on the facts and circumstance of this case.
As a general proposition of law as exemption from payment of tax had not been claimed and obtained as required under this Act, the appellant would be liable to pay tax but as already pointed out and set out clearly in the order of the R.T.O., the question that was raised and disputed was whether on the assumption that the vehicles were kept for use in the states alone and not for use on the public roads of the State, tax is leviable.
The authorities proceeded on the basis that even assuming that the vehicles were not intended to be used on the public roads, they are liable to tax.
In this view, the appellant did not apply for exemption or notify non user as required under the provisions of the Act.
But on the facts and circumstances of the case it is clear that the appellant claimed for exemption from tax on the ground that it was not being used on the public roads.
In the circumstances of the case we have to take it that though, in terms, requirement of sections 3 and 5 have not been complied with, in effect the requirements have been satisfied as the dispute proceeded throughout on that basis.
But as has been specifically stated by the R.T.O., the question whether estate roads are.
public roads is reserved for further investigation and decision.
Equally the R.T.O. will be at liberty to act under section 5(2) of the Act and decline exemption from the liability to pay tax for the relevant period if on verification it is found that the vehicle has been used during that period on the public road.
Before concluding, we would refer to a contention raised by the learned counsel based on the decision of this Court in Bolani Ores Ltd. vs Orissa, (supra).
The plea of the learned counsel is that the word "motor vehicle" should be understood as defined by section 2(18) of the and excluded from taxation motor vehicles "used solely upon the premises of the owner.
" As the vehicles with which we arc concerned were claimed to have been kept for use solely in the premises of the company, it was contended that the vehicles are not exigible to tax.
This Court in the decision cited was dealing with the Orissa Motor Vehicles Taxation Act, 1930.
Section(2c) of the Orissa Taxation Act adopted the definition of Motor vehicles Act as found in Motor Vehicles Act, 1914.
The Motor vehicles Act. ]914 was repealed and replaced by the Motor Vehicles The definition of motor vehicle ' in section 2(18) of the excluded motor vehicles used solely upon the premises of the owner.
The Orissa Motor vehicles Taxation Act was amended and orissa Amendment Act, 1943 re enacted the provisions of the Taxation Act. 'Motor Vehicles ' was defined under section 2(18) of the excluding vehicles used solely upon the premises of the owner.
Subsequently the definition of 'motor vehicle ' under section 2(18) of the was amended by the Act 100 of 1956 which confined the exemption from taxation to "motor vehicles of a special type adopted for use only in a factory or in any other enclosed premises.
" The exemption from tax only be claimed after amendment to section 2(18) by Act, 100 of 1956, if the vehicle was of special type adopted for use only in a factory or in any other enclosed premises and the exemption that was avail able before the amendment by Act 100 of 1956 to Motor Vehicles used solely upon the premises of the owner was taken away.
This Court held "if the subsequent, Orissa Motor Vehicles Taxation (Amendment) Act, 1943, incorporating the definition of`motor vehicle ' referred to the definition of 'motor vehicle ' under the Act as then existing, the effect of this legislative method would, in our view, amount to and incorporation by reference of the provisions of section 2(1) of the Act in section 2(c) of the Taxation Act .
Any subsequent argument in the Act or a total repeal of the Act under a fresh legislation on that topic would not affect the definition of 'motor vehicle ' in section 2(c) of the Taxation Act.
" As a result this Court held that the definition of 'motor vehicle ' given in section 2(18) of the Motor Vehicles Act, 1939 before the amendment by Act 100 of 1956 was applicable.
Relying on this decision, the learned counsel submitted that the test that is to be applied to determine whether motor vehicle is liable to tax or not is whether it comes under the exemption provided by under section 2(18) of the before the amendment.
We are unable to accept the contention mainly on the ground that the Kerala Motor Vehicles Taxation Act, 1963 (Act 24 of 1963) came into force on 18 3 63.
Section 2(1) of the Taxation Act provided that words and expression used but not defined in the Motor Vehicle Act, 1939 (Central Act 4 of 1939) shall have the meaning respectively assigned to them in that Act.
On the date when the Kerala Motor Vehicles Taxation Act was enacted, was amended by Act 10() of 1956 and the amended definition on the date when the Taxation Act came into force exempted only motor vehicles which are of a special type adopted for use only in a factory or in any other enclosed premises.
The amended definition will have to be read into the Taxation Act which was enacted subsequent to the date of the ,.
amendment of the definition of 'Motor Vehicle ' by Act 100 of 1956 1397 In this view we feel that the decision in Bolani 's case (supra) will not be of any assistance to the learned counsel for the appellants.
The appeals are allowed to the extent indicated above.
But in the circumstances there will be no order as to costs.
S.R. Appeals allowed in part.
| The two detenus were carrying Dn business in diamonds and precious stones.
The Customs Officer at Bombay raided their premises and seized a huge quantity of valuables.
During interrogation they claimed that some of the articles seized were not smuggled goods but were locally acquired and gave names of four persons from whom they were acquired.
The detenus were released on bail by the Magistrate on certain conditions.
An order of detention under section 3(i) of the COFEPOSA, 1974 alongwith the grounds of detention was served on the detenus on Feb. 16, 1980.
The wife of the detenu addressed a letter on Feb. 18, 1980 to the first respondent requesting him to furnish the detenus with the materials relied upon by the detaining authority in the grounds of detention.
The detenu received a letter dated March 14, 1980 from the State Government on March 25, 1980 declining the request for supply of copies.
The detenu had also sent a petition through the Central Government on March 11, 1980 complaining the non supply of copies of the necessary documents and also prayed for the revocation of the order of detention.
On April 3, 1980 the Central Government wrote to the detenu that his request for revocation had been rejected, The Central Government, however, advised the State Government to furnish the detenu with the copies of the required documents.
As a result, the copies were received by the detenu on April 3, 1980.
The detenu had also made a representation to the State Government on March 24, 1980 which, according to the information by the counsel of Respondent No. 1, was declined.
The counsel for the detenus challenged the detention order on the grounds; (i) that the detaining authority callously and deliberately refused to supply the copies of the statements and documents relied upon in the grounds of detention, (ii) the detenu had a constitutional right to be afforded a fair and full opportunity to make an effective representation against their detention and his representation dated March 11, 1980, was wrongly rejected by an unauthorised person.
The respondent argued that (i) the substance of the information required had been incorporated in the grounds of detention ! which were served on the detenus, (ii) the supply of further information would have exposed the informants to bodily harm and the information would have adversely affected the investigation and harmed public interest.
344 Accepting the petition ^ HELD: The very fact that soon after the directions of the Central Government copies were ready and despatched to the detenus within three days thereof, shows that there was no physical difficulty in preparing and supplying the copies to the detenus, with due promptitude.
[349A B] It is well settled that "the constitutional imperatives enacted in Article 22(5) of the Constitution are two fold: (i) the detaining authority must, as soon as may be, that is, as soon as practicable after the detention, communicate to the detenu the grounds on which the order has been made and (ii) tho detaining authority must afford the detenu the earliest opportunity of making a representation against the detention order.
In the context 'grounds ' does not merely mean a recital or reproduction of a ground of satisfaction of the authority in the language of section 3, nor is its connotation restricted to a bare statement of conclusion of fact.
Nothing less than all the basic facts and materials which influenced the detaining authority in making the order of detention must be communicated to the detenue.
[350B D] The mere fact that the grounds of detention served on the detenu are elaborate, does not absolve the detaining authority from its constitutional responsibility to supply all the basic facts and materials relied upon in the ground to the detenu.
In the instant case, the grounds contain only tho substance of the statements, while the detenu had asked for copies of tho full text of those statements.
[350E F] Khudiram Das vs The State of West Bengal & Ors. ; referred to.
The statements supplied to the detenus are their subsequent statements in which they have completely resiled from their earlier statements.
It is obvious that the supply of the earlier statements which were entirely in favour of the detenus and the full texts of which have been withheld, could not, by any reckoning, expose those persons to any harm or danger at tho hands of the agents or partisans of the detenus.
If any part of the statements of those witnesses had to be withheld in public interest, the appropriate authority could, after due application of its mind, make an order under clause (6) of Article 22 of the Constitution withholding the supply of those portions of statements after satisfying itself that their disclosure would be against the public interest.
[351 F G] The detaining authority, without applying its mind to the nature of the documents, the copies of which were asked for by the detenus, mechanically refused as desired by the Collector, to supply the copies of all the documents.
It was on receiving a direction from the Central Government that the copies were supplied.
On account of this chill indifference and arbitrary refusal, the detenu, who had applied for copies on Feb. 18, 1980 could get the same only on March 27, 1980 i.e. after more than one month.
Thus, there was unreasonable delay of more than a month in supplying the copies to the detenus of the material that had been relied upon or referred to in the 'grounds ' of detention.
There was thus an infraction of the constitutional imperative that in addition to the supply of the grounds of detention, all the basic material relied upon or referred to in those 'grounds ' must be supplied to the detenu with reasonable expedition 345 to enable him to make a full and effective representation at the earliest.
What is 'reasonable ' expedition is a question of fact depending upon the circumstances of the particular case.
[351 H, 352 A C] In the peculiar facts of the instant case, the delay of more than a month, in supplying the copies of the basic materials and documents to the detenus has vitiated the detention.
[352 C D]
|
Appeals Nos.
966 958 of 1964.
Appeals from the judgment and decree dated September 23.
1959, of the Calcutta High Court in Appeals from Original Decrees Nos.
268 to 270 of 1957.
S.V. Gupte, Solicitor General, A.K. Sen, and D.N. Mukherji, for the appellants (in all the appeals).
A.V. Viswanatha Sastri and S.C. Majumdar, for respondent No. 1.
The Judgment of SUBBA RAO and SHAH JJ. was delivered by SHAH, J. BACHAWAT, J. partially dissented.
Shah, J.
This group of appeals arises out of suits Nos. 79 and 80 of 1954 and 67 of 1955 filed by the first respondent Balai Chand Ghose (who will hereinafter be called "Balai") in the Court of the Eighth Subordinate Judge, Alipore, District 24 Parganas, West Bengal.
In Suits Nos. 79 and 80 of 1954 Balai prayed that he be declared owner of the properties described in the schedules annexed to the respective plaints.
In suit No. 67 of 1955 he claimed that it be declared that his wife Nirmala, is a benamidar for him and that the deed of dedication dated September 15, 1944 did not amount to an absolute dedication of the properties in suit to the deities Sri Satyanarayan Jiu & Sri Lakshminarayan Jiu and that the plaintiff is the sole Shebait of the two deities.
The Trial 552 Court decreed suits Nos.
79 & 80 of 1954 holding that the plaintiff was the owner of the disputed properties and the deed of endowment Ext.
11 (a) executed on March 8, 1939 by Nirmala was "sham and colourable".
In suit No. 67 of 1955 the Subordinate Judge declared that Nirmala was a benamidar of Balai of the properties in suit and the deed of endowment dated September 15, 1944, Ext.
11, did not amount to absolute dedication of the properties to the deities Sri Satyanarayan Jiu and Sri Lakshminarayan Jiu.
The High Court of Judicature at Calcutta, in exercise of its appellate jurisdiction, modified the decrees passed by the Trial Court.
The High Court held that the deed Ext.
11(a) was not sham, but it amounted to a partial dedication in favour of the deity Sri Gopal Jiu i.e. it created a charge on the properties endowed for the purposes of the deity mentioned in the deed.
The decree passed in suit No. 67 of 1955 from which appeal No. 269 of 1957 arose was dismissed subject to the "clarification or clarifications" that it created only a charge in favour of the city or deities for the purposes recited therein and that subject to the charge, the properties belonged to Balai.
With certificates of fitness granted by the High Court, these three appeals have been preferred.
[After stating the facts which gave rise to the appeals His Lordship proceeded] We may briefly set out the terms of the deed Ext.
II(a).
It is described as a deed of dedication in respect of immovable properties valued at Rs. 20,000 for the Seba of the deity.
After describing the properties it is recited that the settlor was in possession and enjoyment of the properties and that she dedicated the properties for Deb Seba.
The deed then recites that the settlor had been carrying on the Seba of Sri Gopal Jiu installed by her husband, and that the properties dedicated by her husband were not sufficient for satisfactorily carrying on the Seba of Sri GopaI Jiu for ever and for perpetuating the names of her father in law and mother in law and for carrying on the work of worship of the deity of Sri Gopal Jiu regularly for ever, the provisions then set out were made.
The deed proceeds ,to state: "I dedicate the above mentioned two properties more fully described in the schedule below in order that the daily and periodical Seba etc.
of the said Sri Sri Gopal Thakur installed by my husband may go on regularly.
From this day the said two properties become the Debuttar properties of the said 'deity Sri Sri Gopal Jiu Thakur and they vest in it in a state absolutely free from encumbrances and defects.
The said deity Sri Sri Gopal Jiu becomes the full owner of the said two properties.
As to this neither I nor any of my heirs and legal representatives in ' succession shall raise or be 553 entitled to lay any claim or demand at any time and even if it be done it shall be wholly void and rejected".
Then the deed directs that "one good temple and ornaments worth approximately Rs. 500/ for Sri Gopal Jiu Thakur will be made out of the income of the Debuttar properties of Sri Gopal Jiu Thakur and on the temple being constructed, the deity will be installed and established therein and the expenses for worship etc.
and entertaining Brahmins and other expenses in connection with the ceremony shall be met out of the income of the Debuttar properties of Sri Gopal Jiu Thakur".
To meet the expenses for the worship of the deity the properties described in the schedule, it was directed, will be let out on rent and all the expenses of the deity will be derrayed out of the rents, that the Shebait shall maintain proper accounts of the income and expenditure and deposit in the deity 's fund any surplus, repair the houses yearly, pay municipal taxes etc., and out of the accumulations from the surplus income purchase immovable properties in the name of the deity and with the income erect a house at 153, Beliaghata Main Road and deposit the rent from that house in the Debuttar fund.
The deed gives detailed directions with regard to succession to the Shebaitship.
By the deed Nirmala and her husband Balai were constituted joint Shebaits and it was directed that after Nirmala 's death Balai shall be the Shebait, and after his death his two sons Paresh and Naresh will become Shebaits of the deity.
The settlor expressed the hope that the two Shebaits and their lineal descendants will live in the same mess as members of the family and directed that any one who separated in mess will not be entitled to be a Shebait of the deity but if they separated in mess for want of accommodation "out of their own accord and being unanimous", and all the properties remain joint, they shall be entitled to remain Shebaits.
On the death of the two sons, Paresh and, Naresh, their sons will become Shebaits in accordance with the shares of their respective fathers in the Shebaitship, and if any of the sons have more than one son then all such sons will together get their father 's turn of worship and will act in accordance with the terms of the deed and carry on the worship of the deity and that in the absence of sons, the settlor 's great grandsons will be appointed Shebaits, and they will protect the Debuttar property.
The deed then directs that the daily Seba will be carried on in the same manner prescribed in the deed of dedication relating to the Debuttar created by Balai and the daily and periodical expenses for the worship of the deity will be met out of the Debuttar properties dedicated by Balai.
Provision was then made that on the occasion of each of the festivals of Janmastami.
Rasjatra and of Sri Gopal Jiu Thakur a sum of Rs. 101/ will be spent by the Shebaits for entertaining Brahmins and the poor.
A monthly remuneration of Rs. 25/ is provided for the person who acts as a Shebart and it is directed that so long as the sons shall remain Shebaits in joint mess, they will get, for the 554 expenses of their common family expenses four maunds of rice, two maunds of flour per month and Rs. 2/ per day "for daily expenses".
An additional amount of Rs. 10/ per month is directed to be spent on the Sankranti day i.e. on the last day of each month and Rs. 51/~ on the occasion of Sivaratri out of the Debuttar estate.
All these expenses, it is directed, are to be met out of the house rents and the monthly Ticca rent of the lands of the Bustee of the Debuttar properties, but the Shebaits are not entitled to let out the house or land in permanent rights to any one nor are they entitled to mortgage, make a gift of, sell, encumber or transfer the same in any other manner, and if there be no tenant in the house or the rent of the Bustee be not realised, the expenses of the deities will be reduced and the Shebaits will get reduced remuneration proportionately.
Provision is made for the devolution of the office of Shebait.
Descendants in the female line are excluded from Shebaitship, until the entire male line is extinct.
Provision is also made for application of the compensation received for Debuttar property: it is directed that out of the amount of compensation immovable properties will be purchased by the Shebaits in the name of the deity or the amount will be invested in Government paper in the name of the deity, and out of the interest thereof disbursements directed in the deed will be made.
The deed then directs that the surplus amount remaining after meeting the cost of worship will be accumulated.
The Shebaits are prohibited from residing in or otherwise using the houses appertaining to the Debuttar estate and it is directed that if any one resides or uses it, he will remain bound to pay proper rent.
Paragraph 12 of the deed then provides: "If in future the Shebaits be in want of rooms for their residence then each of them will take three Cottahs of land within the Bustee No. 153, Beliaghata Main Road beginning from the southern extremity and after erecting houses thereon at his own expense will continue to enjoy and possess the same down to his sons, sons and other heirs in succession on payment of a rent of Rs. 2/ per Cottah per month to the Debuttar estate and will pay for taxes, rents and repairs etc.
of the said house from their respective funds".
In the event of any Shebait dying sonless after constructing a house, his widow will be entitled during her lifetime to reside in the house and will also be entitled to get food and Rs. 5/ per month as expenses.
The deed then again states: "Be it stated that no one will at any time be entitled to make gift, sale or transfer in respect of the house built in the said Bustee.
The said house will form a part of the Debuttar estate and the Shebait will only remain in possession of the same".
555 Finally, the deed states that to the effect stated in the deed the settlor gives to Sri Iswar Gopal Jiu Thakur installed by her husband "the properties etc.
mentioned in the schedule below".
In the preamble as well as in the operative part of the deed, it is stated that the settlor has dedicated the properties described in the schedule to the deed for the purpose of carrying on the worship of Sri Gopal Jiu Thakur.
The deed expressly recites that the properties have, by the deed of dedication, become the properties of the deity and they vest in the deity absolutely free from all encumbrances, and that no other person has any right therein.
The deed undoubtedly contains some inconsistent directions, but the predominant theme of the dedication is that the estate belongs to the deity Sri Gopal Jiu and that no one else has any beneficial interest therein.
The plea raised by Balai in the two suits was that the deed of dedication Ext.
11 (a) was "a mere colourable one and was never acted upon" and that by the deed a cloud was "cast on" his title.
The Trial Court accepted the plea.
The High Court held that the deed was valid, but thereby only a partial dedication was intended.
That there is a genuine endowment in favour of the deity Sri Gopal Jiu is now no longer in dispute.
The only question canvassed at the Bar is whether the dedication is partial or complete.
Balai contends that it is partial: the deity represented by Nirmala contends that it is absolute.
Where there is a deed of dedication, the question whether it creates an absolute or partial dedication must be settled by a conspectus of all the provisions of the deed.
If the property is wholly dedicated to the worship of the idol and no beneficial interest is reserved to the settlor, his descendants or other persons, the dedication is complete: if by the deed what is intended to create is a charge in favour of the deity and the residue vests in the settlor, the dedication is partial.
Counsel for Balai contends that notwithstanding the repeated assertions in the deed of dedication that the property was endowed in favour of Sri Gopal Jiu and that it was of the ownership of the idol, the deed contained diverse directions which indicated that the dedication was intended to be partial.
Counsel relied upon the following indications in the deed in support of the contention: (1) A hereditary right was granted to the lineal descendants of the settlor in the male line to act as Shebaits, and provision was made for their residence, maintenance and expenses.
This was not restricted to the Shebaits only, but enured for the benefit of the members of the Shebaits ' families.
(2) The income of the endowed property was in excess of the amounts required for the expenses of the deity.
Expenses of the deity were, it was contended, static, whereas the income was expanding, leaving a large 556 surplus undisposed of.
Provision was made for reducing the expenses of the deity in the event of the income of the property contracting.
(3) The deed was supplementary to another deed executed by Balai for the benefit of the deity, and the expenses of the deity were primarily to come out of the property endowed under that deed.
(4) Direction for accumulation of income of the property endowed, and other properties which may be acquired, without any provision for disposal of the accumulation disclosed an intention on the part of the settlor to tie up the property in perpetuity for the benefit of the male descendants subject to a fixed charge in favour of the deity.
We do not propose to express any opinion on the validity or otherwise of the directions, under which provision for accumulation of income is made or benefit is given to persons other than the Shebaits are concerned.
This enquiry is only directed to the question whether on the assumption that the directional are valid, they indicate an intention on the part of the settlor to create merely a charge on the estate endowed, reserving the beneficial interest in the settlor or her heirs.
A reasonable provision for remuneration, maintenance and residence of the Shebaits does not make an endowment bad, for even when property is dedicated absolutely to an idol, and no beneficial interest is reserved to the settlor, the property is held by the deity in an ideal sense.
The possession and management of the property must, in the very nature of things, be entrusted to a Shebait or manager and nomination of the settlor himself and his heirs with reasonable remuneration out of the endowed property with right of residence in the property will not invalidate the endowment.
A provision for the benefit of persons other than the Shebait may not be valid, if it infringes the rule against perpetuities or accumulations, or rules against impermeable restrictions, but that does not affect the validity of the endowment.
The beneficial interest in the provision found invalid reverts to the deity or the settlor according as the endowment is absolute or partial.
If the endowment is absolute, and a charge created in favour of other persons is invalid the benefit will enure to the deity, and not revert to the settlor or his heirs.
Evidence about the income of the endowment in favour of Sri GopaI Jiu is somewhat vague and indefinite.
The deed of endowment executed by Balai for the deity to which the present deed Ext.
11 (a) is supplementary is not before the Court, and there is on the record no evidence about the income from that endowment and the directions made thereunder.
The defect in the record is directly traceable to the nature of the plea raised by Balai in the 557 Court of First Instance.
He had pleaded that the endowment Ext.
11 (a) made by his wife Nirmala was a "sham transaction" and was not intended to create any interest in the deity: it was not the case of Balai that the endowment though valid was partial and created a mere charge upon the property in favour of the deity.
Suits Nos.
79 & 80 of 1954 were tried with suit No. 67 of 1955 and the question whether the endowment in favour of Sri GopaI Liu was partial or absolute appears to have been raised without any pleading in the former suits.
There is, however, some evidence on this part of the case, to which our attention has been invited, and on which the argument to support the decree passed by the High Court is rounded by counsel for Balai.
Under the deed of dedication Ext.
11(a) "one good temple and ornaments worth apapproximately Rs. 500" are to be provided for out of the property endowed.
Janamashtami, Rasjatra and other festivals are to be annually celebrated and in respect of each of these festivals Rs. 101/ are to be expended.
The Shebait 's remuneration is fixed at Rs. 25/ per month and for the benefit of the family of the Shebait four maunds of rice, two maunds of Atta and a sum of Rs. 2/per day for the daily expenses are provided.
For performing the Seba of Sri Satyanarayan Jiu on Sankranti day every month Rs. 10/ have to be spent, and Rs. 51/ have to be spent on the Sivaratri day.
Provision has been made for paying Rs. 2/ per month to a pious widow of the family for helping in the Puja and to a widow of a Shebait expenses at the rate of Rs. 5/ per month have to be paid.
In the aggregate, these would amount to Rs. 2,400/per annum at the rates prevailing in 1939.
Income at the date of the endowment from the Bustee land 153/1 was estimated by Nirmala to be Rs. 50/ per month, and income from the house Nos. 155 & 154/2 was estimated at Rs. 200/ .
There is no clear evidence about the Municipal or other taxes, rent collection expenses and repairs.
But on the materials found on the record, the plea that the income of the properties was largely in excess of the total expenses to be incurred cannot be accepted.
The settlor had provided that if a Shebait is unable to reside in the house, he will be entitled to get a plot of land out of premises No. 153 at the rate of Rs. 2/ per month: whether this rent was nominal or real, need not be investigated.
If provision for residence of the Shebait can be made under a deed of endowment without affecting its validity, a provision whereby the Shebait will be entitled to use the land belonging to the deity at specially low rates may not by itself amount to an impermissible reservation by the settlor.
The plea that this was a simulate endowment has been abandoned by Balai.
Assuming therefore that the charge for rent to be levied from the Shebaits as monthly rental was nominal, the validity of the deed of dedication will not on that ground be affected.
Use of land in future by the Shebaits for erecting houses will undoubtedly reduce the land available for letting out at market P(N4SCI 9 558 rates.
If the annual income of the deity was Rs. 3,000/ per annum, and some income under the deed of endowment executed by Balai, and the outgoing were Rs. 2,400/ beside taxes, collection charges for rents and the expenses for repairs, it would be reasonable to hold that there was not much disparity between the total income which the deity received in 1939 and the estimated outgoing.
The fact that on account of the pressure on land increasing in the town of Calcutta, the rentals of immovable property may have gone up later, will be irrelevant in deciding whether a substantial residue was not disposed of by the deed.
The direction in paragraph 6 of the deed that in the event of the rent not being realised, the expenses of the deity will be proportionately reduced and there will be proportionate reduction in the remuneration to be paid to the Shebaits also acquires significance.
Whether the provision for accumulation of income of the endowment is valid, does not call for determination in this case.
If there is an absolute dedication, but the direction for accumulation is invalid, the benefit of the income will enure for the benefit of the deity without restriction: the income will not revert to the settlor.
The High Court observed that the deed commenced with what purported to be an absolute dedication to the deity, but it was clear that the expenses for the Seba Puja and other expenses of the deities under the deed were not of an expanding character, there being specific recitals in the deed which indicated that the dedication was merely supplementary to the earlier deed of endowment by Balai for the Seba Puja etc.
of the deity.
The High Court observed: "As a matter of fact there was specific recital in the deed itself, which indicated that it was merely to be supplementary to the earlier Debuttar deed of the husband Balai Chand Ghose, for the purpose of enabling the said Sheba Puja etc.
to be carried on regularly and in a satisfactory manner.
The expenses are practically all mentioned in the deed itself and however elaborate they may be, having regard to the nature of the properties and the estimate of the income, as appearing in the evidence before us, it is difficult to hold that any large part of said income would be spent on those expenses.
This, undoubtedly, is a strong test in favour of holding that what was merely the creation of a charge for those expenses out of the properties, mentioned in the Schedule to the deed.
Moreover under this deed (Ext.
II(a)) (Vide clause 3) so far as the daily and periodical Shebas were concerned their expenses, or at least, the daily Sheba expenses, both fixed and occasional, were to be met out of the husband 's (Balai Chand 's) ' earlier Debuttar 559 thus leaving practically not much pressure upon the properties covered by this deed, Ext. 11 (a).
It is true that in several places of this deed (Ext. 11 (a), reference has been made to the income of the Debuttar estate or advantages to the Debuttar estate or investment, in the Debuttar estate, but they all, in the context, can be read as referring to the Debuttar estate, which was created by the dedication in question, namely, the partial Debuttar or the charge which was created in favour of the particular deity.
Where a charge is created and a dedication is made, it will not be inappropriate to refer to the dedicated properties as Debuttar, though only for the limited purpose of providing for that charge.
That, indeed, is the meaning of partial dedication, as understood in H indu Law.
The mere use of the word 'Debuttar ' would not necessarily constitute a particular endowment an absolute Debuttar.
On the same principle and in same context, the payment of rent by the Shebaits, occupying particular portion of the dedicated properties for purposes of their residence, may also be explained.
As a matter of fact on a reading of the entire deed, in the light of the circumstances of this case and upon a full consideration of the same, we are inclined to hold this deed, Ext.
11(a).
upon its true construction, did not create an absolute Debuttar, but created only a charge in favour of the deity Sri Sri Gopal Jiu, named therein, for the various services and other necessities, referred to in several paragraphs of the said deed, Ext.
11(a)".
The High Court opined that because the income of the endowed properties was large and was capable of continuous expansion, and the expenses for the purposes of the deity were fixed, it may be inferred that the settlor intended to create a mere charge and not an absolute dedication in favour of the deity.
In support of this proposition, the High Court placed strong reliance upon the judgment of the Judicial Committee in Surendrakeshav Roy vs Doorgasundan Dassee and Another(1).
In that case Rajah Bijoykeshav Roy bequeathed by his will property to a Thakur, to secure proper performance of the Sheba and other ceremonies and directed his two widows each to adopt a son, both of such sons being appointed Shebaits, subject to the control of the widows during their minority, with monthly allowance from the surplus income.
The residue was not disposed of.
Before the Judicial Committee it was urged that all the property had been devised under the will of the Raja to the deity and the heirs of the settlor had become Shebaits and were merely entitled to manage the property in the usual way.
In dealing with that contention the Judicial Committee observed at p. 127: (1) L.R. 19 I.A. 108, 560 "It is true that by the first sentence of the will all is given to the Thakoor; and though in the plaint the question is mooted whether the gift is made bona fide (and of course such gifts may be a mere scheme for making the family property inalienable), it has not been really disputed.
Nor indeed could it well be disputed in this case.
For the last part of the will shews clearly enough that the income was to be applied first in performing the sheba of the Thakoor who is mentioned as the object of the gift, and of other family Thakoors, and in meeting the prescribed monthly allowances, and in performing the daily and fixed rites and ceremonies 'as they are now performed and met '.
The testator must have been well aware that after all these charges had been met there would be a very large surplus.
In fact he directs that out of the surplus each adopted son shall receive Rs. 1,000/ monthly; but of the residue after that he says nothing.
There is no indication that the testator intended any extension of the worship of the family Thakoors.
He does not, as is sometimes done, admit others to the benefit of the worship.
He does not direct any additional ceremonies.
He shews no intention save that which may be reasonably attributed to a devout Hindu gentleman, viz. to secure that this family worship shall be conducted in the accustomed way.
by giving his property to one of the Thakoors whom he venerates most.
But the effect of that, when the estate is large, is to leave some beneficial interest undisposed of, and that interest must be subject to the legal incidents of property".
But the judgment does not lay down any rule that where the income is expanding and the expenses are static, leaving a substantial residue, it must be presumed, notwithstanding the comprehensive and unrestricted nature of the disposition, that the settlor intended to create only a charge in favour of the deity.
The question is always one of intention of the settlor to be determined from a review of all the dispositions under the deed of settlement.
In Sri Sri Iswari Bhubaneshwari Thakurani vs Brojonath Dey and Others(1) certain properties were dedicated by two brothers to a domestic deity and it was directed that the right of Shebait should go to their male heirs by primogeniture.
In dealing with a dispute whether under the deed of settlement, there was an absolute dedication to the deity, the Judicial Committee observed at p. 211: "The dedication is not invalidated by reason of the fact that members of the settlor 's family are nominated as (1) L.R. 64 I.A 203, 561 Shebaits and given reasonable remuneration out of the endowment and also rights of residence in the dedicated property.
In view of the privileges attached to dedicated property it has not infrequently happened, as the Law Reports show, that simulate dedications have been made, and a close scrutiny of any challenged deed of dedication is necessary in order to ascertain whether there has been a genuine divestiture by the settlor in favour of the idol.
The dedication, moreover, may be either absolute or partial.
The property may be given out and out to the idol, or it may be subjected to a charge in favour of the idol. 'The question whether the idol itself shall be considered the true beneficiary, subject to a charge in favour of the heirs or specified relatives, of the testator for their upkeep, or that, on the other hand, these heirs shall be considered the true beneficiaries of the property, subject to a charge for the upkeep, worship and expenses of the idol, is a question which can only be settled by a conspectus of the entire provisions of the will ', Pande Har Narayan vs Surju Kanwari (L.R. 43 1.A. 143).
It is also of importance to consider the extent of the property alleged to be dedicated in relation to the expense to be incurred and the ceremonies to be observed in the worship of the idol.
The purposes of the ,dedication may be directed to expand as the income increases, or the purposes may be prescribed in limiting terms so that if the income increases beyond what is required for the fulfilment of these purposes it may not be protected by the dedication".
In a recent judgment of this Court in Sree Ishwar Sridhar Jew vs Sushila Bala Dasi and Others(1) it was observed.
that the question whether the idol itself is the true beneficiary subject to a charge in favour of the heirs of the testator, or the heirs are the true beneficiaries subject to a charge for the upkeep, worship and expenses of the idol, has to be determined by a conspectus of the entire deed or will by which the properties are dedicated and that a provision giving a right to the Shebaits to reside in the premises dedicated to the idol for the purpose of carrying on the daily and periodical worship and festivals does not detract from the absolute character of a dedication to the idol.
It is inexpedient to construe the terms of one deed by reference to the terms of another, or to lay down general rules applicable to the construction of settlements varying in terms.
In construing a deed, the Court has to ascertain the intention of the settlor, and for that purpose to take into consideration all the (1) ; 562 terms thereof.
If, on a review of all the terms, it appears that after endowing property in favour of a religious institution or a deity, the surplus is either expressly or by implication retained with the settlor or given to his heirs, a partial dedication may readily be inferred, apparently comprehensive words of the disposition in favour of the religious.
endowment notwithstanding.
The terms of Ext.
11 (a) however disclose a clear intention that the entire property was to belong to the deity and no one else had beneficial interest or title thereto.
The Shebaits and their descendants are given a certain interest in tile property, but that direction does not cut down the absolute interest conveyed to the deity, nor can it be interpreted as reserving a beneficial interest in favour of the settlor or his heirs.
The direction operates to create a charge upon the estate of the deity, and not to reduce the estate itself to a charge.
To recapitulate, therefore, the property is dedicated absolutely for the deb seba of the deity: no beneficial interest is reserved to the settlor or his heirs: and the direction for accumulation of the income does not affect the validity of that dedication.
Provision for maintenance and residence of the Shebaits being an ordinary incident of such a dedication cannot be interpreted as restrictive of the estate of the deity.
It is unnecessary to decide whether the directions for appropriation of a part of the income for persons other than the Shebails may be valid; if it be invalid, the interest will revert to the deity and not to the settlor.
It must, therefore, be held that Ext.
11 (a) creates an endowment for the benefit of the deity absolutely, subject to certain charges in favour of the Shebaits and the descendants of the settlor.
It is unnecessary, in view of the course which the proceedings in suit No. 67 of 1955 have taken, to set out the terms of Ext.
11 executed by Balai and Nirmala on September 15, 1944.
Suit No. 67 of 1955 was filed originally by Balai against the two deities Sri Satyanarayan Jiu and Sri Lakshminarayan Jiu and Nirmala, and Balai sought to represent the two deities.
On an objection raised to the constitution of the action by Nirmala, Sunil Sekhar Bhattacharjee was appointed guardian of the two deities for the action.
Bhattacharjee filed a written statement denying the claim made by Balai and submitted mat the dedication in favour of the deity was absolute.
An issue was raised about the nature of the endowment and the Trial Court declared that the endowment was partial and the beneficial interest remained vested in Balai.
The Trial Court had rejected the case of the deities that there was an absolute dedication, and the guardian for the suit did not challenge that decree on behalf of the two deities.
Nirmala appealed and contended that there was an absolute dedication in favour of the deity, but she did not represent the deities and could not raise that claim, unless she got herself formally appointed guardian of the deity by order of the Court.
The High Court confirmed the decree passed 563 by the Trial Court, subject to certain modifications which are not material.
In this appeal, the two deities are also impleaded as party respondents, but the deities have not taken part in the proceeding before this Court, as they did not in the High Court.
The decree against the two.
deities has become final, no appeal having been preferred to the High Court by the deities.
It is not open to Nirmala to challenge the decree insofar as it is against the deities, because she does not represent the deities.
The rights conferred by the deed Ext.
11 upon Nirmala are not affected by the decree of the Trial Court.
She is not seeking in this appeal to claim a more exalted right under the deed for herself, which may require reexamination even incidentally of the correctness of the decision of the Trial Court and the High Court insofar as it relates to the title of the deities.
It was urged, however, that apart from the claim which Nirmala has made for herself, the Court has power and is indeed bound under O. 41 r. 33 Code of Civil Procedure to pass a decree, if on a consideration of the relevant provisions of the deed, this Court comes to the conclusion that the deed operates as an absolute dedication in favour of the two deities.
Order 41 r. 313, insofar as it is material, provides: "The Appellate Court shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties although such respondents or parties may not have filed any appeal or objection:" The rule is undoubtedly expressed in terms which are wide, but it has to be applied with discretion, and to cases where interference in favour of the appellant necessitates interference also with a decree which has by acceptance or acquiescence become final so as to enable the Court to adjust the rights of the parties.
Where in an appeal the Court reaches a conclusion which is inconsistent with the opinion of the Court appealed from and in adjusting the right claimed by the appellant it is necessary to grant relief to a person who has not appealed, the power conferred by O. 41 r. 33 may properly be invoked.
The rule however does not confer an unrestricted right to re open decrees which have become final merely because the appellate Court does not agree with the opinion of the Court appealed from.
The two claims made against Nirmala and the deities in suit No. 67 of 1955, though capable of being joined in a single action were distinct.
Against the deities it was claimed that the property was partially dedicated in their favour; against Nirmala it was 564 claimed that she was merely a benamidar for the settlor Balai and that she was not a Shebait under the deed of settlement.
The High Court has passed a decree declaring that dedication in favour of the deities is partial and has further held, while affirming her right to be a Shebait that Nirmala was merely a benamidar in respect of the properties settled by the deed.
There was no inconsistency between the two parts of the decree, and neither in the High Court nor in this Court did Nirmala claim a right for herself which was larger than the right awarded to her by the decree of the Trial Court.
In considering the personal rights claimed by Nirmala under the deed Ext.
11, it is not necessary, even incidentally, to consider whether the deities were given an absolute interest.
There were therefore two sets of defendants in the suits and in substance two decrees though related were passed.
One of the decrees can stand apart from the other.
When a party allows a decree of the Court of First Instance to become final, by not appealing against the decree, it would not be open to another party to the litigation, whose rights are otherwise not affected by the decree, to invoke the powers of the appellate Court under O. 41 r. 33, to pass a decree in favour of the party not appealing so as to give the latter a benefit which he has not claimed.
Order 41 r. 33 is primarily intended to confer power upon the appellate Court to do justice by granting relief to a party who has not appealed, when refusing to do so, would result in making inconsistent, contradictory or unworkable orders.
We do not think that power under O. 41 r. 33 of the Code of Civil Procedure can be exercised in this case in favour of the deities.
Appeals Nos. 966 and 968 of 1964 must therefore be allowed with costs throughout.
It is declared that the properties in deed Ext.
11(a) were absolutely dedicated in favour of the deity Sri Gopal Jiu.
Suits Nos. 79 & 80 of 1954 will therefore stand dismissed.
This will, however, be without prejudice to the concession made on behalf of Nirmala that she was a benamidar of her husband Balai in respect of the properties settled by the deed Ext.
11 (a).
Appeal No. 967 of 1964 will stand dismissed with costs in favour of Balai.
Bachawat, J. I agree entirely with what has fallen from my learned brother, Shah, J. with regard to the deed, Ext.
1 1(a), and 1 agree that the deed creates an endowment for the benefit of the deity absolutely, subject to certain charges in favour of the Shebaits and the descendants of the settlor.
With regard to exhibit 11, my learned brother has held that it is not open to Nirmala Bala to challenge the decree passed in Suit No. 67 of 1955.
With the greatest respect for my learned brother, I am unable to agree with this conclusion.
The trial Court decreed that the dedication under exhibit 11 is partial and not absolute, and I think it was open to Nirmala Bala to challenge the decree in the 565 High Court, and on the appeal to the High Court being dismissed, it is open to her to challenge the decree of both the Courts by an appeal to this Court.
It is true that the deities were represented by independent guardians ad litem for the purposes of this litigation.
But Nirmala Bala is one of the joint Shebaits of the deity, and as such, she has a right to assail the decree.
In Maharaja Jagadindra Nath Roy Bahadur vs Rani Hemanta Kumari Deb(1), Sir Arthur Wilson observed: "But assuming the religious dedication to have been of the strictest character, it shall remain that the possession and management of the dedicated property belong to the shebait.
And this carries with it the right to bring whatever suits are necessary for the protection of the property.
Every such right of suit is vested in the shebait, not in the idol".
As a joint Shebait of the deity, Nirmala Bala has the right to file this appeal against the decree which declares that the dedication is partial and not absolute.
Such an appeal is necessary for the protection of the property of the deity.
The other Shebait and the deities are parties to the appeal, and I am unable to hold that the appeal is not maintainable at the instance of Nirmala Bala.
Moreover, it is well settled that a Shebaiti right is a right of property.
In The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(3), B.K. Mukherjea, J. observed: "It was held by a Full Bench of the Calcutta High Court [Monahai vs Bhupendra(3)], that Shebaitship itself is property, and this decision was approved of by the Judicial Committee in Ganesh vs Lal Behary(4), and again in Bhabatarini vs Ashalata(5).
The effect of the first two decisions as the Privy Council pointed out in the last case, was to emphasis the proprietary element in the Shebaiti right and to show that though in some respects an anomaly it was an anomaly to be accepted as having been admitted into Hindu Law from an early date.
This view was adopted in its entirety by this Court in Angurbala vs Debabrata(6) .
It follows that the shebaiti right of Nirmala Bala under the deed, exhibit 11 (a) is a right of property.
This right is affected by the declaration that the deed, exhibit 11(a) created a partial and not absolute debuttar.
The shebaiti right is an absolute debuttar is certainly different from the shebaiti right in a partial debuttar.
The decree (1) [1904] L.R. 31 I.A. 203, 210 (2) ; , 1018.
(3) (4) 63 I.A. 448.
(5) 70 I.A. 57.
(6) 566 under appeal therefore affects the shebaiti right of Nirmala Bala.
She is aggrieved by the decree, and is entitled to challenge it in appeal.
In this view of the matter, I hold that the appeal by Nirmala Bala from the decree in Suit No. 67 of 1955 is maintainable.
I would, therefore, have examined the contention of the appellant with regard to exhibit 11 on the merits, and then disposed of the appeal.
But as the majority view is that the appeal is not maintainable, no useful purpose will be served by an examination of the merits of the appellant 's case with regard to exhibit 11.
ORDER Following the judgment of the majority, Appeals Nos. 966 and 968 of 1964 are allowed with costs throughout.
It is declared that the properties in deed Ext.
11(a) were absolutely dedicated in favour of the deity Sri Gopal Jiu.
Suits Nos. 79 & 80 of 1954 will therefore stand dismissed.
This will, however, be without prejudice to the concession made on behalf of Nirmala that she was benamidar of her husband Balai in respect of the properties settled by the deed Ext.
11(a).
Appeal No. 967 of 1964 is dismissed with costs in favour of Balai.
| HELD: (i) The question whether a deed of dedication creates an abosulte or partial dedication must be settled by a conspectus of all the provisions of the deed.
If the property is wholly dedicated to the worship of the idol and no beneficial interest is reserved to the settlor, his descendants or other persons, the dedication is complete: if by the deed it is intended to create a charge in favour of the deity and the residue vests in the settlor, the dedication is partial.
(ii) A reasonable provision for remuneration maintenance and residence of the Shebaits does not make an endowment bad, for even when property is dedicated absolutely to an idol, and no beneficial interest is reserved to the settlor, the property is held by the deity in an ideal sense.
The possession and management of the property must, in the very nature of things, be entrusted to Sitebait or ' manager and nomination of the settlor himself and his heirs with reasonable remuneration out of the endowed property with right of residence in the property will not invalidate the endowment.
[556E G] (iii) A provision for the benefit of persons other than the Shebait may not be valid, if it infringes the rule against perpetuities or accumulations, or rules against impermissible restrictions, but that does not affect the validity of the endowment.
The beneficial interest in the provision found invalid reverts to the deity or the settlor according as the endowment is absolute or partial.
If the endowment absolute and a charge created in favour of other persons is invalid, the benefit will enure to the deity, and will not revert to the settlor or his heirs.
[556G H] (iv) There is no rule that when the income is expanding and the expenses are static, leaving a substantial residue, it must be presumed, notwithstanding the comprehensive and unrestricted nature of the disposition, that the settlor intended to create only a charge in favour of the deity.
The question is always one of intention of the settlor to be determined from a review of all the dispositions under the deed of settlement.
[560G] Surendrakeshav Roy vs Doorgasundari Dassee and Anr.
L.R. 19 I.A. 108, explained.
Sri Sri Iswari Bhubaneshwari Thakurani vs Brojonath Der and Ors.
L.R. 64 I.A. 203 and Sree Ishwar Sridhar Jew vs Sushila Bala Desi and Ors. ; , relied on.
551 Per Subba Rao and Shah, JJ.
When the guardian of the deities did not appeal against the finding of the trial court that there was a partial dedication, it was not open to a joint Shebait who was not a guardian, to appeal against the decree and contend that the dedication was absolute.
When a party allows a decree of the court of First Instance to become final, by not appealing against the decree, it would not be open to another party to the litigation, whose rights are otherwise not affected by the decree, to invoke the powers of the appellate court under o. 41 r. 33 to pass a decree in favour of the party not appealing so as to give the latter a benefit which he has not claimed.
[564D] Per Bachawat, J. (Partially dissenting) When the trial court decrees that the endowment in favour of the deities was not absolute, and the guardian ad litem of the deities does not appeal, it open to a joint shebait even when he is not a guardian to assail the decree in appeal.
[565A] Maharaja Jagadindra Nath Roy Bahadur vs Rani Hemanta Kumari Debi, (1904) L.R. 31 I.A. 203, relied on.
Sihebaiti right is a right to property.
This right is affected by a declaration that the dedication in favour of the deities is partial and not absolute.
The shebaiti right in an absolute debutter is different from the shebaiti right in a partial debutter.
The joint shebait is en titled to defend his right even when the guardian of the deities does not appeal.
[565E, H] The Commissioner of Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt; , , referred to.
|
Appeals Nos. 149 and 150 of 1961.
Appeals from the judgment and order dated September 23, 1968, of the Bombay High Court in I.T.R. No. 86 of the 1957.
R.J. Kolah, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants.
K.N. Rajagopala Sastri and D. Gupta, for the respondent.
312 1962, February 19.
S.K. DAS, J. These are two appeals on a certificate of fitness granted by the High Court of Judicature at Bombay under,%.
66A(2) of the Indian Income tax Act, 1922.
The relevant facts which have given rise to them are shortly stated below.
The Indore Malwa United Mills, a limited liability company, is the appellant before us and will be referred to in this judgment as the assessee company.
The respondent is the Commissioner of Income tax(Central), Bombay.
The assessee company carried on a business of manufacture and sale of textile goods.
The manufacture was made at its mills in Indore which was Indian State before integration and had its own law as to income tax known as the Indore Industrial Tax Rules, 1927.
The sales of textile goods were made at various places, some inside and some outside the taxable territories of British India.
For and upto the assessment year 1949 50 the assessee company was treated as a non resident within the meaning of s.4A of the Indian Income tax Act, 1922.
For the assessment years 19 50 51, and 1951 52 which are two assessment years under consideration, the account years were the calendar years 1946 and 1950 respec tively.
Indore became a part of the taxable territories within the meaning of the Indian Income.
tax Act is the two assessment years and the assessee company was held to be "resident and ordinarily resident" with the meaning of that Act.
Upto the assessment year 1949 50 that part of its profits which was received in British India was subjected to tax together with its other income which accrued in British India, namely, interest on securities and interest on bank accounts.
In the assessments made for the assessment years 1948 49 and 1919 50 the 313 position of the assessee company was stated to be as follows: 1948 49 Income tinder the head 'Interest on securities ' .
Rs. 1,032 Income under the head 'Other sources ' interest from banks .
Rs. 231 Rs 1,263 Business loss Rs. 1,992/ .
Balance of lossRs.
729/ carried forward.
1949 50 Interest on securities .
Rs. 1,023 Bank interest .
Rs. 2 13 Rs.1,236 Less : loss of 1948 49 set off .
Rs. 729 Total income .
Rs. 507 In making the calculation of business profits or loss received or arising in the taxable territories, a proportion was struck between the total turn over of the assessee company and its sales the proceeds whereof were received in the taxable territories.
The following table, which is part of the order of assessment of 1950 51, shows clearly how the calculation was made.
314 1 2 3 4 5 Rs. Rs. Rs. Rs. Net profit Deprecia Busi Total of the as per ness turnover Assess company the Indian income of the ment befor al Income of the company year lowance Tax Act com of depre pany ciation (Col.2 minus col.3) 6 7 8 9 Rs. Rs. Rs. Rs. Sales for Business profit other Total in which considered as income come for proceeds having been accruing the prupose were received in the in the of assess received taxable terri taxable ment under in the tories(by appor terri the Indian taxable tioning the tories Icome Tax territories amount in Act.(Col.8) col. 4 in the proportion of col 5: col.6) 315 Daring the course of the assessment proceedings for 1950 51 the assessee company claimed that it was entitled to a set off of the entire losses of the assessment year 1948 49 which it was common ground before the Tribunal, came to Rs. 5,19,590/ , and not merely the proportionate loss.
The assessee company also claimed that the depreciation allowances of the two years 1948 49 and 1949 50 to which effect could not be given in those years and which had, therefore, to be carried forward should be added to the depreciation allowance of 1950 51 and be set off against the profits and gains of the assessee company liable to assessment in the assessment years in question.
It is to be noted that the assessment of the assessee company for the assessment years 1948 49 and 1949 50 was made both under the Indian Income tax Act and under the Indore Industrial Tax Rules, 1927.
Now the assessee company made two claims in the course of the assessment proceedings for 1950 51.
One was with regard to the loss of Rs. 5,19,590/ and the assessee company 's contention was that it was entitled to set off this loss against the profits made in its business in that year and it also contended that it was entitled to carry forward the unabsorbed depreciation into that year.
The first contention of the assessee company was rejected by the Tribunal but the second was allowed.
Two questions were then raised, one at the instance of the assessee company and the other at the instance of the Commissioner, dealing with the aforesaid two claims of the asseessee company.
These two questions were : " 1.
Whether the loss of Rs. 5,19,590/ of the year 1948 49 is liable to be set off against the assessee 's business income for the assess ment years 1950 51 and 1951 52 ? 2.
Whether the unabsorbed depreciation of the years 1948 49 and 1949 50 is liable to 316 be set off against the income of the assessee for the eassessment years 1950 51 and 1951 52.
" On being satisfied that aforesaid two questions arose out of its order, the income tax Appellate Tribunal, Bombay Bench A, referred them to the High Court of Bombay under s, 66(1) of the Indian Income tax Act.
The High Court answered the first question against the assessee company and the second question in its favour by its judgment and order dated September 23, '1958.
The assessee company then moved the High Court for a certificate under section 66A(2) of the Indian Income tax Act with regard to the answer given by the High Court to the first question and having obtained a certificate of fitness has preferred the two appeals to this Court.
We are concerned in these two appeals with the correctness or otherwise of the answer given by the High Court to the first question; the second question does not fall for our consideration.
On behalf of the assessee company section 24(2) of the Indian Income tax Act has been relied on in support of the claim that the assessee company is entitled to carry forward and set off the entire loss of Rs. 5,19,590/ incurred in the year 1948 49 against the assessee company 's business income for the assessment years 1950 51 and 1951 52.
Mr. Kolah appearing on behalf of the assessee company has put his argument in the following way.
First of all, he has submitted that the Income tax Officer wrongly proceeded on the footing as though the assessee company was carrying on two separate businesses, one within the taxable territories and the other outside them.
Mr. Kolah has contended that the business was one business within the meaning of section 10 of the Indian Income tax Act and in the two assessment years in question Indore having become a part of the taxable terri tories provisions in sub section
(2) of section 24 came into operation; therefore, the losses which the assessee 317 company sustained in 1948 49, being a previous year not earlier than the previous year mentioned in the sub section and the losses not having been set off under sub s.(1) of section 24, the assessee company was entitled to carry forward the losses and set them off against the profits and gains of the assessee company from the same business under any other head, as the time limit of six years had not expired.
As against this argument, the contention on behalf Of the respondent has been that s 24 has no application in the facts of the present case inasmuch as in the year 1948 49 in which year the losses had occurred, the assessee company was treated as a nonresident.
On behalf of the respondent it has been submitted that the provisions of section 24 are applicable only to profits and agains which are assessable under the Indian Income tax Act and in the case of non residents who were assessees in British India or in the taxable territories.
The claim to set off is only allowable in respect of loss of profits or gains incurred by the nonresidents under any of the heads mentioned in section 6, and section 24 is applicable only to such loss of profits arid gains which if they had been profits and gains would have been assessable in British India or the taxable territories.
It is contended that in the case of nonresidents, income accruing or arising without British India or without taxable territories is not liable to be assessed and the loss of such profits and gains is not contemplated to be set off within the provisions of sub sections
(1) and (2) of section 24 of the Indian Incometax Act,.
Before we consider these contentions it is necessary to set out the material provisions of the Indian Income tax Act as they stood at the relevant time.
(1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived 318 which (a) are received or deemed to be received in British India in such year by or on behalf of such person, or (b) x x x x (e) if such person is not resident in British India during such year, accrue or arise or are deemed to accrue or arise to him in British India during such year: x x x 14, (1) x xx (2) The tax shall not be payable by an assessee (a) x x x (b) x x x (c) in respect of any income, profits or gains accruing or arising to him within an Indian State, unless such income, profits or gains are received or deemed to be received in or are brought into British India in the pre vious year by or on behalf of the assessee, or are assessable under section 12B or section 42.
(1) Where any assessee sustains loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year : Provided that, where the lose sustained is a loss of profits or gains which would but for the loss have accrued or arisen within an Indian State and would, under the provisions of clause (c) of subsection (2) of section 14, have been exempted from tax, such loss shall not be set off except against profits or gains accruing or arising within an Indian 319 State and exempt from tax under the said provisions.
x x x (2) Where any assessee sustains a loss of profit or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head "Profits and gains of business, profession or vocation", and the lose cannot be wholly set off under sub section (1) the portion not so set off shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same business, profession or vocation for that year; and if it cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the follow ing year, and so on; but no loss shall be so carried forward for more than six years: Provided that (a) Where the loss sustained is a loss of profits and gains of a business, profession or vocation to which the first proviso to sub section (1) is applicable and the profits and gains of that business, profession or vocation are, under the provisions of clause (c) of sub section (2) of section 14, exempt from tax, such loss shall not be set off except against profits and gains accruing or arising in an Indian State from the same business, profession or vocation and exempt from tax under the said provisions; (b) Where depreciation allowance is, under clause (b) of proviso to clause (vi) of sub section of section 10, also to be carried forward, effect shall be given to the provisions of this sub section; x x x It may perhaps be stated here that Mr. Kolah has placed no reliance on the provisions of the Taxation Laws (Part B States) (Removal of 320 Difficulties) Order, 1950.
Clause 3 of the said Order provides that losses suffered in Indian States can be carried forward and set off only if under the State law they could be so carried forward or set off.
Admittedly, Under the Indore Industrial Tax Rules, 1927 there was no provision for the carrying forward of losses; therefore, cl. 3 of the Taxation Laws (Part B States)(Removal of Difficulties) Order, 1950 was of no assistance to the assessee company.
This view of the High Court has not been contested before us and we need, therefore, make no further reference to this aspect of the case.
The answer to the question which we have to consider depends on the true scope and effect of section 24 of the Indian Income tax Act.
Under the Indian Income tax Act, 1922, assessees are divided into three categories (a) resident and ordinarily resident, (b) resident but not ordinarily resident, and (c) not resident.
We are concerned in the present ' case with, an assessee who in the year in which the loss which is sought to be carried forward occurred, was a nonresident.
Sub section (1) of s.4, the material portion of which we have quoted earlier, states that person Who are not resident in India ire liable to charge under cl.
(a) or cl.(c) of the said subsection.
They may be taxed under cl.
(a) on income received or deemed to be received in India even if it accrues elsewhere, or under on income which accrues or arises or is deemed to corue or arise in India even if it is received elsehere.
The liability to tax in respect of income received in India is common to both residents and non residents and is imposed by the general clause (a).
A non resident, unlike a resident, is not argeable in respect of income accruing or arising without India and not received in India.
Section 4(2) (c), which is now deleted, had great importance when British India was distinct from Indian states, because it exempted income which accrued 321 or was received in the Indian States but was not brought into British India.
The deletion of this clause became inevitable upon,the merger of the Indian States.
This clause which wan inserted in 1941 exempted income accruing or arising within the Indian States; but the exemption did not apply if the income was received or deemed to be received in or was brought into the taxable territories in the previous year by or on behalf of the assessee or if the income was assessable under section 128 or section 42.
The Position, therefore, was that losses made in British India could not be reduced by adjusting against them the profits in the Indian States which were exempted under the clause, but the income exempted from the clause had,, however, to be included in the assessee 's total income for the purpose of determining the rate applicable to his taxable income.
But so far as a non resident was concerned the clause had no application, because a nonresident was not chargeable in respect of ' income accruing or arising without India and not received in India.
Now, we come to section 24, sub ss.(1) and (2) with the provisos appended thereto which we have quoted earlier in this judgment.
It appears that prior to 1950 profits accruing in the Indian States, later called Part B States, were exempt from tax under section 14(2)(c), unless they were, received in or brought into the territories then referred to as British India or were assessable under section 128 or section 42.
The first proviso to sub s.(1) as it stood at the relevant time dealt with losses accruing in the qaondam Indian States and provided that losses incurred in the Indian States should be set off only against profits accruing in the Indian States.
This was a reasonable provision, because an assessee who was not liable to tax in respect of his profits arising in the Indian States could not be allowed to set off his losses incurred in the Indian States against his profits arising in British India.
that losses incurred in an Indian State could be Similarly cl.(a) of the provision to sub s.(2) enacted that losses incurred in an Indian State could be 322 carried forward and set off only against profits accruing in an Indian State from the same business in a Subsequent year.
The argument on behalf of the respondent is that so far as a non resident is concerned, he is not chargeable in respect of income accruing or arising without India and not received in India.
Therefore, in his case it is unnecessary to go to the provisos, but section 24 itself has no application because sub section
(1) of section 24 when it refers to loss of profits or gains, has reference to taxable profits or taxable gains and sub s.(2) of section 24 can only be applied in a case where the loss cannot be set off under sub s.(1) because of the absence or inadequacy of profits etc.
In other words, the argument is that section 24 is applicable only to such loss of profits and gains which if they had been profits and gains would have been assessable in British India or the taxable territories; but in the case of nonresidents, income accruing or arising without British India or without the taxable territories not being liable to be assessed, the loss of such profits and gains is not contemplated to be set off within the provisions of section .24, sub sections
(1) and (2).
Mr. Kolah has pointed out that sub s.(2) of section 24 as also sub s.(1) talk of "any assessee" and he has argued that there is no reason why the provisions of sub s.(2) of section 24 should not the applicable to a non resident assessee.
He has further argued that whatever might have been the effect of the provisos in 1948 49, in 1950 51 Indore became part of the taxable territories and the assessee company became entitled to carry forward the losses up to six years and there is nothing in section 24(2) to prevent ' him from making the claim.
We are unable to accept this argument as correct.
Reading the provisions in section 24 with the provisions in s.4(1)(a) and section 1.4(2)(c) it seems clear to us that section (24)(1) when it talks of profits or gains has reference to 323 taxable profits or taxable gains in other words, it has reference to such profits and gains as would have been assessable in British India or the taxable territories.
It has no reference to income accruing or arising without British India or without the taxable territories which were not liable to be assessed in the case of non residents.
We are further of the view that for determining the nature of the losses under consideration in the present appeals, the relevant year was 1948 49, the year in which the losses occurred and the High Court rightly took the view that for the application of sub section
(2) of section 24, the losses must be such losses as could have been set off under sub s.(1) of section 24.
We agree with the view expressed by the High Court that the loss &mounting to Rs. 5,19,590/ was not such a loss as could have been set off either under sub section
(1) or sub section
(2) of section 24.
We have, therefore, come to the conclusion that the High Court correctly answered the question which was referred to it.
Accordingly, the appeals fail and are dismissed with costs, one hearing fee.
Appeals dismissed.
| The respondents were a firm carrying on the work of solicitors in Bombay.
For the years 1956 and 1957 a claim for bonus was made against them by their employees.
Before.
the Industrial Tribunal to which the dispute was referred by the State Government for adjudication under the provisions of the , the respondents contended that the profession followed by them was not an industry within the meaning of section 2(j) of the Act, that the dispute raised against them was not an industrial dispute under the Act, and that, therefore, the reference made by the Government was incompetent.
Held, that the work of solicitors is not an industry within the meaning of section 2(j) of the , and that, therefore, any dispute raised by the employees of 158 the solicitors against them cannot be made the subject of reference to the Industrial Tribunal.
The distinguishing feature of an industry is that for the production of goods or for the rendering of service, co operation between capital and labour or between the employer and his employee must be direct.
A person following a liberal profession does not carry on his profession in any intelligible sense with the active co operation of his employees, and the principal, if not the sole, capital which he brings into his profession is his special or peculiar intellectual and educational equipment.
Consequently, a liberal profession like that of a solicitor is outside the definition of "industry" under section 2(j) of the Act.
State of Bombay vs The Hospital Mazdoor Sabha, ; , explained and distinguished.
Brij Mohan Bagaria vs N.(,.
Chatterjee, A.I.R. 1958 Cal.
460 and D. P. Dunderdele vs G. P. Mukherjee, A. 1.
R. , approved.
Observations in Federated Municipal and Shire Council Employees ' Union of Australia vs Melbourne Corporation, ; , relied on.
|
Appeal No. 99 of 1954.
Appeal from the judgment and order dated the 20th August, 1952, of the Bombay High Court in Appeal No. 43 of 1952 arising out of Original Suit No. 1262 of 1949.
N. C. Chatterjee, J. B. Dadachanji and Rameshwar Nath, for the appellant.
Porus A. Mehta and R. H. Dhebar, for the respondent.
November 27.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
On February 28,1934, the Appellant who is the religious head of the Dawoodi Bohra Community, passed an order excommunicating one Tyebbhai Moosaji Koicha.
On July 17, 1920, the appellant had excommunicated two persons, Tahirbhai and Hasan Ali, and the validity of the order was questioned in a suit instituted in the Court of the Subordinate Judge, Barhampur.
The litigation went up to the Privy Council, which held that the appellant as the religious head had the power to excommunicate a member of the community, but that that power could only be exercised after observing the requisite 1009 formalities, and as in that case that had not been done, the order of excommunication was invalid.
Vide Hasan Ali vs Mansoorali (1).
Apprehending that the order dated February 28, 1934, was open to challenge under the decision in Hasan Ali vs Mansoorali (supra) on the ground that it had not complied with the requisite formalities, the appellant started fresh proceedings, and on April 28, 1948, passed another order of excommunication.
Thereupon, Tyebbhai Moosaji filed the present suit for a declaration that both the orders of excommunication dated February 28, 1934, and April 28, 1948, were invalid and for other consequential reliefs.
While this action was pending, the Legislature of the Province of Bombay passed the Bombay Prevention of Excommunication Act (Bombay XLII of 1949) prohibiting excommunication, and that came into force on November 1, 1949.
The plaintiff contended that the effect of this legislation was to render the orders of excommunication illegal.
The answer of the appellant to this contention was, firstly, that the Act had no retrospective operation, and that, in consequence, the orders passed on February 28, 1934, and April 28, 1948, were valid, and remained unaffected by it; and secondly, that the Act was itself unconstitutional, because the subject matter of the impugned legislation was not covered by any of the entries in List 2 or 3 of Seventh Schedule to the Government of India Act, 1935, and the Legislature of the Province of Bombay had no competence to enact the law.
After the coming into force of the Constitution, the contention was also raised that the right of the defendant to excommunicate members of the com munity was protected by articles 25 and 26 of the Constitution, and that the impugned Act was void as infringing the same.
The issues in the action were then settled, and issue No. 19, which was raised with reference to the above contentions, was as follows: " Whether the orders of excommunication made in 1934 and/or 1948 are invalid by reason of the (1) A.I.R. 1948 P.C. 66.
1010 provisions of the Bombay Prevention of Excommunication Act of 1949?" This was tried as a preliminary issue, and as it raised the question of the vires of a statute, the State of Bombay was impleaded as the second defendant in the suit.
Shah J.who tried this issue, held that the impugned Act was retrospective in its operation, that it was within the competence of the Provincial Legislature, and further that it did not offend articles 25 and 26 of the Constitution.
Against this finding, the present appellant preferred an appeal to a Bench of the Bombay High Court, and that was heard by Chagla C. J. and Bhagwati J. who held that under the Act, excommunication meant the condition of being expelled, that it was a continuous state during which the person excommunicated was deprived of his rights and privileges, and that, therefore, the Act would operate to protect those rights from the date it came into operation.
They further held that the Act was within the competence of the Legislature, and they also repelled the contention that it infringed the rights guaranteed under articles 25 and 26 of the Constitution.
In the result, they concurred in the decision of Shah J. and dismissed the appeal but granted a certificate to appeal to this Court under articles 132 and 133 of the Constitution.
Hence this appeal.
Pending the appeal, the plaintiff died on March 11, 1953, and his daughter applied on May 22, 1953, to be substituted in his place.
But eventually she did not press the application, and that was dismissed on October 5, 1953.
In this Court by an order dated November 21, 1955, the cause title was amended by deleting the name of the plaintiff.
Thus, the only parties who are now before the Court are the defendant and the State of Bombay.
The question is whether in the events which have happened, the appeal can proceed.
We are of opinion that it cannot.
It should be remembered in this connection that no decree had been passed in the suit.
Only a finding has been given on a preliminary point, and it is that finding that has been the subject of 1011 appeal to the High Court of Bombay and thereafter to this Court.
There are other issues still to be tried, and the action is thus undetermined.
Now, the claim with which the plaintiff came to Court was that he was wrongly excommunicated, and that was an action personal to him.
On the principle, actio personalis moritur cum persona when he died the suit should abate.
As a matter of fact, his legal representative applied to be brought on record, but the application was not pressed.
The result is that the suit has abated.
This would ordinarily entail the dismissal of this appeal.
Mr. N. C. Chatterjee for the appellant argues that as the State of Bombay had been impleaded as a party, and that as the decision on the question of the vires of the Act had been given in its presence, the appellant is entitled to continue the appeal against the State without reference to the plaintiff and seek the decision of this Court on the validity of the Act ; and relies on the decision of the Federal Court in The United Provinces vs Mst.
Atiqa Begum and others (1).
There, a suit was filed by a landlord for recovery of rent.
While it was pending in appeal, an Act was passed by the Legislature of the United Provinces validating certain Government notifications requiring the landlords to give to the tenants remission of rent.
The landlord contended that the Act was ultra vires, and a Full Bench of the Allahabad High Court, for whose opinion the question was referred, agreed with this contention.
Thereafter, the Government of the United Provinces got itself impleaded as a party to the appeal of the landlord, and a decision having been given therein in accordance with the opinion of the Full Bench, it preferred an appeal to the Federal Court on a certificate granted under section 205 of the Government of India Act, 1935, and contended that the impugned Act was valid.
The judgment debtor himself did not file any appeal.
The question was whether the Government was entitled to file the appeal when the party had not chosen to contest the decree.
It was held by the Federal Court that the scope of (1) 1012 section 205 of the Government of India Act was wider than that of section 96 of the Civil Procedure Code, and that the Government was entitled to file the appeal for getting a decision on the validity of the Act, notwithstanding that it had no interest in the claim in the suit.
This ruling has, in our opinion, no application to the facts of the present case.
Here, the action itself has abated, and there can be no question of an appeal in relation thereto, as an appeal is only a continuation of the suit, and there can be no question of continuing what does not exist.
But apart from this, there is another formidable obstacle in the way of the appellant.
Under article 132, an appeal lies to this Court only against judgments, decrees or final orders.
That was also the position under section 205 of the Government of India Act.
Now, the order appealed against is only a decision on one of the issues, and it does not dispose of the suit.
In The United Provinces vs Mst.
Atiqa Begum and others (supra), there was a decree, and the requirements of section 205 were satisfied.
Here, there is only a finding on a preliminary issue, and there is no decree or final order.
The Explanation to article 132 provides that: "For the purposes of this Article, the expression 'final order ' includes an order deciding an issue which, if decided in favour of the appellant, would be sufficient for the final disposal of the case.
" Applying this test, even if we accept the contention of the appellant that the impugned Act is bad, that would not finally dispose of the suit, as there are other issues, which have to be tried.
We are clearly of opinion that the appeal is not competent under article 132, and the fact that a certificate has been given does not alter the position.
It is said that the certificate is also under article 133, but under that article also, an appeal lies Only against judgments, decrees or final orders, and no certificate could be granted in respect of an interlocutory finding.
The result is that this appeal must be dismissed, as not maintainable.
We should add by way of abundant caution that as we express no opinion on the 1013 correctness of the decision under appeal, this order will not preclude the appellant from claiming such rights as he may have, in appropriate proceedings which he may take.
In the circumstances, there will be no order as to costs.
Appeal dismissed.
| Respondent No. 1 who was functioning at the relevant time as the commissioner of Archives and Historical Research, Tamil Nadu, delivered a speech at a function held by the History Association of the Presidency College, Madras criticising the time capsule buried in the precincts of the Red Fort at Delhi which led to a furore both in Parliament as well as in the national press.
The Government, feeling greatly embarrassed by the controversy, started a disciplinary inquiry against him on the view that being a civil servant it was not desirable that he should have participated in a public discussion on the time capsule but later on dropped the same.
However, just a day before that, a signed news item appeared in a newspaper about the controversy regarding the time capsule stating that a Government spokesman had charged respondent No. 1 as trying to 'sabotage the civil services from within '.
Having failed in his efforts to ascertain from the Government the identity of its spokesman who had made this offending utterance against him or to induce it to issue a contradiction through the Press, respondent No. 1 addressed a letter to the correspondent of the newspaper asking him to disclose the name of the Government spokesman.
The correspondent, in his reply, stated that the Government spokesman was respondent No. 2, the Chief Secretary to the Government, who, during a telephonic conversation with him, had made the offending utterance.
Respondent No. 1 made a representation to the Government with regard to his grievance in this behalf but, finding that there was no response, applied for sanction of the Government under r. 17 of the All India Services (Conduct) Rules, 1968 seeking permission to institute a suit against respondent No. 2 for damages for defamation.
The Government refused to grant the permission and respondent No. 1 moved the High Court under article 226 of the Constitution against the order of refusal.
The writ petition was dismissed by a Single Judge, who inter alia in his judgment referred to a concession made by the Advocate 491 General appearing for the appellants that the act complained of was an official act and, therefore, the intended suit was to vindicate an official act which was the subject matter of a defamatory criticism.
Respondent No. 1 preferred an appeal under cl.
15 of the Letters Patent and a Division Bench allowed the appeal holding that the refusal of the State Government to grant the requisite permission under r. 17 could not be justified on the ground of public interest.
B Allowing the appeals, ^ HELD: According to its plain terms, r. 17 of the All India Services (Conduct) Rules, 1968 is in the nature of a restraint on a member of the All India Services from bringing a suit for damages for defamation for an act done in the exercise of his official duties as a public servant or from going to the press in vindication of his official act or character.
Explanation to r. 17 seeks to restrict the scope and effect of the restraint placed by r. 17.
No member of the Service is prohibited from vindicating his private character or any act done by him in his private capacity.
Proviso thereto however casts on him a duty to report to the Government regarding such action.
[497B c l In the instant case, respondent No. 1 made a speech incidentally at a time when he was holding the post of the commissioner of Archives & Historical Research, at a function organised by the History Association of the Presidency College, Madras.
He was invited to make a speech on the occasion presumably for his attainments, in the field.
But the speech delivered by him on the occasion could not be treated to be an official act of his and therefore the suit brought by him against respondent No. 2, the then Chief Secretary of Tamil Nadu could not be treated to be a suit for the vindication of his official act.
It is common knowledge that persons of erudition and eminence are often times asked to grace such occasions or make a speech and when they do so, undoubtedly they give expression to their personal views on various subjects.
By no stretch of imagination can it be said that while doing so they act in the discharge of their official duties merely because they happen to hold public office.
[499A D] During the course of his judgment, the learned Single Judge adverts to paragraph 17 of the writ petition where respondent No. 1 has averred that his intended suit was to vindicate his private character and not to vindicate any official act.
The case of respondent No. 1 therefore throughout has been that r. 17 of the Rules was not attracted to the suit and indeed he specifically aver that he was entitled to file a suit even 492 without the permission of the Government under r. 17.
However, he goes on to say that if a suit were to be filed it might land him into trouble in that disciplinary proceedings might be taken against him for having instituted a suit without previous permission of the Government.
On the assumption that such sanction was necessary under r. 17, he moved the High Court for grant of an appropriate writ under article 226 of the Constitution, apparently by way of ex abundanti cautela.
The learned Single Judge did not deal with the scope and ambit of r. 17 in view of the concession made by the learned Advocate General.
We have no manner of doubt that the appellants are not bound by the concession made by the learned Advocate General before the learned Single Judge that the act complained of was an official act.
It is unfortunate that the State Government was not properly advised at the earlier stages of the proceedings in insisting upon the view that such permission was required under r. 17 and that it was justified in refusing to grant the permission prayed for.
The concession made by the learned Advocate General being on a matter of law is not binding.
[498D G]
|
Civil Appeal No. 3844 of 1983.
Appeal by Special leave from the Judgment and Order dated the 25th July, 1980 of the Delhi High Court in L.P.A. No. 89 of 1976.
A.K. Gupta for the Appellant.
G.B. Pai, S.N. Bhandari and Ashok Grover for Respondent.
No. 3.
R.N. Poddar for Respondent No. 1.
The Judgment of the Court was delivered by 951 CHINNAPPA REDDY, J.
It was just the other day that we were bemoaning the unbecoming devices adopted by certain employers to avoid decision of industrial disputes on merits.
We noticed how they would raise various preliminary objections, invite decision on those objections in the first instance, carry the matter to the High Court under article 226 of the Constitution and to this Court under article 136 of the Constitution and delay a decision of the real dispute for years, sometimes for over a decade.
Industrial peace, one presumes, hangs in the balance in the meanwhile.
We have now before us a case where a dispute originating in 1969 and referred for adjudication by the Government to the Labour Court in 1970 is still at the stage of decision on a preliminary objection.
There was a time when it was thought prudent and wise policy to decide preliminary issues first.
But the time appears to have arrived for a reversal of that policy.
We think it is better that tribunals, particularly those entrusted with the task of adjudicating labour disputes where delay may lead to misery and jeopardise industrial peace, should decide all issues in dispute at the same time without trying some of them as preliminary issues.
Nor should High Courts in the exercise of their jurisdiction under article 226 of the Constitution stop proceedings before a Tribunal so that a preliminary issue may be decided by them.
Neither the jurisdiction of the High Court under article 226 of the Constitution nor the jurisdiction of this Court under article 136 may be allowed to be exploited by those who can well afford to wait to the detriment of those who can ill afford to wait by dragging the latter from Court to Court for adjudication of peripheral issues, avoiding decision on issues more vital to them.
article 226 and article 136 are not meant to be used to break the resistance of workmen in this fashion.
Tribunals and Courts who are requested to decide preliminary questions must therefore ask themselves whether such threshold part adjudication is really necessary and whether it will not lead to other woeful consequences.
After all tribunals like Industrial Tribunals are constituted to decide expeditiously special kinds of disputes and their jurisdiction to so decide is not to be stifled by all manner of preliminary objections journeyings up and down.
It is also worth while remembering that the nature of the jurisdiction under article 226 is supervisory and not appellate while that under article 136 is primarily supervisory but the Court may exercise all necessary appellate powers to do substantial justice.
In the exercise of such jurisdiction neither the High Court nor this Court is required to be too astute to interfere with the exercise of jurisdiction by special tribunals at interlocutory stages and on preliminary issues.
952 Having sermonised this much, we may now proceed to state the facts which provoked the sermon.
The appellant D.P. Maheshwari was an employee of Toshniwal Brothers Pvt. Ltd., when his services were terminated with effect from 28th July 1969.
He raised an industrial dispute and on 3rd July 1970 the Lt. Governor of Delhi referred the dispute for adjudication to the Additional Labour Court Delhi under sections 10(1)(c) and 12(5) of the Industrial Disputes Act.
The dispute referred for adjudication to the Labour Court was, "Whether the termination of services of Shri D.P. Maheshwari is illegal and/or unjustified and if so to what relief is he entitled and what directions are necessary in this respect ?" The Management straightaway questioned the reference by filing Writ petition No. 159 of 1972 in the Delhi High Court.
The writ petition was dismissed on 22nd May 1972.
Thereafter the management raised a preliminary contention before the Labour Court that D.P. Maheshwari was not a 'workman ' within the meaning of Section 2(s) of the Industrial Disputes Act and the reference was therefore incompetent.
The Labour Court tried the question whether D.P. Maheshwari was a workman as defined in Section 2(s) of the Industrial Disputes Act as a preliminary issue.
Both parties adduced oral and documentary evidence.
After referring to the evidence of the employee 's witnesses the Labour Court said, "Thus according to the evidence of the claimant 's witnesses the claimant was employed mainly for clerical duties and he did discharge the same." The Labour Court then referred to the evidence of the witnesses examined by the management and said, "Thus the said evidence falls far short of proving that the claimant was in fact discharging mainly Administrative of supervisory duties." The Labour Court then proceeded to refer to the documents produced by the management and observed, "Thus the documents filed by the respondent do not go to show that the real nature of the duties discharged by the claimant was supervisory or administrative in nature." The Labour Court next referred to what it considered to be an admission on the part of the management who had classified all their employees into three separate classes A, B and C, Class A described as 'Managerial ' Class B described as 'Supervisory ' and Class C described as 'Other Staff '.
The name of D.P. Maheshwari was shown in Class C. After reviewing the entire evidence the Labour Court finally recorded the following finding: "From the above discussion, it is clear that the claimant 's evidence shows that he was doing mainly 953 clerical work of maintaining certain registers preparing drafts and seeking instructions from the superiors and respondents ' lawyers during the period of his services though designated Accounts Officer or officer in special duty or store purchase officer . . . . . . . . . . . . . . . . . . .
As a result, in my opinion it has to be held that the nature of the main duties being discharged by the claimant was clerical and not supervisory or administrative despite his designation as officer.
Accordingly, he has to be held to be a workman under section 2(s) of the Industrial Dispute Act.
" The management was dissatisfied with the decision of the Labour Court on the preliminary issue.
So, they invoked the High Court 's extra ordinary jurisdiction under article 226 of the Constitution.
A learned single judge of the High Court, by his judgment dated 12th July 1976 allowed the Writ Petition and quashed the order of the Labour Court and the reference made by the Government.
A Division Bench of the High Court affirmed the decision of the Single Judge on 25th July 1980.
The matter is now before us at the instance of the workman who obtained special leave to appeal under article 136 on 4th April 1983.
The services of the workman were terminated on 28th July 1969.
A year later the dispute was referred to the Labour Court for adjudication.
Thirteen years thereafter the matter is still at the stage of decision on a preliminary question.
In our view, further comment is needless.
Shri A.K. Gupta, the learned counsel for the appellant submitted that the High Court literally exercised appellate powers and recorded findings of fact differing from those recorded by the Labour Court and this, he complained, had been done by an unfair reading of the order of the Labour Court and without the High Court itself considering a single item of evidence or document.
We are afraid there is considerable force in Shri Gupta 's criticism.
Curiously enough, the Learned Single Judge of the High Court affirmed the finding of the Labour Court that D.P. Maheshwari was not employed in a supervisory capacity.
He said, "In the face of this material and the admitted hypothesis the conclusion that the respondent was not 954 mainly employed in a supervisory capacity is certainly a possible conclusion that may be arrived at by any Tribunal duly instructed in the law as to the manner in which the status of an employee may be determined.
It is, therefore, not possible for this Court to disturb such a conclusion having regard to the limited admit of review of the impugned order." Having so held, the Learned Single Judge went on to consider whether the workman was discharging duties of a clerical nature.
He found that it would be difficult to say that D.P. Maheswari was discharging 'routine duties of a clerical nature which did not involve initiative, imagination, creativity and a limited power of self direction. ' The Learned Single Judge did not refer to a single item of evidence in support of the conclusions thus recorded by him.
He appeared to differ from the Labour Court on a question of fact on the basis of a generalisation without reference to specific evidence.
No appellate court is entitled to do that, less so, a court exercising supervisory jurisdiction.
Referring to the finding of the Labour Court that the workman was discharging mainly clerical duties the Learned Single Judge observed, "It is erroneous to presume, as was apparently done by the Additional Labour Court, that merely because the respondent did not perform substantially supervisory functions, he must belong to the clerical category.
" This was an unfair reading of the Labour Court 's judgment.
We have earlier extracted the relevant findings of the Labour Court.
The Labour Court not only found that the workman was not performing supervisory functions but also expressly found that the workman was discharging duties of a clerical nature.
The Division Bench which affirmed the judgment of the Learned Single Judge also read the judgment of the Labour Court in a similar unfair fashion and observed.
" It is no doubt true that the Labour Court held that the appellant 's evidence showed that he was doing mainly clerical work.
As we read the order as a whole it appears that in arriving at this conclusion the Labour Court was greatly influenced by the fact that the appellant was not employed in a supervisory capacity.
" We have already pointed out that the Labour Court did not infer that the appellant was discharging duties of a clerical nature from the mere circumstance that he was not discharging supervisory functions.
The Labour Court considered the entire evidence and recorded a positive finding that the appellant was 955 discharging duties of a clerical nature.
The finding was distinct from the finding that the appellant was not discharging supervisory function as claimed by the company.
We would further like to add that the circumstance that the appellant was not discharging supervisory functions was itself a very strong circumstance from which it could be legitimately inferred that he was discharging duties of a clerical nature.
If the Labour Court had drawn such an inference it would have been well justified in doing so.
But, as we said, the Labour Court considered the entire evidence and recorded a positive finding that the workman was discharging duties of a clerical nature.
The Division Bench, we are sorry to say, did not consider any of the evidence considered by the Labour Court and yet characterised the conclusion of the Labour Court as perverse.
The only evidence which the Division Bench considered was that of M.W.I.Shri K.K. Sabharwal and under the impression that the Labour Court had not considered the evidence of K.K. Sabharwal, the Division Bench observed.
"The non reference to the said evidence while discussing the point in issue, would clearly vitiate the order to the Labour Court.
" This was again incorrect since we find that the Labour Court did consider the evidence of M.W.I fully.
Shri G.B. Pai, Learned Counsel for the company, drew our attention to the qualifications of the appellant and certain letters written by him to the Managing Director and argued that the qualifications and the letters indicated that the appellant was discharging duties, not of a clerical nature but those of a senior executive closely in the confidence of the Managing Director.
We are enable to agree with Mr. Pai.
First, we are not prepared to go behind the finding of fact arrived at by the Labour Court which certainly was based on relevant evidence and next, all that we can say from the qualifications and the letters is that the appellant was occasionally deputed by the Managing Director to undertake some important missions.
The question is what were his main duties and not whether he was occasionally entrusted with other work.
On that question, the clear finding of the Labour Court is that he was mainly discharging duties of a clerical nature.
We are clearly of the opinion that the High Court was totally unjustified in interfering with the order of the Labour Court under article 226 of the Constitution.
We set aside the judgments of the Learned Single Judge and the Division Bench of the Delhi High 956 Court, restore the order of the Additional Labour Court and direct the Additional Labour Court to dispose of the reference within a period of three months from the date of communication of this order to that Court.
That appellant is entitled to his costs which we stipulate at Rupees five thousand.
H.L.C. Appeal allowed.
| An industrial dispute concerning the termination of services of the appellant in 1969 was referred for adjudication by the Labour Court under sections 10 (1) (c) and 12 (5) of the Industrial Disputes Act in the year 1970.
The Management of the company in which he was employed questioned the reference itself by filing a petition under article 226 and when it was rejected, the Management raised a preliminary contention before the Labour Court that the appellant was not a 'workman ' and therefore the reference was incompetent.
The Labour Court, after a detailed and careful examination of the oral and documentary evidence produced by both the appellant and the Management came to the conclusion that the appellant was a 'workman ' under section 2 (s) of the Act as he was employed mainly for clerical duties.
This finding was challenged by the Management once again by filing a petition under article 226 and a Single Judge of the High Court allowed the same and quashed the order of the Labour Court as well as the reference made by the Government.
On his appeal having been rejected by a Division Bench of the High Court, the appellant approached this Court under article 136.
Allowing the appeal, ^ HELD: The nature of jurisdiction under article 226 is supervisory and not appellate while that under article 136 is primarily supervisory but the Court may exercise all necessary appellate powers to do substantial justice.
In the exercise of such jurisdiction neither the High Court nor this Court is required to be too astute to interfere with the exercise of jurisdiction by special tribunals at interlocutory stages and on preliminary issues.
[951 G H] Tribunals like Industrial Tribunals are constituted to decide expeditiously special kinds of disputes and their jurisdiction to so decide is not to be stifled by all manner of preliminary objections and journeyings up and down.
Tribunals and Courts who are requested to decide preliminary questions must 950 ask themselves whether such threshold part adjudication is really necessary and whether it will not lead to other woeful consequences.
There was a time when it was thought prudent and wise to decide preliminary issues first.
But the time appears to have arrived for a reversal of that policy.
It is better that tribunals, particularly those entrusted with the task of adjudicating Labour disputes where delay may lead to misery and jeopardise industrial peace, should decide all issues in dispute at the same time without trying some of them as preliminary issues.
Nor should High Courts in the exercise of their jurisdiction under article 226 stop proceedings before a Tribunal so that a preliminary issues may be decided by them.
Neither the jurisdiction of the High Court under article 226 nor the jurisdiction of this Court under Art 136 may be allowed to be exploited by those who can well afford to wait to the detriment of those who can ill afford to wait by dragging the latter from Court to Court for adjudication of peripheral issues, avoiding decision on issues more vital to them.
Articles 226 and 136 are not meant to be used to break the resistance of workmen in this fashion.
[951 F, C D] The instant case relates to a dispute originating in 1969 and referred for adjudication in 1970 which is still at the stage of decision of a preliminary objection.
The Labour Court considered the entire evidence and recorded a positive finding that appellant who was discharging duties of a clerical nature was a 'workman '.
The Single Judge of the High Court did not refer to a single item of evidence while reversing the finding of the Labour Court.
He appeared to differ from the Labour Court on a question of fact on the basis of a generalisation without reference to specific evidence.
The Division Bench which affirmed the judgment of the Single Judge also read the judgment of the Labour Court in a similar unfair fashion and did not consider any of the evidence considered by the Labour Court and yet characterised the conclusion of the Labour Court as perverse.
No appellate Court is entitled to do that less so, a Court exercising supervisory jurisdiction.
[951 C, 953 B, 954 C D, 955 C]
|
Appeal No. 2340 of 1966.
Appeal from the judgment and order dated October 7, 1966 of the Bombay High Court, Nagpur Bench in Special Civil Appli cation No. 940 of 1965.
M. C. Setalvad, N. section Bindra and R. H. Dhebar, for appellant No. 1.
A. section Bobde, and section G. Kukdey, for respondent No. 1.
M. M. Kinkhede, G. L. Sanghi and A. G. Ratnaparkhi, for respondents Nos.
3 16, 19 31, 33, 34, 36 45, 47 53, 55 and 57.
The Judgment of the Court was delivered by Bachawat, J.
This appeal arises out of a writ petition filed by respondent No. 1 before the Nagpur Bench of the Bombay High Court, challenging the show cause notice dated July 21, 1965 and the order dated September 29, 1965, superseding the municipal corporation of the city of Nagpur.
In July, 1962, the term of office of the present Councillors commenced.
On July 21, 1965, the Government of Maharashtra issued a notice to respondent No. 1, the Mayor of the Nagpur Municipal Corporation, asking him to show cause why the corporation should not be superseded.
On August 1, 1965, respondent No. I filed his reply to the show cause notice.
On September 29, 1965, the State Government passed the impugned order superseding the corporation under sections 408 and 409 of the City of Nagpur Corporation Act 1948 (C. P. & Berar Act 11 of 1950).
On September 30, 1965, respondent No. I filed a writ petition challenging the show cause notice and the order of supersession.
The High Court allowed the writ petition and quashed the order of supersession.
The High Court held that the State Government exercised its power under section 408 on grounds which were not reasonably related to its legitimate exercise and the finding upon which the order was passed was rationally impossible on the materials before the State Government.
The State of Maharashtra now appeals to this Court on a certificate granted by the High Court.
By an order of this Court, the Administrator of the City of Nagpur appointed under the order of supersession of September 29, 1965, has been joined as the second appellant.
585 Section 408 of the City of Nagpur Corporation Act 1948 is in 'these terms: "408.
(1) If at any time upon representations made or otherwise it appears to the State the Corporation is not competent to perform or persistently makes default in the performance of the duties imposed on it by or under this Act or any other law for the time being in force, or exceeds or abuses its powers the State Government may ', after having given an opportunity to the Corp oration to show cause why such an order should not be made, or if it" appears to the State Government that the case is one of emergency, forthwith issue an order directing that all the Councillors shall retire from office as and from such date as may be appointed and declare the Corporation to be superseded.
Such order shall be published in the Gazette and the reasons for making it shall be stated therein.
(2) Notwithstanding anything contained in sections 17 and 20, all Councillors shall vacate their office from the date mentioned in any order under sub section (1).".
The consequence of supersession of the corporation under section 408 is that all its members vacate their office, all powers and duties of the; corporation; the Standing Committee and the chief executive officer may be exercised by the administrator of the city appointed by the State government, and all property vested in the corporation vests in the administrator (section 408).
The conditions for the exercise of he power under section 408 are clearly stated in the section.
It must appear to the State government that the corporation is not competent or persistently makes default in the performance of the duties imposed on it by or under the Act or any other law for the time being in force, or exceeds or abuses its powers.
Except in cases of emerge icy, the State government must give to the corporation an opportunity to show cause why the order under the section should not be made.
If on a consideration of the explanation submitted by the corporation, the State government considers that there is no ground for making the order, the Government may drop the proceeding.
Otherwise, it may issue an order declaring the corporation to 'be superseded and directing that all the Councillors shall retire from office.
The order must be published in the Gazette and the reasons: For making it must be stated therein.
There is no appeal to the court from the order under section 408.
in a writ application the court will not review the facts as an appellate body.
But the order is liable to be set aside if no reasonable person on a proper consideration of the materials before the State government could form the opinion that the corporation "is not competent to perform, or persistently makes default in the performance of the duties imposed on it by or under this Act or any other law for the 586 time being in force, or exceeds or abuses its powers".
Likewise, the order is liable to be set aside if it was passed in bad faith or if in a case which was not one, of emergency, due opportunity to show cause was not given to the corporation.
In all such cases, the order is in excess of the statutory power under section 408 and is invalid.
On the question whether the order under section 408 is an administrative or quasi judicial act, our attention was drawn to the decisions in Municipal Committed, Karali and Another, vs The State of Madhya Pradesh(1) and Shri Radheshyam Khare and Anr.
vs The State of Madhya Pradesh and Others.(2) These cases turned on the construction of sections 53A and 57 of the C. P. & Berar Municipalities Act 1922 (Act 11 of 1922).
The point whether the order under section 408 is quasi judicial or administrative act is not very material, for it is common ground,that the present case was not one of emergency and the State government was bound to give opportunity to the corporation to show cause why the order should not be made.
The order dated September 29, 1965 was in these terms: "Whereas it is reported to the Government of Maharashtra that the Municipal Corporation of the City of Nagpur (hereinafter referred to as 'the Municipal Corporation ') constituted under the City of Nagpur Municipal Corporation Act, 1948 (C.P. & Berar Act 11 of 1950) (hereinafter.
referred to as 'the said Act ') (a) has, since the present Councillors entered upon their office, planned its expenditure on the basis of uncertain receipts as shown below, that is to say Year Receipts in budget as Actual of previous passed by Corporation year Rs. in lacs Rs. in lacs.
1963 64 351 173 1964 65 221 190 1965 66 258 (200 to 215 lacs anticipated.
and without exercising the proper controls provided by or under the said Act has allowed its financial position to deteriorate rapidly and seriously to such an extent that the free cash balance of Rs. 5.81 lacs approximately in March 1962 was reduced to Rs. 53,000 approximately on the 12th July, 1965: and that the Corporation had no funds even to (1) A.I.R. 1958 M.P. 323.
(2) 587 disburse the salaries of its officers and 'servants as is noticed from the Resolution of the Municipal Corporation No. 98, dated the 4th September, 1965; and (b) has neglected to under take the improvement of water supply and to provide a sufficient supply of suitable water for public and private purposes; And whereas, an opportunity was given to the Municipal Corporation to show cause why in the aforesaid circumstances an order of supersession under sub section (1) of section 408 of the said Act should not be made , And whereas, after considering the reply of the Municipal Corporation and subsequent it submissions made by it the Government of Maharashtra is of the opinion that the Municipal Corporation is not competent to perform the duties imposed on it by or under the said Act; Now ' therefore, in exercise of the powers conferred by sub section (1) of section 408 and subsection (1) of section 409 of the said Act, and of all other powers enabling it in this behalf, the Government of Maharashtra for the reasons specified aforesaid, hereby (1) directs that all the Councillors of the Municipal Corporation shall retire from office as and from the 1st day of October, 1965; (2) declares the Municipal Corporation to be superseded from that date; and (3) appoints Shri D. H. Deshmukh to be the Administrator of the City of Nagpur From the order it appears that there were two grounds on which the State government formed the opinion that the corporation was not competent to perform the duties imposed on it by or under the Nagpur Municipal Corporation Act, 1948.
Annexure 2 to the show cause notice dated July 21, 1965 Set out the following facts relatable to the first ground mentioned in paragraph 1(a) of the order: "II.
(1) In March 1962, the free cash balance with the Corporation was Rs., 5.
81 lacs.
On 12 7 65, the opening cash balance of the Corporation ",as Rs. 53,821.
The Statement 'A ' appended hereto will reveal the financial.
position of the Corporation.
On the basis of average daily receipts the Corporation will have an opening balance of Rs. 7 74 lacs on 1 8 65 as against that their immediate liabilities are of the order of Rs. 30 84 lacs. 'It is 588 thus clear that the Corporation is heading for a grave.
financial crisis and it will not be in a position even to pay fully the salaries and wages of their permanent and temporary employees.
Under Chapter IV of the City of Nagpur corporation Act, the Corporation is required to pay salaries to their officers and servants as provided for in Sections 47, 49 and 50 of the said Act.
The liability arising out of the payment of salaries; and wages is the third charge on the municipal fund the.
previous two charges being repayment of all loans payable by the Corporation under Chapter IX of that Act and the second being the payment for discharge of all liabilities imposed on the Corporation in respect of debts ' and obligations and contracts of ' the Municipality, of Nagpur, to whom the Corporation is a successor.
It is assumed that such liabilities do not any ' longer exist.
Thus the payment of salaries etc., is the ,second charge on the municipal fund, and it is very obvious from the figures in Statement `A ' that the Corporation is not in a position to discharge that liability.
" The opinion of the State, government so far as it is based on the first ground cannot be supported.
The show cause notice did not mention the charge that the Councillors planned the expenditure on the basis of uncertain receipts or that they did not exercise .proper controls provided by or under the Act.
No opportunity was given to the corporation to explain the charge.
Without giving such an opportunity, the State government could not lawfully and that the charge was proved.
The cash balances of the cor poration vary from day to day.
No reasonable person could possibly come to the conclusion hat the financial position of the corporation had deteriorated from the fact that the cash balances were Rs. 5,81,000 in March 1962 and Rs. 53,000 on July 12, 1965.
The, statement that the corporation had no funds to disburse the salaries of its officers and servants had no factual basis.
As a matter of fact, the corporation paid the salaries.
The dearness allowance was not paid because the bills were not scrutinized. ' The resolution dated September 4, 1965 referred to in the order was passed long after the show cause notice was issued and the corporation was not given an, opportunity to explain it.
The resolution did not say that the co ' oration had no ' funds even to disburse ' the salaries of its officers and servants.
The, corporation resolved to raise a loan of Rs. 15 lacs from the State; Government, but, the; loan was not raised.
The High Court also pointed out that many of the statements in the. statement "A" referred to in the show cause notice were factually incorrect.
The opinion of the State government, based on the first ground cannot be sustained, firstly because the corporation had no, opportunity to show cause against the charge, and secondly, because no reasonable Person on the materials 589 before the State government could possibly form the opinion that the charge was proved: The second.
ground referred to in paragraph 1 (b) of the order dated September 29, 1965 is more serious.
Section 57(1)(k) of the City of Nagpur Corporation Act, 1948 provides that the corporation shall make adequate provision by any means or measures which it may lawfully use or take for. . . "(k) the management and maintenance of all municipal water works and the construction and maintenance of new works and Means for providing sufficient supply of suitable water for public and private purposes.
" The charge was that the corporation neglected to undertake the improvement of water, supply and to provide a sufficient supply of suitable water for public and private purposes.
The relevant facts were set out in annexure 1 1(1) to (4) and annexure 11 to the show cause notice.
It is ' common ground that the water supply of the city of Nagpur was inadequate.
The population of the city was fast increasing and it was the duty of the corporation to augment the supply.
The improvement of the head works at the Kanhan Stage III and also the re modelling and redesigning of the distribution system was necessary for augmenting and,improving the water supply.
The work at Kanhan Stage.111 commenced in 1964 and.
for that purpose the Government sanctioned an ad hoc loan of Rs. 21 lacs.
The cost of the remaining work at Kanhan Stage III and the work of re modelling and redesigning of distribution system was estimated to be Rs. 70 lacs.
The corporation could not meet the cost without.
raising a loan.
II had the power to raise a loan for this purpose with the previous sanction of the State government under section 90 of the City of Nagpur Corporation Act 1948.
The corporation was not in a position to raise 1 he loan in the open market unless the repayment of the loan was guaranteed by the Government.
It approached the.
Government to give the guarantee.
The Government was willing to give the guarantee if two conditions were fulfilled (1) the co oration would meter the water supply immediately, and (2) in the annual budget, the budget of the water works department for the supply of water would be shown separately.
The Government was not willing to, give the guarantee unless conditions were fulfilled.
In May/June,.965, these conditions were communicated by, the minister in charge to the municipal commissioner and the chairman of the standing committee.
On June 5, 1965, the standing committee resolved: "(i) The Corporation may raise in the open market loan of Rs. 70 lacs for the purpose of completing the Kanhan Stage III head works and provision of Alteration plant and for re modelling and redesigning the water distribution system in Nagpur Corporation are.
590 (ii) The principle of universal meterisation should be accepted and all water connection in future should only be in the meter system ' (iii) The principle of providing a separate subsidiary budget for water supply should be accepted.
" At a meeting held on June 30, 1965, the corporation appears to have disapproved of the standing committee 's resolution regarding the principle of universal meterisation and setting up a separate subsidiary budget for water supply though no specific resolution to that effect was passed.
A meeting of the corporation on July 5, 1965 was convened to discuss the matter of raising a loan of Rs. 70 lacs.
In the notice calling the meeting, the following office note appeared at the foot of the relevant agenda: "In this connection the State Government demanded the following two assurances from the Corporation, (1) Nagpur Corporation should meter the water supply immediately.
(2) In the annual budget of the Corporation,budget of the water works department should be shown separately for supply of water.
In the said budget provision for payment of loans, sinking.
fund and future increase, in expenditure should be made separately.
After making these provisions the Corporation can expend the money for other works.
" On July 5, 1965, the meeting was adjourned.
On July 1,2, 1965, the corporation passed the, following resolution: "The Corporation gives its approval to the raising of a loan of Rs. 70 lakhs, in the next three years.
Such a loan comprising of Rs. 24 lakhs for Kanhan 3 Stage scheme and Rs. 45 lakhs for improvement in the Distribution System necessitated in view of the additional 29 million gallons of water that will be available after completion of the Kanhan 3 Stage Scheme.
The office should take necessary action to obtain the guarantee of the State Government for raising this loan in the open market in accordance with the above Resolution.
" The resolution is not printed in the paper book, but an agreed copy of the resolution was filed before us.
:The State government was of the view that by the resolution dated July 12, 1965, the corporation refused to accept the two conditions mentioned in the office note and thereby made it impossible for the corporation to meet the cost of construction of the head works and the.
remodelling and 591 redesigning of the distribution system and to provide a sufficient supply of water for the public and private purposes.
The corporation could not raise the loan without the Government guarantee and the government could, not reasonably guarantee the loan unless the two conditions of universal meterisation and the separate budget for the water supply were accepted.
The two conditions were reasonable.
The adoption of universal meterisation would have curtailed the wastage of water and secured adequate revenues necessary for the repayment of the loan and the setting up of an adequate sinking and development fund for the water supply.
A separate budget for the supply of water would have ensured that the receipts from the/ supply of water were a located to the expenditure on the water supply scheme.
The answer of the corporation was twofold.
The corporation said firstly that the resolution dated July 12, 1965 neither accepted nor rejected the two conditions and the question of accepting the conditions was left for future negotiations with the government after the government would be approached for the sanction of the loan under section 420(2)(r) of the City of Nagpur Corporation Act 1948, read with City of Nagpur Corporation Loans Rules 1951.
The corporation said secondly that the cost of immediate meterisation of the old connections would be Rs. 52 lacs and it was impossible for the corporation to raise this sum, nor could it lawfully divert any portion of the loan of Rs. 70 lacs for meeting this cost.
The High Court accepted the contention that at the meeting held on July 12, 1965, the corporation had resolved that the matter with regard to the conditions imposed by the government for giving the loan should be left for further negotiations with the government.
But it is to be noticed that the resolution dated July 12, 1965 did riot state that there should be any further negotiations with the government on the matter, nor did it disclose the financial problem with regard to meterisation or the basis upon which further negotiations should take place.
On June 30, 1965, he corporation had talked out the recommendation of the standing committee with regard to the universal meterisation and separate budget.
In this background, the State government.
could reasonably hold that the passing of the resolution excluding the office note amounted to virtual rejection of the conditions mentioned in the note.
The High Court was in error in accepting the first contention.
The High Court was also in error in holding that the Govern ment passed the order of September 29, 1965 without considering that universal meterisation posed a formidable problem which could not be overcome without a loan of Rs. 52, lacs in addition to the loan of Rs. 70 lacs.
The resolution of July 12, 1965 did not state that the corporation wanted an additional loan of Rs. 52 lacs for meeting the cost of universal meterisation.
Even in the answer to the showcause notice, the corporation did not say that it wanted to raise 592 an additional loan of Rs. 52 lacs.
The answer stated that the raising of this sum for the present was an impossibility.
There is nothing to show that the State, government would not have guaranteed repayment of this additional loan or that it was not possible to raise the loan backed, by a government guarantee.
In the writ petition respondent No.1 gave a summary of the reply to the show cause notice.
But there was no specific averment in the petition supported by affidavit that Rs. 52 lacs was necessary for the meterisation and that the raising of this sum was an impossibility.
That is why the point was not dealt with in the return to the writ, petition.
Even assuming that the meterisation would cost Rs. 52 lacs, there is nothing to show that the government would not have guaranteed the loan for this sum or that the corporation could not have raised the loan with this, guarantee.
Moreover, if the Government was right in assuming that the corporation had refused to entertain the proposal of meterisation, the question of raising funds for the meterisation would not arise and would be irrelevant.
The government passed the order after taking into consideration the reply to the show cause notice.
There were materials be "ore the State Government upon which it could find that the corporation had neglected to undertake an improvement of water supply and to provide a sufficient supply of water for private and public purpose.
On the basis of this finding, the State government could form the opinion that the corporation was not competent to perform the duties imposed on it by or under the Act.
Mr. Bobde contended that the opinion of the State government was based on two grounds arid as one of them is found to be non existent or irrelevant, the order is invalid and should be set aside.
The cases relied on by him may, be briefly noticed.
In a number of cases, the Court has quashed orders of preventive detention based on several grounds one of which is found to be irrelevant or illusory.
After reviewing the earlier cases Jagannadhadas J, in Dwarka Dass Bhatia vs The State of Jammu and Kashmir (1) said: "The principle underlying all these decisions is 'this.
Where power is vested in a statutory authority to deprive the liberty of a subject on its subjective satisfaction with reference to specified matters, if that satisfaction is stated to be based on a number of grounds or for a variety 'of reasons all taken together, and if some out of them are found to be non existent or irrelevant, the very exercise of that power is bad.
This is so because the matter being one for subjective satisfaction, it must be properly based on all the reasons on which it purports to be based.
If 'some out of them are found to be non existent or irrelevant, the Court cannot pre dicate what the subjective satisfaction of the said authority would have been on the exclusion of those grounds or (1) ; ,955.
593 reasons.
To uphold the validity of such an order in spite of the invalidity of some of the reasons or grounds would be to substitute the objective standards of the Court for the subjective satisfaction of the.
statutory authority.
In applying these principles, however, the Court must be.
satisfied that the vague or irrelevant grounds are such as, if excluded, might reasonably have affected the subjective satisfaction of the appropriate authority.
It is not merely because some ground or reason of a comparatively un essential nature is defective that such an order based on subjective satisfaction can be held to be invalid.
The Court, while anxious to safeguard the personal liberty of the individual will not lightly interfere with such orders." In Maursinha vs State of Madhya Pradesh(1), the Madhya Pradesh High Court, following the principle of the preventive detention cases, held that an order of supersession of the municipality under section 208 of the Madhya Bharat Municipal ties Act 1954, based on several grounds, most of which were found to be irrelevant, was invalid.
In Dhirajlal Girdharilal vs Commissioner of Income tax(2) Mahajan, C. J., said with reference to the order of an income tax tribunal "The learned Attorney General frankly conceded that it could not be denied that to a certain extent the Tribunal had drawn upon its own imagination and had made use of a number of surmises and conjectures in reaching its result.
He, however, contended that eliminating the irrelevant material employed by the Tribunal in arriving at its conclusion, there was sufficient material on which the finding of fact could be supported.
In our opinion, this contention is not well founded.
It is well established that when a court of facts acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the 'mind of ' the court was affected by the irrelevant material used by it in arriving at its finding.
Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises.
" In State of Orissa vs Bidyabhushan Mahapatra(3) an administrative tribunal in a disciplinary proceeding against a public servant found the second charge and four out of the five heads under the first charge proved and recommended his dismissal.
The Governor after giving him a reasonable opportunity to show cause against the proposed punishment dismissed him.
The High Court held that, the findings on two of the heads under the first charge could not be sustained as in arriving at those findings the tribunal had violated rules of natural justice.
It held that the second charge and only (1) A.I.R. 1958 M.P. 397 (2) A.I.R. 1956 S.C., 271 273.
(3) [1963] Supp.
I S.C.R. 618,665 6.
594 two heads of the first charge were established and directed the Governor to reconsider whether on the basis of these charges the punishment of dismissal should be maintained.
On appeal, this Court set aside the order of the High Court.
In the course of the judgment, Shah, J, observed: "If the High Court is satisfied that if some but not all of the findings of the Tribunal were 'unassailable ', the order of the Governor on whose powers by the rules no restrictions in determining the appropriate punishment are placed, was final, and the High Court had no jurisdiction to direct the Governor to review the penalty, for as we have already observed the order Of dismissal passed by a competent authority on a public servant, if the conditions of the constitutional prote ction ha* been complied with, is not justiciable.
Therefore if the order may be supported on any finding as to substantial misdemeanour for which the punishment can lawfully be imposed, it is not for the Court to consider whether that ground alone would have weighed with the authority in dismissing the public servant.
The Court has no jurisdiction if the findings of the enquiry officer or the Tribunal prima facie make out a case of misdemeanour, to direct the authority to reconsider that order because in respect of same of the findings but not all it appears that there had been violation of the rules of natural justice.
" The principle underlying these decisions appears to be this.
An administrative or quasi judicial order based on several grounds, all taken together, cannot be sustained if it be found that some of the grounds are non existent or irrelevant, and there is nothing to show that the authority would have passed the order on the basis of the other relevant and existing grounds.
On the other hand, an order based on several grounds some of which are found to be non existent or irrelevant, can be sustained if the court is satisfied that the authority would have passed the order on the basis of the other relevant and existing grounds, and the exclusion of the irrelevant or non existent grounds could not have affected the ultimate opinion or decision.
Now, the opinion of the State government that the corporation was not competent to perform the duties imposed on it by or under the Act, was based on two grounds one of Which is relevant and the other irrelevant.
Both the grounds as also other grounds were set out in paragraphs 1 and 2 read with annexures 1 and 2 of the showcause notice dated July 21, 1965.
Para 3 of the show cause notice stated, "And whereas the grounds aforesaid jointly as well as severally appear serious enough to warrant action under section 408(1) of the said Act".
The (order dated September 29, 1965, 595 read with the notice dated July 21, 1965 shows that in the opinion of the State government the second ground alone was serious enough to warrant action under section 408(1) and was sufficient to establish that the corporation was not competent to perform its duties under the Act.
The fact that the first ground mentioned in the order is now found not to exist and is irrelevant, does not affect the order.
We are reasonably certain that the State government would have passed the order on the basis of the second ground alone.
The order is, therefore, valid and cannot be set aside.
In the result, the appeal is allowed, the order of the High Court is set aside and the writ petition is dismissed.
In all the circumstances, there will be no order as to costs in this Court and, in the court below.
Y.P. Appeal allowed.
| Under section 42(1) of the , no owner of a trans port vehicle shall use it or permit it to be used in any public place save in accordance with the conditions of a permit issued by the appropriated authority.
A "transport vehicle" means, under section 2(33) a "public ser , vice vehiicle" and a "public service vehicle" means,, under section 2(25), a motor vehicle either used or adapted to be used for the carriage of passengers for hire or reward.
The respondent was the owner of a motor vehicle registered as a "motor car" as defined in section 2(16) of the Act and not, as a "transport vehicle".
He was charged with an offence under section 42(1) read with section 123 of the Act, as the car was used on one occasion, for carrying passengers on payment of hire, that is for having used the car as a "transport vehicle" without the requisite permit.
The trial court, and the High Court on appeal, acquitted him on the ground that as section 42(1) uses the words "owner of a transport vehicle" the sub section applies only to cases where the motor vehicle was registered as a transport vehicle.
In appeal to this Court, HELD : It is the use of the motor vehicle for carrying passengers for hire or reward which determines the category of the vehicle and the.appli 'cation of section 42(1).
Therefore, even if the motor vehicle was occasionally used for carrying passengers for hire or reward, it must be regarded when so used, as a "public service vehicle" and therefore a "transport vehicle ' and, if it was so used without the necessary permit the owner who uses it or permits it to be so used would be liable under section 42(1) read with,: section 123.
The interpretation of the High Court would lead to the anomalous result, namely : that whereas the owner of a transport vehicle is required to have the permit, the owner of a motor vehicle not constructed or adapted as a transport vehicle could carry with impunity passengers without any permit, and such an interpretation would defeat the object of the legislature in making the provision in the interest of the safety of passengeii.
A B; 677 H; 678 A B] B section Usman Saheb vs State of Mysore, and.
Jayaram vs State of Mysore, , overruled.
|
Appeal No. 182 of 1964.
Appeal by special leave from the judgment and order dated April 20, 1959, of the Madhya Pradesh High Court in Misc.
Petition No. 325 of 1955.
section V. Gupte, Solicitor General, W. section Barlingay, section T. Khirwarkar and A. G. Ratnaparkhi, for the appellants.
M. section K. Sastri and M. section Narasimhan for I. N. Shroff, for the, respondent.
The Judgment of the Court was delivered by Hidayatullah J.
The appellants claiming to be the descen dants of former ruling chiefs in the Hoshangabad and Nimar Districts of Madhya Pradesh applied under the Central Provinces and Berar Revocation of Land Revenue Exemptions Act, 1948, for grant of money or pension as suitable maintenance for themselves.
By that Act, every estate, mahal, village or land which was exempted from the payment of the whole or part of land revenue by special grant of, or contract with the Crown, or under the provision of any law or rule for the time being in force or in pursuance of any other instrument was after the appointed date made liable to land revenue from the year 1948 49, notwithstanding anything contained in the grant, contract, law, rule or instrument.
The appellants held estates in the two districts on favourable terms as Jahgirdars Maufidars and Ubaridars, and enjoyed an exemption from payment of land revenue amounting in the aggregate to Rs. 27,828 5 0 yearly.
On the passing of the Act the exemption was lost and they claimed to be entitled to grant of money or pension under the provisions of the Act about to be set out.
They applied to the Deputy Commissioner, who forwarded their application to the State Government.
The State Government by its order No. 993 /XVI 4, dated April 26, 1955 rejected their petition.
No reasons are contained in that order.
The appellants thereupon filed a petition in the High Court of Madhya Pradesh under article 226 of the Constitution for a writ of certiorari to quash the order of the State Government.
In that LlSup./65 18 680 petition they contended that the, rejection of their petition by the State Government without giving any reasons amounted to no decision at all and was an improper and illegal exercise of the power vested in the State Government by section 5 of the Act.
The State Government resisted the petition by contending that the appellants were not descendants of any former ruling chief and further that the exercise of the power by the State Government was proper and legal.
The petition in the High Court was heard and disposed of by a Full Bench.
The learned Chief Justice, who delivered the judgment on behalf of the Full Bench held that the State Government was not compelled to grant either money or pension because the exercise of the power under section 5 was discretionary and the petition, therefore was incompetent.
No other question was gone into by the High Court even though a suit is barred under the provisions of the Act and a petition under article 226 would appear to be the only remedy in case the State Government failed to comply with the terms of the Act, or acted in an illegal manner.
The Act consists of eight sections.
The revocation of exemption from liability for land revenue is laid down by section 3, the purport of which has already appeared in this judgment.
It is not necessary to refer to that section in detail because in addition it speaks of lands in Berar governed by the Berar Land Revenue Code and of lands in Madhya Pradesh governed by the Central Provinces Land Revenue Act, 1917 and lays down the classes of such lands and the special rules applicable to them.
In the present appeal we are not concerned with these details and they may, therefore, be put aside.
Section 4 of the Act makes suitable amendments in the Central Provinces Land Revenue Act, 1917 and the Berar Land Revenue Code consequent upon the provisions of section 3 of the Act.
We need not attempt to set out these amendments.
Section 5 then provides as follows : "5.
Awards of money grants or pension.
(1) Any person adversely affected by the provisions of section 3 may apply to the Deputy Commissioner of the district for the award of a grant or money or pension.
(2) The Deputy Commissioner shall forward the application to the Provincial Government, which may pass such orders as it deems fit.
(3) The Provincial Government may make a grant of money or pension 681.
(i) for the maintenance or upkeep of any religious, charitable or public institution or service of.
& like nature; or (ii) for suitable maintenance of any family of at descendant from a former ruling chief.
(4) Any amount sanctioned by way of grant of money or pension under this section shall be a charge on the revenues of the Province.
" Section 6 bars the jurisdiction of civil courts.
Section 8 enables the Provincial Government to make rules for carrying out the purposes of the Act.
Section 7 grants power to the: State Government to grant exemptions from payment of land revenue under the Central Provinces Land Revenue Act, 1917 and the Berar Land Revenue Code in whole or in part, as it may deem fit.
The short question in this appeal is whether the provisions of section 5(3) make it obligatory upon the State Government to make a suitable grant of money or pension in case it is proved that the applicant has lost the exemption under the Act and is a descendant from a former ruling chief? The Full Bench of the High Court was of the view that there was no obligation on the State Government to make such a grant inasmuch as section 5 (3) was discretionary.
The appellants contend that the view of the High Court of section 5 (3) is erroneous and the section is mandatory notwithstanding the use of language which appears to confer a discretion, provided the other conditions of the sub section are fulfilled.
Before we deal with this question we may also refer to the rules which have been framed under section 8 of the Act.
These rules, were made for dealing with applications received under section 5(1) of the Act.
They are six in number.
After defining the terms 'maufi ', 'inane, 'maufidar ' and 'inamdar, rule 3 says that on receipt of the application the Deputy Commissioner may enquire into it personally or may transfer it to a Revenue Officer not below the rank of Extra Assistant Commissioner for enquiry and report.
Rule 4 then provides what the enquiry should cover.
Though the rule is divided into sub rules (a) to (g), under sub rules (a) to (e) the enquiry is directed to ascertain the lands held by the applicant, his income, class of maufi or inam and the details of the maufi and inam.
There were many maufidars, ubaridars, who were holding lands under diverse titles and concessions.
Sub rules (a) to (e) seem to apply to all the applicants.
When, however, a maufi is held by any religious, charitable or public institution or for any service as stated in section 5 (3) (i) quoted above or is held for maintenance Sup./65 19 682 by a descendant of a former ruling chief as mentioned in section 5 (3) (id), sub rules (f) and (g) apply in addition to sub rules (a) to (e).
Under sub rule (f) some special enquiry is required to be made in respect of religious, charitable or public institutions or service, such as, whether the institution should be continued to be maintained or service continued to be rendered and the minimum annual expenditure required for the maintenance of the institution or the service.
Sub rule (g) then says "In the case of maufi or inam for the maintenance of a descendant of a former ruling chief the following further information should also be furnished This is followed by four sub rules the first lays down that the minimum amount required to ensure suitable maintenance of the family should be stated after enquiry; the second requires that any other source of income should be specified; the third requires the enquiring officer to state the extent to which such a person is dependent on maufi income and the fourth requires that his loyalty to Government should be ascertained.
Rule 5 then enjoins that after completing the enquiry the Deputy Commissioner should make his report and his recommendation.
Rule 6 provides that the Deputy Commissioner should also consider whether it would be desirable to exempt some land from liability to pay land revenue in whole or part under section 7 instead of making a money grant under section 5(3).
It is contended on behalf of the State of Madhya Pradesh that the powers exercisable under the Act are in the discretion of the Government and there can be no remedy by way of a writ under article 226 of the Constitution.
It is pointed out in support of the submission that sub section
(2) of section 5 confers on the Government complete discretion because it says "that the Provincial (State) Government". . ." may pass such orders as it deems fit" in respect of every application forwarded by the Deputy Commissioner, and that sub section
(3) is also worded in language which is directory where it says "The Provincial (State) Government may make a grant of money or pension etc.
" This view ,appears to have been accepted in the High Court.
In our opinion, this contention cannot be supported if the scheme of the fifth section is closely examined.
No doubt, the Deputy Commissioner is required to make enquiries and to forward all applications to Government and Government has been 683 given the power to pass such orders as it deems fit but the operation of sub section
(2) and the discretion in it relates to applications in general while in respect of some of the applications the order has to be made under the third sub section where the discretion is to a considerable extent modified.
The rules here help in the understanding of the third sub section.
In all cases an enquiry has to be made which generally follows a pattern disclosed by rule 4, sub rules (a) to (e).
But in cases of maufi or inam held by religious, charitable or public institutions or service or in case of a maufi or inam for the maintenance of a descendant of a former ruling chief additional enquiries have to be made.
File rules highlight the distinction between revocation of exemption in the case of persons belonging to two special categories and the revocation of exemption in the case of others.
It will be noticed presently that section 5 of the Act also follows the same scheme and the rules do no more than emphasise the special character of sub section
(3) of section 5.
Power has been conferred on Government to make some other lands free from land revenue so that sometimes a grant of money or pension and sometimes exemption from land revenue may be ordered.
It could hardly have been intended that sub section
(3) of section (5) was to be rendered nugatory in its purpose by the operation of the discretion conferred by sub section
The two sub sections have to be read separately because though the word "may" appears in both of them that word in sub section
(3) takes its meaning from an obligation which is laid upon Government in respect of certain institutions and persons if the stated conditions are fulfilled.
It is impossible to think that in the case of a religious, charitable or public institution which must be continued or in the case of descendants of former ruling chiefs, Government possessed an absolute discretion to refuse to make a grant of money or pension for their maintenance or upkeep even though they satisfied all the conditions for such a grant and were deserving of a grant of money or pension.
The word "may" in section 5(3) must be interpreted as mandatory when the conditions precedent, namely, the existence of a religious, charitable or public institutions which ought to be continued or of the descendants of a ruling chief, is established.
The words "may pass such orders as it deems fit" in sub section
(2) mean no more than that Government must make its orders to fit the occasion, the kind of order to be made being determined by the necessity of the occasion.
As stated in Maxwell on the Interpretation of Statutes ( 11th edn.
p. 23 1 "Statutes which authorise persons to do acts for the benefit of others, or, as it is sometimes said.
for the 684 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 compulsory force, and so would seem to be modified by judicial exposition.
" This is an instance where, on the existence of the condition precedent, the grant of money or pension becomes obligatory on the Government notwithstanding that in section 5(2) the Government has been given the power to pass such orders as it deems fit and in sub section
(3) the word "may" is used.
The word "may" is often read as "shall" or "must" when there is something in the nature of the thing to be done which makes it the duty of the person on whom the power is conferred to exercise the power.
Section 5 (2) is discretionary because it takes into account all cases which may be brought before the Government of persons claiming to be adversely affected by the provisions of section 3 of the Act.
Many such persons may have no claims at although they may in a general way be said to have been adversely affected by section 3.
If the power was to be discretionary in every case there was no need to enact further than sub section
The reason why two sub sections were enacted is not far to seek.
That Government may have to select some for consideration under sub section
(3) and some under section 7 and may have to dismiss the claims of some others requires the conferment of a discretion and sub section
(2) does no more than to give that discretion to Government and the word "may" in that subsection bears its ordinary meaning.
The word "may" in sub section
(3) ha, ,, however, a different purport.
Under that sub section Government must, if it is satisfied that an institution or service must be continued or that there is a descendant of a former ruling chief, grant money or pension to the institution or service or to the descendant of the former ruling chief, as the case may be.
Of course, it need not make a grant if the person claiming is not a. descendant of a former ruling chief or there is other reasonable ground not to grant money or pension.
But, except in those cases where there are good grounds for not granting the pension, Government is bound to make a grant to those who fulfill the required condition and the word "may" in the third sub section though apparently discretionary has to be read as "must".
File 685 High Court was in error in thinking that the third sub section also like the second conferred an absolute discretion.
The next question is whether Government was justified in making the order of April 26, 1955 ? That order gives no reasons at all.
The Act lays upon the Government a duty which obviously must be performed in a judicial manner.
The appellants do not seem to have been heard at all.
The Act bars a suit and there is all the more reason that Government must deal with such case in a quasi judicial manner giving an opportunity to the claimants to state their case in the light of the report of the Deputy Commissioner.
The appellants were also entitled to know the reason why their claim for the grant of money or a pension was rejected by Government and how they were considered as not falling within the class of persons who it was clearly intended by the Act to be compensated in this manner.
Even in those cases where the order of the Government is based upon confidential material this Court has insisted that reasons should appear when Government performs curial or quasi judicial functions (see Messrs Hari Nagar Sugar Mills Ltd. vs Shyam Sunder Jhunjhunwala & Others(1).
The High Court did not go into any other question at all because it rejected the petition at the threshold on its interpretation of section 5(3).
That interpretation has been found by us to be erroneous and the order of the High Court must be set aside.
As the order of Government does not fulfil the elementary requirements of a quasi judicial process we do not consider it necessary to order a remit to the High Court.
The order of the State Government must be set aside and the Government directed to dispose of the case in the light of our remarks and we order accordingly.
The respondents shall pay the costs of the appellants in this Court and the High Court.
Appeal allowed.
| Applications were made by four respondent under s.33C(2) of the , contending that besides attending to their routine duty as clerks, they had been operating the adding machine provided for use in the clearing department of the appellant Bank during the period mentioned in the list annexed to the petitions and hence each of them was entitled to the payment of Rs. 10/ p m, as special allowance for operating the adding machine as provided for in para 164(b)(1) of the Sastry Award.
The appellant Bank raised certain objections but these were rejected by the Labour Court which held that the respondents were entitled to the amounts claimed 141 by them, and the same were ordered to be paid.
The appellants came to this Court by special leave.
The contentions raised in this court were that section 33C(2) did not apply in the present case and the Labour Court had exceeded its jurisdiction in entertaining the applications made by respondents as claims made by them were outside the scope of s, 33(3(2) which postulated the existence of an admitted right in a workman and did not cover cases where the said right was disputed.
Moreover, special allowance could be claimed only by comptists and as the respondents had not even claimed that they were comptists, their applications should have been rejected.
Held that section 33C(2) takes within its purview cases of workmen who claim that the benefit to which they are entitled should be computed in term of money, even though the right to the benefit on which their claim is based is disputed by their employers.
For the purpose of making the necessary determination under section 33C(2), it is open to the Labour Court to interpret the award or settlement on which the workman 's right rests.
There is a distinction between section 33C(2) and L 36A. Whereas section 33C(2) 'deals with cases of implementation of individual rights of workmen falling under its provisions, section 36A deals merely with a question of interpretation of the award where a dispute arises in that behalf between the workmen and the employer and the appropriate Government is satisfied that the dispute deserves to be resolved by reference under section 36A.
The scope of section 33G(2) is wider than that of section 33G(1).
Claims made under section 33C(1) can be only those claims which are referrable to settlement, award or the relevant provisions of Chapter V A, but those limitations are not to be found in section 33C(2).
Three categories of claims mentioned in section 33C(1) fall.
under section 33C(2)and in that sense section 33C(2) can itself be deemed to be a kind of execution proceeding, but it is possible that claims not based on settlements, awards or made under the provisions of Chapter V A may also be competent under section 33C (2).
Held that respondents ' claim for special allowance as camptists solely on the ground that they could be described as adding machine operators could not be sustained.
No period of limitation is provided for an application under section 33C(2).
142 Punjab National Bank Ltd. vs
K.L. Kharbanda, (1962) 1 L.L.J. 234, M/s. Kasturi and Sons (P) Led.
vs Shri N. Saliva teeswaranb ; , Shri Ambica Mills Co. Ltd. vs Shri S B. Bhatt; , and M/s. Sawatrum Ramprasad Mills Co. Ltd, Akola vs Baliram, (1962) 65 Born.
L.R. 91, referred to.
|
ION: Criminal Appeal No. 32 of 1958.
Appeal by special leave from the judgment and order dated April 25, 1957, of the Allahabad High Court in Criminal Appeal No. 992 of 1954, arising out of the judgment and order dated January 25, 1954, of the Additional Sessions Judge, Gorakhpur in Sessions Trial No. 71 of 1953.
section P. Sinha and section D. Sekhri, for the appellant.
G. C. Mathur and C. P. Lal (for G. N. Dikshit), for the respondent.
September 3.
The Judgment of the Court was delivered by WANCHOO J.
This is an appeal by special leave against the judgment of the Allahabad High Court in a criminal matter.
The facts of the case, as found by the High Court, are no longer in dispute and the 648 question that is raised in this appeal is whether the appellant had exceeded the right of private defence of person.
The relevant facts for our purposes are these.
Gopal deceased was married to the sister of the appellant.
The appellant and his father Badri were living in a railway quarter at Gorakhpur.
Gopal 's sister was married to one Banarsi, who was also living in another railway quarter nearby.
Gopal had been living for some time with his father in law.
They did not, however, pull on well together and Gopal shifted to the house of Banarsi.
Badri persuaded Gopal to come back to his house but the relations remained strained and eventually Gopal shifted again to the quarter of Banarsi about 15 days before the present occurrence which took place on June 11, 1953, at about 10 p.m. Gopal 's wife had continued to live with her father as she was unwilling to go with Gopal.
Her father Badri and her brother Vishwanath appellant sided with her and refused to let her go with Gopal.
Gopal also suspected that she had been carrying on with one Moti who used to visit Badri 's quarter.
Consequently, Gopal was keen to take away his wife, the more so as he had got a job in the local department some months before and wanted to lead an independent life.
On June 11, there was some quarrel between the appellant and Gopal about the girl; but nothing untoward happened then and the appellant went back to his quarter and Gopal went away to Bansari 's quarter.
Gopal asked Banarsi 's sons to help him in bringing back his wife.
Banarsi also arrived and then all four of them went to Badri 's quarter to bring back the girl.
On reaching the place, Banarsi and his two sons stood outside while Gopal went in.
In the meantime, Badri came out and was asked by Banarsi to let the girl go with her husband.
Badri was not agreeable to it and asked Banarsi not to interfere in other people 's affairs.
While Badri and Banarsi were talking, Gopal came out of the quarter dragging his reluctant wife behind him.
The girl caught hold of the door as she was being taken out and a tug of war followed between her and Gopal.
The appellant was also there and shouted to his father 649 that Gopal was adamant.
Badri, thereupon replied that if Gopal was adamant he should be beaten (tomaro).
On this the appellant took out a knife from his pocket and stabbed Gopal once.
The knife penetrated into the heart and Gopal fell down senseless.
Steps were taken to revive Gopal but without success.
Thereupon, Gopal was taken to the hospital by Badri and the appellant and Banarsi and his sons and some others, but Gopal died by the time they reached the hospital.
On these facts the Sessions Judge was of opinion that Badri who had merely asked the appellant to beat Gopal could not have realised that the appellant would take out a knife from his pocket and stab Gopal.
Badri was, therefore, acquitted of abetment.
The Sessions Judge was further of opinion that the appellant had the right of private defence of person, and that this right extended even to the causing of death as it arose on account of an assault on his sister which was with intent to abduct her.
He was further of opinion that more harm than the circumstances of the case required was not caused; and therefore the appellant was also acquitted.
The State then appealed to the High Court against the acquittal of both accused.
The High Court upheld the acquittal of Badri.
The acquittal of the appellant was set aside on the ground that the case was not covered by the fifth clause of section 100 and the right of private defence of person in this case did not extend to the voluntary causing of death to the assailant and therefore it was exceeded.
The High Court relied on an earlier decision of its own in Emperor vs Ram Saiya (1).
The appellant was therefore convicted under section 304, Part 11, of the Penal code and sentenced to three years ' rigorous imprisonment.
He applied for a certificate to enable him to appeal to this Court but this was refused.
Thereupon he applied to this Court for special leave which was granted; and that is how the matter has come up before us.
The main question therefore that falls for consideration in this appeal is whether the decision in Ram (1) I.L.R. 1948 All.
650 Saiya 's case (1) is correct.
It appears that four other high Courts have taken a view which is different on that taken in Ram Saiya 's case (1 ), namely Jagat singh vs King Emperor (2) Daroga Lokar vs Emperor Lohar vs The State (4) and Dayaram Laxman vs State 'here is, however, no discussion of the point in these our cases and we need not refer to them further.
the view taken in Ram Saiya 's case (1) is that the lord " abducting " used in the fifth clause of section 100 of the Penal Code refers to such abducting as is an offence under that Code and not merely to the act of abduction as defined in section 362 thereof.
Mere abduction is not an offence and, therefore, cannot give rise of any right of private defence and the extended right of private defence given by section 100 only arises if the offence which occasions the exercise of the right is of the Of the kinds mentioned in section 100.
Section 97 gives the right of private defence of person against any offence affecting the human body.
Section 99 lays down that the right of private defence a no case extends to the inflicting of more harm than it is necessary to inflict for the purpose of defence.
Section 100 with which we are concerned is in these terms: " The right of private defence of the body extends, under the restrictions mentioned in the last preceding section, to the voluntary causing of death or of any other harm to the assailant, if the offence which occasions the exercise of the right be of any of the descriptions hereinafter enumerated, namely " First Such an assault as may reasonably cause the apprehension that death will otherwise be the consequence of such assault; Secondly Such an assault as may reasonably cause the apprehension that grievous hurt will otherwise be the consequence of such assault; Thirdly An assault with the intention of committing rape ; (1) I.L.R. 1948 All.
(3) A.I. R. 1930 Pat.
347 (2).
(2) A.I.R. 1923 Lab.
155 (1).
(4) 1 (5) A 1.
R. 1953 Madhya Bharat 182.
651 Fourthly An assault with the intention of gratifying unnatural lust; Fifthly An assault with the intention of kidnapping or.
abducting; Sixthly An assault with the intention of wrongfully confining a person under circumstances which may reasonably cause him to apprehend that he will be unable to have recourse to the public authorities for his release.
" The right of private defence of person only arises if there is an offence affecting the human body.
Offences affecting the human body are to be found in Ch.
XVI from section 299 to section 377 of the Penal Code and include offences in the nature of use of criminal force and assault.
Abduction is also in Ch.
XVI and is defined in section 362.
Abduction takes place whenever a person by force compels or by any deceitful means induces another person to go from any place.
But abduction pure and simple is not an offence under the Penal Code.
Only abduction with certain intent is punishable as an offence.
If the intention is that the person abducted may be murdered or so disposed of as to be put in danger of being murdered, section 364 applies.
If the intention is to cause secret and wrongful confinement, section 365 applies.
If the abducted person is a woman and the intention is that she may be compelled or is likely to be compelled to marry any person against her will or may be forced or seduced to illicit intercourse or is likely to be so forced or seduced, section 366 applies.
If the intention is to cause grievous hurt or so dispose of the person abducted as to put him in danger of being subjected to grievous hurt, or slavery or the unnatural lust of any person, section 367 applies.
If the abducted person is a child under the age of ten and the intention is to take dishonestly any movable property from its person, section 369 applies.
It is said that unless an offence under one of these sections is likely to be committed, the fifth clause of section 100 can have no application.
On a plain reading, however, of that clause there does not seem to be any reason for holding that the word " abducting " used there means anything more than what is defined as " abduction " in section 362.
652 It is true that the right of private defence of person arises only if an offence against the human body is committed.
Section 100 gives an extended right of private defence of person in cases where.
the offence which occasions the exercise of the right is of any of the descriptions enumerated therein.
Each of the six clauses of section 100 talks of an assault and assault is an offence against the human body; (see section 352).
So before the extended right under section 100 arises there has to be the offence of assault and this assault has to be of one of the six types mentioned in the six clauses of the section.
The view in Ram Saiya 's case (1) seems to overlook that in each of the six clauses enumerated in section 100, there is an offence against the human body, namely, assault.
So the right of private defence arises against that offence, and what section 100 lays down is that if the assault is of an aggravated nature, as enumerat ed in that section, the right of private defence extends even to the causing of death.
The fact that when describing the nature of the assault some of the clauses in section 100 use words which are themselves offences, as for example, " grievous hurt ", " rape ", " kidnapping ", " wrongfully confining ", does not mean that the intention with which the assault is committed must always be an offence in itself.
In some other clauses, the words used to indicate the intention do not themselves amount to an offence under the Penal Code.
For example, the first clause says that the assault must be such as may reasonably cause the apprehension of death.
Now death is not an offence anywhere in the Penal Code.
Therefore, when the word " abducting " is used in the fifth clause, that word by itself reed not be an offence in order that clause may be taken advantage of by or on behalf of a person who is assaulted with intent to abduct.
All that the clause requires is that there should be an assault which is an offence against the human body and that assault should be with the intention of abducting, and whenever these elements are present the clause will be applicable.
Further the definition of " abduction " is in two parts, namely, (i) abduction where a person is compelled, (1) I.L.R. 1948 All.
653 by force to go from any place and (ii) abduction where a person is induced by any deceitful means to go from any place.
Now the fifth clause of section 100 contemplates only that kind of abduction in which force is used and where the assault is with the intention of abducting, the right of private defence that arises by reason of such assault extends even up to the causing of death.
It would in our opinion be not right to expect from a person who is being abducted by force to pause and consider whether the abductor has further intention as provided in one of the sections of the Penal Code quoted above, before he takes steps to defend himself, even to the extent of causing death of the person abducting.
The framers of the Code knew that abduction by itself was not an offence unless there was some further intention coupled with it.
Even so in the fifth clause of section 100 the word " abducting " has been used without any further qualification to the effect that the abducting must be of the kind mentioned in section 364 onwards.
We are therefore of opinion that the view taken in Ram Saiya 's case (1) is not correct and the fifth clause must be given full effect according to its plain meaning.
Therefore, when the appellant 's sister was being abducted, even though by her husband, and there was an assault on her and she was being compelled by force to go away from her father 's place, the appellant would have the right of private defence of the body of his sister against an assault with the intention of abducting her by force and that right would extend to the causing of death.
The next question is whether the appellant was within the restrictions prescribed by section 99.
It was urged that the right of private defence never extends to the inflicting of more harm than what is necessary for the purpose of defending and that in this case the appellant inflicted more harm than was necessary.
We are of opinion that this is not so.
The appellant gave only one blow with a knife which he happened to have in his pocket.
It is unfortunate that the blow landed right into the heart and therefore Gopal died.
But considering that the appellant had given (1) I.L.R. 1948 All.
83 654 only one below with an ordinary knife which, if it had been a little this way or that, could not have been fatal, it cannot be said that he inflicted more harm than was necessary for the purpose of defence.
As has been pointed out in Amjad Khan vs The State (1), " these things cannot be weighed in too fine a set of scales or in golden scale" '.
We, therefore, allow the appeal and hold that the appellant had the right of private defence of person under the fifth clause of section 100 and did not cause more harm than was necessary and acquit him.
Appeal allowed.
| Section 2(b) of the Delhi and Ajmer Merwara Rent Control Act 1947, provided as follows: , " section 2.
In this Act, unless there is anything repugnant in in the subject or context, (a). . . . . . . . . . (b) Premises ' means any building or part of a building which is, or is intended to be, let separately for use as a residence or for commercial use or for any other purpose. but does not include a room in a dharamshala, hotel or lodging house.
" The respondent occupied two rooms in the appellant 's hotel, described as the Ladies ' and Gents ' Cloak Rooms, where he used to carry on his business as a hair dresser.
The document executed by the parties purported to be one as between a licenser and licensee and provided, inter alia, that the respondent was to pay an annual rent of Rs. 9,600 in four quarterly installments, which was later reduced to Rs. 8,400 by mutual agreement.
The respondent made an application for standardisation of rent under section 7(1) of the Delhi and Ajmer Merwara Rent Control Act, 1947, and the Rent Controller of Delhi fixed the rent at Rs. 94 per month.
On appeal by the appellant, the I District judge reversed the order of the Rent Controller and dismissed the application holding that the Act did not apply.
The High Court in revision set aside the order of the District judge and restored that of the Rent Controller, holding that the agreement created a lease and not a license and that section 2 of the Act did not exempt the two rooms from the operation of the Act.
The two questions for determination in this appeal were, (1) whether the agreement created a lease or a license and, (2) whether the said rooms were rooms in a hotel within the meaning of section 2(b) of the Act.
Held, (Per section K. Das and Sarkar, jj., Subba Rao, J. dissenting), that the rooms let out by the appellant to the respondent were rooms in a hotel within the meaning of section 2(b) of the AjmerMerwara Rent Control Act, 1947, and were as such excluded from the purview of the Act and the respondent was not entitled to claim standardisation of rent under its provisions.
Per section K. Das, j In order that a room may be 'a room in a hotel ' within the meaning of the Act, it must fulfill two conditions, (1) it must be part of the hotel in the physical sense and, (2) its user must be connected with the general purpose of the hotel of which it is a part, 369 A hair dresser 's business provided one of the amenities of a modern hotel and as such it was connected with the business of the hotel.
There could be no doubt from the terms of the agreement executed by the parties in the instant case that it was a lease and not a licence.
Per Sarkar, J.
The words "room in a hotel" in section 2(b) of the Act must be given their plain meaning and a room in a hotel must, therefore, mean any room in a building in the whole of which the business of a hotel was carried on.
Per Subba Rao, J.
Although the document executed by the parties was apparently in a language appropriate to a licence, the agreement between them, judged by its substance and real intention, as it must be, left no manner of doubt that the document was a lease.
It had all the characteristics that distinguished it from a license, namely, (1) that it created an interest in the property in favour of the respondent, and, (2) it gave him exclusive possession thereof, which, in the absence of any circumstances that negatived it, must indicate a clear intention to grant a lease.
Errington vs Errington, ; and Cobb vs Lane, , referred to.
The words 'room in a hotel ', properly construed, must mean a room that was part of a hotel and partook of its character and did not cease to do so even after it was let out.
Consequently, where a hotel, as in the instant case, occupied the entire building, and rooms were let out for carrying on a business different from that of a hotel, such rooms could not fall within purview Of section 2 of the Act.
There could be no reasonable nexus in this case between a hair dresser 's business and that of a hotel as there was nothing in the document in question to prevent the tenant from carrying on any other business, or to bind him to give any preferential treatment to the lodgers, who could take their chance only as general customers, the tenant 's only liability being to pay the stipulated rent.
|
Criminal Appeal No. 150 of 1986.
221 From the Judgment and Order dated 14.7.83 of the Patna High Court in Govt.
Appeal No. 29/83.
S.N. Misra, M.M.P. Sinha and P.C. Kapur for the Petitioner.
S.C. Misra and, Mrs. Gian Sudha Misra for the Respondents.
The Judgment of the Court was delivered by OZA, J.
This appeal has been filed in this Court against the dismissal in limine of a petition filed by the State of Bihar in the High Court of Judicature at Patna wherein learned Judges of the High Court rejected a petition for leave to appeal against acquittal filed by the State Govern ment under Sec.378(1) and (3) of the Code of Criminal Proce dure in limine by any saying "Prayer for leave to appeal is refused.
Appeal is dismissed.
" Before the trial Court 25 accused persons were tried on the allegation that they committed dacoity and in the com mission of the said dacoity murder of one A jab Lal Singh was committed.
Consequently all of them were charged for offence under Section 396 of the Indian Penal Code.
It is alleged that in the night intervening between 5th and 6th day of June, 1980 at Village Nandial Patti situated within P.S. Amarpur in the District of Bhagalpur, occurrence took place in the house of one Jawahar Lal Singh P .W. 21 who lodged the First Information Report, his house is situated in Nandial Patti and in the course of dacoity his brother Ajab Lal Singh was killed.
The incident is said to have taken place at 12 O 'clock at midnight, and the information was lodged on 6th of June 1980 at 8.45 A.M., at Bhagalpur Medical College Hospital as the informant was lying injured in the surgical ward of the Hospital.
At the trial there were number of eye witnesses examined who claimed to have identified the accused persons in the light of a lentern burning at that time.
The evidence also attributed different parts to different accused persons.
The learned Sessions Judge after considering the evidence discarded the evidence and acquitted all the accused persons from the charge le velled against them and unfortunately Hon 'ble the High Court without examining the reasons on the basis on which the learned Sessions Judge discarded evidence dismissed the leave petition and appeal as mentioned above and therefore we are at a disadvantage as we have not before us the exami nation of the reasons by the High Court on the basis of which the learned trial Court discarded the testimony and acquitted all the accused persons.
Although learned counsel for the respondent refer 222 red to portions of the evidence to justify the order of acquittal but also contended that in case this Court feels that the High Court should have considered the matter and pass a reasoned order it would be proper that we may not refer to any part of the evidence on merits nor express any opinion.
Learned counsel for both the sides did not dispute that the incident was such wherein number of persons were in volved.
They also frankly accepted that there are number of witnesses examined in the case.
A perusal of the judgment of the learned trial Court also shows that all the reasons on the basis of which the whole of the prosecution evidence has been discarded is not so simple or reasons so good that they do not require examination.
Under these circumstances there fore without going into the merits we feel that it would be better that the matter be examined by the learned Judges of the High Court so that we may have the advantage of consid ering the considered opinion of the High Court on the rea sons which weighed with the learned trial Court in discard ing the prosecution evidence and acquitting the respondents.
In view of the facts of the case and the circumstances indicated above we feel that it would be better if the High Court considers the matter and dispose it of after giving reasons and in view of this we think it proper not to ex press any opinion on any of the matters that may deserve consideration.
The appeal is therefore allowed.
The order passed by the High Court on 14th July 1983 is set aside and the appeal alongwith petition for leave filed by the State of Bihar is restored to the file of the High Court and it is directed that Hon 'ble the High Court after hearing the parties shall dispose of the matter giving reasons for the conclusions in accordance with law.
P.S.S. Appeal allowed.
| A number of persons were tried on the allegation of committing a decoity with murder and charged for offence under s.396 of the Indian Penal Code.
Eye witnesses claimed to have identified the accused persons in the light of a lantern.
The evidence also attributed different parts to different accused persons.
The trial court after considering the evidence discarded it and acquitted all the accused persons of the charge.
The High Court dismissed the petition for leave to appeal against acquittal filed by the State Government under s.378(1) and (3) of the Code of Criminal Procedure in limine with the words "Prayer for leave to appeal is refused.
Appeal is dismissed.
" Without examining the reasons on the basis of which the trial court had discarded the evidence.
The appellant appealed to this Court.
Allowing the appeal, HELD: The High Court should have considered the matter and passed a reasoned order.
The incident was such wherein a number of persons were involved.
There were a number of witnesses examined in the case.
A perusal of the record shows that all the reasons on the basis of which the whole of the prosecution evidence had been discarded by the trial court were not so simple or so good that they did not re quire examination.
[222B C] The appeal alongwith the petition filed by the State for leave to appeal is restored to the file of the High Court, and directed to be disposed of after hearing the parties, giving reasons for conclusions.
[222E F]
|
Civil Appeal No. 722 of 1978.
From the Judgment and Decree dated 11.4.1977 of the Madhya Pradesh High Court in Second Appeal No. 315 of 1970.
S.K.Gambhir for the Appellant.
S.S. Khanduja for the Respondent .
The Judgment of the Court was delivered by K.RAMASWAMY,J.
The facts in this appeal would lie in a short compass.
The appellant appointed the respondent as Lower Division Clerk on September 22, 1966 and put him on probation for a period of two years which expired on September 21, 1968.
On December 9, 1968, the appellant served him with one month 's notice terminating the services with effect from January 9, 1969.
Calling in question the order of termination, the respondent laid the suit for declaration that the termination without enquiry and an opportunity of being heard was violative of Rule 9A of the Madhya Pradesh Civil Service Classification Control & Appeal (Rules), 1966 with consequential declaration that he became a permanent employee of the corporation with cotiuity of service and arrears of salary.
The Trial Court dismissed the suit and on appeal it was confirmed.
The High Court in Second Appeal No. 315/70 by judgment and decree dated April 11, 1977 allowed the appeal and decreed the suit as prayed for.
On leave under article 136 the Appellant filed this appeal.
Shri S.k.
Gambhir, learned counsel for the appellant contended that the respondent being a probationer, acquires permanent status only on confirmation.
Before confirmation the appellant had exercised its power, in terms of the rules, and terminated the respondent 's service.
The High Court committed manifest error of law in its finding that on expiry of two years period of probation the respondent must be deemed to have been confirmed under Rule 14 of the Municipal Officers and Servants Recruitment Rules which no longer were in force.
He further contended that rule 8 of the Madhya Pradesh Government Servants ' General Conditions of Service Rules, 1961 for short 'the Rules ' expressly provides confirmation of probation as a condition precedent.
Notice was issued terminating the service before confirmation and so it is valid in law.
Shri S.S. Khanduja, learned counsel for the respondent contended that by operation of the resolution passed 324 by the Municipal Corporation under section 25 of the Central Provinces and Berar Municipality Act 1922 the Municipal Officers and Servants are governed by recruitment rules thereunder.
Rule 14 thereof, relied on by the High Court expressly provided to put an employee on probation for a period of two years subject to being confirmed.
At the end of the probationary period, if the probationer was found unfit, the Municipal Committee shall, if he was a direct recruit, to dispense with his service and if he has been recruited by tranfer, to revert to his original post.
On expiry of the period of two years, no action was taken by the Municipal Corporation.
Therefore, the respondent must be deemed to have been confirmed.
Thereafter the only power which the Corporation had was to terminate the service of the respondednt in accordance with Classification Control and Appeal Rules after conducting an enquiry and giving him reasonable opportunity that too for misconduct.
No such procedure was adopted.
Therefore, the impugned notice was illegal and the High Court was justified in granting the decree.
The first question is, which are the relevant rules that would be applicable to the respondent? Admittedly, the Municipal Council became a Municipal Corporation on or after August 26, 1967.
A resolution was passed making a draft bye law by a Municipal Council on November 11, 1960, exercising the power under section 178(3) of the Madhya Pradesh Municipal Act, 1922 and confirmed the same under section 25 (1) of the said Act, adopting Government Rules to regulate the conditions of service of officers and servants of Municipal Committee which provides thus: "The fundamental rules and the Civil Service regulations as amended from time to time in their applications to M.P., the M.P.Government Servants Conduct Rules 1959, as amended from time to time and the General Book Circulars of the Govt.
of M.P. as in force for the time being shall apply to the officers and servants of the M.C. in the same way as they apply to Govt.
Servants".
Thus, it is clear that the Fundamental Rules, Civil Service Regulations, Govt, Servants Conduct Rules and the General Book Circulars of the Government of Madhya Pradesh as amended from time to time, etc.
shall apply to the officers and servants of the Municipal Committee.
The Previous rules were thus superseded and were no longer in force.
Reliance on Rule 14 referred to above made by the High Court is, therefore, wrong.
Rule 8 of the Rules reads thus: 325 "Probation (1) A person appointed to a service or post by direct recruitment shall ordinarily be placed on probation for such period as may be prescribed.
(2) The appointing authority may, for sufficient reasons, extend the period of probation by a further period not exceeding one year.
Note A probationer whose period of probation is not extended under this Sub Rule but who has neither been confirmed nor discharged from service at the end of the period of probation shall be deemed to have been continued in service, subject to the condition of his service being terminable on the expiry of a notice of one calender month given in writing by either side.
(3) A probationer shall undergo such training and pass such departmental examinations during the period of his probation as may be prescribed.
(4) and (5) are not relevant, hence omitted.
(6) On the successful completion of probation and the passing of the prescribed departmental examinations, the probationer shall be confirmed in the services or post to which he has been appointed." Thus, it is clear from Rule 8 of the Rules that the procedure to place a direct recruit on probation for a prescribed period was provided.
The appointing authority would be entitled to place a direct recruit on probation for a specified period and for sufficient reasons may extend the period of probation to a further period not exceeding one year.
Under the note to sub rule (2) if the probationer is neither confirmed nor discharged from service at the end of the period of probation, he shall be deemed to have been continued in service as probationer subject to the condition of his service being terminated on the expiry of a notice of one calender month given in writing by either side.
As per sub rule (6) on passing the prescribed departmental examination and on successful completion of the period of probation, the probationer shall be confirmed in the service or post to which he has been appointed.
Then he becomes an approved probationer.
Therefore, after the expiry of the period of probation and before its confirmation, he would be deemed to have been continued in service 326 as probationer.
Confirmation of probation would be subject to satisfactory completion of the probation and to pass in the prescribed examinations.
Expiry of the period of probation, therefore, does not entitle him with a right to a deemed confirmation.
The rule contemplate to pass an express order of confirmation in that regard.
By issue of notice of one calender month in writing by either side, the tenure could be put to an end, which was done in this case.
In State of Punjab vs
Dharam Singh; , considering the effect of continuing a probationer in service after the period of probation was completed, the Constitution Bench held that there was no rule for the extension of probation after October 1, 1960 and it was not possible to presume the competent authority extended it beyond October 1, 1960.Thus in the above case there was no power to extend the probation in the rules beyond the specified period.
It was held that: "The initial period of probation of the respondents ended on October 1, 1958.
By allowing the respondents to continue in their posts thereafter without any express order of confirmation, the competent authority must be taken to have extended the period of probation upto October 1, 1960 by implication.
But under the proviso to Rule 6(3), the probationary period could not extend beyond October 1, 1960.
In view of the proviso to Rule 6(3), it is not possible to presume that the competent authority extended the probationary period after October 1, 1960, or that there after the respondents continued to hold their posts as probationers".
Accordingly it was held that the respondent therein was deemed to have been confirmed.
In Om Prakash Maurya vs U.P. Co op.
Sugar Factories Federation, Lucknow & Ors.
; this Court held that U.P. Co op.
Sugar Factories Federation Service Rules, 1976 made under the U.P. Co op.
Societies Act were in force.
Regulations 17 of 1975 Regulations does not permit continuance of an employee for a period of more than two years.
One year normally was the period of probation and further being extended to a period of one more year.
Rule 5 of 1976 Rules does not prescribe any limit on the extension of the probationary period.
In the light of the operation of those rules when the probationary period was prescribed on promotion to the post of Commercial Officers with a condition that his probationary period may be extended and he could be reverted to the post of Office Superinten 327 dent without any notice, this Court held that the stipulation for extension of probationary period in the appointment order must be considered in accordance with the proviso to regulation 17(1) which means that the probationary period could be extended for a period of one year more and the probationary period was further extended to one year during which period the service of the appellant was neither terminated nor was he reverted to his substantive post, instead he was allowed to continue.
On those facts this Court held that "since under those regulations ' appellant 's probationary period could not be extended beyond the maximum period of two years, he stood confirmed on the expiry of maximum probationary period and there after he could not be reverted to lower post treating him on probation".
In M.A. Agarwal vs Gurgaon Bank & Ors., and in State of Gujarat vs Akhilesh C. Bhargav & Ors. ; this Court reiterated the same view.
Exercise of the power to extend the probation is hedged with the existence of the rule in that regard followed by positive act of either confirmation of the probation or discharge from service or reversion to the substantive post within a reasonable time after the expiry of the period of probation.
If the rules do not empower the appointing authority to extend the probation beyond the prescribed period, or where the rules are absent about confirmation or passing of the prescribed test for confirmation of probation and inaction for a very long time may lead to an indication of the satisfactory completion of probation.
But in this case Rule 8 expressly postulates otherwise.
The period of probation is subject to extension by order in writing for another period of one year.
Passing the prescribed examinations and successful completion of probation and to make an order of confirmation are condition precedent.
Mere expiry of the initial period of probation does not automatically have the effect of deemed confirmation and the status of a deemed confirmation of the probation.
An express order in that regard only confers the status of an approved probationer.
We are of the view that note to sub rule (2) read with sub rule (6) of Rule 8 manifests the legislative intent that confirmation of the probation of the respondent would be made only on successful completion of the probation and the passing of the prescribed examinations.
It is not the respondent 's case that he passed all the examinations.
He shall be deemed to be continued on probation.
Before confirmation the appointing authority is empowered to terminate the service of the probationer by issuing on calender month 's notice in writing and on expiry thereof the service stands terminated without any further notice.
Within three months from the date of expiry of original two 328 years period of probation and within one year 's period, the order of termination was made.
In this view the question of conducting an inquiry under the Classification Control and Appeal (Rules) after giving an opportunity and that too for specific charges does not arise.
The High Court, therefore, committed manifest error of law in decreeing the suit.
By an interim order passed by this court, the respondent received a sum of Rs. 5,000 from the appellant.
The appellant shall not recover the same from him.
The appeal is accordingly allowed.
The judgment and decree of the High Court is set aside and that of the Trial Court and the Ist Appellate Court are confirmed.
But in the circumstances parties are directed to bear their own costs.
N.P.V. Appeal allowed.
| Under Rule 2 of the Bihar Public Works Department Code, the Governor of Bihar took a decision on 7.4.1958 providing that 25% of the posts of Assistant Engineers in the Bihar Engineering Service, Class II (the Service) were to be filled by promotion, subject to availability of suitable hands, from Overseers in the Bihar Subordinate Engineering Service (Irrigation Department) and 75% of the posts were to be filled by direct recruitment to the Service.
Respondents No. 1 to 5 in both these appeals were appointed as Assistant Engineers in the Service on the recommendation of the Bihar Public Service Commission in the year 1961; and the appellants (in Civil Appeal No. 233 of 1978(respondents No. 6 to 23 in Civil Appeal No. 232 of 1978), who had been working as Overseers in the Bihar Subordinate Engineering Service (Irrigation Department) were promoted to the posts of Assistant Engineers in the Service in 1962 and thereafter.
However, by orders dated 12.7.1975, 20.1.1976 and 9.4.1977, the Government changed the date of promotion of the appellants to the dates prior to the appointment of respondents No. 1 to 5 in the Service, making the former Senior to the letter.
Respondents No. 1 to 5 filed writ petition before the High Court challenging the seniority conferred on the appellants from the retrospective date and contended that the orders giving promotions to the appellants from a date earlier to date of their promotion in the Service purported to affect prejudicially respondents No. 1 to 5 's right inasmuch as they were appointed to the Service earlier to the promotion of the appellants; and that the seniority had to be reckoned amongst the officials working as Assistant Engineers in the Service from the date of their appointment or promotion to the said Service.
The appellants contended that they were entitled to be promoted retrospectively on the 411 basis of reservation of 25% of the Cadre posts in the Service till 1958.
The High Court.
holding that the orders promoting the appellants with retrospective effect were bad, quashed the same and allowed the writ petition.
Hence the present appeals.
On consideration of the legality and validity of the orders of the Government giving promotions to the appellants from a date earlier to the date of their entry into the Service as Assistant Engineers, and its effect on the inter se seniority amongst the appellants and respondents No. 1 to 5, who were directly appointed as Assistant Enginers in the Service before the appellants entered in the said Service.
Dismissing the appeals, this Court, HELD: 1.
The Government Orders dated 12.7.1975, 20.1.1976 and 9.4.1977 which purported to give promotion to the appellants retrospectively were arbitrary, illegal and inoperative inasmuch as these seriously affected rspondents No. 1 to 5.
The appellants were not borne in the cadre of Assistant Engineers even in officiating capacity at time when rspondents No. 1 to 5 were directly recruited to the post of Assistant Egineer.
As such, the promotee appellants could not be under any circumstance given seniority over the directly recruited respondents No. 1 to 5.
The judgment of the High Court in quashing the impugned Government Orders was, therefore, unexceptionable.
[418F H; 420A] 2.1 No person can be promoted with retrospective effect from a date when he was not borne in the Cadre so as to adversely affect others; and amongst members of the same grade, seniority is reckoned from the date of their initial entry into the service.
[419F] 2.2 Seniority inter se amongst the Assistant Engineers in Bihar Engineering Service, Class II would be considered from the date of the length of service rendered as Assistant Engineers.
Therefore, the appellants could not be made senior to respondents No. 1 to 5 by the impugned Government Orders as they entered into the said Service in 1962 and thereafter by promotion subsequent to respondent No. 1 to 5 who were directly recruited in the quota meant for them.
There was nothing to show that the appellants could be deemed to be recruited in 1958 quota and that these vacancies were carried forward.
[419G; 418E F] A.K. Subraman and Ors.
vs Union of India and Ors., , relied on.
412 V.B. Badami vs State of Mysore and Ors., [1976] 1 SCR 815 and Gonal Bihimappa vs State of Karnataka, [1987] Supp.
SCC 207, held inapplicable.
D.K. Mitra and Ors.
vs Union of India and Ors., [1985] Supp.
SCC 243, referred to.
|
Appeal No. 368 of 1966.
Appeal by special leave from the judgment and order dated February 3, 1964 of the Patna High Court in, Appeal from Appellate Order No. 99 of 1963.
Sarjoo Prasad and R. C. Prasad, for the appellants.
K. K. Sinha and section K. Bisaria, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
This appeal against the judgment of the Patna High Court dated the 3rd February, 1964 in its Appellate Order No. 99 of 1963 was filed obtaining special leave from this Court.
It arises from a proceeding under section 47, Civil Procedure Code.
In execution of a mortgage decree, the decree holders sought to proceed against 910 Bakasht lands of the judgment debtors.
The judgment debtors objected to the same on the ground that the execution was barred under section 4(d) of the Bihar Land Reforms Act, 1950 (to be herein,after referred to as the Act).
But that objection was overruled by the executing court on two different grounds namely (1) that the objection in question is barred by the principles of res judicata and (2) the bar of section 4(d) pleaded is not tenable.
The decision of the execution court was affirmed appeal but reversed in second appeal by the High Court.
The two questions that arise for decision in this appeal are (1) whether the objection as regards the executability of the decree pleaded by the judgment debtors is barred by the principles of res judicata and (2) whether the mortgage decree has become unexecutable in view of the provisions of the Act.
We shall now briefly set out the material facts of the case.
The mortgages, the appellants in this appeal obtained a preliminary decree on June 26, 1947 on the basis of a mortgage.
The property mortgaged was an Estate within the meaning of the Act.
That property included both Bakasht lands as well as other lands.
The Act came into force after the passing of the aforementioned preliminary decree.
The decree holders filed petition for passing a final decree on September 19, 1955.
The Estate mortgaged vested in the State of Bihar on January 1, 1956 as a result of a notification issued under section 3 (1) of the Act.
A final decree was passed in the mortgage suit on October 1, 1956.
Thereafter the mortgagees applied under section 14 of the Act and got determined the compensation to which they were entitled under the Act.
It is said that they did not proceed, any further in that proceeding but on the other hand filed on June 18, 1958 an execution petition to execute the mortgage decree against the, Bakasht lands.
The judgment debtors resisted that execution by filing an application under section 47, Civil Procedure Code (Misc.
Case No. 94 of 1959) on the ground that the decree cannot be executed in view of the provisions of the Act.
That application was dismissed for the default of the judgment debtors on September 12, 1959.
A second application raising the same ground (Misc.
Case No. 110 of 1959) was filed by the judgment debtors is barred on the principles of res judicata and further on July 23, 1960 for default of the judgment debtors.
A third application raising the same ground of objection (Misc.
Case No. 91 of 1960) was filed by the judgment debtors on September 12, 1960.
That application was dismissed on January 4, '1962 after examining the contentions of the parties.
Therein the execution court came to the conclusion that the objection raised by the judgment debtors is barred on the principles of res judicata and further that the same has no merits.
This decision as mentioned earlier was affirmed by the appellate court but reversed by the High Court.
We shall first take up the contention that the objection taken 911 by the judgment debtors ' is barried by principles of res judicata.
Though at one stage, learned Counsel for the appellants decree holders attempted to bring the case within Explanation 5, section 11, Civil Procedure Code, he did not pursue that line of argument but tried to support his contention on the broader principles of res judicata.
The real question for decision in this case is whether the dismissal of Misc.
cases Nos. 94 and 110 of 1959 for default of the judgment debtors can be said to be a final decision of the court after hearing the parties.
Before a plea can be held to be barred by the principles of res judicata, it must be shown that the plea in question had not only been pleaded but it had been heard and finally decided by the court.
A dismissal of a suit for default of the plaintiff, we think, would not operate as res judicata against a plaintiff in a subsequent suit on the same cause of action.
If it was otherwise there was no need for the legislature to enact rule 9, Order 9, Civil Procedure Code which in specific term say that where a suit is wholly or partly dismissed under rule 8, the plaintiff shall be precluded from bringing a fresh suit in respect of the same cause of action.
The contention that the dismissal of a previous suit for default of the plaintiffs operates as res judicata in a subsequent suit in respect of the same claim was repelled by the Judicial Committee, of the Privy Council in Maharaja Radha Parshad Singh vs Lal Sahab Rai and Ors.(1).
Therein the Judicial Committee observed thus : "None of the questions, either of fact or law, raised by the pleadings of the parties was heard or determined by the Judge of the Shahabad Court in 1881; and his decree dismissing the suit does not constitute res judicata within the meaning of the Civil Procedure Code.
It must fall within one or other of the sections of chapter VII of the Code; in the present case it is immaterial to consider which, the severest penalty, attached to such dismissal in any case being that the plaintiff cannot bring another suit for the same relief.
" From this decision it is clear that the Judicial Committee opined that before a plea can be held to be barred by res judicata that plea must have been heard and determined by the court.
Only a decision by a court could be res judicata, whether it be statutory under section 11, Civil Procedure Code or constructive as a matter of public policy on which the entire doctrine rests.
Before an earlier decision can be considered as res judicata the same must have been heard and finally decided see Pulvarthi Venkata Subba.
Rao vs Velluri Jagannadha Rao, and Ors.
The courts in India have generally taken the view that an execution petition which has been dismissed for the default of the (1) L.R. 17 I.A. 150.
(2) ; 912 decree holder though by the time that petition came to be dismissed, the judgment debtor had resisted the execution on one or more grounds, does not bar the further execution of the decree in pursuance of fresh execution petition filed in accordance with law see Lakshmibai Anant Kondkar vs Ravji Bhikaji Kondkar(1).
Even the dismissal for default of objections raised under section 47, Civil Procedure Code does not operate as res judicata when the same objections are raised again in the course of the executionsee Bahir Das Pal and Anr.
vs Girish Chandra Pal (1) Bhagawati Prasad Sah vs Radha Kishun Sah and OrS. (3); Jethmal and Ors.
vs Mst.
Sakina (4) ; Bishwanath Kundu vs Sm.
Subala Dassi (5).
We do not think that the decision in Ramnarain vs Basudeo(6) on which the learned Counsel for the appellant placed great deal of reliance is correctly decided.
Hence we agree with the High Court that the plea of res judicata advanced by the appellant is unsustainable.
The next question is whether the execution is barred under the provisions, of the Act.
The contention of the judgment debtors is that it is 'so barred whereas according to the appellants as the Bakasht lands which form part of the mortgaged property had, not vested in the State, the execution can proceed against those lands.
Therefore we have to see whether the entire mortgaged property had vested in the State in pursuance of the notification under section 3 or only the mortgaged property minus the Bakasht lands.
There is no dispute that the property mortgaged was an Estate within the meaning of section 2(1) and the notification issued under section 3 covered the entirety of the Estate.
But what was urged on behalf of the appellants is that what had vested in the State was the non bakasht lands as well as the proprietory interest in the Bakasht lands and hence the Bakasht lands do not have the protection of section 4(d); Consequently it is not necessary for them to exclusively proceed under section 14.
The consequences of the vesting of an Estate is set out in section 4.
Section 4(a) provides that once an Estate vests in the State the various rights in respect of that Estate enumerated therein shall also vest in the State, absolutely free from all encumbrances.
Among the rights enumerated therein undoubtedly includes the right of possession.
In view of section 4(a) there is hardly any doubt that the proprietor loses all his rights in the estate in question.
After setting out the various interests lost by the proprietor the section proceeds to say "such proprietoror tenure holder shall (1) XXXI, B.L.R. 400.
(2) A.I.R. (3) A I.R. 1950 Pat. 354.
(4) A. I. (5) A.I.R. 1962 Cal. 272.
(6) I.L.R. XXV pat.
913 cease to have any interests in such estate or tenure, other than the interests expressly saved by or under the provisions of this Act".
In order to find out the implication of the clause extracted above we have to go to section 6 which provides that on and from the date of vesting all lands used for agriculture or horticultural purposes which were in khas possession of an intermediary on the date a vesting (including certain classes of land specified in that section) shall subject to the provisions of sections 7A and B be deemed to be settled by the State with such intermediary and he shall be entitled to retain possession thereof and hold them as a raiyat under the State having occupancy rights in respect of such lands, subject to the payment of such fair and equitable rent as may be determined by the Collector in the prescribed manner.
Reading sections 3, 4 and 6 together, it follows that all Estates notified under section 3 vest in the State free of all encumbrances.
The quondum proprietors and tenure holders of those Estates lose all interests in those Estates.
As proprietors they retain no interest in respect of them whatsoever.
But in respect of the lands enumerated in section 6 the State settled on them the rights of raiyats.
Though in act the vesting of the Estates and the deemed settlement of raiyats rights in respect of certain classes of lands in cluded in the Estates took place simultaneously, in law the two must be treated as different transactions; first there was a vesting of the Estates in the State absolutely, and free of all encumbrances.
Then followed the deemed settlement by the State of raiyat 's rights on the quondum proprietors.
Therefore in law it would not be correct to say that what vested in the State are only those interests not coming within section 6.
Section 4(d) provides that "no suit shall lie in any Civil Court 'for the recovery of any money due from such proprietor (proprietor whose estate has vested in the State) or tenure holder the payment of which is secured by a mortgage of, or is a charge on, such estate or tenure and all suits and proceedings for the recovery of any such money which may be pending on the date of vesting shall be dropped".
Proceedings in this.
section undoubtedly include execution proceedings.
This is not a case where only a part of the mortgaged property has vested in the such the rule laid down by this Court in Raj Kishore Pratap(1) is not attracted.
As mentioned earlier the State and as vs Ram entire Estate mortgaged had vested though some interest in respect of a portion of the mortgaged property had been settled by the State on the mortgagors.
Under the circumstances the only remedy open to the decreeholders is that provided in Chap.
IV of the Act i.e. a claim under (1) ; ; 914 section 14 before the Claims Officer for "determining the amount of debt legally and justly payable to each creditor in respect of his claim '.
The procedure to be followed in such a proceeding is prescribed in sections 15 to 18. 'Provisions relating to the assessment and payment of compensation payable to the quondum proprietors and tenure holders are found in Chap.
V of the Act (sections 19 to 31.) Section 24(5) provides that "in the case where the interest of a proprietor or tenure holder is subject to a mortgage or charge, the compensation shall be first payable to the creditor holding such mortgage or charge and the balance, if any, shall be payable to the proprietor or tenure holder concerned:" That subsection further prescribes the maximum amount that can be paid to such a creditor.
In view of what has been stated above it follows that under the circumstances of this case it is not open to the appellants to proceed with the execution.
Their only remedy is to get compensation under the Act.
Our conclusion receives strong support from some of the decisions of this Court.
In Rana Sheo Ambar Singh vs Allhabad Bank Ltd., Allahabad(1), a question identical to the one before us, but arising under the U.P. Zamindari Abolition and Land Reforms Act, came up for consideration by this Court.
One of the questions that arose for decision in that case was whether the Bhumidari right settled by the State on a previous proprietor whose estate had vested in the State was liable to be proceeded against in execution of a mortgage decree against the Estate that had vested in the State.
This Court held that it was not liable to be proceeded against.
Therein it was ruled that the intention of the U.P. Zamindari.
Abolition and Land Reforms Act was to vest the proprietory rights in the Sir and Khudkasht land and grove land in the State and resettle on intermediary not as compensation but by virtue of his cultivatory possession of lands comprised therein and on a new tenure and confer upon the intermediary a new and special right of Bhumidari, which he never had before by section 18 of the Act.
The provisions in that Act relating to vesting and settlement of Bhumidari rights are in all essential particulars similar to those in the Act relating to vesting and settlement of Bakasht lands.
This Court further ruled in that case that the mortgagee could only enforce his rights against the mortgagor in the manner as provided in section 6 (h) of the U.P., Act read with section 73 of the Transfer of Property Act and follow the compensation money under the Act.
In Krishna Prasad and Ors.
vs Gauri Kumari Devi( 2) the question that arose for decision by the Court was whether, a mortgage decree holder could proceed against the properties of the mortga (1) ; (2) [1962] Supp.
3 S.C.R. 564.
915 gor other than those mortgaged in enforcement of the personal covenant when the property mortgaged had vested in the State under the provisions of the Act.
That question was answered in the negative.
In the course of the judgment Gajendragadkar, J. (as he then was) who spoke for the Court observed that there is no doubt "that the scheme of the Act postulates that where the provisions of the Act apply, claims, of the creditors have to be submitted before the Claim Officer, the claimants have to follow the procedure prescribed by the Act and cannot avail of any remedy outside the Act by instituting suit or any other proceeding in the court of ordinary civil jurisdiction.
" Proceeding further he observed "It is in the light of this scheme of the Act that we must revert to section 4(b) and determine what its true scope and effect are.
Mr. Jha contends that in construing the words of Section 4 (d) it would be necessary to bear in mind the object of the Act which was merely to provide for the transference to the State of the interests of the proprietors and tenure holders in land and of the mortgagees and lessees of such interests.
It was not the object of the Act, says Mr. Jha, to extinguish, debts due by the proprietors or tenure holders and so, it would be reasonable to confine the operation of section 4 (d) only to the claims made against the estates which have vested in the State and no others.
In our opinion, this argument proceeds on an imperfect view of the aim and object of the Act.
It is true that one of the objects of the Act was to provide for the transference to the State of the estates as specified.
But as we have already seen, the provisions contained in section 16 in regard to the scaling down of the debts due by the proprietors and tenure holders clearly indicate that another object which the Act wanted to achieve was to give some redress to the debtors whose estates have been taken away from them by the notifications issued under section 3.
Therefore, in construing section 4(d), it would not be right to assume that the interests of the debtors affected by the provisions of the Act do not fall within the protection of the Act" and again at page 578 "Having regard to the said scheme, it is difficult to confine the application of section 4(d) only to execution proceedings in which the decree holder seeks to proceed against the estate of the debtor.
In fact, an execution proceeding to recover the decretal amount from the estate which has already vested in the State, would be incompetent because the said estate no longer belong to the judgment debtor.
" Sup CI 69 9 916 Summarising the effect of the aforementioned decisions this is what this Court observed in Raj Kishore 's case(1) a case arising under the Act: From the principles laid down by this Court in the above two decisions, follows that where the whole of the property mortgaged is an estate, there can be no doubt that the procedure prescribed by Chapter IV has to be followed, in order that the amount due to the creditor should be determined by the claims officer and the decision of the claims officer or the Board has been made final by the Act.
" For the reasons mentioned earlier we are of the opinion that the decision of the majority of the judges in the Full Bench decision in Sidheshwar Prasad Singh vs Ram Saroop Singh(2) is not correct.
The true effect of the decisions of this Court in Rana Sheo Ambar Singh 's case(3) and Krishna Prasad 's case(4) is as explained by Kamla Sahai, J. in that case.
In the result this appeal fails and it is dismissed with costs.
Y.P. Appeal dismissed.
| J, a Hindu Jat governed by the Punjab Customary Laws, sold without legal.
necessity, in 1916, a fourth share of his ancestral land to one section Under the Punjab, Customary Laws females could not challenge a sale of ancestral property by a male owner.
J 's son G, in suit No. 75 of 1920 obtained a declaratory decree to the effect that the sale to S would not enure beyond the life time of J. When J died in 1959, the had come into force and his three sons, daughters and widow inherited his estate in equal shares.
The three sons, the widow and the daughters then filed a suit for possession of the aforesaid alienated land on the basis of the decree in suit No. 75 of 1920.
Under section 8 of the Punjab Custom (Power to Contest) Act 1 of 1920 only those competent to contest an alienation clould take advantage of a decree obtained by a reversioner.
The trial court passed a decree for a half share of the suit property in favour of the sons only, holding that the female heirs of J were not entitled to take advantage of the decree in suit No. 75 of 1920.
The District Court modified the decree by decreeing the suit in respect of the whole property in favour of the sons.
In second appeal the High Court restored the decree of the trial court holding that the claim of the female heirs of J could not be upheld, firstly because of the Punjab customary law and section 8 of Act 1 of 1920, and secondly because they had not filed any appeals against the orders of the lower courts.
In appeals by special leave before this Court, HELD : (i) The preliminary objections 'raised by the alienees that the suit in its entirety should have been dismissed, because by the enactment of the J was to be deemed a full owner and notwithstanding the decree of 1920 his sons had after that Act no subsisting reversionary interest in the property, must stand rejected.
There is nothing in the which retrospectively enlarges the power of a holder of ancestral land or nullifies a decree passed before the Act.
[947 B C] (ii) Under the customary law of the Punjab the wife and the daughters of a holder of ancestral property could not sue to obtain a declaration that the alienation of ancestral property will not bind the reversioners after the death of the alienor.
But a declaratory decree 945 obtained in a suit instituted by a reversioner competent to sue has the effect of restoring the property alienated to the estate of the alienor.
[947 G] The effect of the declaratory decree in the suit filed by G in 1920 was merely to delclare that by the sale, the interest conveyed to the alienee was to enure during the life time of the alienor.
The conclusion was therefore inevitable that the property alienated reverted to the estate of J at the point of his death and all persons who would, but for the alienation have taken the estate were entitled to inherit the same.
If J had died before the was enacted, the three sons would have taken the estate to the exclusion of the widow and the two daughters.
After the enactment of the the estate devolved, by virtue of sections 2 and 4(1) of the , upon the three sons, the widow and the two daughters.
L947 H 948 B] The High Court was therefore in error in holding that because in the year 1920 the wife and daughters of J were incompetent to challenge the alienation of ancestral property by J, they could not, after the enactment, of the inherit his estate when succession (iii) The High Court was equally in error in holding that because the widow and daughters had not filed an appeal or cross objections against the decree of the lower courts, they were not entitled to any relief.
The sons, the daughters and the widow of J had filed the suit for a decree for possession of the entire property and their claim was that the alienee had no subsisting interest.
The District Court accepted that claim and granted a decree in favour of the three sons for the entire property which was alienated.
If the alienees were unable to convince the court that they had any subsisting interest in the property in dispute after the death of J, the court was competent under 0.
41 r. 33 of the Code of Civil Procedure to adjust the rights between the sons, the daughters, and the widow of J in that property.
[948 E G; 949 D] In 0.
41 r. 33 the expression 'which ought to have been passed ' means 'what ought in law to have been passed '.
if the Appellate Court is of the view that any decree which ought in law to have been passed was in fact not passed by the 'subordinate court, it may pass or make such further or other decree or order as the justice of the case may require.
[949 D]
|
Civil Appeal No. 1037 of 1988.
589 From the order dated 14.12.1987 of the Customs Excise and Gold (Control) Appellate Tribunal New Delhi in Appeal No. 469/87A order No. 807/87 A S.N. Kackar, R.K. Habbu, P.G. Gokhale, Ms. Sushma Manchanda and B.R. Agarwal for the Appellant.
The Judgment or the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35 L of the (hereinafter called 'the Act ').
The Superintendent of Central Excise returned the price list of the appellant with a covering letter satating that the price should include all the cost of packing and packing charges in terms of section 4(4)(d)(i) of the Act.
The appellant, a private limited company, manufactured various types of glass bottles which were assessed to duty under Item No. 23A of the Central Excise Tariff.
According to the appellant, it sold to the customers on wholesale basis the glass bottles manufactured by it, packed in gunny bags and cartons which it purchases from the market.
According to the appellant further, it has been paying duty on the value of the glass bottles including the cost of gunny bags or the cartons in which these are packed at the time of sale.
It appears, therefore, according to the appellant, that it has been paying duty on glass bottles on the basis of the assessable value which included the costs of packing material, namely, the gunny bags and the cartons.
The case of the appellant further is that the glass bottles are normally sold by it in the packing consisting of gunny bags which are durable and returnable and in several cases the gunny bags are returned by the buyers and are used by the appellant again for packing the glass bottles.
It is only when the customers specifically ask for delivered in cartons instead of in gunny bags that the appellant delivered the glass bottles packed in cartons which are also durable and returnable.
Towards the end of 1977 and early 1978 the appellant submitted price list in regard to the glass bottles manufactured by it for approval by showing separately the price at which such goods were actually sold in the course of "wholesale trade" and "the cost of packing".
By his letter dated 10th January, 1978, the Superintendent of Central Excise returned to the appellant the price list duly approved but nothing therein that the price should be inclusive of the cost of packing and packing charges in terms of section 4(4)(d) of the Act.
Section 4(4)(d)(i) as it stood read as follows: 590 "(4) For the purposes of this section: (a) `assessee ' means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) 'place of removal ' means (i) & (ii) x x x (c) xxx (d) 'value ', in relation to any excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.
Explanation: In this sub clause, 'packing ' means the wrapper, container, bobbin, pirn, spool, reel or wrap beam or any other thing in which or on which the excisable goods are wrapped, contained or wound," Since then the appellant has been paying duty on the cost of packing under protest and lodging claims of refund.
The appellant, however, did not receive any refund nor any intimation that the claims of refund are or were being rejected.
Various representations made by the appellant were in vain.
The Assistant Collector of Central Excise wrote a letter dated 8th March, 1980 advising the appellant to file an appeal before the Appellate Collector if the appellant felt aggrieved.
Feeling aggrieved, the appellant filed a writ petition under Article 226 of the Constitution in the High Court of Bombay.
The High Court passed an interim order on 18th July, 1984 remanding the case back to the Assistant Collector of Central Excise and to decide the matter after giving the appellant fair and adequate opportunity to adduce evidence.
After considering the written statements filed by the appellant, the Assistant Collector passed an order on 29th April, 1986 rejecting the appellant 's refund claim for about Rs.17 lakhs for the period from 1st January, 1978 to 31st December, 1980 and demanding duty for the period 6th January, 1981 to 31st December, 1985 in terms of the bank guarantees executed by the appellant.
There was an appeal before the 591 Collector of Central Excise (Appeals).
The Collector on 21st January, 1987 rejected the appeal and upheld the order of the Assistant Collector.
The appellant filed an appeal before the Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'CEGAT ').
CEGAT dismissed the appeal.
Aggrieved thereby the appellant filed the appeal in this Court.
The Tribunal noted that the appellant manufactured glass bottles.
It delivered these in two types of packing, namely, in open crates and in cartons and gunny bags.
So far as the crates were concerned, the same belonged to the appellant.
The customer was billed for the cost of glass bottles only.
The crates were returnable to the appellant within 30 days.
The revenue has not included the cost of such crates in the assessable value.
The revenue has also not included the cost of packing, if any, supplied by the customer himself.
There was no dispute about these packings.
So far as the packings hl cartons and gunny bags were concerned, it was noted by the Tribunal, that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles.
The appellant 's case was that these packings were also returnable and in many cases they were actually returned and re used by the appellant.
There were no evidence about the durability of the cartons and gunny bags but nothing to show that these were returnable.
The position seems to be as follows.
The Tribunal has rightly applied the returnability test.
In K. Radha Krishnaiah vs Inspector of Central Excise and others, , this Court observed that it cannot be said that the packing is returnable by the buyer to the assessee unless there Is an arrangement between them that it shall be returned.
Therefore, such arrangement has been established.
Actual return or extent of return is not relevant.
What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
In this case after examining the facts, the Tribunal found that there was no clause about returnability of the cartons and gunny bags.
The appellant invited the attention of the Tribunal to the following clause in their standard contractor.
It reads as follows: "6.
All packing cases, other than such as may be supplied or paid for by buyer, shall be returnable in good order and condition within 30 days after receipt. " The Tribunal was of the view that the above clause related to cases".
It could have meant only the crates which belonged to the appellant and for which the customers had not paid anything.
The 592 property in the crates having remained with the appellant all along, the buyers were naturally obliged to return them to their rightful owners.
But that was not the case with the cartons and gunny bags.
The buyers pay for these and the property in these pass on to the buyers.
They could be asked to return them to the appellant only under a term of sale and on payment of the agreed amount and not for the free.
No such contract or agreement was forthcoming.
The Tribunal was not convinced that in the normal course of business anyone could be asked to part with its property, and in addition incur return freight therefor too for nothing.
In those circumstances, the Tribunal held that the cartons and gunny bags were not returnable in the accepted sense of the term.
The Tribunal further noted that since the statute insisted on the packing being returnable, in addition to being durable, the authorities are bound to see whether the transaction fulfilled the tests of returnability as per the Supreme Court and High Court judgments.
In that view of the matter, the Tribunal dismissed the appeal.
As noted above, this Court has considered the meaning of the expression "returnable" in the Section in K. Kadha Krishnaiah 's case (supra).
This Court held that so far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable".
Does it mean physically capable of being returned or does it postulate an arrangement under which the packing is return able.
While interpreting this word, we must bear in mind that what section 4(4)(d)(i) excludes from computation is cost of packing which is of a durable nature and is "returnable by the buyer to the assessee".
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee.
It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words "by the buyer to the assessee" need not have found a place in the section; they would be superfluous.
In that view of the matter we are of the opinion that in the facts found and the expressions used in section 4(4)(d)(i) of the Act which have been set out hereinbefore, there being no evidence of the agreement that the cartons and gunny bags were returnable, we are of the opinion that the Tribunal came to the correct conclusion.
This appeal fails and is rejected accordingly.
G.N. Appeal dismissed.
| The appellant was appointed an Assistant Engineer on June 10, 1963 in the Punjab State Electricity Board on probation for two years which ended on June 10, 1965.
On bifurcation of Punjab Electricity Board, the service of the appellant was allocated to Haryana State Electricity Board.
As a result of a disciplinary proceeding held against him in 1968, a minor penalty of stoppage of one increment without any future effect was imposed on the appellant.
After expiry of one year, the appellant was, however, given the increment.
By virtue of an order dated March 30, 1970, the appellant and respondents 2 to 19 were confirmed as Assistant Engineers, class II on satisfactorily completing the probation period of two years.
Though the others were confirmed with effect from April 1, 1969, the appellant was confirmed with effect from December 1, 1969.
Consequently, the appellant 's name was placed last of all the confirmed officers.
The appellant challenged the said order by way of a writ petition before the High Court which dismissed the petition.
This appeal by special leave is against the judgment of the High Court.
G Allowing the appeal, ^ HELD: 1.
The penalty by way of stoppage of one increment for one year was without any future effect.
In other words, the appellant 's increment for one year was stopped and such stoppage of increment will H 622 have no effect whatsoever on his seniority.
Accordingly, the Electricity Board acted illegally and most arbitrarily in placing the juniors of the appellant above him in the seniority list and/or confirming the appellant in the post with effect from December 1, 1969 instead of April 1, 1969.
The question of seniority has nothing to do with the penalty that was imposed upon the appellant.
It is apparent that for the same act of misconduct, the appellant has been punished twice, that is, first, by the stoppage of one increment for one year and, second, by placing him below his juniors in the seniority list.
[624G H; 625A] 2.
There is no explanation why the confirmation of the appellant was deferred till December 1, 1969.
The explanation that after some substantive posts had fallen vacant on April 1, 1969, the question of confirmation was taken into consideration is not supported by.
any material on record inasmuch as there is nothing to show when these posts had fallen vacant.
It is difficult to accept that all these posts had fallen vacant on the same day, that is, on April 1, 1969.
Though the vacancies had occurred before that day, the Board did not care to take up the question of confirmation for reasons best known to it.
While there is some necessity for appointing a person in government service on probation for a particular period, there may not be any need for confirmation of that officer after the completion of the probationary period.
The archaic rule of confirmation, still in force, gives a scope to the executive authorities to act arbitrarily or malafide giving rise to unnecessary litigations.
It is high time that the Government and other authorities should think over the matter and relieve the government servants of becoming victims of arbitrary actions.
[625H; 626B; 625C; D] S.B. Patwardhan & others vs State of Maharashtra & others; , , referred to.
[Setting aside the High Court judgment and the seniority list, this Court directed that a fresh seniority list be prepared within six months on the basis of this judgment and maintain the appellant 's seniority in the post to which he has been promoted in the meantime.] [626D]
|
Civil Appeal Nos. 196 199/ 73.
Appeals by Special Leave from the Judgment and order date 14 7 1972 of the Kerala High Court in Income Tax Reference Nos. 115 118 of 1970.
K section Ramamurthy, P. N. Ramalingam and A. T. M. Sampath for the Appellant.
B. B. Ahuja and Miss A. Subhashini for the Respondent.
The Judgment of The Court was delivered by TULZAPURKAR, J.
These appeals by special leave raise an interesting question of law whether the distribution of assets of a firm consequent on its dissolution amounts to a transfer of assets within the meaning of the expression "otherwise transferred" occurring in section 34 (3) (b) of the Indian Income Tax Act, 1961, having regard: to the definition of 'transfer ' in section 2(47) of the Act ? The facts giving rise to the question lie in a narrow compass.
The appellant (M/s Malabar Fisheries Co.) is a dissolved firm represented by one of its erstwhile partners.
The firm as originally constituted on April ], 1959 consisted of four partners and carried on six different business in six different names and styles namely, (a) Malabar Fisheries Co., (b) Coastal Engineering Co., (c) Cochin Tin Factory, (d) Goodwill Industries, all at Falluruthy, (e) Combine Steel Industries at the Industrial Estate at Alavakkot and (f) Lite Metal Industries at Viskhapatnam in Andhra Pradesh.
The firm was dissolved on March 31, 1963 and under the deed of dissolution executed by and between the partners, the first business concern was taken over by one of the partners, the remaining five concerns by two of the other partners and the fourth partner received a sum of Rs. 3,81,082/ in lieu of his respective shares in the assets of all the businesses of the firm.
It appears that during the four assessment years 1960 61 to 1963 64 the firm had installed various items of machinery in respect of which it received development rebate in its respective tax assessments under section 33 of the Act.
On dissolution of the firm on March 31, 1963, the Income tax Officer took the view that section 34 (3) (b) of the Act applied 700 on the ground that there was a sale or transfer of the machinery by the firm within the period mentioned in that section and accordingly acting under section 155 (5) of the Act he withdrew the development rebate allowed to the firm for the said assessment years, the amending, orders being passed against the dissolved firm.
The assesses i.e., the dissolved firm through one of its erstwhile partners preferred appeals against the order of the Income tax officer withdrawing the development rebate but the appellate Assistant Commissioner by his order dated July 24, 1964 dismissed the appeals holding that section 155(5) was rightly resorted to since section 34 (3) (b) of the Act applied to the case.
The matter was carried in further appeals; by the dissolved firm to the Income tax Appellate Tribunal, Cochin Bench, Ernakulam, and it was contended that the distribution of the assets of the firm consequent on its dissolution did not amount to a sale or transfer and, therefore, the transaction would not come within the purview of section 34 (3) (b).
The Tribunal by its common order dated January 6, 1970 allowed the appeals holding that the case fell within the principle laid down by this Court in the case of Commissioner of Income tax vs Dewas Cine Corporation and that there was no question of any sale or transfer within the meaning of section 34(3) (b) in a transaction involving the adjustment of the rights of the partners of a dissolved firm.
At the instance of the Revenue, the Tribunal referred two questions of law to the High Court for its opinion, namely "(1) Whether on the facts and in the circumstances of this case, the Appellate Tribunal was legally correct in holding that there was no question of sale and that it was only an adjustment of the mutual rights of the partners and that the provisions of section 34 (3) were not applicable ? (2) Whether on the facts and in the circumstances of this case, there was a transfer of assets within the meaning to the words 'otherwise transferred ' occurring in Section 34(3) (b) to the Income Tax Act ?" The High Court answered the second question in the affirmative and against the assessee and in view of that answer, declined to answer first question as being unnecessary.
The High Court took the view that this Court 's decisions in Dewas Cine Corporation case (supra) and Bankey Lal Vaidya 's case to the effect that the distribution, division or allotment of assets between partners of 701 firm consequent on its dissolution amounts to a mutual adjustment of rights of the partners and does not amount to a sale or transfer had been rendered under the Income Tax Act, 1922 wherein the expression 'sale ' or 'transfer ' had not been defined whereas in the 1961 Act by which the case was governed, the expression 'transfer ' had been defined by section 2(47) in a very wide manner so as to include not merely a sale or exchange but also 'extinguishment of any rights ' in capital assets.
The High Court hold that a dissolution of a firm amounted to extinguishment of the rights of the firm in the assets of the partnership and accordingly was a transfer within the meaning of section 2(47) of the Act and that, therefore, the provisions of section 34(3) (b) applied to the case.
It is this view of the High Court that is being challenged before us in these appals by the assessee.
Counsel for the assessee contented that the High Court has clearly erred in taking the view that the dissolution of a firm amounts to extinguishment of the rights of the firm in the assets of the partnership.
be pointed out that in the two decisions referred to above this Court has clearly enunciated what happens in law upon the dissolution of a firm namely, that the distribution, division or allotment of assets between the partners on dissolution of the firm is merely an adjustment of rights inter se between them and that no sale or transfer is involved in such distribution, division or allotment.
According to him there is no change in this legal position even after the enactment of the definition of 'transfer ' in section 2(47) in the 1961 Act.
Reference was made to this Court 's decision in C.I.T. Gujarat vs R. M. Amin where this Court has held that no transfer of capital assets within the meaning of section 2 (47) of the, 1961 Act was involved when a shareholder received money representing his shares on the distribution of the net assets of the company in liquidation, that he must be regarded as having received that money in satisfaction of the rights which belonged to him by virtue of his holding the shares and that the transaction did not amount to any sale, exchange, relinquishment of capital assets or extinguishment of any rights therein.
In any case, he contended that in every case dissolution must be anterior in point of time to the distribution that takes place after making accounts and discharging all debts and.
liabilities and as such there is no transfer of any assets by the assessee (i.e. the dissolved firm) to any person as contemplated by section 34(3) (b), but all that happens is that upon dissolution and upon making up of accounts and discharge of liabilities it is the erstwhile partners who mutually adjust their rights and it is by way of adjustment of such rights 702 that distribution, division or allotment of assets takes place.
He, therefore urged that section 34 (3) (b) was inapplicable to the case.
On the other hand, counsel for the Revenue pressed the High Court 's view for our acceptance.
He urged that the question has to be considered under the 1961 Act in light of the definition of 'transfer ' contained in section 2 (47) which includes within its scope even 'extinguishment of rights in capital assets '.
According to him , during the continuance of the partnership the machinery undoubtedly belonged to the firm, the firm as a separate taxable entity got the benefit Of development rebate which was sought to be withdrawn in as much as the firm 's rights in the machinery got extinguished upon dissolution and the same got transferred or vested ill individual partner or partners as a result of distribution or allotment made between them be stated qua the.
erstwhile partners there may not be any transfer of assets and there may be mutual adjustment of rights but qua the firm there is certainly extinguishment of its rights in the assets of the partnership and in that sense there is a transfer of assets within the definition under section 2 (47) of the Act.
Since in these appeals the question raised relates to the withdrawal of development rebate under section 34 (3) (b) read with section 155 (5) of the 1961 Act in the light of the definition of the expression transfer given.
under section 2 (47) of the Act, it will be desirable to note what these provisions are.
Section 34 (3) (b) in so far as is material reads: "34.
Conditions for depreciation allowance and development rebate.
x x x x x 3(b) If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed, any allowance made under section 33 or under the corresponding provisions of the Indian Income tax Act, 1922 (XI of 1922), Gin respect of the ship, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act, and the provisions of sub section (5) of section 155 shall apply accordingly." Section 155(5) is a procedural provision enabling the Income tax Officer in a case falling under section 34(3) (b) to recompute the total income of the assessee for the relevant previous year and make the necessary amendments; in other words, acting under this provision the 703 Income tax officer withdraw is the development rebate already granted A by passing an amending order.
It further provides that such amending order has to be passed within a period of 4 years to be reckoned from the end of the previous year in which the sale or transfer took place.
Section 2(47) defines the expression "transfer" thus: "2(47) "transfer", in relation to a capital asset, includes the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof, under any law.
" On a plain reading of section 34(3) (b) it will appear clear that before that provision can be invoked or applied three conditions are required to be satisfied: (a) that the ship, machinery or plant must have been sold or otherwise transferred, (b) that such a sale or transfer must be by the assessee and (c) that the same must be before the expiry of 8 years from the end of the previous year in which it was acquired or installed.
It is only when these three conditions are satisfied that any allowance made under section 33 shall be deemed to have been wrongly made and the Income tax officer acting under section 155(5) will be entitled to withdraw such allowance.
Further, section 2(47) gives an artificial extended meaning to the expression 'transfer ' for, it not merely includes transactions of 'sale ' and 'exchange ' which in ordinary par lance would mean transfers but also 'relinquishment ' or 'extinguishment of rights ' which are ordinarily not included in that concept.
The question is whether the distribution, division or allotment of assets of firm consequent on its dissolution amounts to a transfer of assets within the meaning of the words "otherwise transferred" occurring in section 34(3) (b) of the Act, regard being had to the definition of "trans for" contained in section 2(47) ? To put it pithily, the question is whether the dissolution of a firm extinguishes the firm 's rights in the assets of the partnership so as to constitute a transfer of assets under section 2(47) ? In Dewas Cine Corporation case (supra) the concept of distribution of assets consequent upon the dissolution of the firm was considered in the context of the balancing charge arising under the second proviso to section 10(2) (vii) of the 1922 Act.
In that case two individuals, each of whom owne da cinema theatre, formed a partnership to carry on business of exhibition of cinematograph films, bringing the theatres into the books of the firm as its assets.
For the assessment years 1950 51 to 1952 53 the Income Tax Officer allowed depreciation aggregating to Rs. 44,380/ in the assessment of the firm in respect of the two theatres.
On the dissolution of the firm on September 30.
704 1951, the theatres were returned to their original owners.
In the books of the firm the assets were shown as taken over at the original price less the depreciation allowed, the depreciation being equally divided between the two erstwhile partners.
The Tribunal took the view that by restoring the theatres to the original owners there was a transfer by the partnership and the entries adjusting depreciation and writing off the assets at the original value amounted to local recoupment of the entire depreciation by the partnership and on that account the balancing charge arose under the second proviso to section 10(2) (vii) of the Act.
This Court held that on the dissolution of the partnership, each theatre had to be deemed to be returned to the original owner in satisfaction partially or wholly of his claim to a share in the residue of the assets after discharging the debts and other obligations.
But thereby the theaters were not in law sold by the partnership to the individual partners in consideration of their respective shares in the residue, and, therefore, the amount of Rs. 44,380/ could not be included in the total income of the partnership as a balancing charge arising under the second proviso to section 10(2)(vii).
It is true that this Court was concerned with interpreting the expression "sold" used in section 10(2) (vii) and the second proviso thereto, when the expressions "sale or sold" had nowhere been defined in the Act, and, therefore, this Court held that those expressions when used in section 10(2) (vii) and the second proviso thereto must be understood in their ordinary meaning and that "sale" according to its ordinary meaning meant a transfer of property for a price.
This Court further enunciated the proposition that the distribution of surplus upon dissolution of a partnership after discharging its debts and obligations was always by way of adjustment of rights of partners in the assets of the partnership and did not amount to a transfer much less for a price.
It is significant to note that the question of raising a balancing charge against the dissolved firm, a separate taxable entity which had been allowed depreciation in the earlier years, was considered by this Court and this Court took the view that no balancing charge arose against the firm inasmuch as no sale or transfer was involved in the transaction of distribution of the assets to erstwhile partners of the firm consequent upon its dissolution.
In Bankey Lal Vaidya 's case (supra) the concept of distribution of assets to the partners of a firm consequent upon its dissolution was considered in the context of the charge on capital gains arising under 'H section 128(1) of the 1922 Act.
In that case the respondent assessee, the Karta of a Hindu undivided family, entered into a partnership with to carry on business of manufacturing and selling pharmaceutical 705 products and literature relating thereto.
On the dissolution of the partnership, its assets, which included goodwill, machinery, furniture, medicines, library and copyright in respect of certain publications, were valued at Rs. 2,50,000.
Since a large majority of assets was incapable of physical division, it was agreed that the assets be taken over by and the respondent assessee be paid his share of the value of the assets in money and accordingly he was paid Rs. 1,25,000/ .
The question was whether the sum of Rs. 65,000/ , being part of the amount received by the respondent assessee could be brought to tax as capital gains under section 12B(1) of the Act ? This Court held that the arrangement between the partners of the firm amounted to a distribution of the assets of the firm on dissolution, that there was no sale or exchange of the respondent 's share in the capital assets to D, nor did he transfer his share in the capital assets and, therefore, the sum of Rs. 65,000/ could not be taxed as capital gains.
The Court observed that the rights of the parties were adjusted by handing over to one of the partners the entire assets and to the other partner the money value of his share and such a transaction was neither a sale nor exchange nor transfer of assets of the firm.
It cannot, however, be disputed that both these decisions were rendered under the 1922 Act which did not define expressions like "sale" or "transfer" and the question is whether any difference is E; made in the legal position under the 1961 Act by reason of the enactment of the definition of the expression "transfer" in section 2(47), which includes within its scope a transaction by way of 'extinguishment of any rights in a capital asset ' ? The precise argument which has been advanced by the counsel for the Revenue before us, and which found Favour with the High Court is that during the continuance of the partnership the machinery belonged to the firm, that the firm as a taxable entity received the benefit of development rebate in respect thereof under section 33 of the Act and that upon dissolution the firm 's rights in the machinery got extinguished and became vested in the partner or partners to whom it was allotted in the distribution of assets, and, therefore, the transaction so far as the firm is concerned amounts to a transfer of assets under section 2(47).
The question is how far is it correct to say that in law the firm as such has rights in the partnership assets liable to extinguishment upon dissolution ? It is well known that commercial men and accountants on the one hand and lawyers on the other have different notions respecting the nature of the firm and this difference between the mercantile view and 706 the legal view has been explained in Lindley on Partnership 12th Edn.
at pages 27 and 28 thus: "Partners are called collectively a firm.
Merchants and lawyers have different notions respecting the nature of a firm Commercial man and accountants are apt to look upon a firm in the light in which lawyers look upon a corporation i.e., as a body distinct from the members composing it, and having rights and obligations distinct from those of its members.
Hence, in keeping partnership accounts, the firm is made debtor to each partner for what he brings into the common stock, and each partner is made debtor to the firm for all that he takes out of that stock.
In the mercantile view, partners are never indebted to each other in respect of partnership transactions; but are always either debtors to or creditors of the firm Owing to this impersonification of the firm, there is tendency to regard its rights and obligations as unaffected by the introduction of a new partner, or by the death or retirement of an old one.
Notwithstanding such changes among its members, the firm is considered as continuing the same; and the rights and obligations of the old firm are regarded as continuing in favour of or against the new firm as if no changes had occurred.
The partners are the agents and sureties of the firm, its agent for the transaction of its business, its sureties for the liquidation of its liabilities so far as the assets of the firm are insufficient to meet them.
The liabilities of the firm are regarded as the liabilities of the partners only in case they cannot be met by the firm and discharged out of its assets.
But this is not the legal notion of a firm.
The firm is not recognised by English lawyers as distinct from the members composing it.
In taking partnership accounts and in administering partnership assets, Courts have to some extent adopted the mercantile view, and actions may now, speaking generally, be brought by or against partners in the name of their firm; but speaking generally, the firm as such has no legal recognition.
The law, ignoring the firm, looks to the partners com posing it; any change amongst them destroys the identity of the firm; what is called the property of the firm is their property, and what are called the debts and liabilities of the firm are their debts and their liabilities.
In point of law, a partner may be the debtor or the creditor of his co partners, 707 but he cannot be either debtor or creditor of the firm of which he is himself a member, nor can he be employed by his firm, for a man cannot be his own employer".
(Emphasis supplied) .
Unlike the Scottish system of law where the firm is a legal person distinct from the partners composing it, the English Partnership Act, 1890, avoids making a firm a distinct legal entity.
In English jurisprudence a firm is only a compendious name for certain persons who carry on business, or have authorised one or more of their number to carry it on, in such a way that they are jointly entitled to the profits and jointly liable for the debts and losses of the business.
Further it is true that partnership property is regarded as belonging to the firm, but that is only for the purpose of distinguishing the same form the separate property of the partners.
But, in law the partnership property is jointly owned by all the partners composing the firm.
In Lindley on Partnership at page 359 the following statement of law occurs: "The expression partnership property, partnership stock, partnership assets, joint stock, and joint estate, are used indiscriminately to denote everything to which the firm, or in other words all the partners composing it, can be considered to be entitled as such.
" Again at page 375 the following statement of law occurs: "In the absence of a special agreement to that effect, all the members of an ordinary partnership are interested in the whole of the partnership property, but it is not quite clear whether they are interested therein as tenants in com mon, or as joint tenants without benefit of survivorship, if indeed there is any difference between the two.
It follows from this community of interest that no partner has a right to take any portion of the partnership property and to say that it is his exclusively.
No partner has any such right, either during the existence of the partnership or after it has been dissolved.
" As regards the nature of a share of a partner in a firm the following passage in Lindley on Partnership at page 375 brings out legal position very clearly: "What is meant by the share of a partner in his proportion of the partnership assets after they have been all realised and converted into money, and all the partnership debts and 708 liabilities have been paid and discharged.
This it is, and this only, which on the death of a partner passes to his representative, or to a legatee of his share. and which ; on his bankruptcy passes to his trustee.
" The position as regards the nature of a firm and its property in Indian .
law under the is almost the same as in English law.
Here also a partnership firm is not a distinct legal entity and the partnership property in law belongs to all the partners constituting the firm.
In Bhagwanji Morarji Goculdas vs Alembic Chemcial Works Co. Ltd. and others the Privy Council in para 10 of the judgment observed thus: "Before the Board it was argued that under the , a firm is recognised as an entity apart from the persons constituting it, and that the entity continues so long as the firm exists and continues to carry on its business.
It is true that the goes further than the English Partnership Act, 1890, in recognising that a firm may possess a personality distinct from the persons constituting it; the law in India in that respect being more in accordance with the law of Scotland, than with that of England.
But the fact that a firm possesses a distinct personality does not involve that the personality continues unchanged so long as the business of the firm continues.
The Indian Act, like the English Act, avoids making a firm a corporate body enjoying the right of perpetual succession.
(Emphasis supplied).
It is true that under the Civil Procedure Code order XXX, as under the English Rules of Court, actions may be brought by or against partners in the name of the firm and even between firms and their members but that is only a matter of procedure.
It is also true that the firm 's property is recognised in more than one way (sections 14 and 15 of the Partnership Act) but only as that which is "joint estate" of all the partners as distinguished from the "separate estate" of any of them, and not as belonging to a body distinct in law from its members.
In Addanki Narayanappa & Anr.
vs Bhaskara Krishnappa and 13 Ors, this Court after quoting with approval the aforementioned passages occurring in Lindley on Partnership, 12th Edn., made the following observations in the context of partners ' right during the subsistence as well as upon the dissolution of a firm: 709 "No doubt since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership.
During the subsistence of the partnership, how ever, no partner can deal with any portion of the property as his own nor can he assign his interest in a specific item of property of any one.
His right is to obtain such profits, if R any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in cl.
(a) and sub cls.
(i), (ii) and (iii) of cl.
(b) of section 48.
" Having regard to the above discussion, it seems to us clear that a partnership firm under the is not a distinct legal entity apart from the partners constituting it and equally in law the firm as such has no separate rights of its own in the partnership assets and when one talks of the firm 's property.
Or firm 's assets all that is meant is property or assets in which all partners have a joint or common interest.
If that be the position, it is difficult to accept the contention that upon dissolution the firm 's rights in the partnership assets are extinguished.
The firm as such has no separate rights of its own in the partnership assets but it is the partners who own jointly in common the assets of the partnership and, therefore, the consequences of the distribution, division or allotment of assets to the partners which flows upon dissolution after discharge of liabilities is nothing but a mutual adjustment of rights between the partners and there is no question of any extinguishment of the firm 's rights in the partnership assets amounting to a transfer of assets within the meaning of section (47) of the Act.
In our view, therefore, there is no transfer of assets involved even in the sense of any extinguishment the firm 's rights in the partnership assets when distribution takes place upon dissolution.
Counsel for the Revenue referred us to a decision of the Karnataka High Court in Additional Com missioner of Income Tax vs M. A. J. Vasanaik, where that Court has taken the view that when individual assets are brought in a partnership firm so as to constitute the partnership property, there is a transfer of interest of the individual to the partnership and sections 34(3) (b) and 155(5) of 1961 Act are attracted.
In the first instance, that decision dealt with the converse case and it does not necessarily follow on parity of reasoning that the distribution, division or allotment of partnership assets to partners of a firm upon its dissolution would amount to a transfer of assets as was sought to be contended by the counsel for the Revenue.
Secondly, it is unnecessary 710 for us to express any opinion on the correctness or otherwise of the view taken by the Karnataka High Court in that case.
There is yet another reason for rejecting the contention of the counsel for the Revenue and that is that the second condition required to be satisfied for attracting section 34(3) (b) cannot be said to have been satisfied in the case.
It is necessary that the sale or transfer of assets must be by the assessee to a person.
Now every dissolution must h point of time be anterior to the actual distribution, division or allotment of the assets that takes place after making accounts and discharging the debts and liabilities due by the firm.
Upon dissolution the firm ceases to exist; then follows the making up of accounts, then the discharge of debts and liabilities and there upon Distribution, division or allotment of assets takes place inter se between the erstwhile partners by way of mutual adjustment of rights between them.
The distribution, division or allotment of assets to the erstwhile partners, is not done by the dissolved firm.
In this sense there is no transfer of assets by the assessee (dissolved firm) to any person.
It Dis not possible to accept the view of the High Court that the distribution of assets effected by a deed takes place eo instanti ' with the dissolution or that it is effected by the dissolved firm.
In the result we are clearly of the view that section 34(3)(b) of the Act was not applicable to the case and we uphold the view of the Tribunal.
The appeals are, therefore, allowed and the Revenue will pay the costs of the appeals to the appellant.
| The assessee was incorporated for the purpose of taking over cf certain zamindari properties.
By an indenture the assessee took a lease of extensive zamindari properties for a term of 999 years and also took an assignment OF moveables.
In consideration of the lease and assignment, fully paid shares worth Rs. 4.08 lakhs were issued in the new company to the lessors.
The quit rent receivable by the lessors was a nominal amount of Rs. 100 per annum.
Clause (3) (a) of the Memorandum of Association showed that the assessee was primarily incorporated for the purpose of taking over the assets of the lessor 's family, while cl.
(b) empowered the assessee to purchase, take on lease or otherwise acquire and to traffic in land and generally deal in or traffic by way of sub lease with land and house property.
The assessee thereafter started giving out on sub lease various parcels of land to colliery companies for various terms of long duration.
Rejecting the assessee 's contention that the total amount of salami premia and compensation received by the assessee in three assessment years were of a capital nature, the Income Tax officer treated the amounts as income from business and taxed them.
The Appellate Assistant Commissioner as well as the Appellate Tribunal held in favour of the assessee on the ground that She transactions of granting sub leases were by way of management of the property by the assessee and receipts on account of salami premia and compensation on acquisition of land were of capital nature not liable to be taxed as income.
On reference the High Court was of the view that the assessee could not be regarded as a purely family concern incorporated for the preservation and management of the family assets but was a trading concern which dealt with the lease hold rights in the lands as trading assets by using them to earn income and, therefore, salami, premia and compensation were trading receipts.
Allowing the appeal, ^ HELD: 1.
Having regard to the nature of the various transactions it is clear that the receipts on account of salami etc., must be regarded as receipts of a capital nature.
Similarly the amounts of compensation received by the assessee for compulsory acquisitions of portions of land partake the character of capital receipt in as much as compulsory acquisition could not be said to be a voluntary transaction, and compensation received would be a substitute for the capital asset lost by the assessee.
[722D] 712 2. Ownership of property and leasing it out may be done as part of a business or it may be done as land owner.
Whether it is the one or the other must necessarily depend upon the object with which the act is done.
Where a company is formed with the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business, it can be said that the company has treated them as trader and not as land owner.
In deciding whether a company dealt with its properties as owner one must see not to the form which it gave to the transactions but to the substance of the matter.
[717 H] 3.
On the other hand incidental sale of uneconomic or inconvenient plots of land could not convert what was essentially an investment into a business transaction in real estate.
The purposes or objects for which a limited company was incorporated has no decisive bearing on the question whether the income is of capital nature or a revenue receipt.
The circumstance that a single plot of land was acquired and was thereafter sold as a whole or in plots is not decisive either.
Nor is profit motive in entering into a transaction decisive.
The question whether in purchasing and selling land the tax payer entered into a business activity has to be determined in the light of the facts and circumstances of each case.
[719 C D] P.K.N. Company vs Commissioner of Income Tax, 60 R 65.
Karapura Development Co. Ltd. vs Commissioner of Income Tax, West Bengal.
, discussed.
In the instant case the High Court had erroneously treated the assessee as a trading concern qua its lease hold interest in the zamindari estate without actually examining the real nature and object of the transactions of sub leases entered into by the assessee with several colliery companies.
In coming to this conclusion the High Court was influenced by three factors: (a) existence of power in the memorandum of association enabling the company to indulge in trafficking in land by way of sub leases of land; (b) declaration of dividend at a high rate and (c) creation of reserve fund by the assessee pursuant to certain articles of association.
The special features of declaration of dividend and creation of a reserve fund are not features peculiar to a trading concern because a non trading incorporated entity like an investment company can declare dividends and create a reserve fund.
These special features are not decisive of the question whether the incorporated entity is a trading concern or not.
What is of importance is how it has dealt with its assets or properties.
The assessee, which had been incorporated for the purpose of preservation and management of the family estate of the lessors had dealt with Its leasehold interest as a land owner and not as a trader.
This was clear from the Memorandum and Articles of Association and the draft agreement in accordance with which the indenture was executed.
Nominal rent of Rs. 100 p.a. and the assignment of moveables in favour of the assessee also point to the same conclusion.
Secondly, since its inception the assessee had not taken lease of any other property from anyone else.
Thirdly, the transaction of granting subleases of coal bearing and other lands were by way of management of the estate as land owner.
Fourthly, though the memorandum of association authorised the assessee to do business in collieries it did not work any colliery of its own not did it do any business as miners or coal dealers.
[720 F H] 713
|
Appeal No. 1496 of 1993.
From the Judgment and Order dated 20.2.1985 of the Orissa High Court in First Appeal No.139 of 1974 Raj Kumar Mehta for the Appellant.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
Heard the counsel for the appellant.
None appears for the respondent though served.
Leave granted.
This appeal by the Orissa State Electricity Board is preferred against the judgment of the Orissa High Court allowing partly an appeal preferred .by the respondent.
The dispute pertains to the liability of the consumer (respondent in this appeal) to pay the minimum charges during the period subsequent to the date of disconnection of supply of energy to him for the non payment of electricity dues.
The respondent is an industry.
It entered into an agreement with the appellant for supply of electricity on March 5, 1965.
The agreement was valid for a period of five years.
He started availing of the energy with effect from July 31, 1965.
The supply of his industry was disconnected on April 30, 1968 for non payment of electricity charges.
Since the consumer also failed to pay the minimum charges for the period subsequent to the date of disconnection, the Board filed a suit for the amount due on account of the electricity consumed between April 1, 1968 and April 30, 1968 and for the minimum charges for the period May 1, 1968 to March 5, 1970.
(It may be remembered that the agreement between parties was valid upto March 5, 1970).
The Trial Court decreed the suit as prayed for along with interest 862 of 6% per annum on the amount decreed from the date of suit till the date of decree and also future interest at the same rate till full satisfaction.
On appeal, the High Court sustained the decree of the Trial Court only for the period upto the date of disconnection (April 30, 1968) but disallowed the claim for the period subsequent to the date of disconnection.
The reasoning of the High Court is that inasmuch as the supply was disconnected and the respondent consumer did not avail of any energy whatsoever during the period subsequent to the disconnection, it is not liable to pay the minimum charges.
In this appeal, it is contended by the learned counsel for the appellant that the question arising herein is concluded in favour of the Board by the decision of this Court in Bihar State Electricity Board, Patna and Ors.
vs M/s Green Rubber Industries and Ors., [1990] 1 S.C.C. 731.
On a perusal of the judgment, we find that was also a case where the claim inter alia pertained to the period subsequent to the date of disconnection till the expiry of the agreement.
In that case too, minimum charges were claimed by the Board even for the period during which the supply remained disconnected and no energy whatsoever was availed of by the consumer.
We also find that clause (4) of the agreement considered ' in the said decision and clauses (6) and (13) of the agreement concerned herein are substantially same.
Clause (13) of the agreement between the parties hereto does oblige the consumer to pay a certain minimum charges in any event.
The clause reads as follows: "Clause 13.
The consumer shall (subject to the provisions hereinafter contained) pay to the Engineer for the power demand and electrical energy supplied under this Agreement, the charges to be ascertained as mentioned below viz. (Government resolution on tariff to be inserted here) LARGE INDUSTRIES: For demand of 125 K.V.A. and above for supply at 11 K.V. at (i) Rs.5.50 paise per K.V.A. per month plus (ii) Rs.0.08 paise per K.W.H. per month subject to an overall maximum rate of Rs.0.09 paise per K.W.H. and 863 without prejudice to payment of minimum charge of 75 per cent of the contract demand at the above rate of Rs.5.50 paise per K.V.A. per month and subject further to absolute minimum payment on 125 K.V.A. in the first part of the tariff.
For less than 250 K.V.A the demand may be metered in K.W. and charged for at Rs.6.00 per K.W. per month.
Besides the charges for K.W.H. consumed at the rate specified above.
For supply at M.T. less than 11 K.V.A and M.T. less that 11 K.V.A. and M.T. the above rate will be increased by 10%.
" The reasons for such a stipulation and its justifiability are duly and fully explained by this Court in the aforesaid decision.
It is not necessary for us to reiterate the same.
The appeal is accordingly allowed.
The Judgment of the High Court is set aside.
The judgment and decree of the Trial Court is restored.
No costs.
T.N.A. Appeal allowed.
| During the accounting order relevant to assessment year 1965 66, the Respondent assessee paid to its foreign technical director a total remuneration of Rs. 66,000 including a sum of Rs. 28,576 paid by way of perquisites.
The Income tax Officer allowed only a sum of Rs. 13,200 by way of perquisites and disallowed the balance of Rs. 15,376 in view of Section 40(c)(iii) of the Income tax Act, 1961.
On an appeal by the assessee, the Appellate Assistant Commissioner held that since the salary of the foreign technical director was exempt under S.10(6)(vii), the provision contained in Sec.40(c)(iii) was not applicable.
Revenue preferred an appeal and the Tribunal held that S.40(c)(iii) was applicable.
At the instance of the Assessee, Tribunal referred the question to the High Court.
Since the High Court answered the question in favour of the assessee, Revenue preferred the present appeal.
Dismissing the appeal, this Court, HELD: Under section 10(6)(vii) of the Income tax Act, 1961 the remuneration due to any technician, who was not a resident in any of the four financial years immediately preceding the financial year in which he arrived in India, chargeable under the head 'salaries ', for services rendered as a technician, was exempt.
Thus in the instant case, the salary paid to the foreign technical director was admittedly exempt under Section 10(6)(vii) of the Income tax Act, 1961.
In other words, it was nil for the purposes of the Act.
If so, the second proviso to sub clause (iii) of S.40(c) 994 is attracted, inasmuch as 'nil ' income, under the head 'salaries" is less than Rupees seven thousand five hundred.
By virtue of the said proviso, the main provision in sub clause (iii) goes out of picture.
The High Court reasoned that if income of one rupee is less than Rs. 7,500, there is no reason for saying that 'nil ' income is not an income less than Rs. 7,500.
The High Court was right in taking the view that since the income exempted under Section 10 is not liable to be included in the total income, such exempted salary income should be treated as 'nil ' income for the purposes of Section 40(c)(iii) of the Act.
[996 B E]
|
Appeal No. 304 of 1958.
Appeal from the judgment and order dated September 7, 1956, of the Bombay High Court in Income tax Reference No. 19 of 1956.
C. K. Daphtary,Solicitor General of India,K. N. Rajagopal Sastri and D. Gupta, for the appellant.
N. A. Palkhivala and section N. Andley, for the respondent.
April 28.
The Judgment of the Court was delivered by S.K. DAS, J.
This is an appeal on a certificate of fitness granted by the High Court of Bombay, and the short question for decision is the true scope and effect of the third proviso to section 5 of the Business Profits Tax Act, 1947 (Act No. XXI of 1947), hereinafter referred to as the Act.
The appellant is the Commissioner of Income tax, Ahmedabad, and the respondent is a private limited company under the name and style of Karamchand Premchand Ltd., Ahmedabad, to be called hereafter as the assesses.
729 The relevant facts are these : the assessee held the managing agency of the Ahmedabad Manufacturing and Calico Printing Co. Ltd. It also had a pharmaceutical business in the Baroda State, which was at the relevant time an Indian State run in the name and style of Sarabhai Chemicals.
The assessee 's business in India (we shall use the expression India in this judgment to mean British India as it was then called in contra distinction to an Indian State) showed business profits assessable under the provisions of the Act; but the business carried on in the name and style of Sarabhai Chemicals in Baroda showed a loss in the relevant chargeable accounting periods which were four in number, namely: (1) April 1, 1946, to December 31, 1946; (2) January 1, 1947, to December 31, 1947; (3) January 1, 1948, to December 31, 1948 ; and (4) January 1, 1949, to March 31, 1949.
The assessee claimed that its assessable income in India should be reduced by the loss suffered by it in its business in Baroda.
The Income tax Officer rejected the claim of the assessee and held that the Act did not apply to the business carried on in an Indian State unless profits and gains of that business were received or deemed to have been received in or brought into India.
On appeal the Appellate Assistant Commissioner upheld the contention of the assessee and allowed the appeal.
The Department went up in appeal to the Appellate Tribunal, which held that under the relevant proviso to section 5 of the Act, profits and losses of a business in an Indian State were not to be taken into consideration unless they were received or deemed to have been received in or brought into India.
In that view of the matter the Tribunal set aside the order of the Appellate Assistant Commissioner and restored that of the Income tax Officer.
The assessee then moved four applications in respect of the four relevant chargeable accounting periods, and by these applications the assessee required the Tribunal to state a case to the High Court of Bombay on the question of law which arose out of its order.
These four applications were consolidated.
The Tribunal on being satisfied that a question of law arose out of its order in the four cases numbered as 85, 86, 87 730 and 88 of 1953 54, referred that question to the Bombay High Court in the following terms: " Whether on the facts and in the circumstances of the case the loss suffered by the assessee in the business of Sarabhai Chemicals should be deducted in computing the business income of the assessee company liable to business profits tax ?" The High Court answered the question in the affirmative and came to the conclusion that the assessee was entitled to deduct the losses incurred by it in its Baroda business and set them off against the profits made in the taxable territories.
The appellant then moved the High Court and obtained a certificate of fitness.
On that certificate the present appeal has come to us.
The main contention on behalf of the appellant is that the High Court came to an erroneous conclusion with regard to the true scope and effect of the third proviso to section 5 of the Act.
It is necessary here to refer to some of the provisions of the Act to understand its general scheme.
In 1940 the Central Legislature passed the Excess Profits Tax Act, 1940 (Act No. XV of 1940), to impose a tax on excess profits arising out of certain businesses.
We shall have occasion to refer to some of the provisions of that Act, in due course.
For the purposes of that Act, the expression " chargeable accounting period " meant (a) any accounting period falling wholly within the term beginning on September 1, 1939, and ending on March 31, 1946, and (b) where any accounting period fell partly within and partly without the said term, such part of that accounting period as fell within the said term.
It may be here stated that originally the term was from September 1, 1939, to March 31, 1941, but by several annual Finance Acts the term was extended up to March 31, 1946.
In 1947 came the Act in which " chargeable accounting period" means: (a) any accounting period falling wholly within the term beginning on April 1, 1946, and ending on March 31, 1949, and (b) where any accounting period falls partly within and partly without the said term, such part 731 of that accounting period as falls within the said term.
The Act extended to the whole of India.
The word business" is defined in section 2(3) of the Act as including any trade, commerce or manufacture, etc., the profits of which are chargeable according to the provisions of section 10 of the Indian Income tax Act, 1922.
There are two provisoes to this definition clause, and the second.
proviso states that all businesses to which the Act applies carried on by the same person shall be treated as one business for the purposes of the Act.
The expression " taxable profits" is defined under section 2(17) of the Act and it means the amount by which the profits during a chargeable accounting period exceed the abatement in respect of that period.
What is meant by " abatement" is defined in section 2(1) of the Act.
The charging section is section 4 and we may read that section here, so far as it is relevant for our purpose, in order to understand the general scheme, of the tax imposed under the Act.
" section 4.
Charge of tax Subject to the provisions of this Act, there ;hall in respect of any business to which this Act applies, be charged, levied and paid on the amount of taxable profits during any chargeable accounting period, a tax (in this 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 third 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.
" Shortly stated, the scheme is that in respect of any business to which the Act applies, there shall be charged, levied and paid a tax called "business profits tax" on the amount of the taxable profits, which means the amount exceeding the abatement, during any chargeable accounting period; the tax shall be equal to sixteen and two third per cent.
of the taxable profits in respect of the chargeable accounting period ending on or before March 31, 1947, and in respect of any charge.
able accounting period after that date, the tax shall 732 be equal to such percentage of the taxable profits as may be fixed by the annual Finance Act.
Then comes section 5 which is the section dealing with the application of the Act and it is in these terms: section 5.
Application of Act 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 virtue of the provisions of sub clause (i) or sub clause (ii) of clause (b) of subsection (1) of section 4 of the Indian Income tax Act, 1922, or of clause (c) of that sub section: Provided that this Act shall Dot apply to any business the whole of the profits of which accrue or arise without the taxable territories where such business is carried on by or on behalf of a person who is resident but not ordinarily resident in the taxable territories unless the business is controlled in India: Provided further that where the profits of a part only of a business carried on by a person who is not resident in the taxable territories or not ordinarily so resident accrue or arise in the taxable territories or are deemed under the Indian Income tax Act, 1922, so to accrue or arise, then except where the business being the business of a person who is resident but not ordinarily resident, in the taxable territories is controlled in India, this Act shall apply only to such part of the business and such part shall for all the purposes of this Act be deemed to be a separate business : Provided further that this Act shall not apply to any income, profits or gains of business accruing or arising within any part of India to which this Act does not extend unless such income, profits or gains are received in or are brought into the taxable territories in any chargeable accounting period, or are assessable under section 42 of that Act.
" We have read the section as it stands to day.
The expression " taxable territories " in the provisoes was substituted for " British India " by the Adaptation of Laws Order, 1950, and the third proviso originally referred to any income, profits or gains of business accruing or %rising within "an Indian State"; then 733 the expression " a Part B State " was substituted, but this was again changed by the Adaptation of Laws (No. 3) Order, 1956, and the present expression " any part of India to which this Act does not extend " was introduced.
For the purposes of this appeal nothing turns upon these changes, and we may read the third proviso as referring to any income, profits or gains of a business accruing or arising in an Indian State.
Section 6 deals with relief on occurrence of " deficiency of profits " an expression which is defined in section 2(7) of the Act.
The rest of the Act deals with matters, such as issue of notice for assessment, assessments, profits escaping assessment, penalties, appeal, etc., with which we are not directly concerned in this appeal.
Now, sections 4 and 5 of the Act make it quite clear that the unit of taxation is the business, that is, any busi.
ness to which the Act applies; and if a person carries on more than one business to all of which the Act applies, all the businesses carried on by the same person shall be treated as one business for the purposes of the Act.
Section 5, in its substantive part, states to which business the Act applies and says that the Act applies to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax by virtue of the provisions of sub cl.
(i) or sub cl.
(ii) of cl.
(b) of sub section (1) of section 4 of the Indian Income tax Act, 1922, or el.
(c) of that sub section.
A reference to the aforesaid provisions of the Indian Income tax Act, 1922, shows at once that in so far as they concern the present assessee section 5 in its substantive part makes the Act applicable to his business whether the profits of the business accrued or arose in India or Baroda ; and this is so in spite of the fact that the Act extended only to India.
Indeed, learned counsel for the appellant has conceded that bad section 5 stood by itself without any of the provisoes, the Baroda business of the assessee would have come within the wide ambit of section 5 and the Act would be applicable to that business.
His contention, however, is that the third proviso has the effect of excluding the Baroda business from the pur.
view of the Act, except in so far as the income, profits or gains of that business are received or deemed to 95 734 be received in or brought into India.
On behalf of the assessee the argument is that in its true scope and effect the third proviso has merely the effect of exempting the income, profits or gains of the Baroda business except when they are received or brought into India, but the business itself is not excluded from the purview of the Act; the business is still one to which the Act applies under the substantive part of section 5 and as the third proviso exempts income, profits or gains only, the losses of the Baroda business can be set off against the profits of the business in India.
These are the two main rival contentions which we have to consider in this appeal.
Now, let us examine a little more closely sections 4 and 5 of the Act.
We have stated earlier that section 4 is the charging section, which levies a tax on the amount of taxable profits during any chargeable accounting period, in respect of any business to which the Act applies.
The corresponding section in the Excess Profits Tax Act, 1940, was also section 4 thereof, which levied a tax on the amount by which the profits during any chargeable accounting period exceeded the standard profits inrespect of any business to which that Act applied.
Under the Excess Profits Tax Act, 1940, as also under the Act under our consideration, the unit is the business business to which the Act applies.
For the application of the Act we have to go to section 5.
We have pointed out that section 5 in its substantive part makes the Act applicable to every business of which any part of the profits is chargeable to income tax by virtue of the provisions of sub cl.
(1) or sub cl.
(ii) of el.
(b) of sub section
(1) of section 4 of the Indian Income tax Act, 1922, and, thus makes the Act applicable to the Baroda business of the assessee.
The question then is does the third proviso to section 5 exclude that business except in so far as the income, profits or gains of that business are received or deemed to be received in or are brought into the taxable territories in any chargeable accounting period ? If that is the true scope and effect of the third proviso, then the appellant is entitled to succeed.
If, on the contrary, the third proviso merely makes the Act inapplicable to income, profits or gains of the Baroda business unless such income, profits or gains are 3 received or deemed to be received in or are brought into the taxable territories, but does not exclude the business from the purview of sections 4 and 5, then the answer given by the High Court is correct.
The High Court has stated that whichever view is taken the third proviso leads to certain difficulties, and in a case where much can be said on both sides, the benefit of any ambiguity of language must be given to the assessee.
We agree with the High Court that the question is not quite free from difficulty; but on the language of the proviso as it stands, the answer given by the High Court appears to us to be the correct answer.
It is not the case of the appellant that the first and the second provisoes to section 5 apply to the facts of this case.
But it is significant to note the phraseology of these two provisoes and contrast them with the third proviso.
The first proviso says: " Provided that the Act shall not apply to any business the whole of the profits of which accrue or arise without the taxable territories, etc.
" The language is clear enough to exclude the business referred to therein from the purview of the Act.
Similarly, the second proviso excludes under certain circumstances part of a business and uses appropriate language to give effect to that exclusion.
By a legal fiction as it were, it divides a business into two parts, one separate from the other, and makes the Act applicable to one of them only.
Unlike the other two provisoes, the third proviso does not use the language of exclusion in respect of any business.
What it takes out of the ambit of the Act is merely the " income, profits and gains " of a particular business.
The language is thus more apt to effectuate an exemption from tax of ,income, profits or gains" rather than an exclusion of the business from the purview of the Act.
On behalf of the appellant it is contended that such a construction results in this anomaly that if the income, profits or gains are not brought into India, they escape tax and yet the losses of a business which is outside India are taken into consideration in computing the profits, etc., in India.
This, it is argued, could not have been the object of the legislature in 736 enacting the third proviso to section 5 of the Act.
It is contended that the object was to exclude the business in an Indian State as also the income, profits or gains thereof, unless such profits, etc., were received in or brought into India.
This argument is not devoid of plausibility and requires careful consideration.
We may here refer to the relevant provisions of the Excess Profits Tax Act, 1940.
Section 5 of that Act in its substantive part and the first and second provisoes thereto were worded in identical language, but the third proviso to section 5 of the Excess Profits Tax Act, 1940, was worded quite differently from the third proviso to section 5 of the Act.
The third proviso to section 5 of the Excess Profits Tax Act, 1940, stated: " Provided further that this Act shall not apply to any business the whole of the profits of which accrue or arise in a Part B State, and where the profits of a part of a business accrue or arise in a Part B State, such part shall, for the purposes of this provision, be deemed to be a separate business the whole of the profits of which accrue or arise in a Part B State, and the other part of the business shall, for all the purposes of this Act, be deemed to be a separate business." The language used was clearly one of exclusion, and it said that the Excess Profits Tax Act was not applicable to a business the profits of which accrued or arose in a Part B State.
Why then did the legislature use different language in the third proviso to section 5 of the Act? On behalf of the appellant it has been submitted that the change in language is deliberate and the reason for the change is to make the income, profits or gains of a business accruing in an Indian or Part B State liable to tax when such income, profits or gains are brought in India while under the third proviso to a. 5 of the Excess Profits Tax Act, they were not liable to tax even when they were brought into India.
On behalf of the assessee, however, it has been submitted that the change in language is due to a different reason altogether.
The third proviso to section 5 of the Excess Profits Tax Act, 1940, and section 14(2) (c) (now deleted) of the Indian Income tax Act, 1922, were enacted at about the same time, and the broad object of both the 737 provisions was to exclude profits of a business in an Indian or Part B State from charge of tax; but under the Excess Profits Tax Act, 1940, such profits were not chargeable even if received in or brought into India whereas under section 14(2) (c) of the Indian Income tax Act such profits became chargeable to tax if received in or brought into India.
This difference, learned counsel for the assessee states, was no doubt done away with by the change in language of the third proviso to section 5 of the Act; but the change in language did something more, because it assimilated the position under the proviso to that under section 14(2) (c) of the Indian Income tax Act, namely, that though profits of a business in an Indian State cannot be taxed unless they are brought into the taxable territories, yet the losses incurred can be adjusted in computing the profits of the business as a whole.
Learned counsel for the assessee has relied on the decision of this Court in Commissioner of Income tax, Mysore, Travancore Cochin and Coorg vs Indo Mercantile Bank Ltd. (1) and the decisions of the Bombay High Court in Commissioner of Income tax, Bombay City vs Murlidhar Mathurawalla Mahajan Association (2 ) and Commissioner of Excess Profits Tax, Bombay City vs Bhogilal H. Patel, Bombay (3 ).
The first two decisions cited above considered the effect of section 24 (1), Indian Income tax Act, 1922, with special reference to the first proviso thereto (as it stood at the time relevant therein) and its impact on section 10 of the said Act.
It was held that sub section
(1) of section 24 dealt only with set off of loss under one head against profits under any other head, and therefore the old first proviso to sub section (1) of section 24 applied and barred the right of set off only where a loss in the Indian State was sought to be set off against Indian profits under any other head; where, however, the assessee sought to set off his loss in the Indian State against his Indian profits under the same head, e. g., set off of loss incurred in a business carried on in an Indian State against the profits of the same or another business carried on in India, the proviso did not apply and the assessee was entitled to such set off under section 10 (1) [1959] Supp. 2 S.C.R. 256.
(2) (3) 738 of the Indian Income tax Act.
Learned counsel for the assessee has submitted that the same principle applies with regard to the third proviso to section 5 of the Act.
Learned counsel has submitted that as under section 10 of the Indian Income tax Act, different businesses constitute one head and in order to determine what are the profits and gains of a business under section 10 an assessee is entitled to show all his profits and set off against those profits losses incurred by him, in the same head; so also under section 5 of the Act, the Baroda business of the assessee is within the ambit of the Act, though the income, profits or gains thereof are excluded by the third proviso unless they are received or brought into India.
He has pointed out that the position under the Excess Profits Tax Act was different, as was explained in Bhogilal Patel 's case (1) where the learned Chief Justice said: " This contention of Mr. Kolah is based on the language used in the proviso, namely, that 'this Act shall not apply to any business the whole of the profits of which accrue or arise in an Indian State '.
Now, this contention is obviously fallacious, because the proviso does not say that the Act shall not apply to the profits of a business which accrue or arise in an Indian State.
What the proviso says is that the Act shall not apply to any business the whole of the profits of which accrue or arise in an Indian State.
The expression "the whole of the profits of which accrue or arise in an Indian State ' is an expression which indicates the nature of the business which is excluded from the purview or ambit of the Act".
Now, the third proviso to section 5 of the Act uses not the phraseology of the Excess Profits Tax Act, but the very phraseology which according to the learned Chief Justice would have made all the difference.
Learned counsel for the assessee has argued, and we think it has considerable force, that the legislature had before it the language used in section 14 (2) (e) of the Indian Income tax Act and it knew the effect of those provisions and it used the same language in the third proviso to section 5 of the Act.
If the object of the legislature was to exclude the business itself from the ambit (1) 739 of the Act while taxing the profits which were brought into the taxable territories, then it used language which failed to achieve that object.
On behalf of the appellant it has been pointed out that the expression used in the third proviso to section 5 is "Provided further that the Act shall not apply to any income, profits or gains of a business, etc.
" It is argued that this language, (namely, that the Act shall not apply) is apt to exclude from the purview of the Act business the profits of which accrue or arise in an Indian State, except in so far as such profits are brought into the taxable territories.
In support of this argument a reference has been made to section 4 (3) of the Indian Income tax Act as it stood prior to 1939 and reliance is placed on the decisions in Commissioner of Income tax, Madras vs M. P. T.K. M. M. section M. A. B. Somasundaram Chettiar (1) and" Commissioner of Income tax, Bombay vs The Provident Investment Co. Ltd.(2).
It is true that section 4(3) of the Indian Income tax Act, as it stood prior to 1939, said that this Act (meaning the Indian Income tax Act, 1922) shall not apply to certain classes of income ", and in the two decisions cited it was held that the word " business " meant a business whose profits were being assessed in the year under consideration and there was no justification for deduction of the expenses of a foreign business.
We do not, however, think that the use of the expression, " the Act shall not apply ", is decisive in this case.
We have to read the third proviso as a whole and in the context in which it occurs, in order to find out what it means.
So read it is difficult to hold that it has the effect of excluding the Baroda business except in so far as the profits thereof are brought into the taxable territories.
What it says in express terms is that the Act shall not apply to any income, profits or gains of business accruing or arising in an Indian State, etc.
It does not say that the business itself is excluded from the purview of the Act.
We have to read and construe the third proviso in the context of the substantive part of section 5 which takes in the Baroda business and the phraseology of the first and second provisoes thereto, which clearly uses the (1) A. I. R. (2) (1931) 1 L. R. 740 language of excluding the business referred to therein.
The third proviso does not use that language and what learned counsel for the appellant is seeking to do is to alter the language of the proviso so as to make it read as though it excluded business the income ' profits or gains of which accrue or arise in an Indian State.
The difficulty is that the third proviso does not say so ; on the contrary, it uses language which merely exempts from tax the income, profits or gains unless such income, profits or gains are received in or brought into India.
Next, we have to consider what the expression income, profits or gains " means.
In the context of the third proviso, it cannot include losses because the latter part of the proviso says " unless such income, profits or gains are received, etc., into the taxable territories ".
Obviously, losses cannot be brought into the taxable territories except in an accounting sense, and the expression " income, profits or gains " in the context cannot include losses.
The expression must have the same meaning throughout the proviso, and cannot have one meaning in the first part and a different meaning in the latter part of the proviso.
The appellant cannot therefore say that the third proviso excludes the business altogether, because it takes away from the ambit of the Act not only income, profits or gains but also losses of the business referred to therein.
On behalf of the appellant it has been argued that though the language of the third proviso to section 5 of the Act is similar to that of section 14(2)(c) of the Indian Income tax Act, the language of the two provisions is not identical and it is not correct to say that their effect is substantially the same.
It is pointed out that the language of section 14(2)(c) was one of exemption only in respect of any income, profits or gains accruing or arising in an Indian State, though for purposes of " total income " the Income tax Act applied thereto, and therefore the normal process of aggregating profits and losses wherever they occurred could be adopted.
But says learned counsel for the appellant, the position is otherwise under the third proviso to section 5 of the Act, because, firstly, it uses the expression, " the Act 741 shall not apply " and secondly, there is no question of exempting the profits from tax while including them for the purposes of " total income ".
We agree that the complication of excluding the profits from tax while including them for determining " total income " does not arise under the third proviso to section 5 of the Act; but the argument presented is the same as we have dealt with earlier.
The argument merely takes us back to the question does the third proviso to B. 5 of the Act merely exempt the income, profits or gains or does it exclude the business? If it excludes the business, the appellant is right in saying that the position under the proviso is not the same as under section 14(2)(c) of the Indian Income tax Act.
If, on the contrary, the proviso merely exempts the income, profits or gains of the business to which the Act otherwise applies, then the position is the same as under section 14(2)(c).
It is perhaps repetition, but we may emphasize again that exclusion, if any, must be done with reference to business, which is the unit of taxation.
The first and second provisoes to section 5 do that, but the third proviso does not.
Lastly it has been contended that the construction adopted by the High Court is likely to lead to consequences which the legislature manifestly could not have intended.
This contention has been pressed in respect of two matters: (a) computation of capital under the rules in Schedule 11 of the Act in a case where the assessee company sustains a loss in an Indian State; and (b) relief for deficiency of profits where the assessee makes profits in an Indian State but sustains a loss in India.
As to the first matter, it has been fully dealt with by the High Court with reference to r. 2A of the Rules in Schedule 11 and it has been rightly pointed out that no difficulty really arise,% by reason of r. 2A.
Nor are we satisfied that any real difficulty arises with regard to relief for deficiency of profits when the assessee makes profits in an Indian State but sustains a loss in India.
The Act will not apply to such profits unless they are brought into India, and if they are brought into India.
, a. 6 will apply with regard to relief on the ground of deficiency of profits.
96 742 It is unnecessary to consider here any hypothetical difficulty which may arise in the application of section 6.
The appellant relies on the third proviso to section 5 of the Act in support of the contention that it excludes the Baroda business of the assessee and the losses of that business cannot be set off against the profits of the business in India, and the appellant can succeed only on establishing that the proviso clearly and without any ambiguity excludes the Baroda business.
We agree with the High Court that if there is any ambiguity of language, the benefit of that ambiguity must be given to the assessee.
However, the conclusion at which we have arrived is that on the language of the proviso as it stands, it does not exclude the Baroda business of the assessee but exempts only.
the income, profits or gains thereof unless they are received or deemed to be received in or brought into India.
Accordingly, the High Court correctly answered the question of law referred to it.
The appeal falls and is dismissed with costs.
Appeal dismissed.
| The assesses had made profits during the assessment year 1951 52 but after deduction of the depreciation allowance it was found to have incurred a loss for income tax purposes.
In the same year the assesses declared dividends.
The Income tax Officer treated this amount as 'excess dividend ' and levied additional income tax as provided in paragraph B of Part I of the First Schedule to the Indian Finance Act, 1951.
The assesses contended that inasmuch as there was no income at all which was 954 taxable the words " on the total income " in paragraph B did not apply to it and no additional income tax could be levied.
The appellant, relying on the proviso to paragraph B, contended that additional income tax was imposed on excess dividend and if excess dividend was paid out, the liability to tax arose: Held, that the assessee was not liable to pay additional incometax.
The liability to tax was imposed by section 3 of the Income tax Act and the Finance Act merely laid down the rates at which tax was to be levied on the total income.
If there was no income there was no question of applying a rate to the " total income " and no income tax or super tax could possibly result.
The word " additional " in the expression "additional income tax " implied that there was a tax before.
The expressions " charge on the total income " and " profits liable to tax " in paragraph B contemplated only those cases where there was income and not cases where there was loss.
Consequently the expression " dividends payable out of such profits " could only apply when there were profits and not when there were no profits.
The imposition of additional income tax was conditioned by the existence of income and profits.
The legislature used language appropriate to income and applied the rate to the " total income ".
Where there was no total income the law could not apply and the courts could not be asked to supply the omission made by the legislature or to delete or to modify any words.
If the words of a taxing statute failed then so did the tax.
The courts could not, except rarely and in clear cases, help the draftsman by a favourable construc tion.
Curtis vs Stovin, , Commissioner of Incometax vs Teja Singh, S.C., Whitney vs Commissioners of Inland Revenue, , Special Commissioners of Income Tax vs Linsleys, Ltd., and Commissioners of Inland Revenue vs South Georgia Co. Ltd. , distinguished.
The Cape Brandy Syndicate vs The Commissioners of Inland Revenue,(1620) and Wolfson vs Commissioners of Inland Revenue,(1949) , referred to.
The proviso to paragraph B prescribed varying rates for varying circumstances; it dealt with rates alone and not with the chargeability to tax.
There were no words in this proviso making the excess dividend into income or subjecting it to tax independently of the charge to tax on the total income.
|
ivil Appeal Nos.
1231 of 1973 and 1408 of 197.
(From the Judgment and Order dated 11 5 1973 of the Delhi High Court in Civil Writ No. 690/72).
380 B. Sen, and L N. Shroff for the Appellant (in Appeal No. 1231/73) S.V. Gupte, P.P. Rao and A.K. Ganguli for Respondent Nos. 1 ,.
2, 4, 6 18, 20, 22, 23, 25 32, 34 and 35.
M.K. Ramamurthi, C. N. Murti and R. C Pathak for Re spondent 36.
M.K. Ramamurthi, C.N. Murti and R. C: Pathak for the Appellant (in Appeal No. 1408/74).
P.P. Rao and A.K. Ganguli for Respondents 1.2, 4, 6 18, 20, 22, 23, 25, 32, 34 & 35.
B. Sen and I. N. Shroff for Respondent 36.
The Judgment of the Court was delivered by BHAGWATI, J.
The Reserve Bank of India is the appel lant in ' Civil Appeal No. 1231 of 1973.
This appeal, on certificate, is directed against a judgment of the High Court of Delhi allowing Writ Petition No. 690 of 1972 filed by some of the employees of the Reserve Bank challenging the validity of the combined seniority Scheme issued by the Reserve Bank of India by its Circular dated 13th May, 1972.
This judgment of the High Court is also assailed by the All India Reserve Bank Employees Association (hereinafter referred to as the Association) by preferring Civil Appeal No. 1408 of 1974 after obtaining certificate from the High Court.
Both these appeals have been heard together since they are directed against the same judgment and all the arguments raised on behalf of the appellants are also common except one additional argument advanced on behalf of ,the Association in Civil Appeal No. 1408 of 1974.
The facts giving rise to these two appeals are a little important and it is necessary to state ,them in order to appreciate the questions arising for determination in the appeals.
The primary purpose for which the ,Reserve Bank of India was originally constituted was "to regulate the issue of bank notes and the keeping of the reserves with a view to securing monetary stability in India and generally to oper ate the currency and the credit system of the country to its advantage".
But in course of time other functions came to be added as a result of various statutes passed by the Parliament from time to time to meet the economic needs of the country.
The administrative machinery of the Reserve Bank ' for carrying out these diverse functions was at the material time divided into the following five groups of departments: (1) Group I: General Side.
that is, Banking Department, Issue Department, Public Debt Division and Exchange Control Department; (2) Group II: Department of ' Banking Operations, Development and InduStrial Finance Department and Department of Non banking Companies; (3) Group III: Agricultural Credit Department, (4) Group IV: Economic Department and Department of Statistics and (5) Group V: Industrial Development Bank of India.
The depart ments falling within the first group were known as the general departments, while the departments falling within the other four groups were known as the specialised depart ments.
Though recruitment to these different groups of departments was 381 made on a common basis, each group of departments was treat ed as a separate unit for the purpose of determining the seniority and promotion of the employees within that group and this was done on centrewise basis.
The result was that there was a separate seniority list for the employees in each group of departments at each centre of the Reserve Bank and the employees could seek confirmation and promotion only in the vacancies arising within their own group of departments at their own centre.
There were two grades of clerks in each group of departments, namely, Grade I and Grade II.
The pay scales of Grade I and Grade II clerks in all the groups of depart ments were the same and their conditions of service were also identical.
There was automatic promotion from Grade II to Grade I and when a clerk from Grade II was promoted to officiate in Grade I he got an additional officiating allow ance of Rs. 25/ per month.
While Grade 1 and Grade II clerks in the specialised departments were invariably gradu ates, those in the general departments were not always so.
Some out of them were graduates, while others were non graduates.
There were also several categories of non clerical posts in the general as well as specialised depart ments.
They were in Grade II and the pay scale this Grade was the same as that of Grade II clerks in the general and specialised departments.
It appears from the Circular of the Reserve Bank dated 13th May, 1963 that Stenographers, Typists and Coin/ Note Examiners, though falling within the category of non clerical staff, were sometimes transferred as Grade II clerks and by this circular, it was decided that "with effect from 1st July, 1963, the transfer of staff from one category to another should be governed" by the principles there set out.
Two categories of transfers were contemplated by this Circular: one was transfer by selection and the other was transfer on grounds of health.
The first category of transfers by selection required that the Stenog rapher, Typist or Coin/Note Examiner seeking transfer would have to be a graduate or should have passed both parts of the Institute of Bankers ' Examination and his applica tion for transfer would be considered by the manager from the point of view of his record of service and his suitabil ity for transfer to the clerical grade and he would then have to appear for interview before a selection board and it was only if he was selected that he would be transferred as Grade II clerk.
But once he was transferred as Grade II clerk, his seniority in the new cadre would be counted from the date on which he joined service, as a Typist or Coin/Note Examiner and in the case of a Stenographer, from the date on which he jointed service as a Typist or as a Stenographer in case he was directly recruited as such "provided that the said date shall not_ be earlier than the date on which the transferee acquired the degree or banking qualification by reason of which he became eligible for such transfer: that is to say, in the case of a Coin/Note Examiner/ Typist/Stenographer who graduates or acquires the banking qualifications after the date of his joining serv ice, he will be deemed to have joined service "only o, the date he acquired the said qualification".
382 The second category of transfers was on grounds of health.
However, that is not material for our purpose and we need not consider it.
It seems that in view 'of the expanding activities of the Reserve Bank in the Specialised Departments, there were greater opportunities for confirmation and promotion for employees in the specialised departments as compared to those available to employees in the general departments.
This gave rise to dissatisfaction amongst employees in the general department and they claimed for equalising the confirmation and promotional opportunities by having a combined seniority list for all employees in Class III irrespective of the departments to which they belonged basing promotions on such combined seniority list.
This question was also raised by the Association before the National Tribunal consisting of Mr. Justice K.T. Desai and it was pleaded by the Association that "all promotions should be made strictly according to the combined seniority irrespective of the cadre of department".
The Reserve Bank, on the other hand, sought to justify the maintenance of separate seniority lists for various departments on the ground that the work in each department was becoming more and more of a special nature and inter transferability was not only undesirable in the best interest of the Bank, but it was also hard to achieve.
The National Tribunal, while not accepting the demand of the Association and expressing its inability to give any direction to the Reserve Bank in regard to this question, made the following observations in its Award: " I can only, generally, observe that it is desirable that wherever it is possible, without detriment to the interests of the Bank and without affecting the efficiency, to group employees in a particular category serving in different depart ments at one Centre together for the purpose of being considered for promotion a common seniority list of such employees should be maintained.
The same would result in opening up equal avenues of promotion for a large number of employees and there would be lesser sense of frustration and greater peace of mind among the employees.
" These observations of the National Tribunal were ap proved by Hidayatullah, J., as he then was, speaking on behalf of this Court in All India Bank Employees Association vs Reserve Bank of India(1) at page 57.
In view of these observations of the National Tribu naI, which were endorsed by this Court, the Reserve Bank took the first step towards equalising the confirmation and promotional opportunities of employees in the General Departments by introducing the Optee Scheme of 1965 by a Circular dated 29th June, 1965.
Clause (1) of the Scheme provided that all vacancies in Grade II Clerks occurring in Specialised Departments in each centre upto 30th June, 1970 would be treated as expansion vacancies to be filled up by transfer of confirmed Grade II Clerks including officiat ing Grade I Clerks in the (1) ; 383 General Departments.
The manner in which these vacancies shall be filled was set out in clauses (2) and (3) which read inter alia as follows: "A circular will be issued inviting applica tions in form 'A ' from confirmed graduate Clerks Grade 1I (including officiating Clerks Gr.
I) of the General Side (Group 1) for the preparation of a panel of suitable employees who are willing to opt for transfer to any of the Departments in Groups II, 1II and V at each centre under the optee scheme.
As regards the non clerical staff trans ferred to the clerical cadre, only those who have been absorbed against permanent vacancies of clerks Gr.
II on the General Side will be eligible to opt for transfer.
(i) The panel will be a consolidated one, i.e., separate panels will not be prepared for each of the Departments in Groups II, 1II and V at each centre.
(ii) The option exercised by the employees will be subject to the approval of the 'Manager ' depending on their past record of service and suitability for transfer to departments in Groups II, III and V. (iii) (a) The position of employees on the panel, recruited directly as clerks Gr.
II from the waiting list of graduate clerks Gr.
II will be determined according to their dates of recruitment.
(b) In the case of employees recruited from the waiting list of undergraduate clerks Gr.
II who have become graduates while in service, and in the case of non clerical graduate staff transferred to the clerical cadre, their position in the panel will be determined according to their dates of graduation. (iv) As and when vacancies arise in the Depart ments in Groups II, III and V at each centre, they will be filled up by drawing on the panel, the first vacancy going to the first person on the panel, the second to the second and so on.
An employee will have no choice of the Department to which he will be posted.
The posting will be made in the order in which the vacancies arise.
(v) Officiating clerks Gr.
I will be trans ferred only in their substantive capacity as clerks Gr.
II (vi) (a) The seniority of the optees on transfer to the Departments in Groups II, III and V will be determined on the basis that their trans fers to the concerned Departments have been made in the interest of the Bank, that is to say, the substantive position of the transferee in the seniority list of the Department concerned will be fixed above and employee who joined service after the date of his recruitment 384 or date of graduation as the case may be and below the employee who joined service before the date of his recruitment/graduation . (c) The above method of fixation will, howev er be subject to the provision that if a substan tively junior employee in the Department to which the transferee is posted is already officiating in that Department in a higher grade on a longterm basis on the date the transferee reports for duty that officiating employee will be considered senior to the transferee.
The inter se seniority of the transferee posted to the same Departments in Group II, III and V will be fixed in the order in which their names are listed in the panel . (viii) The panel will be revised annually.
" It will be seen that under the Scheme the option to go over to the Specialised Departments was confined to confirmed Grade II Clerks.
and offici ating Grade 1 Clerks in the General Departments.
But there also, every Grade II Clerk and Officiat ing Grade I Clerk was not entitled to be absorbed in the Specialised Departments as of right, but he had to go through a process of selection and the option exercised by him was "subject to the approv al of the Manager depending on his past record of service and suitability for transfer" to the Spe cialised Departments.
If he exercised the option and was selected, he would be entitled to be ab sorbed only as Grade II Clerk in one of the Specia lised Departments with the result that if he was an officiating Grade I Clerk in the General Depart ments at the time of the exercise of the option, he would lose the benefit of officiation in Grade I in the General Departments as also the monetary bene fit of Rs. 25/ per month which he was getting during such officiation.
His seniority in the cadre of Grade II Clerks in the SpeciaIised Department in which he was absorbed would be liable to be deter mined on the basis of his length of service calcu lated from the date of his recruitment if he was also a graduate when he joined service or from the date of his graduation if he became a graduate whilst in service.
The rationale behind this provision obviously was that graduation being_ regarded as essential qualification for being a Grade II Clerk in the Specialised Departments, the length of service from the date of graduation alone.
should be taken for the purpose of determin ing the seniority of transferees from the General Departments.
The petitioners in Writ Petition No. 690 of 1972, who may for the sake of convenience be hereafter referred to as the petitioners.
were, at the time of the introduction of the Optee Scheme of 1965, confirmed Grade II Clerks in the General Departments and some of them were officiating in the General Departments as Grade I Clerks.
Though most of the petitioners were recruited as Grade II Clerks from the beginning, so far as petitioners 4, 9, 16, 18, 19, 23 and 26 were concerned, they were originally recruited to non cleri cal posts and subsequently transferred as Grade II clerks by selection and that is how at the date when the Optee Scheme of 1965 came into force, they were confirmed Grade II Clerks in 'the General Departments.
The 385 petitioners exercised the option under the Optee Scheme of 1965 and were absorbed substantively as confirmed Grade 1I Clerks in one or the other of the Specialised Departments.
Obviously, the consequence was that those of the petition ers who were officiating as Grade I Clerks in the General Departments lost their officiating position as a result of this transfer together with the attendant monetary benefit of Rs. 25/ per month.
Besides the petitioners, there were also other confirmed Grade I[ Clerks and Officiating Grade I Clerks in the General Departments who, having exercised the option and being selected, were taken over as confirmed Grade I1 Clerks in the Specialised Departments.
Some of them a few were, in due course, in order of seniority, promoted as Officiat ing Grade I Clerks in their respective Specialised Depart ments.
But before the turn of the petitioners for promo tion could arrive, a new Scheme was brought into force to which we shall presently refer.
It appears that the Asso ciation was not satisfied with the Optee Scheme of 1965 as it did not go far enough and equalised opportunities for only a section of the employees in the General Depart ments, namely confirmed Grade II Clerks and Officiating Grade I Clerks, leaving the rest in the same disadvantageous position as before.
The Association, therefore, continued to press its demand for complete equalisation of opportu nities and in 1969, the Reserve Bank took one further step with a view to partly satisfying that demand.
The Reserve Bank introduced another Scheme called the Optee Scheme of 1969 for transfer of confirmed Grade I Clerks in the Gener al Departments to the Specialised Departments to the extent of one third of the long term normal vacancies of Grade I Clerks arising in the Specialised Departments during the period from 1st February, 1969 to 30th June, 1970.
But this also did not satisfy the Association for what the Associa tion desired was full equalisation of opportunities between the General Departments and the Specialised Departments.
The Association continued to agitate for acceptance of its demand and ultimately, as a result of negotiations, an agreement dated 7th May, 1972 was arrived at between the.
Reserve Bank and the Association by which the demand of the Association was substantially conceded and the principle of a combined seniority list was accepted by the Reserve Bank.
The petitioners and some other employees were, however, not members of the Association and they refused to accept the terms of this agreement and hence the Reserve Bank issued a Circular dated 13th May, 1972 introducing d Scheme for combined seniority list and switched over from non clerical to clerical cadre with effect from 7th May, 1972.
This Scheme was substantially in the same terms as the agreement dated 7th May, 1972 and we shall hereafter, for the sake of convenience, refer to this Scheme as the Combined Seniority Scheme.
The Combined Seniority Scheme consisted broadly of two parts.
One part provided for the integration of the clerical staff of the General Departments with the clerical staff of the Specialised Departments and the other, for the switch over and integration of the non clerical staff with the clerical staff in all the Departments of the Reserve Bank 386 Clauses (8) and (9) dealt with the first part and they provided inter alia as follows: "8.
Combined Seniority between clerical staff in dif ferent departments The seniority lists of the staff mentioned below work ing in the general side and Specialised Departments (i.e. in all the Groups 1 to V of the Department wise grouping) will be merged into one with effect from 7th May, 1972 in accordance with the provisions of clause 10 in the manner set out below: (a) All Clerks Grade II, Field Investigators and Clerks Grade I (with less than one year total officiating service) will be placed in the combined seniority list, relative seniority of an employee being fixed according to the date of his first appointment as Clerk/Field Investigator.
(b) All confirmed Clerks Grade I, Clerks Grade I officiating as such on 7th May, 1972 with one year or more total officiating service, Assistants (temporary, officiating as well as confirmed) and Field Inspectors will be placed in the combined seniority list ranking as a group above the employ ees listed under sub clause (a) above.
The relative seniority of an employee will be fixed on the basis of the total length of service put in by him from the date he first started officiating as Clerk Grade I/Field Inspector after deducting therefrom periods during which he reverted as clerk Grade II/Field Investigator otherwise than on account of proceeding on leave.
(c) Fixation of seniority as referred to in sub clauses (a) and (b) above will be subject to the proviso that the inter se position as between two employees in the existing groupwise/departmentwise seniority lists is not disturbed to the detriment of any senior employee within the same group/department except as provided for in clause 6 and sub clause (e) below.
(d) x x x x (e) ' The seniority of class III personnel having been fixed as provided for in sub clauses (a) and (b) above the seniority of an optee, selected clerk in the existing specialised departments whose seniority compared to his juniors in the existing General side is adversely affected will be protected to the extent of his entitlement had he not opted/been selected under the optee/select ed scheme: Provided that he shall apply in this regard in writing within one month from the date of notification of the combined seniority list.
Applications 387 for such adjustments will not be entertained after expiry of the period stipulated above.
(i) (a) Employees officiating as Clerks Grade I on 7lb May, 1972.
An employee officiating as a Clerk Grade I as on 7th May 1972 will continue to officiate without prejudice to the claims of employees whose position may be above him in the.
combined seniority list.
he reverts, his next promotion will be according to his substantive seniority in the combined list.
Reversion only on account of proceeding on leave will not be deemed as reversion for the purpose this clause.
(b) Promotion as Clerks Grade I between 7th May 1972 and the notification of the combined seniority list.
Promotions during this period will be made with reference to the existing departmental/groupwise seniority list but without prejudice to the claims of seniors in the combined seniority list.
When the combined seniority list, becomes available, a review of all such promotions made in the interre gum will be made and senior employees not officiat ing in the higher grades will be promoted by re placing the junior employees.
The review will be completed within a period of two weeks.
(c) Promotions as Clerks Grade I thereafter.
Promotions will be made from the combined seniority list" The second part Was provided for in clauses (1) to (7) and these clauses, so far as material read thus: "1.
Combined seniority between clerical staff and eligible non clerical stall opting for switchover: (a) All employees in Class III non clerical cadre substantively in the categories that have been listed as groups I, Iii, IV and V in the annexure (Reference is not to the department wise groups) who are graduates or have passed both parts of Institute of Bankers Examination will be eligible to exercise an option in accordance with sub clause (a) or (b) of clause 2 to be transferred, automat ically and without any screening, to posts in the clerical cadre which are vacant and are other than of a purely stop gap or short term nature, subject to subclause (b) below.
Actual transfer to posi tions involving clerical duties will be effected in a phased manner as laid down in clause 7.
(b) On such option being exercised within the period of two months as per clause 2 (a), or one month as per clause 2 (b) as the case may be, the position of such optee will be fixed in the com bined seniority list by counting for the purpose of seniority in the clerical cadre onethird of his total non clerical service in Class III in the 388 Bank until 7th May 1972 or the date of acquiring the qualification i.e. the date of publication of the results of the examination, as the case may be (vide clauses 3(a) and 3(b).
(a) x x x x (b) Any employee who acquires the qualifica tion for eligibility after the 7th May 1972, will have, within one month of acquiring the said qualification, to exercise his option whether he desires to switch over to the clerical cadre with his seniority being determined as per clause I(b).
The option once exercised shall be final subject to the right of revocation and with the same consequences, as at subclause (a) above.
Those eligible but not exercising the option within the, aforesaid period of one month shall lose 'the right of option thereafter.
(a) The notional seniority in the clerical cadre of those employees who are eligible for switchover on the 7th May 1972 and exercise their option under clause 2(a) will be fixed with effect from 7th May 1972.
(b) In respect of employees who acquire the eligibility qualification in future and exercise their option under clause 2(b), their notional seniority in the clerical cadre will be fixed with effect from the date of acquiring such quali fication viz. date of publication of the results of the examination.
(c) Fixation of seniority whether under sub clause (a) or (b) will, however, be subject to the proviso that the inter se position as between two employ ees in the concerned seniority list of non cleri cal employees as it stood immediately before the 7th May 1972 or the date of acquiring the qualification for switchover is not disturbed to the detriment of a senior employee as in the relevant seniority list.
(Illustration for fixation of seniority is Enclo sure.
I) 4.(a) An employee opting for switchover will, for the, purpose of compilation of the combined sen iority list, be deemed to be a member of 'the clerical cadre with effect from the date as at clauses 3(a)and 3(b), as the case may be.
(b) Until such time as he is actually transferred to the clerical cadre an optee from the non cleri cal grade in which he is placed at the time of option and will accordingly remain eligible for promotion in the non clerical cadre; Provided that an employee officiating in a category that is listed as group II, VI, VII or VIII of Annexure as the ease may be confirmed in that category only if he revokes his earlier option before confirmation, for which he will have an opportunity.
" 389 _It may be pointed out that though the Optee Scheme of 1965 was originally intended to be operative only upto 30th June, 1970, it was .continued right upto the time that the Combined seniority Scheme came into force.
The effect of the Combined Seniority Scheme was .that it superseded the Optee Scheme of 19 '65.
The petitioners were ,aggrieved by the Combined Seniority Scheme since according to them it affected their chances of confirmation and promotion and placed them in a disadvantageous position and accordingly they filed Civil Writ No. 690 of 1972 in the Delhi High Court challenging the validity of the Combined Seniority Scheme on various grounds relatable to Articles 14 and 16 of the Constitution.
These grounds of challenge found favour with the Division Bench of the Delhi High Court which heard the petition and the Division Bench quashed and set aside the Combined Seniority Scheme on the view that it was viola tive of Articles 14 and 16 of the Constitution.
The three main grounds on which the Division Bench found fault with the Combined Seniority Scheme were first, that it discrimi nated against the petitioners vis a vis.
the others who had opted under the Optee Scheme of 1965 and who had obtained promotion as Grade I Clerks in their respective Specialised Departments before the introduction of the Combined Seniori ty Scheme;secondly, it discriminated against the petitioners in relation to the .
clerical staff in the General Depart ments who either did not exercise the option under the Optee Scheme of 1965 or having exercised the option, were not selected and thirdly, it treated alike the non clerical staff as well as the clerical staff by integrating them together in one cadre with a combined seniority list, though they formed two distinct and separate classes unequal to each other.
The Division Bench accordingly allowed the petition and struck down the Combined Seniority Scheme.
Two appeals were thereupon preferred to this Court after obtaining a certificate of fitness from the Delhi High Court, Civil Appeal No. 1231 of 1973 by the Reserve Bank and Civil Appeal No. 1408 of 1974 by the Association.
Both the Reserve Bank and the Association seek to sustain the validi ty of the Combined Seniority Scheme in these appeals sub stantially on the same grounds.
We will assume for the purpose of these appeals that the Reserve Bank is a "State" within the meaning of Article 12 of the Constitution and hence subject to the limitations imposed by Article 14 and 16.
It was in fact so held by the Delhi High Court and this view was not seriously assailed before us on behalf of the Reserve Bank.
The question which, therefore, requires to be considered is whether the Combined Seniority Scheme in any way falls foul of Articles 14 and 16.
The Delhi High Court relied on three grounds for invalidating the Combined Seniority Scheme under Articles 14 and 16 and the same three grounds were also canvassed before us in these appeals, but we do not think there is any sub stance in them.
We shall examine these grounds in the order in which they were advanced before us.
The first ground was that the Combined Seniority Scheme discriminated unjustly against the petitioners vis a vis those confirmed Grade II Clerks and Officiating Grade I Clerks in the General Departments who either did not exer cise the option under the Optee Scheme 390 of 1965, or, having exercised the option, were not selected.
The argument of the petitioners under tiffs head of chal lenge was that the Optee Scheme of 1965 was introduced by the Reserve Bank for the purpose of improving the promotion al opportunities of Grade II Clerks in the General Depart ments by absorbing them in the cadre of Grade II Clerks in the Specialised Departments where there were greater promotional opportunities by reason of a larger number of posts in the higher grades.
That was the implied assurance given by the Reserve Bank as part of the Optee Scheme of 1965 and the petitioners, acting on this assurance, exer cised the option to be transferred as confirmed Grade II Clerks in the Specialised Departments, some of them even giving up their officiating position as Grade I Clerks and losing in the process the officiating monetary allowance of Rs. 25/ per month.
The Reserve Bank was, in the circum stances, precluded from introducing the Combined Seniority Scheme which had the effect of prejudicing the promotional opportunities assured to the petitioners, until the peti tioners got their promotion to higher posts in the Specia lised Departments in accordance with such assurance.
The position, however, which obtained when the Combined Senior ity Scheme was brought into force was that the petitioners were still confirmed Grade II Clerks in the Specialised Departments, while, as compared to them, some of the Grade II Clerks in the General Departments, who were junior to the petitioners and who had either not exercised the option or, having exercised the option, were not selected were already promoted as Grade 1 Clerks in the General Departments.
In this situation, the effect of the Combined Seniority Scheme was that though theoretically, by reason of cl.
(8)(c), the petitioners were given seniority over these Grade II Clerks who had been promoted as Grade I Clerks in the General Departments, the latter retained their higher Grade I in the Combined Seniority Scheme and thus secured an advantage over the petitioners.
This was the anomalous and unjust result brought about by the Combined Seniority Scheme and that, according to the petitioners, introduced a serious infirmi ty.
This argument, we are afraid, is more an argument of hardship than of law and we do not think we can accept it.
When the petitioners opted to be transferred to the Specialised Departments under the Optee Scheme of 1965, they obviously did so as they thought that they would have quicker chances of promotion in the Specialised Department than in the General Departments.
But it appears that before their turn for promotion as Grade I Clerks in the Specialised Departments could come, some vacancies occurred in the cadre of Grade I Clerks in the General Departments and naturally they were filled up by promotion of Grade II Clerks in the General Departments.
Some of these Grade II Clerks who were promoted were junior to the petitioners, but they got an opportunity for promotion as the petitioners went out of the General Departments by exercising the option to be transferred to the Specialised Departments.
This was a wholly fortuitous possibly not anticipated by the petition ers or perhaps the petitioners might have thought that they would have an advantage in the matter subsequent promotions to posts higher 391 than Grade I Clerks.
Be that as it may, the fact remains that this was the position which obtained at the date when the Combined Seniority Scheme was introduced by the Reserve Bank.
The question is, was there anything which prevented the Reserve Bank from doing so ? We fail to see how from the mere introduction of the Optee Scheme of 1965, any promise or assurance could be spelt out on the part of the Reserve Bank not to take any steps towards integration of other employees not covered by the Optee Scheme of 1965.
The Reserve Bank could not, on any principle of law or by any process of implication, be held bound to hold its hands in the matter of further inte gration, until the petitioners were promoted in the Specia lised Departments.
And the question would again.be: promoted how far one stage or two stages or more than that ? It is obvious that the only object of the Optee Scheme of 1965 was to equalise the promotional opportunities of Grade II Clerks in the General Departments with those of Grade II Clerks in the Specialised Departments by giving an option to the former to be absorbed in the latter.
This object was car ried out as soon as the petitioners and other Grade II Clerks in the General Departments opted to be transferred to the Specialised Departments.
Then they became Grade H Clerks in the Specialised Departments having the same promotional opportunities as the original Grade II Clerks in the Specia lised Departments.
There was no assurance given by the Reserve Bank that the promotional opportunities available to Grade II Clerks in the Specialised Departments will not be diminished.
The Combined Seniority Scheme affected the promotional opportunities of all Grade II Clerks in the Specialised Departments, irrespective of whether they were original or transferee Grade II Clerks.
It did not discrim inate between transferee Grade II Clerks and original Grade II Clerks and treated them alike in bringing about total integration of the employees in the several Departments.
There was no breach of the principle that the promotional opportunities of transferee Grade II Clerks should be equal to those of original grade II Clerks.
Both were ef fected equally by the Combined Seniority Scheme.
Now under the Combined Seniority Scheme, the integration could only be on grade to grade basis and, therefore, if by the time the Combined Seniority Scheme came into force, Grade II Clerks, junior to tile petitioners, had become Grade I Clerks in the General Departments, they could be equated only with Grade I Clerks in the Specialised Departments and to this equation, no valid objection could be taken on behalf of the petition ers.
Undoubtedly, it would cause heart burning amongst the petitioners to find that Grade II Clerks, junior to them in the General Departments, have become Grade I Clerks in the integrated service, while they still continue to be Grade II Clerks, but that is a necessary consequence of integration.
Whenever services are integrated, some hardship is bound to result.
Reasonable anticipations may be belied.
The second ground on which the petitioners challenged the validity of the Combined Seniority Scheme was that it discriminated against the petitioners vis a vis other Grade II Clerks who had opted under the Optee Scheme of 1965 and obtained promotion as Grade I Clerks in their respective Specialised Departments before the introduction of the 9 1104SCI/76 392 Combined Seniority Scheme.
The contention of the petition ers was that some of the Grade I1 Clerks who had opted under the Optee Scheme of 1965 were promoted as Grade I Clerks, while the petitioners continued as Grade II Clerks and before their turn for promotion could arrive, the Combined Seniority Scheme was brought into force and that prejudi cially affected their promotional opportunities and thus brought about unjust discrimination between persons belong ing to the same class.
This contention has no force and must be rejected.
We have already discussed and shown that it was competent to the Reserve Bank to introduce the Com bined Seniority Scheme for the purpose of integrating the clerical staff in all the departments and the Reserve Bank was not bound to wait until all the transferee Grade II Clerks under the Optee Scheme of 1965 were promoted as Grade I Clerks in their respective Specialised Departments.
There was not such assurance given by the Reserve Bank when it introduced the Optee Scheme of 1965.
What it did was merely to equalise the opportunities Grade II Clerks in the General Departments with those of Grade II Clerks in the Specialised Departments.
The Reserve Bank did not undertake that it will not take any steps for bringing about total integration of the clerical services until all the transferee Grade II Clerks were promoted.
The Reserve Bank was entitled to introduce the Combined Seniority Scheme at any time it though fit and the validity of the Combined Seniority Scheme cannot be assailed on the ground that it was intro duced at a time when some of the transferee Grade II Clerks still remained to be promoted and was discriminatory against them.
It may be that some transferee Grade I1 Clerks had already obtained promotion as Grade I Clerks by the time the Combined Seniority Scheme was introduced, while others like the petitioners had not.
But that cannot be helped.
It is all part of the incidence of service and in law, no griev ance can be made against it.
That takes us to the last ground of challenge which relates to integration of non clerical with clerical serv ices.
This ground of challenge was advanced under three heads: first, non clerical services and clerical services were wholly different from each other and by integrating them into one cadre, the Reserve Bank failed to recognise their differences and treated unequals as equals, thereby offending the equality clause of the Constitution secondly, by permitting, in case of non clerical staff, one third of the total non clerical service until 7th May, 1972 and in case of those who become graduates or pass both parts of institute of Bankers Examination subsequent to 7th May, 1972 until the date of acquiring such qualification to be taken into account for the purpose of seniority, the Reserve Bank laid down a wholly irrational and unjust principle of sen iority in the integrated service and thereby violated the equal opportunity clause and lastly, the seniority of the petitioners was adversely affected by the integration with out giving any opportunity to them to represent against it and the Combined Seniority Scheme was, therefore, in viola tion of the principles of natural justice.
We have careful ly examined these three heads of challenge, but we do not find any substance in them.
They are based on a misconcep tion of the true nature of the process involved in integra tion of non clerical with clerical services.
There was, as already 393 pointed out above, a non clerical cadre in each Department of the Reserve Bank and it was decided by the Reserve Bank that the nonclerical cadres in all the Departments should be integrated with the clerical cadre.
With that end in view, the Combined Seniority Scheme gave an option to all employ ees in non clerical cadres to be transferred to posts in the clerical cadre, but in the interest of efficiency, pre scribed a qualification that only those employees in non clerical cadres would be entitled to be transferred who are either graduates or have passed both parts of Institute of Bankers Examination.
Now, when the employees from non clerical cadres are admitted in the clerical cadre, some rule would have to be made for determining their seniori ty vis a vis those in the clerical cadre.
They would have to be fitted into the clerical cadre and for that purpose, some rule would have to be devised for determining how they shall rank in seniority.
The Combined Seniority Scheme adopted the rule that for determining the seniority of non clerical staff who exercised the option and were admit ted in the clerical cadre, one third of their total non clerical service "until 7th May, 1972 or the date of acquir ing qualification" should be taken into account.
This was the manner in which the Combined Seniority Scheme sought to bring about integration of non clerical with.
clerical serv ices in the several departments of the Bank.
Now, the first question which arises for consideration is whether the Reserve Bank violated the constitutional princi ple of equality in bringing about integration of non cleri cal with clerical services.
We fail to see how integration of different cadres into one cadre can be said to involve any violation of the equality clause.
It is now well set tled, as a result of the decision of this Court in Kishori Mohanlal Bakshi vs Union of India(1) that Article 16 a fortiori also Article 14 do not forbid the creation of different cadres for government service.
And if that be so, equally these two Articles cannot stand in the way of the State integrating different cadres into one cadre.
It is entirely a matter for the State to decide whether to have several different cadres or one integrated cadre in its services.
That is a matter of policy which does not attract the applicability of the equality clause.
The integration of non clerical with clerical services sought to be effectuated by the Combined Seniority Scheme cannot in the circumstances be assailed as violative of the constitutional principle of equality.
Then we come to the question of the rule of seniority adopted by the Combined Seniority Scheme.
Now there can be no doubt that it is open to the State to lay down any rule which it thinks appropriate for determining seniority in service and it is not competent to the Court to strike down such rule on the ground that in its opinion another rule would have been better or more appropriate.
The only en quiry which the Court can make is whether the rule laid down by the State is arbitrary and irrational so that it results in inequality of opportunity amongst employees belonging to the same class.
Now, here, employees from non clerical cadres were being absorbed in the clerical cadre and, there fore, a rule for determining their seniority vis a vis (1) A.I.R. 1962 S.C. 1139.
394 those already in the clerical cadre had to be devised.
Obviously, if the non clerical service rendered by the ' employees from non clerical cadres were wholly ignored, it would have been most unjust to them.
Equally, it would have been unjust to employees in the clerical cadre, if the entire non clerical service of those coming from non cleri cal cadres were taken into account, for non clerical service cannot be equated with clerical service and the two cannot be treated on the same footing.
Reserve Bank, therefore, decided that one third of the non clerical service ren dered by employees coming from non clerical cadres should be taken into account for the purpose of determining seniority.
This rule attempted to strike a just balance between the conflicting claims of non clerical and clerical staff and it cannot be condemned as arbitrary or discriminatory.
Vide: Anand Parkash Saksena vs Union of India.(1) The last contention of the petitioners was that seniori ty is a civil right and the State cannot interfere with it to the prejudice of an employee without giving an opportuni ty to him to be heard and since the Combined Seniority Scheme adversely affected the seniority of the petitioners in the clerical cadre without giving them an opportunity to represent against it, it was void and inoperative.
There are two answers to this contention and each is, in our opinion, fatal.
In the first place, we do not find from the judgment of the High Court that this contention was at any time advanced before the High Court and, in the circum stance.s, we do not think it would be fight to permit it to be raised for the first time before this Court.
Secondly, even if this contention were allowed to be raised, we do not think it can be sustained.
Here, there was no question of any existing seniority being disturbed by change in the rule of seniority.
The problem was of fitting into the clerical cadre employees coming from non clerical cadres and for that purpose, a new rule was required to be made which would determine the seniority of these new entrants vis a vis those already in the clerical cadre.
Such rule did not affect seniority and hence there could be no question of giving the petitioners an opportunity to make representation against it.
These were the only contentions urged before us against the constitutional validity of the Combined Seniority Scheme and since there is no substance in them, we think that the High Court was in error in striking down the Combined Sen iority Scheme.
We accordingly allow the appeals, set aside the judgment and order of the High Court and uphold the validity of the Combined Seniority Scheme.
There will be no order as to costs.
V,P.S. Appeals allowed.
(1) [1968] 2 S.C.R. 611, 622.
| At every centre of the Reserve Bank of India there were five departments, the General Department and four Specialised Departments.
There was a separate seniority list for the employees in each Department at each centre and confirmation and promotion of employees was only in the vacancies arising within their Department at each centre.
There were two grades of clerks in each Department, namely, Grade I and Grade 11.
The pay scales of Grade I and Grade II clerks in all the departments were the same and their conditions of service were also identical.
There was automatic promotion from Grade II to Grade I and when a clerk from Grade H was promoted to officiate in Grade I, he got an additional officiating allowance of Rs. 25/ per month.
There were also several categories of non,clerical posts in the General as well as Specialised Departments, and their pay scale was the same as that of Grade II clerks.
In view of expanding activities in the Specialised Departments, there were great er opportunities for confirmation and promotion for employ ees in the Specialised Departments than in the General Department.
This gave rise to dissatisfaction amongst employees in the General Department and they claimed equal opportunities by having a combined seniority list for all the clerks for confirmation and promotion.
The Reserve Bank, sought to justify the separate seniority lists on the ground that the work in each department was of a special nature and inter transferability was undesirable and hard to achieve.
As a result of the recommendation Of the National Tribunal, however, the Reserve Bank introduced the Optee Scheme of 1965 as h first step towards equalization of opportunities.
Under the Scheme, the option to go over to the Specialised Departments was confined to confirmed Grade 11 clerks and officiating Grade I clerks in the General Department.
If he exercised the option, he was eligible to be selected.
If he was selected, he would be entitled to be absorbed only as Grade II clerk in one of the Specialised Departments with the result that if he was an officiating Grade I clerk in the General Department at the time of the exercise of the option, he would lose the benefit of officiation in Grade I in the General Department as also the monetary benefit of Rs. 25/ .
His seniority in the cadre of Grade II clerks in the Specialised Department in Which he was absorbed would be determined on the basis of his length of service calculated from the date of his recruitment if he was a graduate when he joined service, or from the date of his graduation if he became a graduate whilst in service.
The petitioners in the present case and some others were, at the time of introduction of the Optee Scheme, confirmed Grade II clerks in the General Department and some of them were officiating in the General Department as Grade I clerks.
They exercised the option under the Optee Scheme land were absorbed substantively as confirmed Grade II clerks in one or the other of the Specialised Departments.
The clerks, other than the petitioners were in due course, in order of seniority, promoted as officiating Grade I clerks in their respective Specialised Departments.
But before the turn of the petitioners for promotion came, a new ' Scheme was introduced on May 13, 1972 as a result of continuous agitation by the employees for full equalisation of opportunities between the General Department and the Specialised Departments.
This Scheme was known as the Combined Seniority Scheme, and it superseded the Optee Scheme.
It consisted of two parts.
One part provided for the integration of the clerical staff of the General Depart ment with the clerical staff of the Specialised Departments, and the other, 378 for the integration of the non clerical staff with the clerical staff in all the Departments.
The Combined Seniori ty Scheme gave an option to the non clerical employees to be transferred to posts in the clerical cadre, but in the interest of efficiency, prescribed a qualification that only those employees in non clerical cadres would be transferred who arc either graduates or have passed both parts of Insti tute of Bankers Examination.
For determining their seniori ty vis a vis those in the clerical cadre, the Combined Seniority Scheme adopted the rule that one third of their total non clerical service until 7th May, 1972 (the date on which agreement was reached between the Bank and its employ ees in the terms of the Combined Seniority Scheme) or the date of acquiring the qualification should be taken into account.
The petitioners successfully challenged the Combined Seniority Scheme in the High Court.
The High Court held that the Scheme was violative of articles 14 and 16 of the Constitution, because: (1) The position which obtained when the Combined Seniority Scheme was brought into force was that the petitioners were still confirmed Grade 11 clerks in the Specialised Departments, while some of the Grade II clerks in the General Departments, who were junior to them and who had either not exercised the option, or having exercised the option, were not selected, were promoted as Grade 1 Clerks in the General Departments.
The result was that these Grade 11 clerks who had been promoted as Grade I Clerks in the General Department were equated to Grade I Clerks in the Specialised Departments.
Therefore, according to the petitioners, the Combined Seniority Scheme had the effect of prejudicing the promotional opportunities assured to the petitioners under the Optee Scheme and hence the Combined Seniority Scheme discriminated against the petitioners in relation to the clerical staff in the General Department who either did not exercise the option under the Optee Scheme or having exercised the option, were not selected; (2) it discriminated against the petitioners vis a vis others who had opted under the Optee Scheme of 1965 and who had obtained promotion as Grade I clerks in their respective Specialised Departments before the intro duction of the Combined Seniority Scheme; and (3) (a) the Scheme treated alike the non clerical staff as well as the clerical staff by integrating them together in one cadre with a combined seniority list though they formed two dis tinct and separate classes, and thus violated the equali ty clause; (b) by permitting, in the case of non clerical staff, one third of the total non clerical service until 7th May, 1972 or the date of acquiring the qualification, to be taken into account for the purpose of seniority, the Bank laid down a wholly irrational and unjust principle of sen iority in the integrated service and violated the equal opportunity clause and; (c) the seniority of the petitioners was adversely affected by the integration without giving any opportunity to them and thus the introduction of the Com bined Seniority Scheme violated the principles of natural justice.
Allowing the appeal to this Court and upholding the validity of the Combined Seniority Scheme.
HELD: (1) Assuming that the Reserve Bank is State under article 12, and therefore subject to articles 14 and 16, by the mere introduction of the Optee Scheme no promise or assur ance could be spelt out on the part of the Bank not to take any steps towards integration of other employees not covered by the Optee Scheme.
The Reserve Bank could not, on any principle of law or by any process of implication, be held bound to hold its hands in the matter of further inte gration, until the petitioners were promoted in the Specia lised Departments.
The only object of the Optee Scheme was to equalise the promotional opportunities of Grade II clerks in the General Departments with those of Grade II clerks in the Specialised Departments by giving an option to the former to be absorbed in the latter.
This object was carried out as soon as the petitioners and other Grade II clerks in the General Departments opted to be transferred to the Specialised Departments.
Then they became Grade I1 clerks in the Specialised Departments having the same promo tional opportunities as the original Grade 1I clerks in the Specialised Departments.
There was no assurance given by the Bank that the promotional opportunities available to Grade II clerks in the Specialised Departments will not be dimin ished.
The Combined Seniority Scheme affected the promo tional opportunities of all Grade II clerks in the Specia lised Departments, irrespective of whether they were origi nal or transferee Grade II clerks.
It did not discriminate between transferee Grade II clerks and original 379 Grade II clerks.
There was no breach of the principle that the promotional opportunities of transferee Grade 11 clerks should be equal to those of original Grade II clerks.
The fact that some of the Grade II clerks, junior to the peti tioners, had become Grade I clerks in the General Depart ments, and so could be equated only with Grade I clerks in the Specialised Departments is a wholly fortuitous result.
It might cause heart burning amongst the petitioners that they still continue to be Grade II clerks but whenever services are integrated, some hardship is bound to result as a necessary consequence of integration.
B G] (2) The Reserve Bank did not undertake that it will not take any steps for bringing about total integration of the clerical services until all the transferee Grade II clerks were promoted.
The Reserve Bank was entitled to introduce the Combined Seniority Scheme at any time it thought fit and its validity cannot be assailed on the ground that it was introduced at a time when some of the transferee Grade II clerks still remained to be promoted and so was discrimina tory against them.
The fact that some transferee Grade II clerks had already obtained promotion as Grade I clerks in the Specialised Departments by the time the Combined Senior ity Scheme was introduced, is all part of the exigencies of service and in law no grievance can be made against it.
[392 D E] (3) (a) The integration of different cadres into one cadre cannot be said to involve any violation of the equali ty clause.
It is entirely a matter for the State to decide whether to have several different cadres or one integrated cadre in its services.
That is a matter of policy which does not attract the applicability of the equality clause.
The integration of non clerical with clerical service sought to be effectuated by the Combined Seniority Scheme cannot, in the circumstances, be assailed as violative of the prin ciple of quality.
[393 F] Kishori Mohanlal Bakshi vs Union of India AIR 1962 S.C. 1139 referred to (b) It is open to the State to lay down any rule which it thinks appropriate for determining seniority in service and it is not competent to the Court to strike down such a rule on the ground that in its opinion another rule would have been better or more appropriate.
The only enquiry which the Court can make is whether the rule laid down by the State is arbitrary and irrational so that it results in inequality of opportunity amongst employees belonging to the same class.
[393 G H] In the present case the employees from non clerical cadres were being absorbed in the clerical cadre, and, therefore, a rule for determining their seniority vis a vis those already in the clerical cadre had to be devised.
To ignore their .entire non clerical service would have been unjust to them, and to take into account their entire non clerical services would be unjust to those in the clerical service.
The Bank therefore, decided that one third of the non clerical service rendered by the employees coming from non clerical cadres should be taken into account for the purpose of determining seniority.
It strikes a just balance between the conflicting claims of non clerical and clerical staff and cannot be condemned as arbitrary or discriminato ry.
[394 A B] Anand Parkash Saksena vs Union of India [1968] 2 S.C.R. 611, referred to.
(c) (i) The contention that there was violation of princi ples of natural justice was not raised before the High Court; (ii) Even if the contention is allowed be raised in this Court, there was no question of any existing seniority of the petitioners being disturbed by changing the rule of seniority.
The problem was fitting into the clerical cadre employees coming from non clerical cadres.
For that purpose, a new rule was required to be made.
The rule did not affect the petitioners ' seniority, and hence, there was no question of giving the petitioners an opportunity to make representa tion against it.
[394 E]
|
Appeal No. 407/61.
908 Appeal by special leave from the judgment and order dated August 23, 1960, of the Orissa High Court in O.J.C. No. 103 of 1959.
N.O. Chatterjee and P. K. Chatterjee, for the appellant, C. K. Daphtary, Solicitor General of India, B. R. L. Iyengar and P. D. Menon, for the respondents.
B.M. Patnaik, section N. Andley, Rameshwar Nath and P. L. Vohra, for the Intervener.
March 16.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave against the judgment of the Orissa High Court.
The brief facts necessary for present purposes are these.
The appellant made an application to the State Government of Orissa in 1949 for grant of a mining lease for manganese ore over an area comprising 5400 acres situated in the district of Keonjhar.
The appellant was the first applicant for the lease of the aforesaid area, and subsequently other persons applied for lease of the same area including Messrs. Tata from and Steel Company Limited hereinafter referred to as Tatas), the intervener in the present appeal.
The Government of Orissa decided to grant the in favour of Tattas and in January 1956 referred the matter to the Central Government for its approval under r. 32 of the Mineral Concession Rules, 1949 hereinafter referred to as the Rules), which lays down that if more than one application regarding the same, land is received, preference shall be given to the application received first, unless the State Government, for any special reason, and with the prior approval of the Central Government decides to the contrary.
The appellant made a representation to the Central Government against the recommendation of the 909 State Government.
Eventually, on April 9, 1957, the Central Government turned down the recommendation of the State Government about the grant of the mining lease to Tatas.
It also directed that the applications received prior to the application of Tatas should be considered according to the Rules but added that in case the Government of Orissa desired to work the area on a departmental basis, the Central Government would have no objection to consider a proposal for that purpose.
Thereafter the State Government rejected the application of the appellant in December 1957 on the ground that the State Government proposed to arrange for the exploitation of the area in the public sector.
This was followed by an application for review to the 'Central Government under r. 57 of the Rules.
This application was rejected by the Central Government in June 1969.
Thereupon the appellant filed a petition under article 226 of the Constitution in the High Court in July 1959.
This petition was dismissed by the High Court on the ground that it had no jurisdiction to deal with the matter under article 226 as the final order in the case was passed by the Central Government which was located beyond the territorial jurisdiction of the High Court.
The appellant then applied to the High Court for a certificate to appeal to this Court, which was rejected.
He then asked for special leave from this Court, which was granted; and that how the matter has come up before us.
The main question raised before us is the limit of the jurisdiction of the High Court under article 226 in circumstances like those in the present case.
The contention on behalf of the appellant is that as the Central Government bad merely dismissed the review petition, the effective order rejecting the appellant 's application for the mining lease was that of the State Government and therefore the High Court would have jurisdiction to grant a writ 910 under article 226, and that the principle laid down in Election Commission India vs Saka Venkata Subba Rao(l) would not apply.
Reliance in this connection has been placed on the decision of this Court in The State of Uttar Pradesh vs Mohammed Nooh(2).
It is well settled by a series of decisions of this Court beginning with Saka Venkata Subba Rao 's case(1) that there is two fold limitation on the power of the High Court to grant a writ under article 226.
These limitation are firstly that the power is to be exercised throughout the territories in relation to which the High Court exercise jurisdiction, that is to say, the writs issued by the High Court cannot run beyond the territories subject to its jurisdiction, and secondly, that the person or authority to whom the High Court is empowered to issue such writs must be within those territories, which clearly implies that they must be amenable to its jurisdiction either by residence or location within those territories.
The view taken in this case has been recently reaffirmed by this Court in Lt. Col.
Khajoor Singh vs Union of India.
(3) Prima facie, therefore, as the final order in this case was passed by the Central Government which is not located within the territories over which the High Court has jurisdiction, the High Court will have no power to grant a writ in this case.
Learned counsel for the appellant however relies on the decision in Mohd. Nooh 's case (2) where it was held that it was not correct to say that an order of dismissal passed on April 20, 1948, merged in the order in appeal therefrom passed in May 1949, and the two orders in turn merged in the order passed in revision on April 22, 1,950, or that the original order of dismissal only became final on the passing of the order in revision.
It was further held that the order of dismissal was operative on its 1. ; 2. ; 3. ; 911 own strength and therefore no relief under article 226 could be granted against the order of dismissal passed in 1948 as article 226 was not retrospective in operation.
It is urged that if the order of dismissal in that case did not merge in the final order of revision which was passed in April 1950, after the Constitution came into force, there was no reason why the order of the State Government should be taken to have merged in the order of the Central Government in this case so as to deprive the appellant of his remedy in the High Court under article 226.
We are of opinion that the principle of Mohd. Nooh 's Case(1) cannot apply in the circumstances of the present case.
The question there was whether the High Court would have power to issue a writ under article 226 in respect of a dismissal which was effective from 1948, simply because the revision against the order of dismissal was dismissed by the State Government in April 1950 after the Constitution came into force.
It was in those circumstances that this Court held that the dismissal having taken place in 1948 could not be the subject matter of an application under article 226 of the Constitution for that would be giving retrospective effect to that Article.
The argument that the order of dismissal merged in the order passed in appeal therefrom and in the final order of revision was repelled by this Court on two grounds.
It was held (firstly) that the principle of merger applicable to decrees of courts would not apply to orders of departmental tribunals, and (secondly) that the original order of dismissal would be operative on its own strength and did not gain greater efficacy by the subsequent order of dismissal of the appeal or revision, and therefore the order of dismissal having been passed before the Constitution would not be open to attack under article 226 of the Constitution.
We are of opinion that the facts in Mohd. Nooh 's case (1) were of a special kind and (1) ; 912 the reasoning in that case would not apply to the facts of the present case.
Further, in A. Thangal Kunju Musaliar vs M. Venkitachalam Potti (1), though this Court was considering a matter in which the question which is before us was not directly in issue, it had occasion to consider certain decisions of certain High Courts which dealt with oases similar to the present case : (see p. 1213).
In those decisions orders had been passed by certain inferior authorities within the territories subject to the jurisdiction of the High Courts concerned, but they had been taken in appeal before superior authorities which were located out.
side the territories subject to the jurisdiction of the High Courts concerned.
In those circumstances the High Courts had held that the order of the inferior authorities had merged in the orders of the authorities.
This Court apparently approved of the view taken by the High Courts in those cases on the ground that a writ against the inferior authority within the territories could not be of any avail to the petitioners concerned in those oases and could give them no relief for the orders of the superior authority outside the jurisdiction would remain outstanding and operative against them.
Therefore, as no writs could be issued against the outside authorities, this Court was of the view that the High Courts were right in dismissing the petitions, as any writ against the inferior authority which is within the jurisdiction of the High Court, in view of the orders of the superior authority, would be infructuous.
The position in the present case is similar to that envisaged above.
The Orissa Government rejected the application of the appellant for grant of the mining lease.
The appellant being aggrieved by that order went in review to the Central Government under the Rules and that review petition was dismissed so that in effect the Central (1)[1955] 2 S.C.R. 1196, 913 Government also rejected the application of the ,appellant for grant of the mining lease to him.
It is not in dispute that if the Central Government was so minded it could have allowed the review and directed the Orissa Government to grant mining lease to the appellant.
Therefore when the Central Government rejected the review petition, it in effect rejected the application of the appellant for the grant of the mining lease to him.
This order of the Central Government in effect rejecting the application of the appellant for the grant of the mining lease to him and confirming the rejection of the application of the appellant by the Orissa Government is clearly not amenable to the jurisdiction of the High Court of Orissa under Art 226 in view of the fact that the Central Government is not located within the territories subject to the jurisdiction of the Orissa High Court.
It would therefore have been useless for the Orissa High Court to issue a writ against the Orissa Government for the Central Governments order rejecting the review petition and therefore in effect rejecting the application of the appellant for grant of the mining lease would still stand This is made clear by r. 60 of the Rules, which provides that "the order of the Central Government under Rule 59 and subject only to such order, any order of a State Government under these rules, shall be final".
Clearly therefore r. 60 provides that where there is a review petition against the order passed in the first instance by the State Government, the order of the Central Government passed in review would prevail and would be the final order dealing with an application for a mining lease under the Rules.
Therefore, quite apart from the theoretical question of the merger of the State Government 's order with the Central Government 's order, the terms of r.60 make it perfectly clear that whenever the matter is brought to the Central Government under r. 59, it is the order of the Central Government which is effective and final.
In these 914 circumstances we are of opinion that the High Court was right in holding that it had no jurisdiction to issue a writ under article 226 in the present case as the final order in this case was that of the Central Government which was not situate within the territories over which the High Court has jurisdiction.
Our attention in this connection was drawn to Shivji Nathubhai vs The Union of India (1).
In that case a mining lease had been granted by the State Government to a particular person and there was a review petition against the grant of that mining lease.
The order granting the mining lease was set aside on review without notice to the person to whom the lease had been granted.
In that connec tion a question arose whether the person to whom the State Government had granted the lease had any interest to enable him to make an application under article 226.
It was then pointed out by this Court that under the Rules the order of the State Government would be effective as there was no re quirement that it was not final until confirmation by the Central Government.
That case however is of no assistance to the appellant for where there is a review petition and the Central Government passes an order on such petition one way or the other it is the Central Government 's order that prevails and the State Government 's order must in those circumstances merge in the order of the Central Government.
The observations in that case on which the appellant relies were made in another connection and can have no bearing on the question before us, where an order has been passed by the Central Government on review and it is that order which is made final by r. 60 and which stands in the way of the appellant.
There is therefore no force in this appeal and it is hereby dismissed with costs.
Appeal dismissed.
| On August 5, 1947, the appellant booked two consigments by the N. W. Railway from Gujranwala, now in Pakistan, to jagadhari.
The consignments were not delivered and, on January 22, 1948, the appellant gave a notice to the railway under section 80 of the Code of Civil Procedure claiming the value of the goods by way of compensation.
It was stated in the notice that the cause of action had arisen on August 21 and 30, 1947, when delivery was refused.
On December 1, 1948, the railway informed the appellant that the consignments were still lying at Gujranwala and could be despatched on the appellant obtaining the necessary permits from the Pakistan authorities.
On December 13, 1949, the appellant bro ught a suit for compensation for non delivery of the goods.
The respondent contended that the suit was beyond time as it was not filed within one year from the time "when the goods ought to be delivered" as prescribed by article 31 of the Limitation Act.
Held, that the suit was barred by time.
The words "when the goods ought to be delivered" in article 31 had to be given their strict grammatical meaning and equitable consi derations were out of place.
Under article 31 limitation started on the expiry of the time fixed between the parties for delivery of the goods and in the absence of any such agreement the limitation started after reasonable time had elapsed on the expiry of which the delivery ought to have been made.
The reasonable time was to be determined according to the circumstances of each case.
The view taken by some High Courts that time began to run from the date when the railway finally refused to deliver was not correct ; where the legislature intended that time should run from ' the date of refusal it had used appropriate words in that connection.
The starting point of limitation could not generally be affected by the conduct of the parties or by the correspondence between them, unless it contained an acknowledgment of liability by the carrier or showed something affecting the reasonable time In the present case delivery ought to have been made within five or six months, as is also indicated by the s, 80 notice given 71 by the appellant and the suit was filed more than a year after that expiry of that time.
Dominion of India vs Firm Aminchand Bholanath (F. B.) decided by Punjab High Court on May 2, 1956, approved.
Jugal Kishore vs The Great Indian Peninsular Rat (1923) I. L. R. 45 All.
43 ; Bengal and North Western Railway Company vs Maharajadhiraj Kameshwar Singh Bahadur, (1933) I. L. R. 12 Pat. 67, 77 ; Jai Narain vs The Governor General of India, A. I. R. ; and Governor General in Council vs section G. Ahmed, A. 1.
R. , disapproved.
Nagendranath vs Suresh, A. 1.
R. and General Accident Fire and Life Insurance Corporation Limited vs Janmahomed Abdul Rahim, A. I. R. , referred to.
|
Criminal Appeal No. 322 of 1987.
From the Judgment and Order dated 19.1.1987 of the Bombay High Court in Criminal Writ Petition No. 103 of 1986.
672 Hardev Singh and Ms. Madhu Moolchandani for the Appellant.
B.A. Masodkar, A.S. Bhasme and A.M. Khanwilkarforthe Respondent.
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 January 19, 1987 rejecting the petition under article 226 of the Constitution filed by the appellant in the High Court for grant of a writ of habeas corpus.
The appellant has been placed under detention by the impugned order dated September 7, 1986 passed by the District Magistrate, Beed under section 3(2) of the on his being satis fied that it was necessary to do so 'with a view to prevent ing him from acting in any manner prejudicial to the mainte nance of public order '.
The appellant challenged the im pugned order of detention on grounds inter alia that there was infraction of the constitutional safeguards enshrined in article 22(5) read with section 8 of the Act inasmuch as there was inordinate, unexplained delay on the part of the detaining authority to consider and dispose of his representation.
On the view that we take, it is not necessary to deal with the facts elaborately.
The material facts are these.
The appellant was taken into custody on September 8, 1986 and was lodged at the Aurangabad Central Prison, Aurangabad where he is now detained.
He was served with the grounds of detention along with the copies of the relevant documents on September 14, 1986.
It appears that a week thereafter i.e. on September 22, 1986 he addressed a representation to the Chief Minister through the Superintendent, Aurangabad Cen tral Prison, Aurangabad which the Superintendent forwarded to the Home Department on September 24, 1986.
The State Government, in the meanwhile, under section 3 (4) of the Act accorded its approval to the impugned order of detention on September 18, 1986.
On October 6, 1986 the appellant made another representation to the Advisory Board which met and considered the same on October 8, 1986.
On October 13, 1986 the Advisory Board after considering the representation made by the appellant together with the materials placed before it forwarded its report to the State Government recommending confirmation of the impugned order of detention as there was, in its opinion, sufficient cause for the detention of the appellant.
Acting upon the report of the Advisory Board, the State Government by its order dated November 19, 1986 confirmed the order of detention.
In the mean 673 time, the appellant moved the High Court on November 13, 1986.
The main ground on which the legality of the impugned order of detention was assailed in the High Court was that although the appellant had addressed a representation to the Chief Minister on September 22.
1986, it was not considered and disposed of by the Chief Minister till November 17, 1986 i.e. there was unexplained, unreasonable delay in disposal of the same.
It was said that such unreasonable delay in disposal of the representation was sufficient to render the continued detention of the appellant illegal.
The High Court did not think it necessary to call upon the respondents and by an oral judgment dismissed the writ petition mainly on the ground of imperfect pleadings.
It observed that the appellant had not specifically pleaded that there was unrea sonable delay in the office of the Chief Minister which had not been explained and therefore the detention was illegal, but his grievance was that his representation had not been considered.
It referred to paragraph 4 of the writ petition where it is submitted: "It is submitted that in law, the State Gov ernment is bound to consider the representa tion before the decision of the Advisory Board, but in the instant case neither the State Government has considered the represen tation of the petitioner nor the Government has communicated its decision.
" It referred to the underlined portion of the averments in paragraph 4 of the writ petition, namely: "Eight weeks have elapsed since the date of detention of the petitioner but still neither the State Government has taken any decision on the representation forwarded through the Home Department nor the petitioner is communicated any decision pursuant to the report . . " The High Court distinguished the decision of this Court in Harish Pahwa vs State of Uttar Pradesh & Ors., ; on the ground that in that case the Court had before it the affidavit of the Government showing that it had no explanation to offer except that it had referred the matter to the Law Department and also there was sufficient material to show that there was unreasonable delay in dealing with the representation whereas in the present case there was no such ground raised.
The High Court disallowed the prayer for grant of a writ of habeas corpus mainly on the ground of defective pleadings, and 674 added that the appellant "had not even asked for time to amend the petition" and "put the respondents to notice".
It observed: "While the State undoubtedly has the duty to process the representation of the detenu promptly, it is also the duty of the petition er to make specific adverments of facts and their effect, if necessary, by amendment.
This is necessary to put the respondents to notice, that the effect of these facts have to be answered and explained.
The respondents may have an explanation as to why the Chief Minis ter took so much time.
On such submission we cannot hold that the respondents have failed to explain delay or that the time taken by the Chief Minister was wholly necessary.
We should not be understood to have held that the time taken by the Government was justified.
Far from it.
But we cannot allow the petitioner to take the respondents by surprise by such a style of pleading.
" It was an improper exercise of power on the part of the High Court in disallowing the writ petition on the ground of imperfect pleadings.
Normally, writ petitions are decided on the basis of affidavits and the petitioner cannot be permit ted to raise grounds not taken in the petition at the hear ing.
The same rule cannot be applied to a petition for grant of a writ of habseas corpus.
It is enough for the detenu to say that he is under wrongful detention, and the burden lies on the detaining authority to satisfy the Court that the detention is not illegal or wrongful and that the petitioner is not entitled to the relief claimed.
This Court on more occasions than one has dealt with the question and it is now well settled that it is incumbent on the State to satisfy the Court that the detention of the petitioner/detenu was legal and in conformity not only with the mandatory provi sions of the Act but also strictly in accord with the con stitutional safeguards embodied in article 22(5).
In return to a rule nisi issued by this Court or the High Court in a habeas corpus petition, the proper person to file the same is the District Magistrate who had passed the impugned order of detention and he must explain his subjective satisfaction and the grounds therefore; and if for some good reason the District Magistrate is not available, the affidavit must be sworn by some responsible officer like the Secretary or the Deputy Secretary to the Government in the Home Department who personally dealt with or processed the case in the Secretariat or submitted it to the Minister or other Officer duly authorised under the Rules of Business framed by the Governor under article 166 of the Constitution to pass orders on behalf of the Govern 675 ment in such matters: Niranjan Singh vs State of Madhya Pradesh, ; ; Habibullah Khan vs State of West Bengal, ; Jagdish Prasad vs State of Bihar & Anr., ; and Mohd. Alam vs State of West Bengal, ; In the present case, in answer to the notice issued by this Court under article 136, the affidavit in reply has been filed by Shri S.V. Joshi, District Magistrate, Beed who passed the impugned order of detention.
There is a general denial in paragraph 2 of the counter affidavit that there was unreasonable delay in the disposal of the representation made by the appellant.
However, the delay in disposal of the representation was in the Secretariat and therefore it is averred in paragraph 11: "I say that the affidavit filed by Shri Vish wasrao, Desk Officer, Home Department (Special), Mantralaya, Bombay on behalf of State of Maharashtra in the High Court Bench at Aurangabad will reveal that different steps, as required by the provisions of Na tional Security Act, 1980 are taken immediate ly, within stipulated period." and it is then averred in paragraph 12 that the contentions raised by the appellant with regard to delay have been dealt with by the High Court while deciding the writ petition.
It is said that the appellant has raised the contention about unreasonable delay in disposal of his representation, for the first time in this Court presumably on the reasoning of the High Court.
There is on record an affidavit sworn by I.S. Vishwasrao, Desk Officer, Home Department (Special), Mantralaya, Bombay in answer to the grounds 16(A) and 16(E).
As regards the grounds 16(A) and 16(E) formulated in the petition for grant of special leave regarding unreasonbale delay, it is averred in paragraph 3 of the affidavit: "I say that the representation dated 22nd September, 1986 addressed to the Chief Minis ter by the detenu was forwarded by the Super intendent, Aurangabad Central Prison, Auranga bad on 24th September, 1986.
I further say that the said representation was received in the Department on 26th September, 1986.
I further say that the parawise remarks on the said representation were called for from the detaining authority, i.e. District Magistrate, Beed on 26th September, 1986 and remarks of the District Magistrate dated 3rd October, 1986 were received by the 676 Government on 6th October, 1986.
I further say that thereafter, the said representation was processed together with report of the Advisory Board and as stated in the earlier paragraphs, the said representation was rejected and the detention of the detenu was confirmed by the Chief Minister on 17th November, 1986.
" In the same paragraph, there is the following averment made with regard to delay in disposal of the representation in the Chief Minister 's Secretariat: "I further say that the Chief Minister was pre occupied in connection with very important matters of the State which involved tours as well as meetings outside Bombay.
I further say that during the period from 23.10.1986 to 17.11.
1986, two Cabinet meetings were held at Pune and Aurangabad, each meeting lasting for two days i.e. 28th and 29th October, 1986 at Pune and 11th and 12th November, 1986 at Aurangabad.
I further say that such meetings in Pune and Aurangabad are generally held once a year to focus the attention on regional problems.
I further say that the preparations for these meetings as well as other meetings held with the concerned Ministers and offi cials demanded a lot of time of the Chief Minister and this naturally resulted in some delay in disposing of several cases submitted to the Chief Minister including this case.
I further say that the cases where such repre sentations are made in the detention matters, they required a close scrutiny of all the relevant record and careful application of mind.
I therefore, respectfully submit that the time taken for passing the Government order in this case should be viewed in the light of the averments made in this affidavit and therefore, if properly considered, it cannot be said that the delay in disposing of the representation is unreasonable and unex plained.
" It is somewhat strange that the State Government should have acted in such a cavalier fashion in dealing with the appellant 's representation addressed to the Chief Minister.
We are satisfied that there was failure on the part of the Government to discharge its obligations under article 22(5).
The affidavit reveals that there were two representations made by the appellant, one to the Chief Minister dated September 22, 1986 and the other to the Advisory Board dated 677 October 6, 1986.
While the Advisory Board acted with com mendable despatch in considering the same at its meeting held on October 8, 1986 and forwarded its report together with the materials on October 13, 1986, there was utter callousness on the part of the State Government to deal with the other representation addressed to the Chief Minister.
It was not till November 17, 1986 that the Chief Minister condescended to have a look at the representation.
When the life and liberty of a citizen is involved, it is expected that the Government will ensure that the constitutional safeguards embodied in article 22(5) are strictly observed.
We say and we think it necessary to repeat that the gravity of the evil to the community resulting from anti social activi ties can never furnish an adequate reason for invading the personal liberty of a citizen, except in accordance with the procedure established by the Constitution and the laws.
The history of personal liberty is largely the history of in sistence on observance of the procedural safeguards.
Apart from the admitted inordinate delay, there is a fundamental defect which renders the continued detention of the appellant constitutionally invalid.
As observed by one of us (Sen, J.) in Narendra Purshotam Umrao vs B.B. Gujral & Ors., ; there was a duty cast on the Govern ment to consider the representation made by the detenu without waiting for the opinion of the Advisory Board.
The constitution of.an Advisory Board under section 9 of the Act does not relieve the State Government from the legal obligation to consider the representation of the detenu as soon as it is received by it.
It goes without saying that the constitu tional right to make a representation guaranteed by article 22(5) must be taken to include by necessary implication the constitutional right to a proper consideration of the repre sentation by the authority to whom it is made.
The right of representation under article 22(5) is a valuable constitutional right and is not a mere formality.
The representation made by the appellant addressed to the Chief Minister could not lie unattended to in the portals of the Secretariat while the Chief Minister was attending to other political affairs.
Nor could the Government keep the representation in the archives of the Secretariat till the Advisory Board submit ted its report.
In Narendra 'Purshotam Umrao 's case it was observed: "Thus, the two obligations of the Government to refer the case of the detenu to the Advisory Board and to obtain its report on the one hand, and to give an earliest opportunity to him to make a representation and consider the representation on the other, are two distinct obligations, independent of each other.
" After referring to the decisions of this Court in Abdul Karim vs State of West Bengal, ; ; Pankaj Kumar Chakrabarty vs State of West Bengal, ; 678 and Khairul Haque vs State of West Bengal, W.P. No. 246 of 1969, decided on September 10, 1969 the nature and dual obligation of the Government and the corresponding dual right in favour of the detenu under article 22(5) was reiterat ed.
The following observations of the Court in Khairul Haque 's case were quoted with approval: "It is implicit in the language of article 22 that the appropriate Government, while dis charging its duty to consider the representa tion, cannot depend upon the view of the Board on such representation.
It has to consider the representation on its own without being influ enced by any such view of the Board.
There was, therefore, no reason for the Government to wait for considering the petitioner 's representation until it had received the report of the Advisory Board.
As laid down in Abdul Karim vs State of West Bengal, the obli gation of the appropriate Government under article 22(5) is to consider the representation made by the detenu as expeditiously as possi ble.
The consideration by the Government of such representation has to be, as aforesaid, independent of any opinion which may be ex pressed by the Advisory Board.
The fact that article 22(5) enjoins upon the detaining authority to afford to the detenu the earliest opportunity to make a representation must implicitly mean that such representation must, when made, be considered and disposed of as expeditiously as possible, otherwise, it is obvious that the obligation to furnish the earliest opportunity to make a representation loses both its purpose and meaning." In the circumstances, there being a failure on the part of the State Government to consider the representation made by the appellant addressed to the Chief Minister without wait ing for the opinion of the Advisory Board, renders the continued detention of the appellant invalid and constitu tionally impermissible.
We have no manner of doubt that there is no explanation whatever much less any reasonable explanation for the inor dinate delay in consideration of the representation made by the appellant addressed to the Chief Minister and that by itself is sufficient to invalidate the impugned order of detention.
In fact, no one has filed any affidavit to ex plain the cause for the delay in Chief Minister 's Secretari at.
The counter affidavit filed by Shri S.V. Joshi, District Magistrate contains 679 a bare denial in paragraph 2 that there was any unreasonable delay in the disposal of the representation.
As regards the delay in disposal of the representation in the Secretariat, he adverts in paragraph 11 to the affidavit filed by Vish wasrao, Desk Officer, Home Department on behalf of the State Government and asserts that it reveals the different steps that were taken and in paragraph 12 he submits that the contention about unreasonable delay in disposal of the representation by the State Government was not raised in the High Court and it has been taken for the first time in this Court.
Even so, the appellant having raised the ground in appeal it was the duty of the State Government to have placed all the material along with the counter affidavit.
There is in fact no explanation offered as regards the delay in disposal of the representation in the Secretariat.
We have already extracted the relevant portion from the affida vit of Vishwasrao, Desk Officer.
It is accepted that the representation made by the appellant to the Chief Minister on September 22, 1986, forwarded by the Superintendent, Aurangabad Central Prison on the 24th, was received in the Home Department on the 26th which in its turn forwarded the same to the detaining authority i.e. the District Magistrate on the same day i.e. 26th for his comments.
The District Magistrate returned the representation along with his com ments dated October 3, 1986 which was received by the Gov ernment on the 6th.
It is said that thereafter the represen tation was processed together with the report of the Adviso ry Board and was forwarded to the Chief Minister 's Secre tariat where the same was received on October 23, 1986.
It is enough to say that the explanation that the Chief Minis ter was "pre occupied with very important matters of the State which involved tours as well as two Cabinet meetings at Pune on October 28 and 29, 1986 and at Aurangabad on November 11 and 12, 1986" was no explanation at all why the Chief Minister did not attend to the representation made by the appellant till November 17, 1986 i.e. for a period of 25 days.
There was no reason why the representation submitted by the appellant could not be dealt with by the Chief Minis ter with all reasonable promptitude and diligence and the explanation that he remained away from Bombay is certainly not a reasonable explanation.
In view of the wholly unex plained and unduly long delay in the disposal of the repre sentation by the State Government, the further detention of the appellant must be held illegal and he must be set at liberty forthwith.
For these reasons, the appeal must succeed and is allowed.
The judgment and order passed by the High Court are set aside and the appellant is directed to be set at liberty forthwith.
P.S.S. Appeal allowed.
| All the surplus lands in the compensation pool of the Central Government as well as the excess area in the occupa tion of allottees were transferred under a package deal to the Punjab Government with effect from April 1, 1961.
In October 1961 the Managing Officer, Rehabilitation Department detected that there was excess allotment of land to the appellant in lieu of land left by him in Pakistan.
By an order dated February 21, 1962 he allowed the petitioner to purchase the said excess area.
The petitioner deposited the required amount in the Treasury on March 6, 1962.
On reference, the Chief Settlement Commissioner held that the excess land which was found in October 1961 could not be sold by the Managing Officer under the as under the package deal this land had been transferred to the Punjab Government.
The petitioner then made an application under section 33 of the said Act to the Central Government which was dismissed.
Thereupon he moved a petition under Articles 226 and 227 of the Constitution before the High Court, and contended that he is entitled to get the same land as he had already depos ited the price in accordance with the order of the Managing Officer, and that the said purchase could not be can 625 celled on the plea that the land had already been trans ferred to the Punjab Government by the Central Government under the package deal.
The petition was opposed by the respondent, who contended that the transfer of the land in dispute to the petitioner was void ab initio as under the package deal it vested in the State Government.
The High Court held that the Chief Settlement Commissioner (Lands), had jurisdiction to cancel the allotment even after confer ment of the proprietary right, that in view of the package deal the title to the land had already passed to the Punjab Government in 1961 and no authority under the Displaced Persons Act could make any order in regard to the sale of the land to the appellant at a concessional rate, and that only the Punjab Government could deal with the said land.
Dismissing the appeal by special leave, HELD: 1.
The Chief Settlement Commissioner had duly and properly made the order.
He was competent under section 24 of the to cancel the allotment of land in excess of the area the petitioner was entitled to get under the provisions of the Act.
[630F, 629E] Smt.
Balwant Kaur vs Chief Settlement Commissioner (Lands), Punjab, [1963] Punjab Law Reporter (Vol. 65) 1141 at 1187, approved.
The excess land allotted to the appellant was package deal property vested in the State of Punjab.
As such the same could not be sold nor could it be allowed to be sold to the petitioner appellant by the Managing Officer under the provisions of the Displaced Persons Act.
The order of the Managing Officer, was, therefore, wholly without jurisdic tion inasmuch as the said property was no longer in the compensation pool of the Central Government.
[629CD] Ram Chander vs State of Punjab, [1968] Current Law Journal (Punjab & Haryana) 668 approved.
It is for the Government of Punjab to consider and decide whether the legal representatives of the deceased appellant are entitled to purchase the said excess land under the provisions of the Punjab Package Deal Properties (Disposal) Act, 1976.
The Punjab Package Deal Properties (Disposal) Rules, 1976 prescribe procedure as to how the lands in excess of the entitlement, which have been can celled, may be transferred to the allottees or their succes sors in interest.
Rule 4 lays down that the allottee or his legal representatives will not be entitled to 626 have the excess land which was cancelled on the ground of fraud, concealment or mis representation of material facts.
It is also provided in clause 8 of the said rules that the price of the land that will be transferred shall be the current market price to be determined by the Tehsildar (Sales).
[630G, 63lAB]
|
Appeal No. 268 of 1959.
419 Appeal from the judgment and decree dated September 3, 1958, of the former Bombay High Court in Appeal No. 28/1958.
A. V. Viswanatha Sastri, Ganpat Rai and I. N. Shroff, for the appellant.
M. C. Setalvad, Attorney General for India, B. Sen and T. M. Sen, for the respondents.
August 31.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
The appellant Raja Narayanlal Bansilal of Bombay is the Managing Agent of a Limited Company named the Harinagar Sugar Mills Limited.
By virtue of the power conferred on him by section 137 of the Indian Companies Act, 1913 (VII of 1913), the Registrar wrote to the mills on November 15, 1954, that it had been represented to him under section 137(6) that the business of the company was carried on in fraud, and so he called upon the company to furnish the information which he required as set out in a part of his letter (exhibit A).
On April 15, 1955, the Registrar made a report (exhibit AA) to the Central Government under section 137(5) of the said Act.
This report showed that according to the Registrar the affairs of the company were carried on in fraud of contributories and they disclosed an unsatisfactory state of affairs.
The report pointed out that the appellant was the Managing Agent of the company as well as its promoter, and that it was suspected that under a fictitious name of Bansilal Uchant Account the company was advancing money to the several firms owned by the appellant which were ostensibly purchased from the company 's funds.
The report further stated that between the years ending in September, 1942 and 1951 about Rs. 19,200 were paid for Harpur Farm and Rs.;. 39,300 for Bhavanipur Farm, and accounts disclosed that the Uchant Account was chiefly operated upon for purchasing such lands out of the funds of the company though the purchase in fact was for and on behalf of the appellant.
The Registrar also added that he had reason to believe that the Managing 54 420 Agent was utilising the property of the company in some cases for his personal gain, and concluded that, in his opinion, a case had been made out for an investigation under section 138.
On receiving this report, on November 1, 1955, the 'Central Government passed an order under section 138(4) of the said Act (exhibit B) appointing the first respondent Maneck P. Mistry, who is a Chartered Accountant, as an inspector to investigate the affairs of the company from the date of its incorporation.
The said inspector was asked to point out all irregularities and contraventions of the provisions of the said Act or any other law, and make a full report as indicated in a communication which was separately sent to him.
This separate communication (exhibit BB) prescribes the mode of enquiry which should be adopted by inspectors.
It requires that while investigating the affairs of companies the inspectors should bear in mind that for a successful prosecution the evidence in support of a charge must be clear, tangible and cogent, and that their reports should specify with reference to the evidence collected during the investigations the points specified under paragraph 2(a) to (e).
In the course of their investigation the inspectors are asked to make use of the powers available to them under section 140 of the said Act including the right to examine a per son on oath.
The investigation should be conducted in private and the inspectors are not entitled to make public the information received by them during the course of the investigation.
Pursuant to the powers conferred on him by the said order respondent 1 wrote to the appellant intimating to him that he would examine him on oath in relation to the business of the company under section 140(2) of the said Act (exhibit C).
Meanwhile on April 1, 1956, the Companies Act of 1913 (VII of 1913) was repealed by the Companies Act of 1956 (1 of 1956).
For the sake of convenience we would hereafter refer to the repealed Act as the old Act and the Act which came into force on April 1, 1956, as the new Act.
On July 26, 1956, the Central Government purported to exercise its power under section 239(2) of the new Act and 421 accorded approval to respondent 1 exercising his powers of investigating into, and reporting on, the affairs of the appellant including his personal books of accounts as well as the affairs of the three concerns specified in the order.
These three concerns are M/s. Narayanlal Bansilal, who are the Managing Agents of Harinagar Sugar Mills, the Shangrila Food Pro ducts Limited and, Harinagar Cane Farm.
It appears that the appellant is the proprietor of the firm of Narayanlal Bansilal.
After this order was passed respondent 1 served upon the appellant the four impugned notices (exhibit E collectively) on May 9, 1957, May 16, 1957, May 29, 1957 and June 29, 1957, respectively.
These notices are substantially identical in terms ' and so it would be sufficient for our purpose to set out the purport of one of them.
The first notice called upon the appellant to attend the office of respondent 1 on the date and at the time specified for the purpose of being examined on oath in relation to the affairs of the company, and to produce before respondent 1 all the books of accounts and papers relating to the said company as mentioned in the notice.
The appellant was further told that in default of compliance with the requisition aforesaid necessary legal steps would be taken without further reference to him.
The notice contains a list of twelve items describing the several documents which the appellant was required to produce before respondent 1.
After these notices were served on the appellant he filed a, petition (No. 201 of 1957) in the Bombay High Court and prayed that the High Court should issue a writ of certiorari or any other appropriate direction, order or writ under article 226 of the Constitution calling upon respondent 1 to produce the records of the case relating to the notices in question and to set aside the said notices, the proposed examination of the appellant and the interim report made by him.
It further prayed for a writ of prohibition or any other appropriate direction, order or writ restraining respondent 1 from making any investigation under the said notices and from exercising any powers of investigation under section 239 and/or section 240 of the new Act and/or 122 from investigating into the affairs of any persons or concerns specified in the petition.
The petitioner claimed these writs mainly on two grounds.
He first alleged that since respondent 1 had been appointed under the old Act he had no jurisdiction to exercise powers referable to the relevant provisions of the new Act.
This ground assumed that the said relevant provisions of the new Act are valid, but it is urged that the powers referable to the said provisions are not available to respondent 1 since he was appointed under the old Act.
The other ground on which the writs were claimed challenges the vires of sections 239 and 240 of the new Act.
This challenge assumed an alternative form.
It is argued that section 240 offends against the constitutional guarantee provided by article 20(3) of the Constitution and it is also urged that certain portions of sections 239 and 240 offend against another constitutional guarantee provided by article 14 of the Constitution.
It is thus on these three contentions that the petitioner claimed appropriate writs by his petition before the Bombay High Court.
These pleas were resisted by the Union of India which had been joined to the proceedings as respondent 2.
Mr. Justice K. T. Desai, who heard the petition, rejected the contentions raised by the petitioner, and held that no case had been made out for the issue of any writ.
This decision was challenged by the appellant before the Court of Appeal in the Bombay High Court; the Court of Appeal agreed with the view taken by Desai, J., and dismissed the appeal.
Thereupon the appellant applied for and obtained a certificate from the High Court, and it is with the said certificate that he has come to this Court by his present appeal.
On his behalf Mr. Viswanatha Sastri has raised the same three points for our decision.
Let us first examine the question whether or not the first respondent has jurisdiction to exercise the powers under the relevant provisions of the new Act.
It is common ground that if respondent 1 's powers to bold the investigation in question are to be found in the relevant provisions of the old Act and not those of the new Act the impugned notices issued by him would be 423 without authority and jurisdiction.
In dealing with this question it is necessary to examine the broad features of the relevant sections of the two Acts.
We will begin with the old Act.
Section 137 of the old Act deals with investigation by the Registrar.
Section 137(1) provides that where the Registrar on ' perusal of any document which a company is required to submit to him is of opinion that any information or explanation is necessary in order that such document may afford full particulars of the matter to which it purports to relate he may, by a written order, call on the company to furnish in writing the necessary information or explanation within the time to be specified in the order.
Section 137(5) requires the Registrar to make a report in writing to the Central Government if no information is supplied to him within the specified time, or if the information supplied to him appears to him to disclose an unsatisfactory state of affairs, or does not disclose a full and fair statement of the relevant matters.
Thus section 137(1) to (5) deal with the investigation which the Registrar is empowered to make on a persual of the document submitted to him by a company under the provisions of this Act.
Section 137(6) deals with a case where if it is represented to the Registrar on materials placed before him by any contributory or creditor that the business of a company is carried on in fraud or in fraud of its creditors or in fraud of persons dealing with the company or for a fraudulent purpose, he may, after following the procedure prescribed in that behalf, call for information or explanation on matters to be specified in his order within such time as he may fix, and when such an order is passed the provisions of section 137(2) to (5) would be applicable.
This sub section provides that if at the end of the investigation the Registrar is satisfied that the representation on which he took action was frivolous or vexatious he shall disclose the identity of the informant to the company.
This provision is obviously intended as a safeguard against frivolous or vexatious representations in respect of the affairs of any company.
The provisions of this section are substantially similar to the provisions of section 234 of the new Act.
424 affairs of companies by inspectors, authorises the Central Government to appoint one or more competent inspectors to investigate the affairs of any company and report thereon in such manner as the said ,Government may direct.
The appointment of competent inspectors can be made by the Central Government in four classes of cases as specified in section 138(1) to (4).
It would be relevant to refer to two of these cases.
Under section 138(1) a competent inspector can be appointed in the case of a banking company having a share capital on the application of members holding not less than one fifth of the shares issued, and under section 138(4) in the case of any company on a report by the Registrar under section 137(5).
This section substantially corresponds to section 235 of the new Act.
The other sections of the old Act to which reference must be made are sections 140, 141 and 141A. Section 140(1) imposes upon all persons who are.
or have been officers of the company an obligation to produce before the inspectors all books and documents in their custody or power relating to the company.
Section 140(2) empowers the inspector to examine on oath any such person, meaning a person who is or has been an officer of the company in relation to the business of the company and to administer an oath to him.
Section 140(3) provides that if a person refuses to produce a book or a document or to answer any question he shall be liable to a fine not exceeding Rs. 50 in respect of each offence.
Section 141 provides that on the conclusion of an investigation the inspectors shall report their opinions to the Central Government, and shall forward a copy of their report to the registered office of the company ; and it also provides that a copy of the said report can be delivered at their request to the applicants for the investigation.
Then we have section 141A which deals with the institution of prosecutions.
Section 141A(1) provides that if from any report made under section 138 it appears to the Central Government that any person has been guilty of any offence in relation to the company for which he is criminally liable the Central Government shall refer the 425 matter to the Advocate General or the Public Prosecutor.
Section 141A(2) lays down that if the law officer who is consulted under (1) considers that there is a case in which prosecution ought to be instituted he shall cause proceedings to be instituted accordingly , That in brief is the scheme of the relevant provisions of the old Act.
We will now examine the scheme of the relevant provisions of the new Act.
It has already been noticed that sections 234 and 235 of the new Act are substantially similar to sections 137 and 138 of the old Act.
Section 239 of the new Act provides for the powers of the inspectors to carry on investigation into the affairs of related companies or of managing agent or associate.
The sweep of the enquiry authorised by this section is very much wider than that under the corresponding section of the old Act.
Sub section (1) of this section authorises an inspector to investigate the affairs of a company and also the affairs of any other body corporate or person specified in cls.
(a) to (d) if he thinks it necessary so to do.
These clauses include several cases of body corporate which may have any connection direct or indirect, immediate or remote, with the affair of the company whose affairs are under investigation.
It is unnecessary for our purpose in the present appeal to enumerate the said cases serially or exhaustively.
It is conceded that the three other persons who have been called upon by respondent 1 to produce documents and give evidence fall within the purview of section 239.
As a result of the provisions of section 239(1) the inspector has to report not only on the affairs of the company under investigation but also on the affairs of other bodies or persons who have been compelled to give evidence and produce documents during the course of the enquiry.
The only safeguard provided against a possible abuse of these extensive powers is that in the case of any body corporate or person referred to in cls.
(b)(ii), (b)(iii), (c) or (d) of subs.
(1) the inspector shall not exercise his relevant power without first having obtained the prior approval of the Central Government thereto.
Section 240 of the new Act imposes an obligation 426 on the corporate bodies and persons in respect of which or whom investigation is authorised by section 239 to produce all books and papers and to give all assistance in connection with the said investigation ; that is the result of section 240(1).
Section 240(2) empowers the inspector to examine on oath any of the persons referred to in sub section
(1) in relation to the relevant matters as specified.
Section 240(3) deals with a case where a person refuses to comply with the obligation imposed on him by section 240(1) or (2) ; and it provides that in such a case the inspector may certify the refusal under his hand to the court, and the court may thereupon enquire into the case, hear witnesses who may be produced against or on behalf of the alleged offender, consider any statement which may be offered in defence, and punish the offender as if he had been guilty of contempt of the court.
Section 240(4) deals with a case where the inspector thinks it necessary for the purpose of his investigation that a person whom he has no power to examine on oath should be .examined, and it provides that in such a case he may apply to the court, and the court may, if it thinks fit, order that person to attend and be examined on oath before it on any matter relevant to the investigation.
This sub section provides for the procedure to be followed in examining such a witness.
Section 240(5) lays down that notes of any examination under sub section
(2) or (4) shall be taken down in writing, and shall be read over to or by, and signed by, the person examined, and may thereafter be used as evidence against him.
Having thus made elaborate provisions for the production of documents and evidence in the course of the investigation by the inspector, section 241 deals with the inspectors ' report and provides that inspectors may, and if so directed by the Central Government shall, make interim reports to that Government, and on the conclusion of the investigation shall make a final report to it.
Section 241(2) provides for the supply of the copy of the said report to the several parties concerned as specified in cls.
(a) to (e).
That takes us to section 242 which deals with prosecution.
Section 242(1) provides inter alia that if from 427 any report made under a. 241 it appears to the Central Government that any person has in relation to the company been guilty of any offence for which he is criminally liable, the Central Government may, after taking such legal advice as it thinks fit, prosecute such person for the offence, and it imposes on all officers, and agents of the company, except those prosecuted, to give the Central Government all assistance in connection with the prosecution which they are reasonably able to give.
That broadly stated is the position with regard to the relevant provisions of the new Act.
Mr. Sastri has drawn our pointed attention to the fact that the scope and nature of the enquiry authorised by the new Act are very much wider than under the old Act, and he has characterised the relevant ,powers conferred on the investigating inspectors as draconian.
He, therefore, contends that unless it is established that these powers are available to the inspector appointed under the relevant provisions of the old Act the impugned notices must be set aside; and his argument is that these powers are not available to the inspector appointed under the old Act.
The decision of this question will depend mainly on the con struction of sections 645 and 646 of the new Act.
Section 644 provides for the repeal of the enactments mentioned in Schedule XII; the old Act is one of the enactments thus repealed.
Ordinarily the effect of the repeal of the old Act would have been governed by the provisions of section 6 of the General Clauses Act (10 of 1897), but in the case of the new Act the application of the said section is subject to the provisions of sections 645 to 657 of the Act; that is the effect of section 658 which provides that the mention of particulars in sections 645 to 657 or in any other provisions of this Act shall not prejudice the general application of section 6 of the , with respect to the effect of repeals.
In other words, though section 6 of the will generally apply, its application will be subject to the provisions contained in as.
645 to 657; this position is not disputed.
It is now necessary to consider section 645.
It reads thus: 55 428 "Nothing in this Act shall affect any order, rule, regulation, appointment, conveyance mortgage, deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken, instrument executed or issued, or thing done, under or in pursuance of any previous companies law; but any such order, rule, regulation, appointment, conveyance, mortgage, deed, document, agreement, fee, resolution, direction, proceeding.
instrument or thing shall, if in force at the commencement of this Act, continue to be in force, and so far as it could have been made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act, shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act.
" The effect of this section is clear.
If an inspector has. been appointed under the relevant section of the old Act, on repeal of the old Act and on coming into force of the new Act, his appointment shall have effect as if it was made under or in pursuance of the new Act.
Indeed it is common ground that if section 645 had stood alone and had not been followed by section 646 there would have been no difficulty in holding that the inspector appointed under the old Act could exercise his powers and authority under the relevant provisions of the new Act, and the impugned notices would then be perfectly valid.
Incidentally we may refer to the provisions of a. 652 in this connection.
Under this section any person appointed to any office under or by virtue of any previous company law shall be deemed to have been appointed to that office under this Act.
It is, however, urged that the authority of the inspector which is in dispute is governed by section 646.
This section provides: "Nothing in this Act shall affect the operation of section 138 of the Indian Companies Act, 1913 (VII of 1913), as respects inspectors, or as respects the continuation of an inspection begun by inspectors, appointed before the commencement of this Act; and the provisions of this Act shall apply to or in relation to a report of inspectors appointed under the said section 138 as they apply to or in relation to a report 429 of inspectors appointed under section 235 or 237 of this Act.
" The argument is that the expression " nothing in this Act " includes section 645 and so section 646 should be read as an exception or proviso to section 645; and if that is so, all matters covered by section 138 of the old Act must continue to be governed by the said Act and not by any of the provisions of the new Act.
We are unable to accept this argument.
In appreciating the effect of the provisions of section 646 it is necessary to bear in mind that it occurs in that part of the new Act which deals with repeals and savings.
Sections 645 to 648 are the saving sections, and ordinarily and in the absence of any indication to the contrary these saving clauses should be read as independent of, and in addition to, and not as providing exceptions to, one another.
It is significant that whereas section 646 provides for the continuance of the operation of section 138 it does not make a corresponding provision for the continuance of the operation of a. 140 of the old Act which deals with the powers of the inspector to call for books and to examine parties.
Besides, it may perhaps not be accurate to suggest that having regard to the provisions of section 645, section 646 is wholly redundant.
It would be possible to take the view that cases falling under section 138(1) of the old Act are intended to be covered by section 646 as they would not be covered by section 645.
In regard to the case of a banking company covered by section 138(1) section 646 will come into operation and that may be one of the reasons for which section 646 was enacted.
It may be that the case of the banking company may also be covered by section 35 of the Banking Companies Act 10 of 1949, but since a. 138(1) applied to the said case until the old Act was repealed the Legislature may have, as a matter of caution, thought it necessary to provide for the continuance of the operation of section 138 by enacting section 646.
However that may be, we feel no difficulty in holding that s: 646 should not be construed as a proviso to s.645 but as an additional saving provision.
The words used in section 645 are so clear, and the policy and object of enacting the said provision are in our opinion so emphatically expressed, that it 430 would be unreasonable to hold that section 646 was intended to provide for such a radical exception to section 645.
Where the Legislature enacts a saving section as a matter of abundant caution the argument that the enactment of the said section was not wholly necessary cannot be treated as decisive or even effective.
Therefore, in our opinion, the High Court was right in coming to the conclusion that the inspector appointed under section 138(4) of the old Act must by legal fiction, which is authorised by section 645, be deemed to have been appointed under section 235 of the new Act, and if that is so, respondent 1 had authority and power to issue the impugned notices under section 240 of the new Act.
The challenge to the validity of the impugned notices on the ground that respondent 1 had no authority to issue the said notices must, therefore, fail.
That takes us to the question as to whether the relevant provisions of section 240, which empower respondent 1 to issue the relevant notices by which the appellant was called upon to give evidence and to produce documents, offend against the fundamental constitutional right guaranteed by article 20(3).
It has been strenuously urged before us that the main object of the present investigation is to discover whether the appellant has committed any offenses, and so by compelling him to give evidence and produce documents he is denied the constitutional protection against self incrimination.
Article 20(3) provides that " no person accused of any offence shall be compelled to be a witness against himself ".
It may be assumed that the appellant is being compelled to be witness against himself in the present proceedings; but even so the question which arises for our decision is whether the appellant can be said to be a person who is accused of any offence as required by article 20(3).
Mr. Sastri has contended that the words " person accused of any offence " should not receive a narrow or literal construction; they should be liberally interpreted because.
the clause, in which they occur enshrines a fundamental constitutional right and the scope and reach of the said right should not be unduly narrowed down.
In support of this 431 general argument Mr. Sastri has naturally relied on the historical background of the doctrine of protection against self incrimination; and he has strongly pressed into service the decisions of the Supreme Court of the United States of America dealing with the Fifth Amendment to the Constitution of the United States.
The said Amendment inter alia provides that " no person shall be compelled in any criminal case to be a witness against himself ".
It would be noticed that in terms the Amendment refer to a criminal case, and yet it has received a very broad and liberal interpretation at the hands of the Supreme Court of the United States of America.
It has been held that the said constitutional protection is not confined only to criminal cases but it extends even to civil proceedings (Vide: McCarthy vs Arndstein(1)).
As observed by Mr. Justice Blatchford in Charles Counselman vs Frank Hitchcock (2) " it is impossible that the meaning of the constitutional provision can only be that a person shall not be compelled to be a witness against himself in a criminal prosecution against himself.
It would doubtless cover such cases but it is not limited to them.
The object was to insure that a person should not be compelled, when acting as a witness in any investigation, to give testimony which might tend to show that he himself had committed a crime.
The privilege is limited to criminal matters, but it is as broad as the mischief against which it seeks to guard ".
In support of his plea that a liberal interpretation should be put on an article which enshrines a fundamental constitutional right Mr. Sastri has also invited our attention to the observation made by Mr. Justice Bradley in Edward A. Boyd and George H. Boyd vs United States (3).
Says Bradley, J., " illegitimate and unconstitutional practices get their first footing in that way, namely by silent approaches and slight deviations from legal modes of procedure.
This can only be obviated by adhering to the rule that constitutional provisions for the security of person and (1) ; (2) ; (3) ; ,752.
432 property should be liberally construed ".
The learned judge has also added that any compulsory discovery by extorting the party 's oath, or compelling the production of his private books and papers, to convict him of crime or to forfeit his property, is contrary to the principles of a free government, and is abhorrent to the instincts of an American.
It may suit the purposes of despotic power; but it cannot abide the pure atmosphere of political liberty and personal freedom".
In regard to this eloquent statement of the law it may, however, be permissible to state that under the English Law the doctrine of protection against self incrimination has never been applied in the departments of Company Law ' and Insolvency Law.
There is no doubt that under section 15 of the English Bankruptcy Act when a public examination of a debtor is held he is compelled to answer all questions as the court may put, or allow to be put to him, and that the answers given have to be signed by him and can be used against him in evidence (Vide: In Re: Atherton (1)); similar is the position under section 270 of the English Companies Act.
However, the general argument for the appellant is that in construing article 20(3) we may take some assistance from the broad and liberal construction which has been placed on the apparently narrow and limited words used in the Fifth Amendment to the Constitution of the United States of America.
Thus presented the argument is no doubt attractive, and its validity and effectiveness would have had to be fully and carefully examined if the question raised in the present appeal had been a matter of first impression ; but the construction of article 20 in general and article 20(2) and (3) in particular has been the subject matter of some decisions of this Court, and naturally it is in the light of the previous decisions that we have to deal with the merits of the appellants case in the present appeal.
In Maqbool Hussain vs The State of Bombay (2) this Court had occasion to consider the scope and effect of the constitutional guarantee provided by article 20(2).
A person against whom proceedings (1) (2) ; 433 had been taken by the Sea Customs Authorities under section 167 of the Sea Customs Act and an order for confiscation of goods had been passed was subsequently prosecuted before the Presidency Magistrate for an offence under section 23 of the Foreign Exchange Regulations Act in respect of the same act.
It was urged on, his behalf that the proceedings taken against him before the Sea Customs Authorities was a prosecution and the order of confiscation passed in the said proceedings wag a punishment, and.
so it was argued that the constitutional guarantee afforded by article 20(2) made his subsequent prosecution under section 23 of the Foreign Exchange Regulation Act invalid.
This plea was rejected.
In dealing with the merits of the plea this Court had to consider the meaning of the words " prosecuted and punished " used in article 20(2).
Article 20(2) provides that no person shall be prosecuted and punished for the same offence more than once, and the question raised was whether the proceedings before the Sea Customs Authorities constituted prosecution, and whether the order of confiscation was punishment under article 20(2).
In construing article 20(2) this Court considered article 20 as a whole and examined the interrelation of the relevant terms used in the three clauses of the said article.
" The very wording of article 20 ", observed Bhagwati, J., " and the words used therein" convicted ", " commission of the act charged as an offence ", " be subjected to a penalty ", " commission of the offence ", " prosecuted and punished ", " accused of any offence " would indicate that the proceedings therein contemplated are of the nature of criminal proceedings before a court of law or a judicial tribunal.
and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulated the procedure ".
Having thus construed article 20(2) in the light of the relevant words used in the different clauses of the said article, this Court naturally proceeded to enquire whether the Sea Customs Authorities acted as a judicial tribunal in holding proceedings 434 against the person.
The scheme of the relevant pro.
visions of the Act was then examined, and it was held that the said authorities are not a judicial tribunal with the result that the "I adjudging increased rate of duty or penalty and confiscation" under the provisions of the said act did not constitute a judgment or order of a court or judicial tribunal necessary for the purpose of supporting the plea of double jeopardy.
In the result the conclusion of this Court was that when the Customs Authorities confiscated the gold in question the proceedings taken did not amount to a prosecution of the party nor did the order of confiscation constitute a punishment as contemplated by article 20(2).
This decision has been affirmed by this Court in the case of section A. Venkataraman vs The Union of India (1).
In that case an enquiry bad been made against the appellant Venkataraman under the (Act XXXVII of 1850).
On receiving the report of the enquiry commissioner opportunity was given to the appellant under article 311(2) to show cause, and, ultimately after consultation with the Union Public Service Commission the appellant was dismissed by an order passed by the President.
The order of dismissal was passed on September 17, 1953.
Soon thereafter on February 23, 1954, the police submitted a charge sheet against him charging him with having committed offenses under sections 161/165 of the Indian Penal Code 'and section 5(2) of the Prevention of Corruption Act.
The validity of the subsequent prosecution was challenged by the appellant on the ground that it contravened the constitutional guarantee enshrined in article 20(2).
The appellant 's plea was, however, rejected on the ground that the proceedings taken against him before the commissioner under the Inquiries Act did not amount to a prosecution.
The relevant provisions of the said act were examined, and it was held that in an inquiry under the said Act there is neither any question of investigating an offence in the sense of an act or omission punishable by any law for the time being in force nor is there (1) 435 any question of imposing punishment prescribed by the law which makes that act or omission an offence.
Mukherjea, J., as he then was, who delivered the judgment of the Court, has referred to the earlier decision in the case of Maqbool Hussain (1), and has observed that " the effect of the said decision was that the proceedings in connection with the prosecution and punishment of a person must be in the nature of a criminal proceeding before a court of law or a judicial tribunal, and not before a tribunal which entertains a departmental or an administrative enquiry even though set up by a statute but which is not required by law to try a matter judicially and on legal evidence ".
Thus these two decisions can be said to have considered incidentally the general scope of article 20 though both of them were concerned directly with the construction and application of article 20(2) alone.
Article 20(3) was considered by the Full Court in M. P. Sharma vs Satish Chandra, District Magistrate, Delhi (2).
The question about the scope and effect of article 20(3) was raised in that case by a petition filed under article 32 of the Constitution.
It appears that the Registrar of the Joint Stock Companies, Delhi State, lodged information with the Inspector General, Delhi Special Police Establishment, against the petitioners alleging that they had committed several offenses punishable under the Indian Penal Code.
The lodging of this information was preceded by an investigation into the affairs of the petitioners ' company which had been ordered by the Central Government under a. 138 of the old Act, and the report received at the end of the said investigation indicated that a well planned and organised attempt had been made by the petitioners to misappropriate and embezzle the funds of the company by adopting several ingenious methods.
On receipt of the said First Information Report the District Magistrate ordered investigation into the offenses and issued warrants for simultaneous searches at as many as thirty four places.
By their petitions the petitioners contended that the search warrants (1) ; (2) ; 56 436 were illegal and they prayed that the same may be quashed as being in violation of Art, 20(3).
The plea thus raised by the petitioners was ultimately rejected on the ground that the impugned.
searches did not violate the ' said constitutional guarantee.
Jagannadha das, J., who spoke for the Court, observed that " since article 20(3) provides for a constitutional guarantee against testimonial compulsion its words should be liberally construed, and that there was no reason to confine the content of the said guarantee to its barely literal import ".
He, therefore, held that the phrase " to be a witness " means nothing more than to furnish evidence, and such evidence can be furnished through the lips or by production of a thing or of a document or in other modes.
He also pointed out that the phrase was " to be a witness " and not " to appear as a witness " and so the protection afforded was not merely in respect of testimonial compulsion in the court room but may well extend to compel testimony previously obtained from him.
The conclusion of the Court on this part of the construction was thus stated.
The constitutional guarantee " is available to a person against whom a formal accusation relating to the commission of an offence has been leveled which in the normal course may result in prosecution ; whether it is available to other persons in other situations does not call for a decision in this case ".
Since the First Information Report bad been recorded against the petitioners in that case it followed that the first test that a formal accusation relating to the commission of an offence must have been leveled was satisfied.
The question which was then considered was whether there was any basis in the Indian Law for the assumption that a search or seizure of a thing or document is in itself to be, treated as compelled production of the same; and it was held that there would be no justification for treating the said search or seizure as compelled production; that is why the challenge to the validity of the search warrants issued against the petitioners was repelled.
The effect of this decision thus appears to be that one of the.
essential conditions for invoking the constitutional guarantee enshrined in article 20(3) 437 is that a formal accusation relating to the commission of an offence, which would normally lead to his prosecution,, must have been leveled against the party who is being compelled to give evidence against himself; and this conclusion, in our opinion is fully consistent with the two other decisions of this Court to which we have already referred.
There are two other subsequent decisions of this ' Court to which reference may be made.
In Thomas Dana vs State of Punjab (1), according to the majority decision " prosecution " in article 20(2) means a proceeding either by way of indictment or information in a criminal court in order to put an offender upon his trial.
It would be noticed that this conclusion is wholly consistent with the view taken by this Court in the case of Maqbool Hussain (2) and section A. Venkataraman (3).
In Mohammed Dastaqir vs The State of Madras (4) this Court had to consider article 20(3).
The appellant in that case had gone to the bungalow of the Deputy Superintendent of Police to offer him a bribe which was covered in a closed envelope with a request that he might drop the action registered against him.
The police officer threw the envelope at the appellant who took it up.
While the appellant was still in the bungalow he was asked by the police officer to produce the envelope and he took out from his pocket some currency notes and placed them on the table without the envelope.
The notes were then seized by the police officer and a rubber stamp of his office was placed on them.
On these facts it was urged that in relying upon the evidence of compelled production of notes the prosecution had , violated the provisions of article 20(3).
In support of this contention the general observations made by this Court in the case of M. P., Sharma(5), were strongly pressed into service.
This Court, however, rejected the appellant 's arguments and held that the prosecution did not suffer from any infirmity.
On the facts it was found that though the offence had in fact been already committed (1) [1959] Supp. 1 S.C.R. 274.
(2) ; (3) ; (4) ; (5) ; 438 by the appellant, he had in fact not been accused of it at the stage when the currency notes were produced by him; it was also held that it could not be said that he was compelled to produce the said currency notes, because he might easily have refused to produce them, ,and so there was no occasion for him to invoke the constitutional protection against self incrimination.
What then is the result of these decisions ? They show that in determining the complexion and reach of its respective sub clauses the general scheme of article 20 as a whole must be considered, and the effect of the inter action of the relevant words used 'in them must be properly appreciated.
Thus considered the constitutional right guaranteed by article 20(2) against double jeopardy can be successfully invoked only where the prior proceedings on which reliance is plac ed must be of a criminal nature instituted or continued before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure.
It would be noticed that the character of the said proceedings as well as the character of the forum before which the proceedings are initiated or conducted are treated as decisive in the matter.
Similarly, for invoking the constitutional right against testimonial compulsion guaranteed under article 20 (3) it must appear that a formal accusation has been made against the party pleading the guarantee and that it relates to the commission of an offence which in the normal course may result in prosecution.
Here again the nature of the accusation and its probable sequel or consequence are regarded as important.
Thus we go back to the question which we have already posed: was the appellant accused of any offence at the time when the impugned notices were served on him ? In answering this question in the light of the tests to which we have just referred it will be necessary to determine the scope and nature of the enquiry which the inspector undertakes under section 240 ; for, unless it is shown that an accusation of a crime can be made in such an enquiry, the appellant 's plea under article 20(3) cannot succeed.
Section 240 439 shows that the enquiry which the inspector undertakes is in substance an enquiry into the affairs of the company concerned.
Certain documents are required to be furnished by a company to the Registrar under the provisions of the new Act.
If, on examining the said documents, the Registrar thinks it necessary to call for information or explanation he is empowered to take the necessary action under section 234(1).
Similarly, under section 234(7) if it is represented to the Registrar on materials placed before him by any contributory or creditor or any other person interested that the business of the company is carried on in the manner specified in the said sub section the Registrar proceeds to make the enquiry.
Thus the scope of the enquiry con templated by section 234 is clear; wherever the Registrar has reason to believe that the affairs of the company are not properly carried on he is empowered to make an enquiry into the said affairs.
Similarly under section 235 inspectors are appointed to investigate ' the affairs of any company and report thereon.
The investigation carried on by the inspectors is no more than the work of a fact finding commission.
It is true that as a result of the investigation made by the inspectors it may be discovered that the affairs of the company disclose not only irregularities and malpractice but also commission of offenses, and in such a case the report would specify the relevant.
particulars prescribed by the circular in that behalf If, after receiving the report, the Central Government is satisfied hat any person is guilty of an offence for which he is criminally liable, it may, after taking legal advice, institute criminal proceedings against the offending person under section 242(1); but the fact that a prosecution may ultimately be launched against the alleged offender will not retrospectively change the complexion or character of the proceedings held by the inspector when he makes the investigation.
Have irregularities been committed in managing the affairs of the company ; if yes, what is the nature of the irregularities ? Do they amount to the commission of an offence punishable under the criminal law ? If they do who is liable for the said offence? These and 440 such other questions fall within the purview of the ins pector 's investigation.
The scheme of the relevant sections is that the investigation begins broadly with a view to examine the management of the affairs of the company to find out whether any irregularities have been committed or not.
In such a case there is no accusation, either formal or otherwise, against any specified individual; there may be a general allegation that the affairs are irregularly, improperly or illegally managed; but who would be responsible for the affairs which are reported to be irregularly managed is a matter which would be determined at the end of the enquiry.
At the commencement of the enquiry and indeed throughout its proceedings there is no accused person, no accuser and no accusation against anyone that he has committed an offence.
In our opinion a general enquiry and investigation into the affairs of the company thus contemplated cannot be regarded as an investigation which starts with an accusation contemplated in article 20(3) of the Constitution.
In this connection it is necessary to remember that the relevant sections of the Act appear in Part VI which generally deals with management and administration of the companies.
It is well known, that the provisions of the Act are modeled on the corresponding provisions of the English Companies Act.
It would, therefore, be useful to refer to the observations made by the House of Lords in describing the character of the enquiry held under the corresponding provisions of the English Act in the case of Hearts of Oak Assurance Co. vs Attorney General (1).
In that case Lord Thankerton said " it appears to me to be clear that the object of the examination is merely to recover information as to the company 's affairs and that it is in no sense a judicial proceeding for the purpose of trial of an offence; it is enough to point out that there are no parties before the inspector, that he alone conducts the enquiry, and that the power to examine on oath is confined to the officers, members, agents and servants of the company ".
We ought, however, to add that the last (1) 441 observation is no longer true about the inspector 's powers under section 240 of the new Act.
In the same case Lord Macmillan observed that " the object of the enquiry manifestly is that the Commissioner may either by himself directly or through the medium of a delegate obtain the information necessary to enable him, to decide what action, if any, he should take.
The cardinal words of the section are those which empower the Commissioner or his inspector to examine into and report on the affairs of the society ".
Thus it is clear that the examination of, or investigation into, the affairs of the company cannot be regarded as a proceeding started against any individual after framing an accusation against him.
Besides it is quite likely that in some cases investigation may disclose that there are no irregularities, or if there are they do not amount to the commission of any offence; in such cases there would obviously be no occasion for the Central Government to institute criminal proceedings under section 242(1).
Therefore, in our opinion, the High Court was right in holding that when the inspector issued the impugned notices against the appellant the appellant cannot be said to have been accused of any offence; and so the first essential condition for the application of article 20(3) is absent.
We ought to add that in the present case the same conclusion would follow even if the clause "accused of any offence " is interpreted more liberally than was done in the case of M. P. Sharma (1), because even if the expression 'accused of any offence" is interpreted in a very broad and liberal way it is clear that at the relevant stage the appellant has not been, and in law cannot be, accused of any offence.
Thus the tests about the character of the proceedings and the forum where the proceedings are initiated or intended to be taken are also not satisfied; but, as we have already indicated, such a broad and liberal interpretation of the relevant expression does not appear to be consistent with the tenor and effect of the previous decisions of this Court.
It is true that in his report the Registrar has made (1) ; 442 certain allegations on which Mr. Sastri has relied.
He contends that the statements in the report do amount to allegations of commission of offenses by the appellant.
What the Registrar has stated in his report in this particular case cannot be relevant or material in deciding the vires of the impugned section.
The vires of the section can be determined only by examining 'the relevant scheme of the Act, and we have already Been that such an examination does not assist the appellants contention that article 20(3) is contravened.
Besides, what the Registrar has stated in his report can hardly amount to an accusation against the appellant; it is a report submitted by him to the Central Government, and it is only intended to enable the Central Government to decide whether it should appoint an inspector.
It is not as if the investigation before the inspector begins on the basis that the Registrar is the complainant who has made an accusation against the appellant, or that the function of the investigation is to find out whether the said accusation is proved or not.
As we have already seen an enquiry under section 240 may require a large number of persons to give evidence or produce documents but it cannot be said that any accusation is made against any of the said persons.
In fact three persons have been served with similar notices in the present enquiry which shows that the inspector desires to obtain relevant evidence from them as from the appellant.
How can it be said that an accusation has been made against the said three persons, and that incidentally helps to bring out the real character and scope of the enquiry.
Therefore we do not think that the state ments made in the Registrar 's report, on which Mr. Sastri relies can really assist us in deciding the question of the vires of section 240.
It is also significant that the appellant has not challenged the validity of the impugned notices on any ground relatable to, or based on, the said report.
The challenge is founded on.
the broad and general ground that section 240 offends against article 20(3).
We may incidentally add that it was in support of his argument based on the Registrar 's report that 443 Mr. Sastri sought to rely on the decision of the Calcutta High Court in Collector of Customs vs Calcutta Motor and Cycle Co. (1).
In that case certain notices had been issued under section 171A of the Sea Customs Act to certain persons to appear before the customs officials and to produce certain documents.
The High Court took the view that " it appeared from the accusations made in the search warrants at the instance" of the customs authorities and those made in one of the notices by the customs authorities themselves, that the accusations of criminal offenses could not be excluded " ; and so it was held that the requirements of article 20(3) were satisfied and the protection under the said article was available to the persons concerned.
In our opinion this decision does not assist the appellant.
It proceeded on the finding that accusations of criminal offenses could be held in substance to have been made against the persons concerned, and it dealt with the other points of law on that assumption.
That being so, we think it unnecessary to discuss or consider the said decision.
Our conclusion, therefore, is that section 240 does not offend against article 20(3) of the Constitution.
That still leaves the challenge to the vires of the said section under article 14 of the Constitution, though we ought to add that Mr. Sastri did not seriously press his case under article 14, and we think rightly.
The argument under article 14 proceeds on familiar lines.
It is urged that the ordinary protection afforded to witnesses under section 132 of the Indian Evidence Act as well as the protection afforded to accused persons under section 161(1) and (2) of the Criminal Procedure Code, have been denied to the appellant in the investigation which respondent 1 is carrying on in regard to the affairs of his company, and that violates equality before the law.
The scope and effect of article 14 have been considered by this Court frequently.
: It has been repeatedly held that what article 14,prohibits is class legislation; it does not, however,, forbid reasonable classification for the purpose of legislation.
If the classification on which legislation is based is founded 57 444 on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and if the differentia has a rational relation to the object sought to be achieved, then the classification does not offend article 14 (Vide: Shri Ram Krishna Dalmia vs Justice Tendolkar (1)).
Now in the light of this test how can it be said that the classification made by sections 239 and 240 offends article 14 of the Constitution ? A company is a creature of the statute.
There can be no doubt that one of the objects of the Companies Act is to throw open to all citizens the privilege of carrying on business with limited liability.
Inevitably the business of the company has to be carried on through human agency, and that sometimes gives rise to irregularities and malpractice in the management of the affairs of the company.
If persons in charge of the management of companies abuse their position and make personal profit at the cost of the creditors, contributories and others interested in the company, that raises a problem which is very much different from the problem of ordinary misappropriation or breach of trust.
The interest of the company is the interest of several persons who constitute the company, and thus persons in management of the affairs of such companies can be classed by themselves as distinct from other individual citizens.
A citizen can and may protect his own interest, but where the financial interest of a large number of citizens is left in charge of persons who manage the affairs of the companies it would be legitimate to treat such companies and their managers as a class by themselves and to provide for necessary safeguards and checks against a possible abuse of power vesting in the managers.
If the relevant provisions of the Act dealing with enquiries and investigations of the affairs of the companies are considered from this point of view there would be no difficulty in holding that article 14 is not violated either by section 239 or section 240 of the new Act.
The result is the appeal fails and is dismissed with costs.
Appeal dismissed.
| The respondent was Siem of Mylliem siemship in United Khasi and jaintia Hills District in the Tribal Areas of Assam, having been elected as such by the Myntri electors according to custom in 1951.
In June, 1952, a District Council was constituted for the District under the Sixth Schedule to the Constitution and the siemship was brought under it.
The rules in the Sixth Schedule empowered the District Council to make laws with respect to various matters regarding the administration of the District including the appointment or succession of Chiefs and Headmen.
No law was made regulating the appointment and succession of Chiefs and Headmen.
The Chief Executive Member of the Executive Committee of the District Council served on the respondent a notice to show cause why he should not be removed from his office and suspended him.
The respondent challenged the action on the grounds: (i) that he could not be removed by administrative orders but only by making a law, (ii) that the Executive Committee could not take any action in this case, and (iii) that the order of suspension was ultra vires.
Held, that the District Council had the power to appoint or remove administrative personnel under the general power of administration vested in it by the Sixth Schedule.
The District Council was both an administration well as a legislative body.
After a law was made with respect to the appointment or removal of administrative personnel the authority would be bound to follow it; but until then it could exercise its administrative powers.
Since the United Khasi jaintia Hills Autonomous District (Appointment and Succession of Chiefs and Headmen) Act, 1959, had now come into force further action should be taken in accordance with that Act.
The Executive Committee could, under r. 3o(a) of the Assam Autonomous Districts (Constitution of District Councils) Rules, 1951, act on behalf of the District Council in cases of emergency and it was not for the courts to go into the question whether there was an emergency or not.
In these circumstances the action taken by the Executive Committee could not be challenged.
An order of interim suspension could be passed against the 751 respondent while inquiry was pending into his conduct even though there was no specific provision to that effect in his terms of appointment.
But he was entitled to his remuneration for the period of his interim suspension as there was no statute or rule existing under which it could be withheld.
The Management of Hotel Imperial vs Hotel Workers ' Union, ; , applied.
Per Subba Rao, J. It is very doubtful whether, when the Constitution confers on an authority power to make laws in respect of a specific subject matter, that authority can deal with the same subject matter without making such a law in its administrative capacity.
|
Civil Miscellaneous Petitions Nos.
34114 15 of 1987 in S.L.P. Nos.
5678 79 of 1987.
From the Judgment and Order dated 18.8.1987 of this Hon 'ble Court in S.L.P. Nos.
5678 79 of 1987.
Shanti Bhushan, G.L. Sanghi and S.R. Srivastava for the Petitioners.
PG NO 1019 Somnath Chatterjee, Tapas Ray, A.K. Mitra, B.P. Singh, Mrs. Pratibha Jain, S.K. Jain, J.R. Dass and D.K. Sinha for the Respondents.
The following Order of the Court was delivered by SEN, J. By these applications the applicants Calcutta Youth Front and its President Hridayanand Gupta pray for committing for contempt respondents Nos.
3 9 under the , namely: 1.
Kamal Basu, Mayor & Administrator, Calcutta Municipal Corporation; 2.
R.K. Prasannan, Municipal Commissioner; 3.
B.C. Mitra, Municipal Engineer in Chief; 4.
B.K. Roy, Deputy Municipal Commissioner (Sr. ); 5.
Sarkar, Chief Municipal Architect & Town Planner; 6.
A.K. Goswami, District Engineer; 7.
Dr. S.K. Chowdhury, Chief Municipal Health Officer, as well as the lessees respondents Nos. 13 and 14 Jugal Kishore Kajaria in his individual capacity as well as as Director, Messrs Happy Homes & Hotels Private Limited.
The applicants alleged that these respondents were guilty of contempt in that they had in breach of the terms and conditions laid down by this Court in its order dated August 18, 1987 in SLPs 5678 79/87 See JT permitted the lessees Messrs Happy Homes & Hotels Pvt. Ltd. to construct an underground airconditioned market at Satyanarayan Park, and that they had connived and acquiesced in permitting the lessees to construct four pucca structures 15 feet in height above the road level partly covering the surface of the Park and covering a major portion of the surface of the Park.
It is alleged that the said constructions constitute gross and deliberate violation of the undertaking of the respondent No. 13 in his supplementary affidavit dated July 25, 1987 and the terms of the Court 's order dated October 18, ]987.
Applicant No. 2 Hridayanand Gupta in his affidavit dated July 14, 1988 placed reliance on the following observations made by this Court in its order: "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 relaxation of the thickly congested Burrabazar locality and in particular for the children as a playground.
" PG NO 1020 It was alleged that the assertion of the contemnors before this Court, as was before the High Court, was that tali trees and/or shrubs would be planted apart from the lush green lawn on the eastern garden under the direct supervision of the Agri Horticultural Society of India, Alipore as per its letter dated July 25, 1987.
This, according to the applicants, was nothing but a hoax.
The applicants allege that the aforesaid respondents have committed deliberate violation of the terms and conditions of this Court 's order by permitting the lessees to construct the aforesaid pucca structures of lofty heights which, apart from the four storeyed building, cover a substantial portion of the surface of the park which would make it literally impossible to have a terrace garden with a lush green lawn with tall trees, shrubs etc.
as a place of relaxation, and therefore liable to be committed for contempt.
They in the meanwhile pray that respondents Nos. 13 and 14, the lessees, be restrained from subletting the underground air conditioned park to anyone in the greater public interest.
These allegations were controverted by the counter affidavit of Jagdish Kanjilal, Deputy Chief Engineer (Design), Planning & Development Department of the Municipal Corporation dated February 10, 1988 and that by the lessees Jugal Kishore Kajaria impleaded as respondents Nos. 13 and 14.
The applicants filed rejoinders to these counter affidavits.
Having carefully gone through the applications for contempt, the counter affidavit of respondents Nos. 13 and 14 and that filed on behalf of the Municipal Corporation, and having regard to the fact that the allegations made in the applications involve controverted facts, we thought it expedient to request Shri Justice Umesh Chandra Banerjee by our order dated April 21, 1988 to hold an enquiry as to whether there was a violation of the judgment and order passed by him, as affirmed in letters patent appeal by the Division Bench and also by this Court and directed him to forward his findings by the second week of July 1988 that direction of ours was not to be construed as meaning that there was a breach of the terms and conditions laid down in the judgment.
It was further directed that the High Court shall not, during the pendency of the enquiry, pass any interim order which would tend to obstruct or delay the completion of the construction work of the underground airconditioned market.
In compliance therewith, Shri Justice Umesh Chandra Banerjee has submitted his report holding that there was no violation of his judgment.
The learned Single Judge not only heard the parties but also took the trouble of personally visiting the park and note his observations on personal inspection.
In the report the learned Judge records his visual impression in the following words: PG NO 1021 "Two open staircases have been provided for an entry onto the park apart from the three other covered entrances which would facilitate entry onto both the Air Conditioned Market as well as to the park.
The covered entrances are more or less at a height of about 15 ' ft.
There are three other units for Air Handling Plants which are also more or less at a height of about 15 ' ft.
On the eastern side there is a storied building and on the top, a built in water reservoir has been erected and atop the built in water reservoir there are existing two huge water cooling tanks.
The 4 storied building admittedly has been constructed in place and stead of a one storied building which was existing prior to the licensing agreement and popularly known as Service Block".
On visual examination it appears that certain plant and machinery along with a switch room are located and housed in the service block." The learned Judge then goes on to add: "On a close look at the entire nature of construction it cannot be said that the area looks totally green with some trees on one side.
shrubs and other small trees all around.
In my judgment dated 17th July 1986 l observed: "Lovely lush green park soothing to the eyes would be visualised since the same would be at a raised level.
Tall trees have already been re planted.
The entire area in question would have a different look.
The sceptics might say that this is too much to expect but optimism prompts judicial conscience to allow such a project so that prospect of having such an area in the heart of a commercial centre in the city of Calcutta is not ruled out".
" The learned Judge expresses satisfaction that his expectations for beautification of the Metropolitan City of Calcutta were not belied, in these words: "It seems that the judicial optimism has paid a rich dividend in this particular case and the entire area in fact is having a decent and sophisticated look.
There was not a blade of grass on the park prior to the licensing agreement.
PG NO 1022 But now a lush green lawn is visible and the place in fact has turned out to be a place for recreation of tax payers place for recreation for the children of the locality and a place to wither away the time for the old and aged people.
" Along with the report he has annexed a photograph which depicts the existing state of Satyanarayan Park which was once a dark, dangerous place frequented by persons with criminal record, has now turned out to be a beauty spot in a thickly congested area like Burrabazar.
It shows that all the work of construction including the covered staircases together with the open staircase, including the four storeyed service block ' is complete.
The photograph depicts the state of affairs as to the shape, size and dimensions of these structures and gives an overall view of the proposed park atop the underground air conditioned market at Satyanarayan Park.
The learned Single Judge accordingly records a finding that by the raising of these constructions, question of committing any contempt of his judgment does not and cannot arise.
We find no justification to come to any different conclusion.
At the hearing Shri Shanti Bhushan.
learned counsel appearing for the applicants was gracious enough to accept that the re location of the park at a height of 8 feet above the road level instead of 6 feet is not a matter of moment because a few inches more or less here or there is hardly of any significance.
He however confined his submissions to two aspects.
namely (i) the raising of the lofty structures over the staircase leading to the underground airconditioned market constitutes a breach of the conditions laid down.
and (ii) the construction of a four storeyed building covering an area of the park is a flagrant violation of the Court s order.
We are afraid.
the contention cannot be accepted.
The so called lofty structures which we may call bunkers are nothing but the covered space over the staircases from three directions leading to the underground market.
The learned counsel perhaps is not right in assuming that the staircases go upwards.
Actually.
the staircases provide an approach to the public to the undergroud airconditioned market and they go downwards.
The staircases would not possibly be kept open and exposed to the sky having regard to the fact that the underground market is centrally airconditioned.
We can take judicial notice of the tact that the central air conditioning plant would not be functional unless there were these bunkers constructed over the staircases.
That is how the staircases are covered at the Palika Bazar in New Delhi.
Furthermore, the bunkers have been constructed according to the architect 's plan duly sanctioned by the Municipal corporation.
PG NO 1023 Shri Somnath Chatterjee, learned counsel for respondents Nos. 13 and 14 rightly draws our attention to the finding of the learned Single Judge indicating that the four storeyed building has been constructed to locate the staff quarters.
Since the underground market is fully air conditioned, it is essential that the maintenance staff should be located in the park itself.
Originally, there was a single storeyed building covering an area of 150 square metres.
The newly constructed four storeyed building now covers only 72 square metres i.e. practically half the area earlier occupied.
The learned Single Judge has also pointed out that in cl.
(3) of the agreement it has been mentioned that the existing fittings and accessories and structures will have to be dismantled and the dismantled materials will be the property of the Municipal Corporation.
(4) provides that prior to the aforesaid demolition of the existing staff quarters and other infra structures like pump room etc.
which are in use, alternative arrangement shall have to be made by the licensee 'for re location of staff quarters and other infra structures elsewhere which are necessary for maintaining the existing service during the construction period and then finally to rehabilitate them in the premises by the licensee.
The agreement further provides that the cost of temporary re location and final rehabilitation shall be borne by the licensee.
The learned counsel pointed out that Shri Justice Umesh Chandra Banerjee in his judgment has also made a mention of overhead water tanks.
It has been recorded therein as follows: "In any event.
the scheme has been approved by the West Bengal Fire Service since adequate provisions have been made for supply of water in case of necessity.
55000 gallons of water will be available at the park, once the scheme is implemented.
Apart therefrom, a further 38000 gallons of water will be available at the Lily Pool and 17000 gallons of water at the overhead water tanks In the premises my judgment records therefore: (a) that there be some structures atop the underground market, and (b) that there would also be overhead tanks with the storage facility of about 17000 gallons of water.
Question of there being an overhead tank would not arise unless there are constructions atop the underground market.
PG NO 1024 The other aspect of the matter which ought also to be noticed is that the licensing agreement itself provides for approval of the drawing and design by the licensor and in fact drawings and designs as appears from the records were approved and constructions were effected as per the plan sanctioned by the Calcutta Municipal Corporation in accordance with the Building Rules.
There is no dispute as to the factum of such a construction being made in accordance with the sanctioned plan." Shri Chatterjee further drew our attention to paragraph of the judgment delivered by the Division Bench wherein it has been stated: "After demolishing the old structures the trust had laid a public park commonly known as Satyanarayan Park having approximately an area of 20,000 sq.
The Calcutta Improvement Trust had made over the said park to the Calcutta Corporation now known as Calcutta .
Municipal Corporation (The Corporation for short) for the purpose of maintenance at its own cost.
This fact also finds mention in the order delivered by this court.
It would appear that the area of the said park initially was about 28 cottahs corresponding to 20,000 square feet.
In the licence it appears that the area mentioned in 2500 square metres equivalent to 26,900 square feet.
As such.
by no stretch of imagination can it he asserted that a substantial portion of the park has been covered by encroachment and the statement that there cannot be a park or a terrace garden as visualised by this Court 's order runs counter to the existing stale of affairs.
To sum up.
the learned Single .judge very rightly and properly addressed himself to the question whether there was a breach of the terms and conditions laid down in his Judgment.
leaving the question open for this Court to determine whether there was any deviation from the conditions set forth by the Division Bench or by this Court in appeal.
We fully concur with the finding and reasoning of the learned Single Judge as also his approach There can be no doubt whatever that there is no breach either of the conditions laid down by this Court or the Division Bench of the High Court.
The construction of the hunkers over the there staircases leading to the underground airconditioned market as well as of the four storeyed building were in the architect 's plan and were expressly permitted in the licence and formed part of the sanctioned plan.
It was therefore present in the mind of all concerned including the Chief Municipal Architect & Town PG NO 1025 Planner as also of the Administrator of the Municipal Corporation while planning th construction of the underground airconditioned market that these structures would be built up.
As already stated, the construction of the bunkers over the three staircases was a matter of absolute necessity to make the central airconditioning plant fully functional.
That is how a fully underground airconditioned market can be conceived, as has been done in the Palika Bazar in Connaught Place, New Delhi.
As regards the four storeyed structure, the construction thereof does not constitute breach of the conditions laid down.
It has already been stated that the four storeyed structure is built to provide residential quarters to the staff and actually now it occupies much lesser space than before.
In the premises, the allegation made by the applicant that the aforesaid structures cover a substantial portion of the surface of the park which cannot now be turned into a terrace garden with a lush green lawn,is wholly unfounded.
We have already mentioned that the area of land covered by structures acquired by the Calcutta Improvement trust for laying of a park in the Burrabazar area was 20,000 square feet whereas the area of the park in question as mentioned in the licence is 26,900 square feet.
These peripheral structures now built are therefore well outside the area of the Satyanarayan Park proper.
The applications for contempt must therefore fail and are dismissed with costs.
We cannot but deprecate the attempts made by the applicants to move the High Court as well as this Court time and again on one pretext or another in a frantic effort to prevent the construction of the underground airconditioned market at Satyanarayan Park which is a part of the beautification scheme of the great metropolitan city of Calcutta by the State Government of West Bengal where a party in opposition is in power, to provide civic amenities to the citizens.
It is fortunate that these attempts by the making of false and vexatious applications to hold up the construction of the underground airconditioned market, the estimated cost of which is about Rs. 4.50 crores, have been frustrated and what was conceived of a development scheme has come to reality.
The work of construction is nearing completion, as is evident from the photograph annexed to the report of the learned Single Judge, and we hope and trust that the underground airconditioned market would be commissioned in the near future, and the terrace garden over the market will provide to the amenities to the people living in the locality as a place for recreation besides playground for the children.
H.S.K. Petitions Dismissed.
| The applicants filed a contempt petition under Contempt of Courts Act against the respondents (some high officers of the Calcutta Municipal Corporation) and the lessees, respondent Nos. 13 and 14, who were given contract for construction alleging that they were guilty of contempt in that they had constructed the underground market in breach of the terms and conditions laid down by this Court in its order dated 18th August, 19X7.
The applicants submitted that the officers had permitted the lessees, to construct an underground air conditioned market at Satyanarayan Park and that they had connived and acquiesced in permitting the lessees to construct four pucca structures of 15 feet in height above the road level partly convering the surface of the park and covering a major portion of the surface of the Park.
They also alleged that the construction of the four storeyed quarters (service block) were also in violation of the conditions.
The respondents controverted these facts.
The matter was referred to the Single Judge of the High Court who had earlier heard the matter and whose decision had been confirmed by a Division Bench of the High Court and by this Court, to hold an enquiry as to whether there was a violation of the judgment and order passed by him The Learned Single Judge personally visited the site and heard the parties.
He submitted his report containing his visual impressions and holding that there was no violation of any directions given by him in his judgment and the question of committing any contempt of the judgment does not and cannot arise, He left the question open for this Court to determine whether there was any derivation from the conditions set forth by the Division Bench order and by this Court, PG NO 1017 PG NO 1018 Rejecting the contentions of the applicants, aggreeing with the findings and reasoning of the Single Judge and dismissing the contempt application, this Court, HELD: There can be no doubt whatever that there is no breach either of the conditions laid down by this Court or the Division Bench of the High Court.
The construction of the so called lofty structures over the staircase leading to the underground market, which we may call bunkers, as well as of the four storeyed building were in the architect 's plan and were expressly permitted in the licence and formed part of the sanctioned plan.
It was therefore present In the mind of all concerned including the Chief Municipal Architect and Town Planner as also of the Administrator of the Municipal Corporation while planning the costruction of the underground air conditioned market that these structures would be built up.
As already stated, the construction of the bunkers over the three staircases was a matter of absolute necessity to make the central air conditioning plant fully functional.
As regards the four storeyed structure, the construction thereof does not constitute a breach of the conditions laid down.
It has already been stated that the four storeyed structure is built to provide residential quarters to the staff and actually now it occupies much lesser space than before.
In the premises, the allegation made by the applicants that the aforesaid structures cover a substantial portion of the surface of the park which cannot now be turned into a terrace garden with a lush green lawn, is fully unfounded.
[1024G H; 1025A C] The Court cannot but deprecate the attempts made by the applicants to move the High Court as well as this Court time and again on one pretext or another in a frantic effort to prevent the construction of the underground air conditioned market at Satyanarayan Park which is a part of the beautification scheme of the great Metropolitan City of Calcutta by the State Government of West Bengal where a party in opposition is in power, to provide civic amenities to the citizens It is fortunate that these attempts have been frustrated and what was conceived of a development scheme has come to a reality.
[1025E G]
|
vil Appeals Nos. 1314 to 1318 of 1979.
Appeals by Certificate from the Judgment and Order dated 4.4.1979 of the Judicial Commissioner Goa, Daman & Diu in Special Civil Application (Writ Petition) Nos. 75,76, 77 of 1977, 103 and 111 of 1978.
AND Writ Petition No. 864 of 1988.
(Under Article 32 of the Constitution of India).
G. Ramaswamy, Additional Solicitor General, T.V.S. Krishnamoorthy Iyer, S.S. Ray, Y.S. Chitaley, Joachin Dias, A.B. Nadkarni, Arun Madan, Ms. A. Subhashini, section Ganesh and R. Swamy for the Appellants/Petitioners.
Manohar section Usgaocar, F.S. Nariman, G.L. Sanghi, M.N. Phadke, R.F. Nariman, S.K. Mehta, Atul Nauda, Aman Vachher, Mrs. Nineti Sharma, S.M. Usgaocar and M.K. Dua for the Respondents.
SHARMA, J.
The civil appeals No. 1314 to 1318 of 1979 by certificate are directed against the decision of the Judi cial Commissioner of Goa, Daman and Diu, declaring the Goa, Daman and Diu Agricultural Tenancy (5th Amendment) Act, 1976, as unconstitutional.
The respondents are landlords in Goa.
The lands were in possession of the tenants who were cultivating the same and paying rent to the respondents.
The respondents were divested of their title in the lands by the provisions of the impugned Act which came in force in 1976 vesting the same in the tenants.
The respondents filed five writ applications in the court of the Judicial Commissioner challenging the validity of the Amendment Act.
The writ petitions were allowed by the impugned judgment.
It has been held that the Act violates Articles 14 and 19 of the Consti tution and the protection of Article 31A is not available as the scheme of the Act does not constitute agrarian reform.
It has been contended on behalf of the respondent writ petitioners that the landlords in Goa are generally small land holders and their condition is not better than that of the tenants and in that view the Act divesting the landlords of their title in the land and veting the same in the tenants suffers from the vice of illegal discrimination.
A similar Act was earlier passed by the Maharashtra Legisla ture also which has been found to be constitutionally valid.
The writ petitioners have, before the court below, success fully argued that the decision in that case is not applica ble inasmuch as the Maharashtra Act contains provisions fixing ceiling to which the other provisions are subject to, while there is no such restriction in the present Act.
The result is that although the Maharashtra Act had to be upheld as a measure of agrarian reform and thus protected by Arti cle 31A of the Constitution, the present Act cannot be so interpreted.
During the pendency of these appeals the impugned Amendment Act along with the main Act were included in the 9th Schedule of the Constitution and the assent of the President was received on the 26th of August, 1984.
Lakshmibai Narayan Patil, the writ petitioner in the three of the cases in the court of Judicial Commissioner (respond ent in Civil Appeals No. 1314, 1315 and 1316 of 1979) has challenged the constitutional amendment as illegal and ultra vires by filing an application under Article 32 of the Constitution which has 501 been numbered as Writ Petition No. 864 of 1988.
By the impugned Amendment Act, Chapter IIA has been included in the Goa, Daman and Diu Agricultural Tenancy Act, 1964 (hereinafter referred to as the Act), Chapter III has been deleted and some consequential changes have been made in some other sections.
Chapter IIA deals with "Special rights and privileges of tenants" as indicated by the head ing.
Broadly speaking, by the provisions of section 18A of this Chapter the land belonging to a landlord not in his culti vating possession on the tiller 's day gets transferred to the tenant inpossession for a price to be paid to the land lord.
The expression 'tenant ' has been given a larger mean ing under the Act by section 4.
By the second proviso of section 4 a sub tenant cultivating any land on or after 1.7.
1962 has to be deemed to be a lawfully cultivating tenant notwithstand ing the fact that the creation of sub tenancy might have been prohibited by any law, and the tenant prior to the creation of the sub tenancy (who may be referred to as intermediary tenant) is not to be treated as a tenant.
The price of the land in question has to be determined and the payment made in accordance with the provisions of Chapter IIA.
Separate provisions have been made with respect to special cases where tenant is a minor or has been evicted by the landlord before the tiller 's day.
The provisions of section 18 J provide for the resumption and disposal of the land not purchased by the tenant by reason of purchase being ineffec tive under section 18C or section 18H or due to the failure of the tenant to take steps under section 18B within time.
A revenue officer described as Mamlatdar is vested with the power to dispose of such land in the manner provided in sub section (2) of section 18J.
Such land has to be disposed of in the order of priority, whereunder 75% of such land is to be disposed of by sale to persons belonging to Scheduled Castes or Scheduled Tribes and thereafter the remaining land to serv ing members of the Defence Forces of the country or ex servicemen or freedom fighters who agree to cultivate the land personally.
If the land still remains undisposed of, it first goes to agricultural labourers and thereafter to landless persons.
If some of the land still remains avail able, it has to be sold to a co operative farming society.
Section 18 K puts a restriction on transfer of the land which the tenant acquires by purchase under the Chapter.
Only with the previous sanction of the Mamlatdar any trans fer whether by sale, gift, exchange, mortgage, lease or assignment can be made.
If the land owner is himself cultivating it, there being no tenant or a deemed tenant he continues to be in possession without any curtailment of his rights.
On the other hand, in a case where the tenant 502 after getting a tenancy from the landlord inducts another person as a sub tenant who cultivates the same, the benefits of the impugned provisions go to him and not to the tenant.
The object of the Amending Act is thus clearly to vest the land in the tiller.
The right of any person to receive merely rent is taken away for a price.
The respondents who are landlords, have challenged the Amendment Act whereby Chapter IIA has been inserted in the Act on the ground of illegal discrimination.
The argument is that in absence of provisions for ceiling the impugned Act bestows undeserved benefit on the tenants at the cost of the landlords, without reference to the respective areas in their possession.
The Amendment was enforced as also the impugned judgment was delivered before the deletion of Clause (f) of Article 19(1) from the Constitution and one of the grounds which has been successfully urged before the High Court is based on Article 19(1)(f).
So far Article 31A of the Constitution is con cerned, the case of the respondents which has found favour with the court below is that the provisions of the impugned Amendment Act cannot be held to be a step by way of agrarian reforms and, therefore, cannot have the protection of the Article.
This is the main thrust of the argument of Mr. R.F. Nariman in this Court also.
He has strenuously contended that for extending the protection of Article 31A(1)(a) to any particular law it is necessary that the law contains adequate measure against concentration of wealth in the hands of a few.
It is claimed that fixation of ceiling is the heart and soul of agrarian reform without which it does not survive.
It has been observed in the impugned judgment that from the transcripts of newspapers produced by the writ petitioners and the statements alleged to have been made by the late Chief Minister that there were very few big land holders in Goa, it can be assumed that the landlords in Goa are small holders of land.
Certain statements made in the affidavit filed before the Court were also referred to in this connection.
An attempt was made in this Court also to urge that there could not be many big landlords in Goa and therefore their deprivation of the lands cannot be deemed to be a step towards fair distribution.
It was contended that in many a case, a cultivating tenant in possession of lands under different landlords may be having far larger area of land than his landlords and there cannot be any justifica tion in clothing such a tenant with title to the land at the cost of his comparatively poor landlords.
The argument proceeded, that so far the holdings of the tenants are concerned.
a necessity of placing ceiling on the holdings cannot be denied in view of the affidavit filed on behalf of the State stating that further legislation for that purpose was in contemplation.
Mr. R.F. Nariman emphasized the fact that no such law has been 503 brought in force till now.
To the last part of the argument it was tightly pointed out by the learned counsel for the appellants that since the Amendment Act was struck down by the Judicial Commissioner 's Court as ultra vires, further amendment in the Act by way of introducing provisions for ceiling had to await this Court 's judgment in the present civil appeals.
Before proceeding with the main argument of Mr. R.F. Nariman and the cases relied upon by him, it may be useful to briefly refer to the nature of the right of the landlords and the tenants under the Act before the insertion of Chap ter IIA by the impugned Amendment Act.
The rights of a tenant were heritable and Sections 8 and 9 prohibited the termination of his tenancy and his eviction except where the himself surrendered his right to the landlord or where the landlord established one of the grounds specified in this regard.
By an Amendment in 1966.
the tenant was given, by section 13A, the first option to purchase the land in case the landlord proposed to sell it.
By Chapter III the landlord was permitted to resume the land, subject to the ceiling of an area of 2 hectares in case of paddy land and 4 hectares in other lands, on the ground of bona fide requirement for personal cultivation; but this right was also dependent on the fulfilment of certain conditions.
This Chapter was to come into force only on a notification for the purpose which was never issued.
By the impugned Amendment Act this Chapter was omitted from the Act.
In effect the right of resumption contemplated by the Act never vested in the landlords before it disappeared from the statute book.
It may be stated here that the 1964 Act is not under attack and the challenge is confined to its 5th Amendment whereby Chapter IIA has been included and Chapter III deleted.
The statement of objects and reasons was placed before us wherein it has been mentioned that there was a similar legislation in force in the neighbouring State of Maharash tra.
The reference obviously is to the Bombay Tenancy and Agricultural Lands (Amendment)Act, 1956, mentioned in para graph 2 above, introducing similar amendments in the Bombay Tenancy and Agricultural Lands Act,1948.
In Sri Ram Ram Narain Medhi vs The State of Bombay, [1959] Supp 1 SCR 489, the validity of the Act was upheld by a Constitution Bench of this Court.
It has been contended that the Maharashtra A mending Act including provisions fixing ceiling which effec tively prevented accumulation of large areas of land in possession of the tenants; and since there is no similar safeguard in the present 5th Amendment Act, the aforesaid decision does not come to its rescue 504 and leads to the conclusion that in absence of similar provi sions the Act cannot be sustained.
The learned counsel for the respondents relied upon the observation of several decisions of this Court in support of his contention that provisions regarding ceiling are essential for a statute enacted as a measure of agrarian reform and in their absence the same cannot claim pro tection of Article 31A of the Constitution.
Article 31A(1)(a) declares that no law providing for "the acquisition by the State of any estate or of any rights therein or the extinction or modification of any such rights", shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by Article 14 or Article 19.
The 5th Amend ment Act has received the assent of the President as re quired by the first proviso.
The expression 'estate ' is undisputedly applicable in the present case in view of the provisions of clause (2) of the said Article.
Although Article 31A(1)(a) does not by express language restrict its application to a particular nature of law, it is now well settled that the protection of the Article is limited to the laws which serve the purpose of agrarian reform, and Mr. R.F. Nariman is right in relying upon the observations at page 90IF of the judgment in Godavari Sugar Mills Ltd. and Others vs S.B. Kamble and Others, [1975] 3 SCR page 885.
The learned counsel has further urged that the other observa tions in this judgment support his main argument also that in absence of provisions for ceiling a statute cannot be held to be for agrarian reform.
We are unable to agree.
In that case the constitutional validity of the Act amending certain provisions of the Maharashtra Agricultural (Ceiling and Holdings) Act was under challenge and it was sought to be saved inter alia with the aid of Article 3 1A.
While discussing the scope of Article 3 1A, the Court at page 902F relied upon the decision in Balmadies Plantations Ltd. and Another vs State of Tamil Nadu, ; , in the following terms: "In the case of Balmadies Plantations Ltd. & Anr.
vs State of Tamil Nadu it was held while dealing with the provisions of Gudalur Janmam Estates (Abolition and Conver sion into Ryotwari) Act that the object and general scheme of the Act was to abolish intermediaries between the state and the cultivator and to help the actual cultivator by giving him the status of direct relationship between himself and the state.
The Act, as such, in its broad outlines was held to be a measure of agrarian reform and protected by article 31A." 505 At page 903H it was observed that in a sense agrarian reform is wider than land reform.
At page 905 the conclusion was summarised under 8 heads, and Mr. R.F. Nariman strongly relied on the last proposition stating, "(8) A provision fixing ceiling area and providing for the disposal of surplus land in accordance with the rules is a measure of agrarian reform.
" It cannot be denied that the appropriately enacted statutes having provisions for fixing ceiling of holdings do fall in the category of legislation for agrarian reform, but the proposition relied upon, does not say and cannot be inter preted as holding that it is such an essential feature of agrarian reform without which a law cannot be included in that category.
The observations at page 902F in respect of the judgment in Balmadies Plantations case, quoted earlier rather negative such an assumption.
The case of Sri Ram Ram Narain Medhi (supra) has not only been distinguished in the impugned judgment but has been relied upon for supporting the writ petitioner 's argu ment.
Reliance has been placed on the observations at page 495 of the reported judgment to the effect that the object of the Maharashtra Act, which was under consideration in that case.
was to bring about such distribution of the agricultural lands as best to subserve the common good and this object was sought to be achieved by fixing ceiling on areas of holdings.
It, however, does not follow that fixing ceiling area of land which can be held by a person is a basic and essential requirement of land reform.
Since the challenge against the Maharashtra Act was being directed to the provisions fixing ceiling it became necessary to consid er and decide the effect of those provisions pointedly.
But on a careful consideration of the entire judgment, there does not remain any element of doubt that a proper statute even without including provisions regarding ceiling may be entitled to the protection of Article 31A provided it is otherwise a measure of agrarian reform.
As mentioned earli er, the Court was deciding the question of constitutional validity of the 1956 Act which amended the Bombay Tenancy and Agricultural Lands Act enacted in 1948.
The original 1948 Act did not contain the provisions of ceiling which were later introduced by the impugned amendment.
If the stand of the respondents be assumed to be correct, the 1948 Act could not have been in absence of the provisions of ceiling, held to be a step in agrarian reform.
But the Court at page 492 stated that: 506 "The 1948 Act had been passed by the State Legislature as a measure of agrarian reform . " With respect to the 1956 Amendment Act, it was said at page 493 that, "With a view to achieve the objective of establish ing a socialistic pattern of society in the state within the meaning of Articles 38 and 39 of the Constitution, a further measure of agrarian reform was enacted by the State Legisla ture, being the impugned Act, hereinbefore referred to, which was designed to bring about such distribution of the ownership and control of agricultural lands as best to subserve the common goods thus eliminating concentration of wealth and means of production to the common detriment." (emphasis added) The use of the expression "further measure ' as mentioned above and the repetition of the said expression again at page 495 emphasise the fact that the original Act also was a measure of agrarian reform.
Thus the decision, instead of helping the respondents lends support to the appellants ' argument.
Mr. R.F. Nariman cited a number of other decisions dealing with the validity of provisions fixing ceiling and the Court upheld those provisions on the ground that they were measures of agrarian reform, but they do not support the reverse proposition as put forward on behalf of the respondents.
All these decisions are, therefore, clearly distinguishable and we will mention briefly some of them which were heavily relied on by Mr. Nariman.
In the case of Sonapur Tea Co. Ltd. vs Must.
Mazi runnessa; , , writ petitions were filed in the High Court challenging the validity of the Assam Fixation of Ceiling on Land Holding Act, 1957.
The High Court in dis missing the petitions held that the impugned Act was pro tected by Article 31A as it was a measure of agrarian re forms and imposed limits on lands to be held by persons in order to bring about its equitable distribution.
The main question which was canvassed before this Court was whether the expression "the rights in relation to an estate" in the Article could cover the impugned Act, and it was answered in the affirmative by holding that the said expression is of a very wide amplitude.
At page 729 this Court observed thus: 507 "This Article has been construed by this Court on several occasions in dealing with legislative measures of agrarian reforms.
The object of such reforms generally is to abolish the intermediaries between the State and the cultivator and to help the actual cultivator by giving him the status of direct relationship between himself and the State." The 5th Amendment Act impugned in the cases before us satis fies this test.
Similar was the position in Purushothaman Nambudiri y.
The state of Kerala, [1962] Supp. 1 SCR 753.
The case of Fida Ali and Others vs State of Jammu and Kash mir; , , was also considering a statute pro viding a scheme for agrarian reform which included provi sions in respect of ceiling.
While upholding the Act the provisions fixing ceiling were upheld but the other observa tions in the judgment clearly indicate that the same cannot be assumed to be a condition precedent.
Personal cultivation by the holder of land was emphasised as an important aspect in the following words at page 345G: "The golden web, throughout the warp and woof of the Act, is the feature of personal cultivation of the land.
The expression 'personal cultivation ' which runs through sections 3, 4, 5, 7 and 8 is defined with care under section 2(7) in a detailed manner with a proviso and six explana tions.
From a review of the foregoing provisions it is obvious that the Act contains a clear programme of agrarian reforms intaking stock of the land in the State which is not in personal cultivation (section 3) and which though in personal cultivation is in excess of the ceiling area (section 4).
" In the ultimate paragraph of the judgment it was pointed that for framing a scheme for agrarian reforms it is not necessary or feasible to follow a set pattern in different parts of the country.
It was observed, "On the other hand, the predominant object under lying the provisions of the Act is agrarian reforms.
Agrar ian reforms naturally cannot take the same pattern through out the country.
Besides the availability of land for the purpose, limited in scope in the nature of things, the scheme has to fit in with the local conditions, variability of climate, rainfall, peculiarity of terrain, suitability and profitability of multiple crop patterns, vulnerability of floods and so 508 many other factors in formulating a scheme of agrarian reforms suitable to a particular State".
The decision, therefore, indicates that a flexible approach has to be adopted in deciding as to the nature of agrarian reform to be taken, rather than laying down a strait jacket rule for universal application.
The observations in Datta traya Govind Mahajan and Others vs State of Maharashtra and Another, ; , were also made while examining an Act fixing ceiling of holdings and in justification of the impugned provisions it was observed that the policy in this regard was initiated following the report of the Agricultur al Labour Inquiry conducted in the 1960s and in implementa tion of this policy the Act under consideration was passed.
The implication is that the fixation of ceiling was not essentially involved in agrarian reform but it had to be resorted to in the State of Maharashtra following the con clusion arrived at in the Agricultural Labour Inquiry. 13.
The learned counsel for the respondents also placed two cases wherein Article 31A was held to be inapplicable.
In K.K. Kochuni and Others vs The State of Madras and Oth ers, , the question of Article 31A did arise but in absolutely different context.
The immediate predeces sor of the petitioner K.K. Kochini was the sthanee of the properties attached to the various sthanee held by him.
On his death in 1925, the petitioner being the senior member became the sthanee and the respondents No. 2 to 17 being the junior members of the tarwad did not get any interest in the properties.
In an earlier litigation which was commenced following the passing of an Act in 1932, the petitioners ' exclusive right was established up to the Privy Council stage.
It was held that the Members of the tarwad had no interest therein.
After the title of the sthanee was thus established, the Madras Legislature passed the impugned Act in 1955, which declared that every sthanam satisfying cer tain conditions mentioned in the Act would be deemed and would always be deemed to have properties belonging to the tarwad.
The petitioner K.K. Kochuni challenged the Act as ultra vires before this Court by an application under Arti cle 32 of the Constitution.
Two other petitions were also filed, one by his wife and daughters with respect to certain other properties gifted to them and the other by his son.
In support of the constitutional validity of the Act it was argued on behalf of the respondents that the petitioner 's sthanam was an estate within the meaning of Article 31A and, therefore, enjoyed the protection under that Article.
The argument was that a law relating inter se the rights "of a proprietor in his estate and the junior members of his family was also covered by the wide 509 pharseology used in clause (2)(b) of Article 31A.
This Court rejected the plea, holding that: "The definition of "estate" refers to an existing law relat ing to land tenures in a particular area indicating thereby that the Article is concerned only with the land tenure described as an "estate".
The inclusive definition of the rights of such an estate also enumerates the rights vested in the proprietor and his subordinate tenure holders.
The last clause in that definition, viz., that those rights also include the rights or privileges in respect of land revenue, emphasizes the fact that the Article is concerned with land tenure.
It is, therefore, manifest that the said Article deals with a tenure called "estate" and provides for its acquisition or the extinguishment or modification of the rights of the land holders or the various subordinate ten ure holders in respect of their rights in relation to the estate.
The contrary view would enable the State to divest a proprietor of his estate and vest it in another without reference to any agrarian reform.
It would also enable the state to compel a proprietor to divide his properties, though self acquired, between himself and other members of his family or create interest therein in favour of persons other than tenants who had none before." The Court, thus held that Article 31A (1)(a) will not apply to an Act which does not contemplate or see to regulate the fights inter se between the landlords and tenants leaving all their characteristics intact.
The Court further consid ered the judgment in Sri Ram Ram Narain 's case (supra) and distinguished it on the ground that under the Bombay Act certain fights were conferred on the tenants in respect of their tenements which they did not have before.
The other case of San jeer Coke Manufacturing Company vs Bharat Coking Coal Ltd. and Another, ; , relied upon by Mr. Nariman is also of no help as the same was dealing with certain legislation in regard to mines and minerals.
The question of interpreting Article 31A (1)(a) did not arise there at all.
As has been discussed above.
the title to the land shall vest in the tiller and the landlord shall get the compensation.
Earlier also his right to resume the land for personal cultivation was considerably restricted by the provisions of the 1964 Act.
As a result of the impugned Amendment Act he has been divested of this limited right 510 for a price, and the tiller shall no more be under a threat of dispossession.
The impugned provisions must therefore be accepted as a measure of land reform.
We reject the argument of the respondents that in absence of provisions fixing ceiling on the area of land which can be held by a person a statute cannot be accepted as a measure of land reform.
The 5th Amendment Act is, therefore, entitled to the protection of Article 3 IA and it cannot be struck down on the ground of violation of Articles 14 and 19 of the Constitution.
The judgment of the Judicial Commissioner declaring the Act as ultra vires is accordingly set aside and the writ petitions filed by the respondents are dismissed.
Consequently it is not necessary to deal with the writ petition (W.P. No. 864 of 1988) filed in this Court under Article 32 challenging the inclusion of the impugned Act in the 9th Schedule of the Constitution and the same is rejected.
In the result, Civil Appeals No. 1314 1318 of 1979 are allowed, but, in the circumstances, the parties are directed to bear their own costs throughout.
R.S.S. Appeals allowed Petition dismissed.
| The respondents in the civil appeals and the petitioner in the writ petition were landlords in Goa, whose lands were in the possession of the cultivating tenants.
Prior to the enactment of the Goa, Daman and Diu Agricultural Tenancy (5th Amendment) Act, 1976 the nature of the rights of the landlords and tenants were governed by the Goa.
Daman and Diu Agricultural Tenancy Act, 1964.
By Chapter III of the 1964 Act the landlord was permitted to resume his land for bona fide personal cultivation, subject to a ceiling.
Chap ter III, however, was to come into force only on a notifica tion for the purpose, which was never issued.
The impugned 5th Amendment omitted Chapter III from the 1964 Act and in its place included Chapter IIA.
By the provisions of section 18A of Chapter IIA the land belonging to a landlord not in his cultivating possession on the tiller 's day got trans ferred to the tenant in possession for a price to be paid to the landlord.
The respondents filed writ applications in the Court of the Judicial Commissioner challenging the validity of the 5th Amendment Act.
The writ petitions were allowed by the Judicial Commissioner who held that the Amendment Act vio lated Articles 14 and 19 of the Constitution and that the protection of Article 31A was not available as the scheme of the Amendment Act did not constitute agrarian reform.
498 During the pendency of the present appeals the impugned Amendment Act along with the main Act were included in the 9th Schedule of the Constitution.
The writ petition filed in this Court under Article 32 has challenged this constitu tional amendment as illegal and ultra vires.
Before this Court it was contended on behalf of the respondentslandlords that fixation of ceiling was the heart and soul of agrarian reform; that provisions regarding ceiling were essential for a statute enacted as a measure of agrarian reform and in their absence the same could not claim protection of Article 31A of the Constitution; that in the absence of provisions for ceiling the impugned Amendment Act had bestowed undeserved benefit on the tenants at the cost of the landlords, without reference to the respective areas in their possession.
In this connection it was submit ted that in many a case, a cultivating tenant in possession of lands under different landlords might be having far larger area of land than his landlords and there could not be any preference to clothing such a tenant with title to the land at the cost of his comparatively poor landlords.
Allowing the appeals and dismissing the writ petition this Court, HELD: (1) It is well settled that the protection of Article 31A is limited to the laws which serve the purpose of agrarian reform.
[504D] (2) It cannot be denied that the appropriately enacted statutes having provisions for fixing ceiling of holdings do fall in the category of legislation for agrarian reform, but that proposition does not say and cannot be interpreted as holding that fixing ceiling areas is a basis and essential feature of agrarian reform without which a law cannot be included in the category.
A proper statute even without including provisions regarding ceiling may be entitled to the protection of Article 31A provided it is otherwise a measure of agrarian reform.
[505C, F] Sri Ram Ram Narain Medhi vs The State of Bombay, [1959] Supp. 1 SCR 489; Godavari Sugar Mills Ltd. vs S.B. Kamble & Ors., ; and Balmadies Plantations Ltd. & Ant.
vs State of Tamil Nadu; , , referred to.
(3) The title to the land shall vest in the tiller and the landlord shall get the compensation.
Earlier also his right to resume the land for personal cultivation was con siderably restricted by the provisions of the 1964 Act.
As a result of the impugned 5th Amendment Act he has been 499 divested of this limited right for a price, and the tiller shall no more be under a threat of dispossession.
The im pugned provisions must therefore be accepted as a measure of land reform.
[509G H; 510A] (4) The argument of the respondents that in absence of provisions fixing ceiling on the area of land which can be held by a person a statute cannot be accepted as a measure of land reform is, accordingly, rejected.
The 5th Amendment Act is.
therefore, entitled to the protection of Article 31A and it cannot be struck down on the ground of violation of Articles 14 and 19 of the Constitution.
[510A B] Sri Ram Ram Narain Medhi vs The State of Bombay, [1959] Supp. 1 SCR 489; Sonapur Tea Co. Ltd. vs Must.
Mazirunnes sa; , ; Purushothaman Nambudiri vs The State of Kerala, [1962] Supp. 1 SCR 753; Fida Ali & Ors.
vs State of Jammu & Kashmir, ; ; Dattatraya Govind Mahajan vs State of Maharashtra, ; ; K.K. Kochuni vs The State of Madras, and Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd. & Anr., ; , distinguished.
|
(c) No. 715 of 1990.
Under Article 32 of the Constitution of India.
Gobinda Mukhoty, R.K. Jain, Yusuf H. Machhale, Ms. K. Amreswari, (N.P) R.N. Sachthey, N.N. Goswamy, Ashwani kumar, Mukesh K.Giri, A.K. Sharma, B.K. Prasad, (N.P) Ms. Anil Katiyar, Ms. Niranjana Singh, section Wasim A. Qadri, B.K. Prasad,Nafis Ahmad Siddiqui,Asoar Ali Khan,A.S. Bhasme, E.M.S. Anam, Sakil Ahmed Syed, Anil K. Jha, Raj Kumar Mehta, S.K. Agnihotri, B.R. Jad, Anip Sachthey, Syed Ali Ahmed, Syed Tanweer Ahmad, Mohan Pandey, M. Veerappa, K.H. Nobin Singh section K. Mehta, Dhruv Mehta, Aman Vachher, P. K. Manohar, B. B. Singh, Aruneshwar Gupta and R.Mohan for the appearing parties.
The Judgment of the Court was delivered by R.M. SAHAI, J.
Imams,incharge of religious activities of the mosque '(1) have approached this court by way of this, representative, petition under Article 32 of the Constitution for enforcement of fundamental right against their exploitation by Wakf Boards.
Relief sought is direction to Central and State Wakf Boards to treat the petitioner as employees of the Board and to pay them basic wages to enable them to survive.
Basis of claim is glaring disparity between the nature of work and amount of remuneration.
Higher pay scale is claimed for degree holders.
Imams perform the duty of offering prayer (Namaz) for congregation in mosques. 'Essentially the mosque is a centre of community worship where Muslims perform ritual prayers and where historically they have also gathered for political, social and cultural functions '.
(2) The functions of the mosque is summarised by the 13th Century jurist Ibn Taymiyah 'as a. place of fathering where prayer was celebrated and when public affairs were conducted '.
(3) 'All mosques are where Muslim men on an equalitarian basis rich or poor, noble or humble, stand in rows to perform their prayers behind the imam (4) Imams are expected to look after the cleanliness of mosque, call azans from the balcony of the minarets to the whole religious meetings and propagate the Islamic faith.
They are expected to be 745 well versed in the Shariat, the holy Quran, the Hadiths, ethics, philosophy, social, economic and religious aspects.
"Imam or prayer leader is the most important appointee.
In the early days the ruler himself filled this role; he was leader (imam) of the government of war, and of the common salat ("ritual prayer").
Under the Abbasids, when the caliph no longer conducted prayers on a regular basis, a paid imam was appointed.
While any prominent or learned Muslim can have the honor of leading prayers, each mosque specifically appoints a man well versed in theological matters to act as its imam.
He is in charge of the religious activities of the mosque, and it is his duty to conduct prayers five times a day in front of Mihyab '.
(5) On nature of the duties performed by the imams there is no dispute.
But both the Union of India and various State Wakf Boards of different States which have put in appearance in response to the notice issued by this Court have seriously disputed the manner of their appointment, right to receive any payment and absence of any relationship of master and servant.
It is stated that the imams or muazzins are appointed by the Mutwallis.
According to them the Wakf Boards have nothing to do either with their, appointment or working.
It is claimed that under lslamic religious practice they are not entitled to any emoluments as a matter of right as the Islamic law ordains the imams to offer voluntary service.
They are said to be paid some money out of the donations received in mosques or by the Mutwallis of the Boards.
Their job is stated to be honorary and not paid.
Nature of duty under Islamic Sharjat is stated to lead prayers which is performed voluntarily by any suitable Muslim without any monetary benefit.
Some of the affidavits claim that they are appointed by people of the locality.
The Union Government has specifically stated that the Islam does not recognise the concept of priesthood as in other religions and the selection of imams is the sole prerogative of the members of the local community or the managing committee, if any, of the mosque.
According to Karnataka Wakf Board Imamate in the mosque is not considered to be employment.
The allegation of the petitioners that due to meagre payment they are humiliated or insulted in the society, is denied and it is claimed that they are respectable persons who carry on the duty of Imamate as a part of religious activity and not for earning bread and butter.
The Delhi Wakf Board pointed out that the honorarium is paid to an imam as a consideration for his five time presence in the mosque regularly and punctually.
The Board has denied any right to exercise an authority over the mosque where imams and muazzins are appointed by the mutwallis or by the managing committees.
It is stated that holding of a certificate from a registered institution to enable a person to lead the prayer is not necessary as the only requirement for being an imam under the Sharjat is to (1) to (5) The Encyclopedia of Religion Vol.
10 p 121 122 746 have a thorough knowledge of the holy Quaran and the rites, rules and obligations required for offering prayers according to the principles laid down by the Kuran and Sunnah.
The affidavit filed on behalf of Wakf Board has pointed out that mosque can be categorised in five categories, one, which are under direct control or management of the Government such as Mecca Masjid or the mosque situated in public garden which are not governed or regulated by the Muslim Wakf Board ', second, mosques which are under the direct management of Wakf Board , third, mosques which are under the control of mutwallis under various Wakfs according to the wishes of the Wakf as the creator of the Wakf, fourth, mosques which are not registered with the Wakf Board and are managed by local inhabitants and are under the management of the public who offer prayers regularly in a particular mosque , and fifth, mosques which are not managed by mutwallis or the Muslin is of the locality.
It is claimed that imams of fourth and fifth category are not regular and any Muslim can lead the prayers, whereas under the third category mosques are having regular imams.
Financial difficulty of the Wakf Board to meet the demand has also been pointed out.
The Pondicherry Wakf Board has pointed that there is not even one employee except a peon working therein and, therefore, it is not possible to meet the demand of the imam.
It is also claimed that the Board has no control over the pesh imams as they are considered to be well dignified personality of the society and they are given due respect by the Muslim community as a whole.
In the counter affidavit filed by the Punjab Wakf Board it has been stated that imams of mosques in Punjab were being paid on basis of their qualification.
Imam: Nazara (Muntaii grade) are in the scale of Rs. 380 20 58O25 830 30 980, whereas Imams Hafiz (Wasti grade),are paid Rs. 445 20 645 25895 30 1045, and Imam Alim (Muntaii grade) are paid Rs. 520 20 720 25 97030 1120.
They are also paid Rs.30 per month medical allowance and muazzins are paid Rs. 310 per month.
These scales were revised in 1992.
According to them imams of all the mosques in Punjab, Haryana and Himachal Pradesh which come under the Punjab Wakf Board are being paid regularly and they are treated as regular employees.
The Sunni Central Wakf Board of 'Uttar Pradesh filed only a Written submission stating that all the sunni mosques were managed by mutwallis of the concerned managing committees and not by the Wakf Board.
The mosque differs from a church or a temple in many respects.
Ceremonies and service connected with marriages and birth are never performed in mosques.
Tile rites that are important and integral functions of many churches such as confessions, penitencies and confirmations do not exist in the mosques.
(6) Nor any offerings are made as is common in Hindu temples. 'In Muslims countries mosques are subsidized by the States, hence no collection of money from the community is permitted.
The Ministry of Wakf (Endowments) appoints the 747 servant, preachers and readers of the Koran.
Mosques in non Muslim countries are subsidised by individuals.
They are administered by their founder or by their special fund.
A caretaker is appointed to keep the place clean.
The muazzin cells to prayer five times a day from the minaret.
(7) In our country in 1954 was passed by the Parliament for better administration and supervision of Wakfs.
To achieve the objective of the Act Section 9 provides for establishment of a Wakf Board the functions of which are detailed in Section 15.
Sub section (1) of it reads as under "(1) Subject to any rules that may be made under this Act, the (general superintendence of all wakfs in State in relation to all matters, except those which are expressly required by this Act to be dealt with by the Wakf Commissioner, shall vest) in the Boar d established for the State; and it shall be the duty of the Board so to exercise its powers under this Act as to ensure that the Wakfs under its superintendence are properly maintained controlled and administered and the income thereof is duly applied to the objects and for the purposes for the objects and for the purposes for which such wakfs were created or intended: Provided that in exercising its powers under this Act in respect of any wakf, the Board shall act in conformity with the directions of the Wakf, the purposes of the wakf and any usage or custom of the wakf sanctioned by the Muslim law".
Clause (b) of Sub section (2) obliges the board "to ensure that the income and other property of a wakf are applied to the objects and for the purposes for which that wakf was created or intended".
The board is vested not only with supervisory and administrative powers over the wakfs but even the financial power vests in it.
One of its primary duties is to ensure that the income from the wakf is spent on carrying out the purposes for which wakf was created.
Mosques are wakfs and are required to be registered under the Act over which the board exercises control.
Purpose of their creation is community, worship.
Namaz or Salat is the mandatory practice observed in every mosque. "(Among the Five Pillars (arkan; so., rukn) of Islam, it holds the second most import, position, immediately after the declaration of faith (shahadah) (8).
The ' (6) & (7) Encyclopedia, Britannica Vol.
(8) The Encyclopedia of Religion Vol.
748 principal functionary to undertake it is the Imam.
The objective and purpose of every mosque being community worship and it being the obligation of board under the Act to ensure that the objective of the wakf is carried on the Board cannot escape from its responsibility for proper maintenance of religious service in a mosque.
To say, therefore, that the Board has no control over the mosque or Imam is not correct.
Absence of any provision in the Act or the rules providing for appointment of Imam or laying down condition of their service is probably because they are not considered as employees.
At the same time it cannot be disputed that due to change in social and economic set up they too need sustenance.
Nature of their job is such that,they may be required to be present in the mosque nearly for the whole day.
There may be some who may perform the duty as part of their religious observance.
Still others may be ordained by the community to do so.
But there are large number of such persons who have no other occupation or profession or service for their livelihood except doing duty as Imam.
What should be their fate? Should they be paid any remuneration and if so how much and by whom? According to the Board they are appointed by the mutwallis and, therefore, any payment by the board was out of question.
Prima.facie it is not correct as the letter of appointments issued in some states are from the Board.
But assuming that they are appointed by the Mutwallis the Board cannot escape from its responsibility as the mutwallis too section 36 of the Act are under the supervision and control of the Board.
In series of decisions rendered by this Court it has been held that right to life enshrined in Article 21 means right to live with human dignity.
It is too late in the day, therefore, to claim or urge that since Imams perform religious duties they are not entitled to any emoluments.
Whatever may leave been the ancient concept but it has undergone change and even in Muslim countries mosques are subsidised and the Imams are paid their remuneration.
We are, therefore, not willing to accept the submission that in our set up or in absence of any statutory provision in the the imams who look after the religious activities of mosques are not entitled to any remuneration.
Much was argued on behalf of Union and the Wakf Boards that their financial position was not such that they can meet the obligations of paying the imams as they are being paid in the State of Punjab.
It was also urged that the number of mosques is so large that it would entail heavy expenditure which the boards of different States would not be able to bear.
We do not find any co relation between the two.
Financial difficulties of the institution cannot be above fundamental right of a citizen.
If the boards have been entrusted with the responsibility of supervision and administering the wakf then it is their duty to harness resources to pay those persons who perform the most important duty namely of leading community prayer in a mosque the very purpose or which it is created.
749 In the circumstances we allow this petitions and issue following directions (i) The Union of India and the Central Wakf Board will prepare a scheme within a period of six months in respect of different types of mosques some detail of which has been furnished in the counter affidavit filed by the Delhi Wakf Board.
(ii) Mosques which are under control of the Government shall not be governed by this order.
But if their imams are not paid any remuneration and they have no independent income.
The Government may fix their emoluments on the basis as the Central Wakf Board may do for other mosques in pursuance of our order.
(iii) For other mosques, except those which are nonregistered with the Board of their respective States or which are not manned by members of Islamic faith the scheme shall provide for payment of remuneration to such Imams taking guidance from the scale of pay prevalent in the State of Punjab and Haryana.
(iv) The State Board shall ascertain income of each mosque the number and nature of Imams required by it namely full time or part time.
(v) For the full time Punjab Wakf Board may be treated as a guideline.
That shall also furnish guideline for payment to part time imam, (vi) In all those mosques where full time Imams are working they shall be paid the remuneration determined in pursuance of this order.
(vii) Part time and honorary Imam shall be paid such remuneration and allowance as is determined under the scheme.
(viii) The scheme shall also take into account those mosques which are small or are in the rural area or are such as mentioned in the affidavit of Pondichery Board and have no source of income and find out ways and means to raise its income.
(ix) The exercise should be completed and the scheme be enforced within six months.
(x) Our order for payment to Imams shall come into operation from 1st Dec., 750 1993.
In case the scheme it not prepared within the time allowed then it shall operate retrospectively from 1st December, 1993.
(xi) The scheme framed by the Central Wakf Board shall be implemented by every State Board.
The Writ Petition is decided accordingly.
Parties shall bear their own costs.
U.R. Petition allowed.
| On 16.3.1984, the police raided the business premise and godown of the respondents and sized certain essential commodities which were stored there in contravention of certain orders issued under section 3 read with section 5 of the .
On the same day the respondents were arrested for the commission of an offence punishable under section 7(1) (a) (ii) of the Act.
But chargesheet was submitted under section 173, Code of Criminal Procedure on 30.9.1986, after expiry of the period of six months.
The Special Court constituted under section 12A took cognizance of the offence on 13.3.1987 on the basis of the charge sheet.
The respondent No. 1 moved an application before the Special Court to quash the proceeding since the case was triable as a summon case in view of section 12AA (1) (f) of the , sub section (5) of Section 167 of Code of Criminal Procedure was attracted.
Relying on the decision in Kanta Dey vs The State of West Bengal (1986) Calcutta Criminal Law Reporter 158, the Special Court rejected the application holding that the provision of section 167 (5) of the Code had no application to a case initiated for the commission of an offence punishable under section 7(1) (a) (ii) of the Act.
571 Respondents ' revision application against the order of Special Court was allowed by single judge of the high Court.
The High Court relying on the decision in public Prosecutor, High Court of Hyderabad vs Anjaneyulu, , held that sub section (5) of section 167 of the Code stood attracted.
On the High court quashing the prosecution, the respondents were discharged.
The present appeal by special leave was filed by the State against the order of the High Court.
On the questions, 1 whether a Special Court constituted under "Section 12A of the is empowered to exercise powers under section 167 (5) of the Code of Criminal Procedure, 1973 in relation to an accused person forwarded to it under section 12AA (1) (b) of the Act and (ii) whether a Special Court can take cognizance of the offence and proceed to try and punish the accused person, notwithstanding the fact that the charge sheet is filed after expiry of the period of six months from the date of arrest of the accused person?", partly allowing the appeal, this Court, HELD: 1.1.
From the plain language of the provisions, introduced by Act 18 of 1981 the legislature desired to ensure that all offences under the Act were tried by the Special Court constituted under section 12A in a summary manner applying the provisions of sections 262 to 265 of the Code and further provided that in case of conviction the sentence shall not exceed two years, bringing the offence within the definition of a summons case under the Code.
But for the insertion of section 12A in its present form and section 12AA, the offence under section 7 (1) (a) (ii) of the Act would have attracted the definition of a warrant case.
(578 D) 1.2.
The avowed object of these legislative changes was expeditious disposal of offences under the Act by Special Courts employing summary procedure and applying the provisions of the Code to such trials save as otherwise provided.
This enabled the special Courts to take cognizance of the offences under the Act without a formal order of commitment.
(578 C) 1.3.
After the constitution of Special Courts all offences under the Act have to he tried by that court in a summary ways by applying the provision,% of section. .
262 to 265 (both inclusive) of the Code.
The proviso places a fetter on the power of the Court in the matter of passing a sentence on conviction, namely, notwithstanding the fact that section 7(1) (a ) (ii) prescribes a punishment extending upto seven years and fine, Special Court shall not pass a sentence of imprisonment for a term exceeding two years .
It is this proviso which attracts the definition of a summon case, the trial whereof must he 572 undertaken in accordance with the procedure outlined in Chapter XX of the Code.
(579 A B) 1.4.Section 167 (5)says that if in any case triable as a summons case,the investigation is wit concluded within a period of six months from the date on which tile accused came to he arrested, the Magistrate shall make an order stopping further investigation into the offence unless the Magistrate for special reasons and in the interest of justice considers it necessary.
to permit continuation of the investigation.
(579 C) 1.5.
The object of sub section clearly (5) of Section 167 is to ensure prompt investigation into all offence triable as summons case to avoid hardship and harassment to the accused person.
(646 C) 1.6.
The prosecution in question being a summons case triable in a summary manner as per procedure outlined in sections 262 to 265 of the Code which in turn attracts tile procedure meant for summons case, it is obvious that the power conferred by sub section (5) of section 167 can be invoked by the Special Court by virtue or clause (c) of section 12AA (1) of the Act which in terms states that the Special Court may exercise the same powers which a Magistrate may exercise under section 167 of the Code.
Thus a special Court is expressly empowered by clause (c) of section 12AA (1) to exercise the same powers which a Megistrate having jurisdiction to try a cast may exercise under section 167 of the Code in relation to an accused person who has been forwarded to him under that provision.
(579 1)) 1.7.
The High Court was right in concluding that section 167(5) of the Code was attracted in the present case and the Special Court was entitled to exercise the power conferred by that sub section.
(579 F) 1.8.
In the case of an offence punishable under section 7(i) (a) (ii) of the Act which is tried by a Special Court constituted under section 12A, the provision (of sub section (5) of section 167 of the Code get attracted if tile investigation has not been completed within the period allowed by that sub.section.
(582 F) 1.9.
The Special Court was competent to entertain the police report restricted to six months investigation and take cognizance on the basis thereof Therefore the Special Court is directed to proceed with the trial from that stage on wards and complete the same as early as possible in accordance 573 with law.
(582 G) Kanta Dev vs The State of west Bengal, (1986) Calcutta Criminal Law Reporter 158 (1986) 1 CHN 267 and Babulal Agarwal vs State, (1987) 1 CHN 218, overruled.
(639 B C) Jnan Prakesh Agarwala vs State of West Bengal, (1992) 1 CHN 218 and Public Prosecution High Court of Hyderabad & etc.
vs Ajnaneyulu and etc.
, , approved.
Hussainara Khantoon & Ors.
vs Home Secretary State of Bihar, Patna, ; , referred to.
(639 H, 647 F)
|
Appeal No. 29 of 1966.
Appeal from the judgment and order dated April 30, 1964 of the Patna High Court in M.J.C. No. 498 of 1963.
B. C. Ghosh and K. K. Sinha, for the appellant.
section Mustafi and A. K. Nag, for respondent No. 3 P. K. Chatterjee, for respondent No. 4. 233 The Judgment of the Court was delivered by Wanchoo, C. J.
This is an appeal on a certificate granted by the Patna High Court and arises in the following circumstances.
The appellant.
Jagdish Pandey, joined as a lecturer in Ramakrishna College Madhubani in July 1948.
His appointment was approved by the University in June 1949, and on September 23, 1951 he was confirmed as a lecturer in that College.
In July 1961 the post of the Principal of Pandaul College, Pandaul fell vacant and was advertised.
The appellant was one of the applicants and was appointed after interview as the Principal of the college on January 22, 1962.
On January 24, 1962, the appellant 's appointment as Principal of the College was approved by the University.
It appears that the appointment was challenged by a writ petition before the Patna Court, but that challenge failed on July 11, 1962, when the petition was dismissed.
In the meantime, the Bihar Legislature passed the Bihar State Universities (University of Bihar, Bhagalpur and, Ranchi) (Amendment) Act, No. 13 of 1962 (hereinafter referred to as the Act) which came into force on April 21, 1962.
Section 4 thereof was in the following terms: "Certain appointments, etc., of teachers of nonGovernment affiliated colleges to be subject to Chancellor 's orders Notwithstanding anything contained in the said Act or the Magadh University Act, 1961 (Bihar Act IV of 1962) or the statutes made thereunder, or the Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) Ordinance, 1962, (Bihar Ordinance No. 1 of 1962) every appointment, dismissal, removal, termination of service or reduction in rank of any teacher of a college, not belonging to the State Government, affiliated to the University established under the said Act or the Magadh University Act, 1961 (Bihar Act IV of 1962) made on or after the twenty seventh day of November, 1961 and before the first day of March, 1962, shall be subject to such order as the Chancellor of the University may, on the recommendation of the University Service Commission established under section 48A of the said Act, pass with respect thereto.
" This Act was passed to amend the Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) Act, No. 14 of 1960, The reason for making the amendment as stated in the statement of objects and reasons was this.
The Bihar State Universities Act, No. 14 of 1960, was amended by Bihar Act II of 1962 and section 48 A was introduced therein.
That section provided for the establishment of a University Service Commission (hereinafter referred to as the Commission) for affiliated colleges not belonging to the State Government.
Sub section (6) of section 48 A provided that "subject to the approval of the University, appointments, dismis 234 teachres of an affiliated college not belonging to the State Government shall be made by the governing body of the college on the recommendation of the Commission.
" In effect thereafter no appointment, dismissal, etc., could be made after section 48 A came into force without the recommendation of the Commission.
This section came into force on March 1, 1962, but the report of the Joint Select Committee, which resulted in the enactment of section 48 A, was made on November 27, 1961.
The statement of objects and reasons of the Act stated that several reports had been received by Government that the Governing Bodies of affiliated colleges had made a very large number of unnecessary appointments and unwarranted removals from service in order to avoid scrutiny of such cases by the Commission.
It was to meet this situation that an Ordinance was first promulgated which made obligatory for the Governing Bodies to submit for the scrutiny of the Commission, the cases of appointments, dismissals, removals etc.
of teachers which occurred between November 27, 1961 and March 1, 1962.
The Act replaced that Ordinance.
After the Act came into force, the appellant received an order dated August 18, 1962 from the Chancellor of the University to the effect that the Chancellor had been pleased to approve, under section 4 of the Act, on the recommendation of the Commission the appointment of the appellant as Principal of the Pandaul College till November 30, 1962 or till the candidate recommended by the Commission joined, whichever was earlier.
It seems that before this, a similar order had been passed with respect to another teacher of Ramakrishna College Madhubani on May 31, 1962, and that order was challenged in the Patna High Court on the ground that the teacher in question had not been heard before the order was made and therefore the order was bad as it violated the principles of natural justice.
That case was decided by the High Court on April 23, 1963 and the order in question was struck down on the ground that it violated principles of natural justice.
Further in that case the validity of section 4 of the Act was also challenged but that question was not decided.
(See Ram Kripalu Mishra vs University of Patna)(1).
It seems that it was realised sometime in October or Novem ber, 1962 that the order of August 18, 1962 in the case of the appellant might be similarly challenged; so on November 8, 1962 the Commission gave notice to the appellant to show cause why the Commission should not recommend to the Chancellor that there was no adequate justification or reason for the Chancellor to modify the order already passed on August 18, 1962.
This was a composite notice to the appellant and several other teachers with whose cases we are not concerned.
The body of the notice shows various grounds on which the notice was issued, but it did not (1) A.I.R. 1964 Patna, 41.
235 indicate which particular ground applied to the appellant.
e must say that we should have expected a better notice than this from the Commission.
The notice should have been addressed to each teacher separately indicating the particular ground on which the notice was given as against him.
However, the appellant replied to the notice and controverted all the grounds mentioned therein, though it now appears from the final order which was passed on February 18, 1963 that the only ground that concerned him was that he was not academically qualified for appointment as Principal of the College on the date of the selection by the governing body.
The appellant seems to have been given a hearing by the Commission and eventually on February 18, 1963 the Chancellor passed another order which purported to modify the order of August 18, 1962 insofar as it related to the appellant.
The modification was that the appellant would be given a year or two to appear at the examination to enable him to obtain a second class Master 's Degree , otherwise his services would be terminated.
Thereupon the appellant filed a writ petition in the High Court challenging both the orders of August 18, 1962 and February 18, 1963.
Three main grounds were urged by the appellant in this con nection.
It was first urged that section 4 of the Act was ultra vires, as it violated article 14 of the Constitution.
Secondly, it was urged that the order of August 18, 1962 violated the principles of natural justice and it could not be modified after November 30, 1962 as it had worked itself out and there was no power of review given to the Chancellor under section 4 and further that proceedings based on the notice issued on November 8, 1962 by the Commission were a mala fide device to get over the infirmity in the order of August 18, 1962.
Thirdly, it was urged that in view of ch.
16 r. (1) of the Statutes of the University, the appellant must be deemed to have the minimum qualification for the post of the Principal and therefore the order of February 18, 1963 requiring him to appear at an examination to obtain a Second Class Master 's degree or in the alternative requiring that his services be terminated was bad.
The petition was resisted on behalf of the Chancellor and the University.
The High Court rejected all the three contentions and dismissed the petition, but granted a certificate to appeal to this Court; and.
that is how the matter has come before us.
The three points raised in the High Court have been urged before us in support of the appellant 's contention that the two orders dated August 18, 1962 and February 18, 1963 are liable to be quashed.
We shall first consider whether section 4 is ultra vires article 14 of the Constitution.
The first ground in that behalf is that the dates mentioned in section 4 were completely arbitrary and therefore there was no valid classification to uphold the validity of the section.
There is no doubt that if the dates are arbitrary, 236 section 4 would be violative of article 14, for then there would be no justification for singling out a class of teachers who were appointed or dismissed etc.
between these dates and applying section 4 to them while the rest would be out of the purview of that section.
But we are of opinion that the dates in section 4 cannot be said to be arbitrary.
We have already referred to the statement of objects and reasons which gives the reasons for the enactment of section 4.
We are entitled to look into those reasons to see what was the state of affairs when section 4.
came to be passed and whether that state of affairs would justify making a special provision for teachers appointed, dismissed etc.
between the two dates specified therein.
The reason for these two dates appears to be that a bill for the establishment of the Commission which would have the effect of curtailing the powers of the governing bodies of affiliated colleges was on the anvil of the legislature.
The report of the Joint Select Committee in that connection was made on November 27, 1961.
Act II of 1962 was passed after the report of the Joint Select Committee on January 19, 1962 and section 48 A with respect to the Commission was actually put into force from March 1, 1962.
The statement of objects and reasons also shows that irregularities had been brought to the notice of the Government as to appointments, dismissals etc.
during this period and that led to the enactment of section 4 of the Act by the legislature.
In these circumstances it cannot be said that these dates in section 4 are arbitrary.
Taking the circumstances as they were when section 4 came to be enacted and enforced, it cannot be said that teachers appointed etc.
between these two dates did not form a class that would have nexus with the object to be achieved.
In these circum stances we must hold that section 4.
cannot be struck down, on the ground that it has fixed two arbitrary dates and has visited teachers appointed, dismissed etc.
between these two dates with a differential treatment as compared to teachers appointed before November 27, 1961.
The next attack on the validity of section 4 is that it confers uncanalised powers on the Chancellor without indicating any critedon on the basis of which the power under section 4 can be exercised.
There is no doubt that if one reads section 4 literally it does appear to give uncanalised powers to the Chancellor to do what he likes on the recommendation of the Commission with respect to teachers covered by it .
We do not however think that the Legislature intended to give such an arbitrary power to the Chancellor.
We are of opinion that section 4 must be read down and if we read it down there is no reason to hold that the legislature was conferring a naked arbitrary power on the Chancellor.
It seems to us that the intention of the legislature was that all appointments, dismissals etc.
made between the two dates should be scrutinised and the scrutiny must be for the purpose of seeing that the appointments, dismissals etc., were in accordance with the University Act and the.
Statutes, Ordinances, Regulations and Rules 237 framed thereunder, both in the matter of qualifications, and in the matter of procedure prescribed for these purposes.
We do not think that the legislature intended more than that when it gave power to the Chancellor to scrutinise the appointments, dismissals, etc.
made between these two dates.
We have therefore no hesitation in reading down the section and hold that it only authorises the Chancellor to scrutinise appointments, dismissals etc.
made between these two dates for the purpose of satisfying himself that these appointments, dismissals etc., were in accordance with the University Act and the Statutes, Ordinances, Regulations or Rules made thereunder, both as to the substantive and procedural aspects thereof.
If the appointments etc. were in accordance with the University Act etc., the Chancellor would uphold them, and if they were not, the Chancellor would pass such orders as he deemed fit.
Read down this way, section 4 does not confer uncanalised power on the Chancellor; as such it is not liable to be struck down as discriminatory under article 14.
It is then urged that no provision was made in section 4 for hearing of the teacher before passing an order thereunder.
Now section 4 provides that the Chancellor will pass an order on the recommendation of the Commission.
It seems to us reasonable to hold that the Commission before making the recommendation would hear the teacher concerned, according to the rules of natural justice.
This to our mind is implicit in the section when it provides that the Commission has to make a recommendation, to the Chancellor on which the Chancellor will pass necessary orders.
If an order is passed under section 4 even though on the recommendation of the Commission but without complying with the principles of natural justice, that order would be bad and liable to be struck down as was done by the Patna High Court in Ram Kripalu Mishra vs University of Bihar(1).
But we have no difficulty in reading section 4 as requiring that the Commission before it makes its commendation must hear the teacher concerned according to principles of natural justice.
Reading the section therefore in this way and that is the only way in which it can be read we are of opinion that it cannot be struck down under article 14 of the Constitution as discriminatory.
Then it is urged that section 4 does not provide for approval by the University of the Chancellor 's order while section 48 A(6) does, and it is therefore discriminatory.
We are of opinion that section 4 was enacted, to meet a particular situation as we have already indicated above, and in that situation the approval by the University of the Chancellor 's order would be quite out of place.
Section 4 cannot be struck down as discriminatory on this ground.
We therefore read section 4 in the manner indicated above both as to the limit of the Chancellor 's power while passing an order thereunder and as to the necessity of the Commission giving a hearing (1) A.I.R. 1964 Pat.
238 to the teacher concerned before making the recommendation, and so read we are of opinion that section 4 cannot be held to be discriminatory and as such liable to be struck down under article 14 of the Constitution.
This brings us to the next point, namely, that the order of August 18, 1962, violated the principles of natural justice and was therefore bad.
It is not the case of the respondents that the appellant was heard before the said order was passed, and if that order stood by itself it would be bad as the appellant was not given a hearing before it was.
passed and the decision of the Patna High Court in Rain Kripalu Mishra(1) would apply.
What happened in this case was that at some stage it was realised that the appellant should be given a hearing before an order was passed against him under section 4.
Therefore the appellant was given a hearing by the Commission on a notice issued on November 8, 1962 to show cause.
It is true that the subsequent proceedings were in form as if they were for the review or modification of the order of August 18, 1962 and it is doubtful whether section 4 provides for review of an order once passed.
It seems to us that in substance what happened was that the order of August 18, 1962 was not given effect to when it was realised that it might be illegal and thereafter action was taken to give notice to the appellant and a hearing before passing an order under section 4.
Here again the order of February 18, 1963 is in form an order modifying the order of August 18, 1962, but in substance it should be taken as a fresh, order under section 4 after giving opportunity to the appellant to represent his case before the Commission.
The order made on February 18, 1963 therefore cannot be said to suffer from the defect that it was passed without observing the principles of na tural justice.
As for the order of August 18, 1962, it must be taken to have fallen when action was taken to give notice to the appellant on November 8, 1962 and pass a fresh order on February 18, 1963 after giving a proper hearing.
In the circumstances it is not necessary to quash the order of August 18, 1962, for it fell when further proceedings were taken after notice to the appellant.
Further as to the order of February 18, 1963 it must be treated to be a fresh order and as it is not defective on the ground that the principles of natural justice had been violated, it cannot be struck down on that ground.
This brings us to the last contention raised on behalf of the appellant.
The order of February 18, 1963 shows that the only defect that was found in the appointment of the appellant as Principal of the Pandaul College was that he was not a second class M.A.
It appears that according to chapter 16, r. (1) of the Statutes, the minimum qualification for the appointment of Principal is a second class Master 's degree and at least ten years,, (1) A.I.R. 1964 Pat.
239 teaching experience in a college of which at least seven years must be in a degree college or five years ' experience as Principal of an Intermediate College.
It is not disputed, that the appellant had ten years ' teaching experience in a college of which sever,, years were in a degree college.
But it appears that the appellant had a third class Master 's degree and therefore did not satisfy the qualification that a Principal should have a second class Master 's degree.
The appellant relies on sub r.
(6) of r. (1) which is in these terms: "Notwithstanding anything in the Article, the qualifications of a teacher already in service and confirmed before the 1st July 1952 shall be considered to be equivalent to the minimum qualifications for the post he holds.
" The appellant was confirmed before July 1, 1952.
It is therefore contended on his behalf that in view of sub r.
(6), he must be deemed to have the minimum qualification for a lecturer, which, according to sub r.
(1) is a second class Master 's degree.
Once therefore it is deemed under sub r.
(6) that he had a second class Master 's degree, it follows that that deeming must continue when he is appointed Principal for which also the minimum qualification is second class Master 's degree with certain experience.
The High Court has however held that sub r.
(6) would only mean this that the appellant had a second class Master 's degree for the purpose of the post of a lecturer in Ramakrishna College and that sub rule could not mean that for the purpose of appointment as a Principal of the Pandaul College, the appellant would be deemed to have a second class Master 's degree.
The High Court therefore held that as the appellant did not fulfil the minimum qualification for the post of a Principal, his appointment was irregular under the Statutes and the Chancellor would have the power to pass such order as he thought fit under section 4.
We are unable to accept this construction of sub r.
Rule (1) of chapter 16 of the Statutes provides for the grades, pay scales and qualifications of teachers.
This sub rule is prospective in operation meaning thereby that the minimum qualifications thereunder would be required for future appointments.
Further nothing has been brought to our notice in the Statutes to show that teachers appointed before July 1, 1952 would be liable to removal on the ground that they did not possess the minimum qualifications.
This means that sub r.
(6) was not necessary in order that teachers appointed and confirmed before July 1, 1952 who did not fulfil the minimum qualifications then being prescribed should continue in service.
Obviously those teachers would have continued in service even without sub r.
Therefore, the view of the High Court that sub r.
(6) was made for the purpose of allowing teachers with less than the minimum qualifications to continue in the post which they actually held at the time the 240 Statutes were passed cannot be accepted.
If that was the intention of sub r.
(6), we would have found its language very different It would then have provided that teachers already in service and confirmed before July 1, 1952 would continue in their present posts even though they did not fulfil the minimum qualifications.
But the language of sub r. (6) is very different.
It begins with a non obstante clause and says in effect that whatever may be the actual qualification of the teacher appointed and confirmed before July 1, 1952 that qualification will be considered to be equal to the minimum qualification for the post he holds.
The words "for the post he holds" are only descriptive and mean that if a person holds the post of a lecturer, his actual qualification will be considered to be equal to the minimum qualification of the lecturer; if he happens to hold the post of a Principal, his actual qualification will be considered to be equal to the minimum qualification required for the post of the Principal, even though in either of these cases the actual qualification is less than the minimum qualification.
The obvious intention behind sub r.
(6) was to safeguard the interest of teachers already appointed and confirmed before July 1, 1952, and that is why we find language which lays down that even though the actual qualification may be less than the minimum, that will be considered equivalent to the minimum.
Once that equivalence is established by sub r.
(6), and it is held that even though the actual qualification was less, it was equal to the minimum qualification as provided by sub r.
(1), we fall to see how that deemed qualification can be given a go by in the case of further promotion or appointment.
The appellant was a lecturer in Ramakrishna College, and though he had only a third class Master 's degree, sub r.
(6) provided that that third class Master 's degree must be treated as equivalent to the minimum qualification necessary for the lecturer 's post i.e., a second class Master 's degree.
Therefore, it must be held that from the date the sub rule came into force, the appellant, though he actually had a third class Master 's degree, must be deemed to have a second class Master 's degree, which was the minimum qualification for the lecturer 's grade.
Nothing has been pointed out to us in the Statutes which would take away this deemed qualification thereafter.
We cannot therefore agree with the High Court that when sub r.
(6) says that a teacher appointed and confirmed before July 1, 1952 would be deemed to have the minimum qualification though in fact he does not have it it only provides for this deeming so long as he held the particular post he was holding on the date the Statutes came into force.
That in our opinion is not the effect of the words "the post he holds", for these words are only descriptive and have to be there because the provision in r. (1) (1) referred to three categories, namely, lecturers, professors and principals. 'We may in this connection refer to sub r.
(5) which shows that even if in future candidates with minimum qualification are not available, the 241 A Syndicate can relax the minimum qualification, thus indicating that the minimum qualifications are not absolutely rigid.
But apart from this it appears to us that sub r.
(6) was made for the protection of teachers who were appointed and confirmed before July 1, 1952 and by this deeming provision gave them the minimum qualifications and if that was so that must be for all pur poses in future.
If this were not the interpretation of sub r.
(6) another curious result would follow inasmuch as a lecturer could be appointed a college professor for which a second class Mas ter 's degree was not made the minimum qualification under sub r.
(1) but he could not be appointed a Principal on the interpretation pressed before us on behalf of the respondents.
We should have thought that a good degree would be more necessary in the case of a professor whose main work is teaching than in the case of a principal whose main work is administrative.
However that may be, we are of opinion that sub r.
(6) is meant for the protection of teachers who were appointed and confirmed before July 1, 1952 and it confers on them a qualification by its deeming provision and that must enure to their benefit for all time in future for the purpose of promotion or appointment to a higher grade in another college.
Another curious result would follow if the interpretation accepted by the High Court is correct.
The High Court as we have pointed out above has held that sub r.
(6) give equivalence only for the particular post held by a teacher appointed and confirmed before July 1, 1952.
Suppose that a lecturer in one college who holds a third class Master 's degree and is entitled to remain as lecturer in that college, for some reason is appointed to another college after the Statutes came into force.
This would be a new appointment and such a lecturer could not be appointed in a new college because he would not have a second class Mas ter 's degree for the new appointment.
It seems to us therefore that the intention of sub r.
(6) was not that for the purpose of the particular post actually held the equivalence would prevail but no more.
We are of opinion that sub r.
(6) must be read as a protection to the teachers who were appointed and confirmed before July 1, 1952 and by fiction it gave the minimum qualification even though they may not actually have.
That minimum qualification must therefore remain with them always for the future, for nothing has been brought to our notice which takes away that minimum qualification deemed to be conferred on the teachers by sub rule (6).
We are therefore of opinion that the order dated February 18, 1963 passed by the Chancellor requiring the governing body of the Pandaul College to give the appellant a year or two to appear at an examination to enable him to obtain a second class Master 's degree, otherwise his services might be terminated, is not valid, for the appellant must be deemed to have the minimum qualification of a second class Master 's degree by 412 virtue of sub rule (6) of the Statutes and as such he was qualified A for appointment as Principal of Pandaul College.
We therefore allow the appeal, set aside the order of the High Court and allowing the writ petition quash the order of the Chancellor dated February 18, 1963 in respect of the appellant.
The appellant will get his costs from the respondent University.
R.K.P.S Appeal allowed.
| The appellant was appointed as a lecturer in 1952 of a non Government College affiliated to the Bihar University and later as Principal of another college.
Both these appointments were approved by the University.
The Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) (Amendment) Act 13 of 1962 came into force in April 1962, section 4 of which provided that every appointment, dismissal, etc., of any teacher of a college not belonging to the State Government affiliated to the University made after the 27th November, 1961 and before 1st March, 1962 shall be subject to such order as the Chancellor of the University, on the recommendation of the University Service Commission, may pass.
Thereafter, the appellant received an order dated August 8, 1962, from the Chancellor to the effect that he had been pleased to approve under section 4 of the Act, on the recommendation of the Commission, the appointment of the appellant as Principal till November 30, 1962 or till the candidate recommended by the Commission joined, whichever was earlier.
Subsequently, as ' it was realised that the order of August 18.
1962 Might be successfully challenged on the ground that the appellant had not been given an opportunity for a hearing, the Commission gave the appellant a show cause notice on November 8, 1962 and after he was given a hearing the Chancellor passed another order on February 18, 1963 which purported to modify the order of August 18, 1962; the modification was to the effect that the appellant would be given a year or two to sit for an examination and obtain a second class Master 's degree which was the minimum qualification for the post of Principal, failing which his services would be terminated.
The appellant filed a writ petition in the High Court challenging both the orders of August 18, 1962 and February 18, 1963 on the grounds, inter alia; (i) that under sub rule (6) of Rule (1) of Chapter 16 of the Statutes of the University, which provided that notwithstanding any other requirements the qualifications of a teacher already in service and confirmed before the 1st July, 1962, shall be considered to be equivalent to the minimum qualifications for the post he holds, the appellant must be deemed to have the minimum qualifications for a lecturer i.e. a Second Class MaSter 's degree.
and that this deeming would continue when he was appointed Pricipal for which also the minimum qualification was a Second Class Master 's degree with certain experience; (ii) that section 4 of the Act was violative of article 14 of the Constitution.
and (iii) that the order of August 18, 1962 violated the principles of natural justice and it could not be modified after November 30, 1962 as it had worked itself out 231 232 and there was no power of review given to the Chancellor under section 4.
The High Court dismissed the petition.
On appeal to this Court, HELD: allowing the appeal, (i) The Chancellor 's order of February 18, 1963 giving the appellant time to appear at an examination to enable him to obtain a second class Master 's degree failing which his services would be terminated was invalid.
The appellant must be deemed to have the minimum qualifica tion of a second class Master 's degree by virtue of sub rule (6) of the Statutes and as such he was qualified for appointment as Principal.
Sub r.
(6) must be read as a protection to the teachers who were appointed and confirmed before July 1, 1952 and by fiction it gave them the minimum qualification even though they may not actually have it.
That minimum qualification must therefore remain with them always for the future.
for there was nothing to show that it was taken away.
[241G 242A].
(ii) Section 4 was not discriminatory and violative of article 14 of the Constitution on the ground that it fixed two arbitrary dates and had visited teachers appointed, dismissed etc.
between these two dates with a differential treatment as compared to teachers appointed before November 27, 1961.
The report of the Joint Select Committee recommending the establishment of the University Service Commission which would have the effect of curtailing the powers of the governing bodies of affiliated colleges was published on November 27, 1961 and after the passing of Act II of 1962, section 48 A with respect to the Commission was actually put into force from March 1, 17962.
Many irregularities as to appointments, dismissals etc., during this period were brought to the notice of the government and this led to the enactment of section 4 of the Act.
It cannot therefore be said that teachers appointed etc.
between these two dates did not form a class that would have a nexus with the object to be achieved.
[236B F].
Furthermore, section 4 only authorises the Chancellor to scrutinise appointments.
dismissals etc.
made between these two dates for the purpose of satisfying himself that these were in accordance with the University Act and the Statutes, etc.
Read this way, section 4 cannot be said to confer uncanalised power on the Chancellor.
[237A C].
Although section 4 makes no provision for giving the teacher a hearing before passing an order thereunder, it must be read as requiring that the Commission must act according to principles of natural justice and must hear the teacher concerned before making its recommendation.
[237 D E].
(iii) The order of August 18, 1962 must be taken to have fallen when action was taken to give notice to the appellant on November 8, 1962 and a fresh order passed on February 18. 1963.
The latter order must be treated as a fresh order which was passed after giving the appellant a hearing and which was not therefore defective on the round that principles of natural justice had been violated.
[238G].
|
ivil Appeal No. 783 (NM) of 1987.
From the Judgment and Order dated 9.3.87 of the High Court of Patna in C.W.J.C. No. 608 of 1983.
Soli J. Sorabjee, Ravinder Narain, section Ganesh, Laxmi Kumaran, P.K. Ram and D.N. Mishra for the Appellant.
Govind Das, C.V.S. Rao and A. Subba Rao for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal by the Tata Iron and Steel Co. Ltd. (referred to hereinafter "the Tisco") against the judgment of a Division Bench of the Patna High Court in Writ Petition filed by the Tisco.
The Writ Petition was filed by the Tisco for quashing an order passed by the Collector, Central Excise, Patna on 24th September, 1982.
The Division Bench of the Patna High Court in the impugned judgment only granted partial relief to the Tisco and the appeal in respect of the relief refused.
The relevant facts are follows: The appellant manufactures inter alia wheels, tyres and axles of rail ays.
The buyers of these products are the Indian Railways.
Apart from this, the appellant also makes and supplies to the Indian Railways wheel and exles as composite units.
These are forged products.
Before the said goods are supplied to the railways the said goods after being forged are machined and polished by the appellant and as a result of this machining and polishing the excess layer of steel which is commonly referred as "excess skin" 'is removed; and one of the disputes is as to whether for the purpose of Item 26AA(ia) of the Central Excise 1027 Tariff set out in the First Schedule to the (referred to hereinafter as "the Central Excises Act") the weight of the steel should be calculated as at the time when the forging was complete or after machining and polishing to remove the excess skin of steel.
Certain other incidental work on the said goods might have been done by the appellant, but that is not material for our purposes.
The stand of the appellant was that these items were dutiable in their hands only once and under Tariff Item No. 26AA(ia).
The contention of the revenue was that in the hands of the appellant they were liable to duties at two stages, namely, under Tariff Item No. 26AA(ia) when they were forged and under Tariff Item No. 68 of the Excise Tariff after they were machined and polished for being supplied to the railways.
Right from 1962, the appellant was filing classification lists showing these goods as liable to excise duty only under Tariff Item No. 26AA(ia) and this classification list submitted by the appellant was accepted and approved by the excise authorities.
In 1981, the Asstt.
Collector, Central Excise, Jamshedpur who is one of the respondents before us by a show cause notice dated 16.5.1981 called upon the appellant to show cause why it should not be proceeded against for contravention of Rule 173 B, 9(i) read with rule 173(G)(i) and rule 173(i)(a).
The ground was that the goods supplied by the appellant to the railways were not forged items as such, but the said goods after they had undergone machining and polishing after being forged and had been turned into distinct commercial commodities by the process of machining and polishing which amounted to manufacture and hence the goods were also liable to the payment of excise duty as set out in Item 68.
The notice also called upon the appellant to show cause as to why duty on the forged goods under Tariff Item No. 26AA(ia) should not be payable on the footing of the weight of the goods as forged and before the removal of the excess skin by the machining.
The appellant by their letter dated 27th May, 1982 replied to the said notice taking up the stand that the process of forging of the goods could be said to be completed only after machining and polishing and that this was required to be done in order to bring the goods in line with the specifications of the Indian Railways.
The said letter addressed to the Collector inter alia pointed out that all the wheels, tyres and axles had to be rolled and machined by the appellant to make them conform to the Indian Railways standard denominations.
However, all wheels, tyres and axles supplied by the appellant were further precision machined and fine polished at the railway workshop 1028 that this further machining at the railway workshop, is a must before the said articles could be put to use by the railways and hence the machining by the appellant did not amount to manufacture.
A copy of the letter is not on record, but there is a clear reference to it in the order passed by the Collector imposing excise duties as aforesaid.
The Collector rejected the stand of the appellant and held that the apellant was liable to pay differential duty under item 26AA(ia) on the difference between weight of the said goods when forged and the weight after machining to remove the excess skin as well as the duty under Tariff Item No. 68 as set out earlier.
The Collector further held that the appellant was liable to penalty of Rs.1 lac under Rule 173Q of the Central Excise Rules, 1944 for suppression of facts or giving misleading particulars.
The Collector took the view that the appellant was guilty of mis statement of suppression of facts and hence the period of limitation for making the demand was 5 years prior to the service of the show cause notice.
The Division Bench of the Patna High Court accepted the conclusions of the Collector save and except that they took the view that there was no suppression or mis statement of facts on the part of the appellant and hence the period of limitation would be only 6 months prior to the service of the show cause notice.
Before proceeding further, we would like to set out the relevant items from the Central Excise Tariff.
The relevant portion of Item 26AA of the Central Excise Tariff, at the relevant time read as follows (with emphasis supplied): "26AA.
Iron or steel products, the following, namely,: (ia) Bars, rods, coils wires, joists, girders, angles, other than slotted angles, channels, other than slotted channels, tees, beams, zeds, trough, piling and all other rolled, forged or extruded shapes and sections, not otherwise specified.
" Item 68 of the Excise Tariff is the residury item and it ran as follows: "68.
All other goods, not elsewhere specified, but excluding: (a) alcohol, all sorts, including alcoholic liquors for human consumption; 1029 (b) opium, Indian hemp and other narcotic drugs and narcotics; and (c) dutiable goods as defined in section 2(c) of the Medicinal and Toilet Preparations (Excise Duties) Act 1955 (16 of 1955).
" There is an explanation to Item 68, but the same is not relevant for our purpose.
A perusal of these items makes it clear that forged steel products are liable to duty in terms of Tariff Item No. 26AA.
It is also beyond dispute that forged steel goods with which we are concerned would be covered by Tariff Item No. 26AA(ia) which includes forged or extruded shapes and sections, not otherwise specified.
It is common ground that the appellant is liable to pay excise duty on the said goods under Tariff Item No. 26AA(ia).
The dispute in this connection is what is the stage at which the said goods could be said to be forged iron and steel products as contemplated in the said item; whether they could be regarded as such as soon as they are forged or after machining and polishing to remove the excess skin before being supplied to the Indian Railways.
The stand of the appellant is that this machining and polishing which is done in its workshop, is not significant character and extensive precision machining and polishing has to be done by the railway at their workshop before the wheels, tyres and axles supplied by the appellant can be attached to the rolling stock.
The machining and polishing done in the workshop of the appellant was only in the nature of shaping by removing the superficial material to bring the forged items upto with the Railways ' specifications.
A perusal of Item 26AA would show the excise duty on forged goods covered under the said entry, is according to the weight of the goods.
It was contended by the appellant that the weight should be measured only after the polishing and machining at the appellant 's workshop was completed.
It is obvious that as a result of such machining and polishing there would be some loss weight on account of excess skin removal.
It was on the other hand contended on behalf of the Revenue, the respondent herein, that the forging of the goods was complete before the machining and polishing was done to remove the excess surface or excess skin.
It appears to us that the aforesaid contention of the appellant deserves to be accepted.
Even to prepare forged goods for supplying to the Railways, it was essential that the goods should comply with the Railways ' specifications and the excess steel on the surface or the excess skin as it is called, would have to be removed for that purpose.
1030 Moreover, as pointed out by learned single judge of the Delhi High Court, in Metal Forgings Pvt. Ltd. & Anr.
vs Union of India & Ors.
, [1985] 20 E.L.T. p.280 at paragraph 12: "The process of manufacture of forged products consists of cutting of steel, pre heating of material, heating and beating of steel material till final shaping is achieved.
The steel forging process involves open forging process where the quantity small and drop/close die forging and/or upset forging process under which the product is made with the help of dies.
Thereafter, the extra/unwanted material is removed by either trimming or by gas cutting or by skin cutting to achieve the shape and section nearest to the forged steel product required and also the forging clearances specified in the standards by I.S.I./or International.
It is conceded by the Government that forging would not cease to be forging by processes like removal of superfluous extra skin of cast iron.
" The learned judge has further pointed out in the next paragraph of the said judgment that the removal of extra/unwanted surface steel by either trimming or by gas cutting or by skin cutting of the forged products must be regarded as incidental or ancillary to the process of manufacture.
This view is also consistent with the definition given to the term "manufacture" contained in Sub section (f) of section 2 of the .
This definition shows that the manufacture includes any process incidental or ancillary to the completion of a manufactured product.
We are, therefore, of the view that in respect of the said goods the weight for the purpose of levy of excise duty under Item 26AA(ia) should be taken after the machining and polishing is done to remove the excess surface skin and the contention of the appellant in this regard must be accepted.
The next question is, whether, as a result of the polishing and machining done by the appellant on the said goods before supplying them to the railways the same were transformed into new commercial commodities, namely, finished axles, wheels, tyres and so on or whether these finished or manufactured goods which could be regarded as distinct commercial products came into existence only after precision machining done at workshops of the Indian Railways to enable the Railway to put these goods to use to meet the actual requirments of the Railways.
It is not the case of the respondent that there were three distinct sets of goods, namely, one the forged steel pro 1031 ducts, two the manufactured goods supplied by the appellant to the Railways and three, the finished goods as turned out from the Indian Railways ' workshops for being used by the Railways.
It must be regarded as common ground that duty under Item No.26AA was payable on the forged products and duty under Tariff Item No. 68 was payable only at the stage of the completion of the manufacture of the finished goods, namely, axles, wheels, tyres and so on.
The certificate issued by A.K. Malhotra, Additonal Director, Railways (Stores) clearly states that the goods supplied by the appellant to the Indian Railways and manufactured at its plant at Jamshedpur are manufactured according to specifications and drawings agreed to between the parties.
Axles are supplied to the railways in rough machined condition and wheels, tyres and blanks are supplied in as "rolled/as forged" condition.
These wheels/tyres, axles and blanks have to be sometimes rough machined partially to remove excess steel or manufacturing defects.
These products are subsequently precision machined by the Railways at their workshops before being put to use to meet the actual requirements of the Railways.
There is no challenge to the correctness of this certificate either before the Collector or before the Trial Court and there is no reason as to why it should not be taken as correct.
The certificate clearly shows that axles supplied by the appellant to the Railways were in rough machined condition and wheels, tyres and blanks were supplied in rough or forged condition.
Sometimes wheels, tyres, axles and blanks had to be even rough machined partially at the Railways workshop to remove excess steel or manufacturing defects.
All these products had to be subsequently precision machined by the Railways before being put to use.
In these state of affairs, it is quite clear that the finished goods, namely, finished wheels, tyres, axles and blanks could be said to have come into existence only after the precision machining and other processing at the Railways ' workshops was completed and the appellant is not liable to pay any duty on these goods as under Item No. 68 of the said Central Excise Tariff.
We may make it clear that what we have said in the foregoing paragraphs is applicable to all the goods with which we are concerned save and except wheels, tyres and axles manufactured by the appellant and supplied as composite units.
In respect of these composite units, it is beyond dispute, and it is conceded by the appellant, that it is liable to pay duty on the same under Tariff Item No. 26AA(ia) as well as under Tariff Item No. 68.
The only contention in this connection is as regards the question of limitation to which we shall presently come.
1032 Regarding the question of limitation, the dispute is whether, assuming that the demand made by the Collector was valid, what is the period to which it could relate, it being common ground that as far as composite units comprising wheels, tyres and axles supplied by the appellant to the Indian Railways are concerned the demand under Item No. 68 of the Central Excise Tariff was justified.
The question here is as to whether that demand could extend only to six months prior to the service of the show cause notice as contended by the appellant or upto a period of five years prior to that notice as contended by the respondent.
In this regard, Section 11 A is the relevant provision.
The said Section has been amended in 1978, but we are not concerned with that amendment.
A perusal of Sub section (1) of that Section shows that where any duty of excise has not been levied or short levied or short paid or erroneously refunded, the Central Excise Officer concerned may, within six months from the relevant date, serve notice on the person chargeable with that duty.
This provision would clearly show that the period for which the demand could be made was only six months prior to the service of the notice.
Now, in the present case, it has been found by the High Court and, in our opinion, rightly that there was no suppression or mis statement of facts or fraud by the appellant to which the alleged short levy or non levy could be attributed.
In fact, it is common ground that right from 1962 the appellant was filing classification lists containing the description of the items and showing them as liable to the payment of excise duty only under Item No. 26AA(ia) and these lists were accepted and approved by the excise authorities.
In these circumstances, we fail to see how it could be said that the appellant was guilty of any suppression or mis statement of facts or collusion or violation of the provisions of Central Excises Act as contemplated under the proviso to Section 11 A of the said Act.
In view of this, the period of limitation would clearly be only six months prior to the service of the show cause notice.
The demand for excise duty against the appellant on the said composite units under Item No. 68 of the Excise Tariff, to the extent that it exceeds the period of six months prior to the service of the show cause notice must, therefore, be struck down.
In our view, the learned judges who delivered the impugned judgment were in error in taking the view which they took on the questions discussed aforesaid, except regarding limitation.
The learned judges have placed considerable reliance on the new classification of the Tariff Items in 1985 in considering the true scope of Item No. 26AA and Item No. 68 as they stood in 1981.
In our opinion, this reliance was misplaced.
1033 In the result, the appeal is allowed.
The appellant is liable to pay duty on the goods referred to in the petition other than the composite units only under Item No. 26AA(ia) of the First Schedule to the Central Excises Act and the duty will be based on the weight after the machining carried out in the factory of the appellant to remove the excess skin or excess surface steel.
Secondly, in respect of the composite sets, the appellant is liable to pay duty both under Items Nos. 26AA(ia) and 68, but only for a period of six months prior to the service of the show cause notice.
Looking to all the facts and circumstances of the case, there will be no order as to costs.
R.S.S. Appeal allowed.
| The appellant is an Advocate.
Gautam Chand was one of his old clients.
The complainant Respondent No. l engaged the appellant on being introduced by Gautam Chand to file a Suit against Shri section Anantaraju for recovery of a sum of Rs.30,098 with Court costs and interest in the Court of City Civil Judge at Bangalore.
The appellant passed on the papers to his junior advocate to file the Suit which he did.
The complainant 's allegation is that the matter in dispute in the suit had not been settled at all and the appellant without the knowledge and without his instructions filed a memo in the Court to the effect that the matter has been settled out of Court and accordingly got the suit dismis sed and also received half of the institution court fee; about which the complainant was not aware, nor was he informed by the appellant.
The complainant 's allegation is that he was not informed about the dates of hearing of the suit; when inquired he was simply told that the case is posted for filing written statement where his presence was not neces sary.
When nothing was heard by the complainant from the appellant about the progress of his suit, he personally made inquiries and came to learn to his great surprise that the suit in question had in fact been withdrawn as settled out of Court.
The version of the appellant Advocate is that Gautam Chand, his old client, had business dealings with the plaintiffs, Haradara (Complainant) and the defendant Anantaraju.
Anantaraju had also executed an agreement on 9.8.80 to sell his house property to Gautam Chand.
He received earnest money amounting to Rs.35,000 from Gautam Chand.
Anantaraju however did not execute the sale deed within the specified time.
Gautam Chand approached the appellant for legal advice.
The appellant caused the issue of notice to Anantaraju calling upon him to execute the sale deed.
A notice was also issued on behalf of the complainant calling upon the defendant Anantaraju demanding certain amounts due on 3 self bearer cheques amounting to PG NO 362 Rs. 30,098 issued by him in course of their mutual transactions.
Gautam Chand and the complainant were friends having no conflict of interests Gautam Chand instructed the appellant and his junior Ashok that he was in possession of the said cheques issued by Anantaraju and that no amount was actually due from Anantaraju to Haradara Complainant.
Gautam Chand desired Anantaraju to execute the sale deed.
Anantaraju executed the sale deed on 27.11.81 in favour of Gautam Chand, even though an order of attachment before judg ment in respect of the said property was in existence.
Consequent on the execution of the sale deed, the object of the suit was achieved.
The complainant did not at any time object.
In this back ground, the appellant had reasons to believe the information re: settlement of dispute conveyed by the three together on 9.12.81.
Acting on the said informa tion, the appellant asked Ashok his erstwhile junior to take steps to withdraw the suit, which he did on 10.12.8l as per instructions received from the appellant noted on the docket of the brief.
The state Bar Council, called for the comments of the appellant relating to the complaint.
No charge was framed specifying the nature and content of the professional misconduct attributed to the appellant.
Nor were any issues framed or prints for determination formulated.
Instead thereof the Bar Council proceeded to record evidence.
As the case could not be concluded within the time limit, the matter came to be transferred to the Bar Council of India.
The Bar Council off India addressed itself to the three questions, viz. (i) Whether the complainant was the person who entrusted the brief to the appellant and whether the brief was entrusted by the complainant to the appellant.
(ii) Whether report of settlement was made without instructions or knowledge of the complainant? (iii) Who was responsible for reporting settlement and instructions of the complainant ? The Disciplinary Committee of the Bar Council of India after considering the matter found appellant guilty of professional misconduct and suspended him for practising his profession for 3 years on the charge of having withdrawn a suit (not settled) without the instruction of the clients.
PG NO 363 The appellant has filed the appeal u,s 38 of the Advocates Act.
The following questions arose for consideration by this Court.
(i) Whether a specific charge should have been framed apprising the appellant of the true nature and content of the professional misconduct ascribed to him: (ii) Whether the doctrine of benefit of doubt and the need of establishing the basic allegations were present in the mind of the Disciplinary Authority in recording the finding of guilt or in determining the nature and extent of the punishment inflicted on him; (iii) Whether in the absence of the charge and finding of dishonesty against him the appellant could be held guilty of professional misconduct even on the assumption that he had acted on the instructions of a person not authorised to act on behalf of his client if he was acting in good faith and in a bona fide manner.
Would it amount to lack of prudence or non culpable negligence or would it constitute professional misconduct.
Disposing of the appeal, the Court, HELD: That the appellant was not afforded reasonable and fair Opportunity of showing cause inasmuch as he was not apprised of the exact content of the professional misconduct attributed to him and was not made aware of the precise charge he was required to rebut.
[376E F] That in recording the finding of facts on the three questions.
referred to above.
the applicability of the doctrine of benefit of doubt and the need for established the facts beyond reasonable doubt were not realized.
Nor did the Disciplinary Committee consider the question as to whether the facts established that the appellant was acting with bona fides or mala fides whether the appellant was acting with any oblique and dishonest motive.
whether there was any mens rea; whether the facts constituted negligence and if so whether it constituted culpable negligence.
Nor has the Disciplinary Committee considered the question as regards the quantum of punishment in the light of the aforesaid considerations and the exact nature of the professional misconduct established against the appellant.
[376F H; 377A] The Court, in view of the fact that "the matter is one of the ethics of the profession which the law has entrusted to the Bar Council of India" and it is in their opinion, "a case which must receive due weight" did not consider it PG NO 364 appropriate to examine the matter on merits without first having the opinion of the Bar Council of India.
[377D] Remanding the matter to the Bar Council of India the Court directed it to consider whether it would constitute an imprudent act, an unwise act, a negligent act or whether it constituted negligence and if so a culpable negligence, or whether it constituted a professional misconduct deserving severe punishment, even when it was not established or at least not established beyond reasonable doubt that the concerned Advocate was acting with any oblique or dishonest motive or with mala fides.
[377H; 378A] L.D. Jaisinghani vs Naraindas N. Punjabi, and Re: M. vs Distt.
Judge Delhi, [1956] S.C.R. P. 811(814), referred to.
|
Appeal No. 447 of 1957.
Appeal by special leave from the judgment and order dated the 1st August 1956 of the Labour Appellate Tribunal of India, Culcutta in Appeal No. Cal. 107 of 1956.
D. N. Mukherjee, for the appellants.
Y. Kumar, for the respondent.
May 6.
The Judgment of the Court was delivered by SINHA J.
This appeal by special leave, is directed against the order of the Labour Appellate Tribunal, dated August 1, 1956, dismissing in limine the appeal 15 against the Award of the Third Industrial.
Tribunal, dated March 8, 1956.
The Great Indian Motor Works Ltd., now in liquidation (hereinafter referred to as 'the Company '), represented by one of the Managing Directors, K. D. Nundy, is the first appellant.
The said K. D. Nundy, in his capacity as the creditor of the Company and/or as the auction purchaser of the Company, is the second appellant.
One hundred and forty two employees of the Company, represented by the Bus Workers ' Union, are collectively the first respondent.
The second and third respondents, C. D. Nundy and D. L. Dutt, are the Official Liquidators of the Company, appointed by the High Court as such.
The relevant facts are these: The Company was incorporated and registered under the Indian Companies Act, 1913, in 1926, as a private limited company with its registered office at Calcutta.
Its business was mainly that of carrying on public transport on Route No. 14 in the City of Calcutta, as also of dealers in and repairers of motor vehicles.
It had an authorized capital of six lacs of rupees divided into 600 shares of Rs. 1,000 each, out of which, shares worth Rs. 4,00,000 only had been subscribed and paid up.
The registered ,share holders of the Company, were Kristo Das Nundy, the second appellant, having 246 shares; Chandy Das Nundy, respondent No. 2, having 142 shares, and Kumar Kartick Charan Mullick, holding 12 shares, each of the face value of Rs. 1,000.
On account of financial difficulties and disputes between its share holders, an application for compulsory winding up of the Company was made by the said respondent No. 2, on the Original Side in the High Court at Calcutta.
On July 23, 1951, an order for winding up the Company was made, and the Official Receiver was appointed the Official Liquidator of the Company.
An appeal against the order aforesaid, was dismissed on December 5, 1951, and the order for winding up the Company, stood confirmed.
By an order dated December 11, 1951, the Official Receiver was discharged and the respondents 2 and 3 aforesaid, were appointed Joint official liquidators in his place, with 16 power to sell the business of the Company as a going concern.
In April, 1953, the list of the creditors of the Company was settled by the Court, and the second appellant aforesaid, was included in the list as a creditor for the largest amount, namely, Rs. 2,35,818.
It may be added that the discharged employees of the Company were not included in the list of creditors thus settled by the Court, After several infructuous attempts for selling the property by auction, on May 4, 1954, the Court ordered the sale of the Company 's business free from all encumbrances, out goings and liabilities, to the highest bidder, subject to confirmation by the Court.
The second appellant bid for the purchase of the business with the leave of the Court, and he was declared the highest bidder and purchaser of the business for Rs. 1,42,500 at the sale held on June 12.
The said sale was confirmed by the Calcutta High Court on July 5, 1954.
On July 23, 1954, the Official Liquidators issued a notice terminating the services of all the employees of the Company with effect from July 24, 1954, except one Assistant and one clerk, whose services were retained until the winding up proceedings were completed.
On July 24, the Official Liquidators put the appellant No. 2, the auction purchaser, in possession of the business of the Company, which is now being carried on by the second appellant as the sole proprietor.
AS a result of the termination of the services of the one hundred and forty two employees of the Company, as aforesaid, an industrial dispute was raised at the instance of the said employees whose list is attached to the order of Reference, dated August 26, 1954, which is in these terms: " Whereas an Industrial dispute exists between (1) Messrs. Great Indian Motor Works Ltd., 33, Rowland Road, Calcutta, represented by their Managing Directors Sri C. D. Nundy and Sri K. D. Nundy, (2) Official Liquidators of the Company, Sri D. L. Dutta and Sri C. D. Nundy, 33, Rowland Road, Calcutta and (3) Sri K. D. Nundy, Auction Purchaser of the Company, 33, Rowland Road, Calcutta, and their 142, employees, given in the enclosed list, represented by 17 the Bus Workers ' Union, 249, Bowbazar Street, Calcutta, regarding the matters specified in the schedule ; And whereas it is expedient that the said dispute should be referred to an Industrial Tribunal constituted under section 7 of the Industrial Disputes Act, 1947 (XIV of 1947); Now, therefore, in exercise of the powers conferred by section 10 of the said Act, the Governor is pleased hereby to refer the said dispute to the Third Industrial Tribunal constituted under Notification No. 592 Dis./D/12L 5/12 dated the 23rd February, 1953 for adjudication.
The said Third Industrial Tribunal shall meet at such places and on such dates as it may direct.
SCHEDULE 1.Whether the notice dated 23rd July, 1954, of termination of services of 142 employees with effect from 24 7 54 issued by the Joint Official Liquidators,was justified ? 2.Whether the refusal of the auction purchaser to continue the employment of the 142 employees was justified ? 3.
What reliefs are the employees entitled to By order of the Governor.
" The employees of the Company had moved the High Court for directions to the Liquidators for the payment of their dues from the Company.
The Court, by its order dated September 8, 1954, directed the Liquidators to pay within a week the arrears of salary of all the workmen, and also within a week from receiving sale proceeds of the auction sale aforesaid, to pay the workers, in lieu of notice, one week 's wages to weekly paid workmen, two weeks ' wages to fortnightly paid workmen, and one month 's wages to monthly paid workmen.
The Directors were to hold the balance of the sale proceeds till further orders of the Court.
It will be noticed from the order of reference, quoted above, that besides the Official Liquidators, the second appellant was also impleaded as a party to the Reference, in his capacity as the auction purchaser of the Company.
In his written statement before the Third 18 Industrial Tribunal of West Bengal, which was in seizin of the case, the auction purchaser, now the second appellant, after reciting the facts and circumstances leading up to his auction purchase, as aforesaid, contended that as an auction purchaser, he was not in any event liable for any compensation or dues, as claimed by the workmen; that he was not bound to reinstate the old employees of the Company ; that having purchased the business free from any encum brances, he was not liable for the dues of the workmen, as claimed; that be " had unnecessarily been made a party and dragged here before the Tribunal." He added that he admitted that he was one of the Managing Directors of the Company before its liquidation, but with the order for liquidation, he ceased to function as such.
After hearing the parties, the Tribunal made its Award dated March 8, 1955.
The Tribunal awarded, inter alia, compensation under section 25(F)(b) of the , and directed the Company to pay compensation, within two months from the date the award became enforceable, to such of the workmen as had been found entitled to the same.
It may be noted here that the proceedings before the Industrial Tribunal had commenced without the necessary sanction of the High Court in the liquidation proceedings, but during the pendency of the proceedings, the High Court, by its order dated December 20, 1955, granted leave to the workmen to proceed with and continue the proceedings against the Official Liquidators of the Company.
The Industrial Tribunal, therefore, further directed that so far as the Liquidators were concerned, the compensation awarded to the workmen " shall be recoverable only out of the assets in their hands according to law".
So far as the auction purchaser was concerned, the award proceeded to make further directions in these terms: " The auction purchaser, it has already been noted, purchased the different sections of the business with the name " The Great Indian Motor Works " free from encumbrances and all outgoings and liabilities (Vide Exts.
D and E), and the said purchase was 19 confirmed on 5th July, 1954.
After the sale was confirmed and before possession was taken by the auction purchaser, the Liquidators terminated the employment of all the employees (save and except the Accountant and one Clerk) by a notice dated 23rd July, 1954, with effect from 24th July, 1954.
After such termination of employment, the auction purchaser obtained possession on 24th July, 1954.
At that time no relationship of employer and employees subsisted.
In the circumstances the dispute with the auctionpurchaser cannot be considered to be 'industrial dis pute ' as no relationship of employer and employee existed 'between the auction purchaser and the old staff who had been discharged earlier.
Hence I agree with the learned Advocate of the auction purchaser that the reference so far as.
the auction purchaser is concerned is incompetent.
Apart from that, when the auction purchaser purchased the business free from encumbrances and all outgoings and liabilities and when there is nothing to show that the auction purchaser undertook at any time to maintain the old staff in his service, it cannot be said that his refusal to continue the employment of 142 employees was unjustified.
Only when one purchases with all assets and liabilities as a going concern, he is bound to continue the old employees in service and not otherwise.
I award accordingly.
" Against the said Award which, in terms, was made only against the Liquidators and not against the auction purchaser aforesaid, only one of the two Liquidators, namely, Debendra Lall Dutt, made ail application to the High Court for necessary directions regarding preferring an appeal.
The other Liquidator, Chandy Das Nundy, opposed the said application for leave to appeal.
The High Court, thereupon, made an order on April 30, 1956, refusing leave to the Liquidators to prefer an appeal from the said Award, It was in those circumstances that the appellants, namely, Messrs. Great Indian Motor Works Ltd., represented by the Managing Director, K.D. Nundy, as the first appellant, and K.D. Nundy, in his capacity as creditor and/or contributory of the said Great Indian Motor 20 Works Ltd. (under liquidation) and/or as auctionpurchaser of the Company, as appellant No. 2, filed an appeal before the Labour Appellate Tribunal of India, on May 3, 1956, impleading the one hundred and forty two employees through the Bus Workers ' Union, as the principal respondents, C.D. Nundy and D. L. Dutt, the Official Liquidators of the Company, as proforma respondents.
As a counter blast, the aforesaid workmen of the Company filed their appeal on May 17, 1956, impleading the Company represented by their Managing Directors, C. D. Nundy and K. D. Nundy, as the first respondent, the Official Liquidators of the Company, D.L. Dutt and C.D. Nundy, as respondents second party, K.D. Nundy, the auction purchaser, as respondent third party and the workmen not represented by the Bus Workers? Union, as respondents fourth party.
It is not necessary to set out the grounds of appeal in either of the two appeals, in view of our decision on the preliminary question of the maintainability of the appeal in this Court, as will presently appear.
The Labour Appellate Tribunal disposed of the two appeals by its order dated August 1, 1956.
The appellants ' appeal was dismissed as incompetent in view of the provisions of section 179 of Indian Companies Act, 1913, reenacted as section 457 of the .
The dismissal of the appeal on the ground of the appeal not being competent, was based on the order of the Calcutta High Court, dated April 30,1956, aforesaid, refusing leave to the Liquidators to prefer an appeal.
It is noteworthy that the appeal before the Appellate Tribunal, was not by the Liquidators but by K.D. Nundy as Managing Director of the Company, as also by him in his capacity as the creditor or contributory or as the auction purchaser of the Company.
This aspect of the case has not been dealt with by the Tribunal which held that the appeal was not maintainable as it was not authorised by the High Court.
The employees ' appeal also was dismissed as it was not pressed in view of the fact that the appeal by the Company stood dismissed as unauthorized.
It was against the aforesaid order of the Appellate 21 Tribunal, dismissing the appeal in limine, that the appellants aforesaid moved this Court and obtained special leave to appeal, and the main ground of attack, naturally, was that the Labour Appellate Tribunal was in error in dismissing the appeal as unauthorised or as not maintainable.
It is manifest that we are called upon, in the first instance, to decide whether the Labour Appellate Tribunal had rightly dismissed the appeal in limine on the ground that the Liquidators had failed to obtain the necessary sanction of the Calcutta High Court to prefer an appeal from the Award of the Industrial Tribunal.
If that order of the Appellate Tribunal is correct, and if we find that the appellants could not have any locus standi to prefer an appeal of their own as distinct from that on behalf of the Company, no other question would arise for determination in this case.
If, on the other hand, we come to the conclusion that order was erroneous, at least in respect of the appellants ' appeal, then the appeal will have to be remanded to be re heard by the Appellate Tribunal.
It has been urged on behalf of the appellants that in view of the provisions of section 12, read with section 3, of the Industrial Disputes (Appellate Tribunal) Act (48 of 1950) (which was repealed by Act 36 of 1956), which governed the making of appeals before the Appellate Tribunal, the appeal to that Tribunal was competent, and should have been beard and determined on merits.
The provisions of sections 3 and 12, which we have to construe in this case, are in these terms: " 3.
The provisions of this Act and of the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any such law.
" " 12.
An appeal under this Act against any award or decision of an industrial tribunal may be presented to the Appellate Tribunal by (i)any party which is aggrieved by the award or decision ; or 22 (ii)the appropriate Government or the Central Government, where it is not the appropriate Government, whether or not such Government is a party to the dispute.
" We have first to determine whether there is anything in the Indian , with particular reference to section 179 of the Indian Companies Act, 1913, (reenacted as section 457 of the ), that is inconsistent with the provisions of the Industrial Disputes (Appellate Tribunal) Act, 1950 (which hereinafter will be referred 'to as "the Act").
If there is anything in those provisions of the , inconsistent with the provisions of the Act, the latter shall prevail.
Hence, we have to construe the provisions of section 12 which specifically deals with appeals.
That section permits an appeal to be presented to the Appellate Tribunal by any party which is aggrieved by the award (omitting the words not necessary for our present purpose).
It is the usual statutory provision for an appeal, which otherwise would not lie.
It does not say either in express terms or by necessary implication, that those specific provisions of the , are abrogated or modified.
It does not do away with the necessity of the requisite sanction of the Court so far as a Liquidator is concerned.
Under the provisions of the Indian , the affairs of the company under liquidation, are placed in charge of the Official Liquidator, and under section 457, it is only the Liquidator who is authorized with the sanction of the Court, to institute any suit or other legal proceedings in the name and on behalf of the company.
Thus, there is no inconsistency between the aforesaid provisions of the Act and the , which only laid down a condition precedent to the filing of an appeal, if it has to be, by a Liquidator of a company in the process of winding up.
It concerns a very special case and has no bearing on the general right of appeal.
As, in the instant case, the Court refused the necessary sanction to the Liquidators to prefer the appeal, no appeal could have been filed on behalf of the Company.
Hence, in so far as the appeal purported to be on behalf of the Company, through the Managing 23 Director aforesaid, it was wholly incompetent.
But the appeal was not only by the Company as such, but also by the said K.D. Nundy as the creditor or contributory or auction purchaser ' of the Company.
So far as this part of the appeal is concerned, it is clear that only a party.
to the Reference aggrieved by the Award could be a party to the appeal.
K.D. Nundy was not a party in his capacity as creditor or as contributory.
He was impleaded, as already indicated as a party to the Reference in his capacity as the auction purchaser of the business of the Company.
So far as that capacity is concerned, it is clear from the order of the Tribunal, that no award was made against him as such.
He could not, therefore, be said to be a party aggrieved by the award, having been exonerated from its terms.
The Tribunal put this on three main grounds (1) that the auction purchaser had purchased the business of the Company free from all encumbrances, out goings and liabilities, (2) that the employment of the workmen.
had been terminated by the Liquidators before possession of the business was delivered to the auctionpurchaser, and (3) that there was no relationship of employer and employees between the auction purchaser and the workmen whose services were so terminated.
The Tribunal, in that view of the matter, declared the Reference to be incompetent in so far as the auction purchaser was concerned.
This order, the Tribunal passed at the instance of the auctionpurchaser himself.
The auction purchaser, therefore, succeeded in obtaining the order which the Tribunal passed, holding that the Reference, so far as he was concerned, was incompetent.
In view of these facts, it must be held that so far as the auction purchaser is concerned, he was not aggrieved by the Award made by the Industrial Tribunal.
That being so, the provisions of section 12 of the Act, are not attracted to the appeal purported to have been filed by the auction purchaser.
It is a little difficult to appreciate why the auctionpurchaser, having succeeded in obtaining the order, set out above, in his favour, changed his mind and preferred an appeal which, in the events that had happened, was not maintainable.
24 In our opinion, therefore, the Labour Appellate Tribunal was not in error in dismissing the appeal by the Company and by the auction purchaser, as incompetent.
It follows, therefore, that we are not concerned with the merits of the appeal.
In view of the fact that we have not expressed any opinion on the merits of the controversy raised in the abortive appeal, this dismissal shall be without prejudice to the appellants ' rights, if any.
The appeal is, accordingly, dismissed, but the parties here are directed to bear their own costs, in view of the fact that we have not gone into the merits of the controversy.
Appeal dismissed.
| The discharged employees of the Company in liquidation raised an industrial dispute wherein the auction purchaser of the Company was also impleaded as a party.
The Tribunal, inter alia, held that no relationship of employer and employee existed between the auction purchaser and the old staff who had been discharged prior to the purchase of the business, and the reference so far as the auction purchaser was concerned was incompetent.
The Tribunal directed the liquidators to pay compensation to the discharged employees.
The liquidators were refused sanction to appeal from the said award by the High Court whereupon the auction purchaser who was also the managing director of the Company, prior to its liquidation, preferred an appeal in the name of the Company represented by himself as the managing director and also in his capacity as the auction purchaser of the Company.
The Appellate Tribunal dismissed the appeal in limine as incompetent in view of the provisions Of section 457 Of the , on the ground that the appeal was not maintainable as it was not authorised by the High Court.
Held, that where a party to the Reference in an industrial dispute was exonerated from its terms, and no Award was made against him, he could not be said to be an aggrieved party, thereby attracting the provisions of section 12 of the Industrial Disputes (Appellate Tribunal) Act 1950, and any appeal by him from the said Award will be incompetent.
14 No person other than the Official Liquidator, who is place in charge of the affairs of the Company in the process of winding up, is authorised with the sanction of the Court to institute any suit, prefer an appeal or other legal proceedings in the name and on behalf of the Company.
Held, further, that there is no inconsistency between section 457 of the and section 12 Of the Industrial Disputes (Appellate Tribunal) Act 1950.
But in construing the provisions Of section 12 Of the Industrial Disputes (Appellate Tribunal) Act 1950, if there was anything in the , with particular reference to section 457 which was inconsistent with the provisions of Industrial Disputes (Appellate Tribunal) Act 1950, the latter Act shall prevail.
Section 457 of the , concerns a very special case, it only lays down a condition precedent to the filing of a case if it has to be by the liquidator of a company in the process of winding up.
Section 12 of the Industrial Disputes (Appellate Tribunal) Act 1950 is the usual statutory provision which permits an appeal to be presented to the Appellate Tribunal, which otherwise would not lie, by any party who is aggrieved by an award; it does not either in express terms or by necessary implication override, abrogate or modify the provisions Of section 457 Of the , nor does it do away with the necessity for the requisite sanction of the court which is a condition precedent so far as the liquidator is concerned to institute any suit or proceedings in the name or on behalf of the company in liquidation.
In the instant case the appeal purported to be filed on behalf of the Company in liquidation through its managing director was wholly incompetent ; and the second appellant, the auctionpurchaser, could not be said to the aggrieved party enabling him to invokes.
12 of the Act.
|
Appeal No. 264 of 1956.
Appeal by special leave from the Judgment and Order dated June 29, 1954, of the Bombay High Court in Appeal No. 127 of 1953.
A. V. Viswanatha Sastri, Hemendra Shah, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for,the Appellant.
J. C. Bhatt, C. J. Shah and Naunit Lal, for the Respondent. 1960.
November 30.
The Judgment of the Court was delivered by SARKAR, J.
The appellant is a commission agent and pucca aratiya and has been acting as such for the respondent since November 7, 1951, in the course of which various contracts were made between them in Greater Bombay.
On February 26, 1952, two of such contracts were outstanding, one of which was in respect of groundnuts and was a forward contract.
In March 1952, disputes arose between the parties as to whether these contracts had been closed, each side making a claim on the other on the basis of its own contention.
Eventually, on March 18, 1952, the appellant referred the disputes to arbitration under the arbitration clause contained in the contracts.
On October 7, 1952, the arbitrators made one composite award for Rs. 22,529 15 9 against the respondent in respect of the said disputes.
It is not very clear whether this award covered other disputes also.
This award was duly filed in the Bombay City Civil 99 782 Court under the , for a judgment being passed on it.
Thereafter, on July 17, 1953, the respondent made an application to the Bombay City Civil Court for setting aside the award contending that forward contracts in groundnuts were illegal as the making of such contracts was prohibited by the Oilseeds (Forward Contract Prohibition) Order, 1943, issued under the Essential Supplies (Temporary Powers) Act, 1946, and hence the arbitration clause con tained in the forward contract in groundnuts between the parties was null and void.
It was said that the award based on that arbitration clause was therefore a nullity.
The appellant 's answer to this contention was that the Essential Supplies (Temporary Powers) Act did not apply to Greater Bombay where forward contracts were governed by the Bombay Forward Contracts Control Act, 1947, hereafter called the Bombay Act, and as the contract in groundnuts had been made in terms of that Act, it was legal, and, therefore, the award in terms of the arbitration clause contained in it was a valid and enforceable award.
The learned Principal Judge of the Bombay City Civil Court accepted the respondent 's contention and set aside the award.
An appeal by the appellant to the High Court at Bombay against the judgment of the City Civil Court failed.
The appellant has now come to this Court in further appeal.
The only question in this appeal is whether the Essential Supplies (Temporary Powers) Act, which was passed by the Central Legislature in 1946, applied to Bombay? If it did, then the Oilseeds (Forward Contract Prohibition) Order, 1943, hereafter called, the Oilseeds Order, issued under it would make the contract in groundnuts illegal and no award could be made under the arbitration clause contained in it.
This is not in dispute.
Now, the Oilseeds Order was first passed in 1943 under r. 83 of the Defence of India Rules.
The Defence of India Rules ceased to be in force on September 30, 1946.
In the meantime however, as the situation had not quite returned to normal in spite of the termination of the war, the British Parliament passed 783 an Act on March 26, 1946, called the India (Central Government and Legislature) Act, 1946 (9 & 10 Geo.
VI, Ch. 39), hereafter called the British Act.
Section 2 of this Act provided that the Central Legislature of India would have power to make laws with respect to various matters therein mentioned notwithstanding anything in the Government of India Act, 1935, and that that power could be exercised during the period mentioned in section 4 and further that the laws so made to IV he extent they could not have been otherwise made, would cease to have effect at the expiration of that period.
The Governor General under the powers reserved in section 4 and subsequently, the Constituent Assembly of India, under the powers conferred on it under the Indian Independence Act, 1947, extended the period mentioned in section 4 of the British Act from time to time and eventually up to March 31, 1951.
It would be unprofitable for our purposes to refer to the various statutory provisions and orders under which this was done for, the extension is not in dispute.
Under the powers conferred by the British Act, the Governor General promulgated the Essential Supplies (Temporary Powers) Ordinance, 1946, which came into force on October 1, 1946.
On November 19, 1946, the Central Legislature under the same powers, passe the Essential Supplies (Temporary Powers) Act, 1946, hereafter called the Central Act, repealing the Ordinance and substantially incorporating its terms.
The Central Act originally provided that it would cease to have effect on the expiration of the period mentioned is section 4 of the British Act.
As the life of the British Act was extended from time to time, suitable amend ments were made in the Central Act extending its life also.
Our Constitution came into force on January 26, 1950 and by virtue of article 372 the Central Act was continued as one of the existing laws.
On August 16, 1950, under powers conferred by article 369 of the Constitution, Parliament passed the Essential Supplies (Temporary Powers) Amendment Act, 1950, Act LII of 1950, amending the Central Act in various respects and extending its life up to December 31, 1952.
By another amendment made by Act LXV of 1952, the 784 life of the Central Act was extended till January 26, 1955.
Section 3(1) of the Central Act is in these terms: "The Central Government, so far as it appears 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, may by notified order provide for regulating or prohibiting the production, supply and distribution thereof, and trade and commerce therein.
" Section 2 of the Act provides that foodstuffs would be an essential commodity within the meaning of the Act and would include edible oilseeds.
We have earlier stated that the Oilseeds Order was originally passed under the Defence of India Rules, which expired on September 30,1946.
The Ordinance of 1946 continued in force, orders issued under the Defence of India Rules in so far as they were consistent with it and provided that such orders would be deemed to be orders made under it.
Section 17(2) of the Central Act provided that an order deemed to be made under the Ordinance and in force immediately before its commencement would continue in force and be deemed to be an order made under it.
As a result of the Ordinance and the Central Act replacing it and the extension of the life of the latter from time to time, the Oilseeds Order so far as it related to edible oilseeds including groundnuts, continued in force after the expiry of the Defence of India Rules till January 26, 1955.
That Order, as so continued, prohibited the making of forward contracts, that is to say, contracts providing for delivery at a future date, in respect of certain specified oilseeds including groundnuts.
It is the respondent 's contention that it is because of this order, read with the Central Act, that the contract in groundnuts between the parties was illegal and therefore the award made under the arbitration clause contained in it was void.
Now the British Act under which the Central Act was passed, provided in sub sec.
(4) of section 2 that, "Sub section (2) of section 107 of the Government of India Act, 1935, and sub section (2) of section 126 785 of that Act shall apply in relation to a law enacted by virtue of this section with respect to any matter being a matter with respect to which a Province has power to make laws as if that matter were a matter specified in Part 11 of the Concurrent Legislative List.
" Section 107(2) of the Government of India Act, 1935, laid down that, "Where a Provincial law with respect to one of the matters enumerated in the Concurrent Legislative List contains any provision repugnantto the provisions of an earlier Federal lawthen if the Provincial law, having been reserved for the consideration of the Governor Generalhas received the assent of the Governor Generalthe Provincial law shall in that Province prevail It would follow from these provisions that if a Provincial Act which had received the assent of the Governor General, contained anything repugnant to a Central Act passed under the powers conferred by the British Act, then in the Province concerned, the Provincial Act would apply and not the Central Act.
Now, the Bombay Act which had been passed by the Provincial Legislature of Bombay in 1947, came into operation in 1948.
That Legislature had power to pass the Act and the Act had received the assent of the Governor General.
At that time the Central Act deriving its force from the British Act, was in, operation.
If, therefore, the Bombay Act was repugnant to the Central Act, in Bombay, the Bombay Act would apply and not the Central Act.
This is not in dispute.
The appellant contends that the Bombay Act is so repugnant and therefore the Central Act cannot render the forward contract in groundnuts made in, Greater Bombay, illegal and void.
The question, therefore, is whether the Bombay Act, contains any provision repugnant to the Central Act.
The preamble of the Bombay Act states that it was enacted as it was thought expedient to regulate and control forward contracts and for certain other matters.
Section 1 of this Act came into force at once and gave power to the Government to bring into force by notification the remaining sections of the Act in the 786 whole of the Province of Bombay or parts thereof on such date and in respect of such goods as might be specified.
The Government of Bombay issued notifications under this section on December 19, 1950, applying the remaining provisions of the Act to the area called Greater Bombay in respect of all varieties of oilseeds as from the said date.
Section 8 of the Bombay Act provides as follows: section 8. (1) Every forward contract for the sale or purchase of, or relating to, any goods specified in the notification under sub section (3) of section I which is entered into, made or to be performed in any notified area shall be illegal if it is not entered into, made or to be performed (a)In accordance with such bye laws, made under section 6 or 7 relating to the entering into, making or performance of such contracts, as may be specified in the bye laws, or (b) (i) between members of a recognised association, (ii) through a member of a recognised association, or (iii) with a member of a recognised association, provided that such member has previously secured the written authority or consent, which shall be in writing if the bye laws so provide, of the person entering into or making the contract, and no claim of any description in respect of such contract shall be entertained in any civil court.
(2) Any person entering into or making such illegal contract shall, on conviction, be punishable with imprisonment for a term which may extend to six months or with fine or with both. "Recognised association" is defined in the Bombay Act as an association recognised by the Provincial Government and on December 19, 1950, the Bombay Oilseeds Exchange Limited was recognised as such an association by the Government of Bombay.
The appellant is a member of this association.
The contracts between the parties were all expressly made subject to the rules and regulations of this Association.
The case before us has proceeded on the basis that the impugned contract in groundnut had been made in compliance 787 with the requirements of section 8 and there is no finding to the contrary by the Courts below.
We have hence to proceed on the same basis.
The appellant contends that section 8 of the Bombay Act and section 3 of the Central Act are repugnant to each other.
Now section 8 of the Bombay Act, it will, be noticed, does not purport to make any contract legal.
Its only effect is to render forward contracts in all varieties of oilseeds illegal if not made in compliance with its terms.
The learned Advocate for the appellant says that the effect of section 8 was to render a forward contract in all oilseeds made in terms of it, legal and, therefore, a repugnancy arose between its terms and the terms of the Oilseeds Order issued under the Central Act which made forward contracts in edible oilseeds illegal.
The learned Advocate referred to various other provisions of the Bombay Act and the bye laws of the Association made in terms of the Act to show that the Bombay Act was intended to cover the entire field of forward contracts with respect to all varieties of oilseeds and was therefore intended to oust the operation of the Central Act in Greater Bombay with regard to the forward contracts covered by the former.
It does not seem to us that a reference to the other provisions in the Bombay Act or to the bye laws, is relevant in deciding the question.
If the effect of section 8 of the Bombay Act was not to render forward contracts made in terms of it legal, then no question of repugnancy with the Central Act can arise whatever may be the scope of the Bombay Act and the provisions in the bye laws.
Therefore, it seems to us that the question is whether section 8 of the Bombay Act by its terms makes any forward contract legal.
Section 3 of the Central Act, as already seen, gives power to the Central Government to prohibit trade and commerce in oilseeds.
That Act, therefore, enable& the Central Government to make forward contracts in essential commodities as defined in it, illegal.
That is what the Central Government did by the Oilseeds Order in so far as edible oilseeds are concerned.
We find nothing in section 8 from which it can be said 788 that it rendered any contract legal.
Its only intent and effect is to declare certain forward contracts illegal.
We think that the matter was very correctly put by Chagla, C. J., who delivered the judgment of the High Court.
He said, "All that Sec. 8 does is to declare that forward contracts will be illegal unless they comply with the procedure laid down in Sec. 8.
But it is one thing to declare a certain contract illegal.
It is entirely another thing to declare an illegal contract legal.
Sec. 8 does not even make an attempt to declare that forward contracts declared illegal by the Central legislation shall be legal if they comply with the technicalities laid down in Sec. 8.
The assumption underlying Sec. 8, it seems to us, is that forward contracts which the Legislature is dealing with are legal contracts, but even if they are legal they are declared to be illegal unless they are performed or made or entered into in the manner laid down in Sec. 8".
With these observations we fully agree.
In regard to the contention that section 8 of the Bombay Act necessarily implies that contracts made in terms of it would be legal, it seems to us that there is no such necessity indicated in the Act.
The Act clearly intends only to create an illegality, that is to say, as Chagla, C. J. said, it takes a legal contract and imposes on it certain conditions and makes it illegal if those conditions are not fulfilled.
If a contract is already illegal, there is no scope for applying the Bombay Act.
Furthermore, the Bombay Act deals with all kinds of goods.
Sub section (4) of section 2 of this Act defines goods as any kind of movable property including securities but not including money or actionable claims.
Now the Central Act only applies to essential commodities as defined in it.
Therefore, there would be many contracts to which the Central Act would not apply and such contracts may be rendered illegal by the Bombay Act if they come within its scope and are made in disregard of the conditions laid down in section 8.
We, therefore, come to the conclusion that there is no repugnancy between the Bombay Act and the Central Act.
It follows that there is no scope for 789 applying the provisions of section 107(2) of the Government of India Act, 1935.
That would be the position in 1948, when the Bombay Act came into force and the Central Act was already in existence.
Both the Acts would then be applying to Greater Bombay as there is no inconsistency between them.
Article 372 of the Constitution continued both these Acts after the Constitution came into force and there is nothing in the Constitution which provides that any one of two existing laws, both of which had applied up to the coming into force of the Constitution, would apply to the exclusion of the other.
It follows that in 1951 or 1952, when the contract in groundnuts which it is not disputed, was a forward contract within the meaning of both the Acts was made, both the Acts applied to it.
The Constitution had not affected such application.
That being the position, the contract in groundnuts must be held to be illegal under the Central Act which clearly prohibited the making of it.
The Bombay Act could not make it legal for, as we have said, it was not intended to make any contract legal.
It would follow that the arbitration clause contained in that contract was of no effect.
It has therefore to be held that the award made under that arbitration clause is a nullity and has been rightly set aside.
The award, it will have been noticed, was however in respect of disputes under several contracts, one of which we have found to be void.
But as the award was one and is not severable in respect of the different disputes covered by it, some of which may have been legally and validly referred, the whole award was rightly set aside.
The appeal, therefore, fails and is dismissed with costs.
Appeal dismissed.
100 619 of the Act.
These rules are called the Bihar Preservation and Improvement of Animals Rules, 1960.
The provisions of r. 3 have also been impugned by the.
petitioners by an amendment petition filed by them.
Rule 3 so far as it is material.
for our purpose is in these terms: "3(1).
For the purpose of section 3 of the Act, the Veterinary Officer and the Chairman or Chief Officer, as the case may be, shall be the prescribed authority: Provided that where there is no Chairman or Chief Officer in respect of any area, the Veterinary Officer shall be the sole prescribed authority.
(2) Where the authority prescribed under subrule (1) or sub rule (5) refuses to issue a certificate under the proviso to section 3, it shall record the reasons for the refusal and no such refusal shall be made unless the person 'applying for the certificate has been given a reasonable opportunity of being heard.
(3). . . . . . . . . . (4)A bull, bullock or she buffalo in respect of which a certificate has been issued under section 3 shall not be slaughtered at any place other than the place indicated in the certificate and it shall be slaughtered within 20 days of the date of the receipt of the certificate by the person in whose favour it is issued.
(5) In case of difference of opinion between the Veterinary Officer and the Chairman or Chief Officer, the matter shall be referred to the Sub divisional Animal Husbandry Officer or the District Animal Husbandry Officer, as the case may be, and the certificate shall be issued or refused according to the decision of the Sub divisional Animal Husbandry Officer or the District Animal Husbandry Officer, as the case may be.
| The respondents filed a suit for specific performance against the appellant which was dismissed on March 12, 1954.
On March 24 the respondents made an application for a certified copy of the judgment and decree.
The decree was not drawn up and the respondents were supplied a certified copy of the judgment and the memo of costs.
The respondents filed an appeal before the High Court without the certified copy of the decree and only with the certified copy of the judgment and the memo of costs.
The appeal was admitted under 0.
41, r. 11 Code of Civil Procedure on August 30, 1954.
On December 23, 1958, the appellant served a notice on the respondents that he would raise a preliminary objection at the hearing that the appeal was incompetent as a certified copy of the decree was not filed as required by 0. 41, r. 1.
On December 24, 1958, the respondents moved the trial Court for drawing up of the decree, but since the record was in the High Court this could not be done.
At the hearing of the appeal, the appellant raised the preliminary objection, but the High Court passed an order on December 15, 1959, allowing the respondents one month 's time for getting a decree drawn up and obtaining.
a copy and directed the record to be sent to the trial Court.
Against this order the appellant preferred an appeal to the Supreme Court contending that the High Court was bound to dismiss the appeal as it was manifestly incompetent under 0.
41, r. 1.
Subsequently, on December 23, 1959, the respondents obtained a certified copy of the decree and filed it before the High Court the same day.
The appellant contended that the appeal was to be deemed to be filed on this date and was time barred.
Held, that in the circumstances of this case the order passed by the High Court was right. ' There was no doubt that 0. 41, r. 1 was mandatory and in the absence of or the decree the filing of the appeal was incomplete, defective and incompetent.
The office of the trial Court was negligent in not drawing up a decree and the office of the High Court was also not as careful as it should have been in examining the appeal and these have contributed substantially to the unfortunate position.
In such a case, the respondents deserved to be protected.
Besides the, 919 question had become academic and technical in view of subse quent events.
The certified copy of the decree was filed on December 23, 1959, and even if the appeal was considered to have been filed on that date, it was within time.
Under section 12(2) of the Limitation Act the respondents could treat the time taken in the drawing up of the decree after the application for a certified copy thereof had been made as part of the time taken in obtaining the certified copy of the decree.
Tarabati Koer vs Lala jagdeo Narain, , Bani Madhub Mitter vs Matungini Desai, Cal.
104 (F.B.), Gabriel Christian vs 'Chandra Mohan Missir, Pat. 284(F.B.), Jayashankar Mulshankar Mehta vs Mayabhai Lalbhai Shah, , Gokul Prasad vs Kunwar Bahadur, Luck.
250 and Umda vs Rupchand, , referred to.
Rodger vs Comptoir d 'Escompte de Paris, (1871) L.R. 3 P.C. 465, relied on.
|
Civil Appeal No. 8454 (NL) Of 1983.
From the Judgment and order dated the 8th August, 1980 of the Madhya Pradesh High Court Bench at Gwalior in Civil Miscellaneous Petition No. 127 of 1972.
H.K. Puri, for the Appellant.
A.K. Sanghi for the Respondent.
J. This is an appeal, by special leave, against the Judgment dated 8th August, 1980, by the High Court of Madhya Pradesh at Jabalpur in Civil Miscellaneous Petition No. 127 of l972.
The appellant is a trade union registered under the Trade Union Act.
It represents employees in the Chambal Hydel Irrigation Scheme under the Department of Chambal Project of Government of Madhya Pradesh in Gwalior Division.
The union raised three demands and served notices of these demands on the Deputy Chief Engineer, Major Project, Chambal, Bhopal.
The demands were: (1) Chambal allowance; (2) Dearness allowance equal to that of the Central Government employees; and (3) Wages for the 1022 period of strike lasting 20 days in the year 1966.
Copies of these notices were sent to the Assistant Labour Commissioner, Indore and the Secretary, Government of Madhya Pradesh.
The Deputy Chief Engineer did not respond to the demands.
There upon, the Assistant Labour Commissioner, Gwalior, at the instance of the union tried for a settlement, but did not succeed.
He sent a report under Section 12(4) of the Industrial Disputes Act.
The State Government, the first respondent in the appeal refused to refer the matter to the concerned Tribunal by its order dated 15.3.1969.
The appellant took the matter before the High Court by filing Miscellaneous petition No 29/69 for a mandamus to the State Government to refer the dispute for adjudication.
The High Court allowed the writ petition.
quashed the order of the State Government dated 15th March, 1969, and directed it to consider the question whether a reference was necessary or not.
When the matter went back to the Government, the Government took the stand that the provisions of the Industrial Disputes Act were not applicable to the workmen in the Chambal Hydel Irrigation Scheme since the Scheme was not an Industry and hence again refused to refer the dispute to the Tribunal.
The appellant pursued the matter further by filing miscellaneous petition No. 45 of 1970 before the High Court.
The High Court allowed the petition and directed the Government to take suitable action under Section 12(5 of the Act.
The Government challenged this decision before this Court by filing S.L.P.No.
933 of 1972, without success.
The matter, therefore, went back to the Government again. 'By its order dated 13.1.1972, the State Government referred only one question to the Tribunal and that related to the wages for the strike period but declined to refer the other two questions.
The reason given for this was: (1) that the Government was not in a position to bear the additional burden; and (2) that grant of the special allowance claimed would invite similar demands by other employees which would affect the entire administration.
Miscellaneous Petition No. 127 of 1972 was, therefore, filed for a direction to the State to refer the other two demands also.
In the meanwhile, this Court as per its decision dated July 20, 1978, bad confirmed the decision of the High Court that Chambal Project was an Industry within the meaning of the Industrial Disputes Act.
After this decision was rendered by this Court, the Government reviewed the matter and passed an order on 3.5.1979 giving additional reasons for refusing to refer the dispute for adjudication.
The reasons stated were as under: 1023 "(1) That the State Government was not in a position A to pay dearness allowance equal to that of Central Government employees.
In the present situation the State Government would not pay dearness allowance equal to that of Central Government employees to any particular department.
the question of such payment to the petitioners, therefore, does not arise.
B (2) The work charged employees were already given a consolidated pay.
Therefore, there was no justification for paying such employees the Chambal allowance.
The rules regulating the service conditions of the work charged employees of the Chambal division do not provide for payment of Chambal allowance to them. ' ' 3.
Before the High Court, it was contended by the appellant that the State Government had by refusing to refer the dispute to the Tribunal giving the above reasons taken upon itself the power to decide the dispute and had usurped the powers of the Tribunal.
It was further contended that the question raised related to the conditions of service of the employees and was, therefore, a matter primarily to be decided by the Tribunal The High Court repelled the contention and held as follows: "It is now 12 years that the matter has been pending.
But it would appear from the history of the case that the delay has been mostly due to the fact that the case was pending before various Courts.
The Government has not materially changed its stand.
As regards Chambal allowance, they were, from the very inception, taking the stand P that the work charged employees of the Project were given a consolidated salary and the service conditions did not warrant payment of extra allowance.
Now the rules regulating service conditions of the work charged employees of the project did not contain the provision for payment of Chambal allowance to them.
The Government was of the opinion that prima facie no case arises, particularly, when the extra benefit was already being granted to them.
The Government undoubtedly could no decide the matter finally, but they could certainly consider whether a prima facie case for reference has been made out on merits.
If no case is made out, it would be open to the Government to refuse 1024 to refer such a question and it could not be said that the Government was usurping the functions of the Tribunal and deciding the case finally.
In our opinion, the State Government 's order could not be said to be punitive and it takes into account the entitlement of the Chambal employees for the Chambal allowance.
As regards the other question, the State Government are on a firmer ground.
Since the Government is not paying dearness allowance equal to that of the Central Government employees to the employees in any other department in the State, there is no reason to discriminate and pay the same to the Chambal employees.
This is what the State Government have stated and we think that if the allowance at the rate payable to the Central Government employees is not paid to any one in the State, the Government was justified in holding that no prima facie case has been made out by the petitioner for referring this dispute to the Tribunal.
The State Government have also considered the question of expediency that by payment of such allowance to the Chambal employees alone, there would be dissatisfaction amongst the other employees of the State.
Both these reasons are germane and relevant.
The Government here was not deciding the case finally.
It has to decide question of expediency and whether a prima facie case has been made out. " In support of this conclusion the High Court relied upon the observations made by this Court in Bombay .
Union of Journalists P vs State of Bombay(l) and held that the Government was not precluded from making a prima facie examination of the merits of the dispute while considering whether a reference was necessary or not.
It was further held that "the two reasons given by the State Government fulfilled necessary test laid down by the orders of this Court earlier and the various Supreme Court decisions cited by the petitioners.
In the appeal before us, it was contended that the approach made by the High Court was erroneous and that the High Court had failed to properly delineate the jurisdiction of the Government under Section 10 read with Section 12(5) of the Industrial Disputes (1) ; 1025 Act.
It was contended before us that the question raised by the appellant had to be decided by the Tribunal on evidence to be adduced before it and it could not be decided by the Government on a prima facie examination of the facts of the case.
This submission was met with the plea that the Government had in appropriate cases at least a limited jurisdiction to consider on a prima facie examination of the merits of the demands, whether they merited a reference or not.
We have considered the rival contentions raised before us The High Court apparently has relied upon the following passage in Bombay Union of Journalists vs State of Bombay, (Supra) C ". .But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of the dispute when it decides the question as to whether its power to make a reference should be exercised under Section 10(1) read with Section 12(5) or not.
If the claim made is patently frivolous, or is clearly belated, the appropriate Government may refuse to make a reference.
Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not. ' ' We find that the approach made by the High Court was wrong and the reliance on the above passage on the facts of this case, is misplaced and unsupportable.
This Court had made it clear in the same Judgment in the sentence preceding the passage quoted above that it was the province of the Industrial Tribunal to decide the disputed questions of fact. ".
Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach final conclusions, for that again would be the province of the Industrial Tribunal. " Therefore, while conceding a very limited jurisdiction to the State Government to examine patent frivolousness of the demands, it is to be understood as a rule, that adjudication of demands made 1026 by workmen should be left to the Tribunal to decide.
Section 10 permits appropriate Government to determine whether dispute 'exists or is apprehended ' and then refer it for adjudication on merits.
The demarcated functions are (1) reference, (2) adjudication when a reference is rejected on the specious plea that the Government cannot bear the additional burden, it constitutes adjudication and thereby usurpation of the power of a quasi judicial Tribunal by an administrative authority namely the Appropriate Government.
In our opinion, the reasons given by the State Government to decline reference are beyond the powers of the Government under the relevant sections of the Industrial Disputes Act.
What the State Government has done in this case is not a prima facie examination of the merits of the question involved.
To say that granting of dearness allowance equal to that of the employees of the Central Government would cost additional financial burden on the Government is to make a unilateral decision without necessary evidence and without giving an opportunity to the workmen to rebut this conclusion.
This virtually amounts to a final adjudication of the demand itself.
The demand can never be characterised as either preverse or frivolous.
The conclusion so arrived at robs the employees of an opportunity to place evidence before the Tribunal and to substantiate the reasonableness of the demand.
Same is the case with the conclusion arrived at by the High Court accepting the stand of the State Government that the employees were not entitled to the Chambal allowance as the same was included in the consolidated pay.
This question, in fact, relates to the conditions of service of the employees.
What exactly are the conditions of service of the employees and in what manner their conditions of service could be improved are matters which are the special preserve of the appropriate Tribunals to be decided in adjudicatory processes and are not ones to be decided by the Government on a prima facie examination of the demand.
This demand again can never be said to be either perverse or frivolous.
There may be exceptional cases in which the State Government may, on a proper examination of the demand, come to a conclusion that the demands are either perverse or frivolous and do not merit a reference.
Government should be very slow to attempt an examination of the demand with a view to decline reference and Courts will always be vigilant whenever the Government attempts to usurp the powers of the Tribunal for adjudication of valid dis 1027 putes.
To allow the Government to do so would be to render A Section 10 and Section 12(5) of the Industrial Disputes Act nugatory.
We have no hesitation to hold that in this case, the Government had exceeded its jurisdiction in refusing to refer the dispute to the Tribunal by making its own assessment unilaterally of the reasonableness of the demands on merits.
The High Court erred in accepting the plea of the Government that refusal to refer the demands in this case was justified.
The demands raised in this case have necessarily to be decided by the appropriate Tribunal on merits.
In the result, we set aside the Judgment of the High Court, allow this appeal and direct the State Government to refer all the questions raised by the appellant to the appropriate Tribunal.
The appeal is allowed with costs to the appellant quantified at Rs.2,500 n S.R. Appeal allowed.
| The appellant is a trade union registered under the Trade Unions Act.
It represents employees in the Chambal Project of Government of Madhya Pradesh in Gwalior Division.
The union raised three demands, namely, (1) Chambal allowance; (2) Dearness allowance equal to that of the Central Government employees; and (3) Wages for the period of strike lasting 20 days in the year 1966 and served notices of these demands on the Deputy Chief Engineer, Major Project Chambal Since the attempts for settlement by the canciliation officer failed, a full report of the dispute under section 12 (4) of the Act was sent to the State Government which, by its order dated 15.
3. 1969, refused to refer the matter to the concerned Tribunal.
The appellant took the matter before the High Court by filing Miscellaneous Petition No 29169 for a mandamus to the State Government to refer the matter for adjudication.
The High Court allowed the writ petition, and directed the State Government to consider the question whether a reference was necessary or not.
The Government again refused to refer the dispute to the Tribunal, taking the stand that the provisions of the Industrial Disputes Act were not applicable to the workmen in the Chambal Scheme as it was not Industry '.
The appellant approached the High Court for the second time by filing Miscellaneous Petition No. 45 of 1970 and challenged the said orders.
The High Court allowed the petition and directed the Government to take suitable action under section 12 (5) of the Act.
The Government challenged the said decision before the Supreme Court by filing SLP No. 933 of 1972 without success.
Later, by its order dated 13.
1. 72, the State Government referred to the Tribunal only the third question of payment of wages for the strike period and declined to refer the other two questions for the reasons that (a) the Government was not in a position to bear the additional burden and (b) the grant of the special allowance claimed would invite similar demands by other employees which would affect the entire administration.
The appellant was perforced 1020 to approach the High Court, for the third time, by way of a miscellaneous Petition No. 127 of 1972 for a direction to the State to refer the other two demands also.
In the meanwhile, the Supreme Court by its decision dated July 20, 1978 confirmed the High Court 's order that Chambal Project was a 'industry ' within the meaning of the Act.
whereupon the Government reviewed the matter and passed an order on 3. 79 giving additional reasons for declining to refer the dispute for adjudication namely, (a) the State Government was not in a position and therefore cannot pay Central DA to any of its employees in any department and (b) the work charged employees who get a consolidated salary are not entitled to Chambal allowance under the rules.
The High Court, by its decision dated 8th August 1980 dismissed the petition holding that the reasons given by the Court are germane and relevant.
Hence the appeal by special leave.
Allowing the appeal, the Court, ^ HELD: 1.1 The reasons given by the State Government to decline reference are beyond the powers of the Government under the relevant sections of the Industrial Disputes Act.
[1026C] 1.2 While conceding a very limited jurisdiction to the State Government to examine patent frivolousness of the demands, it is to be understood as a rule, that adjudication of demands made by workmen should be left to the Tribunal to decide.
Section 10 permits appropriate Government to determine whether dispute 'exists or is apprehended" and then refer it for adjudication on merits.
The demarcated functions are (1) reference, (2) adjudication.
[1025H; 1026A] 1.3 When a reference is rejected on the specious plea that the Government cannot bear the additional burden, it constitutes adjudication and thereby usurpation of the power of a quasi judicial Tribunal by an administrative authority namely the Appropriate Government.
What the State Government had done in this case is not a prima facie examination of the merits of the question involved.
To say that granting of dearness allowance equal to that of the employees of the Central Government would cost additional financial burden on the government is to make a unilateral decision without necessary evidence and without giving an opportunity to the workmen to rebut this conclusion.
This virtually amounts to a final adjudication of the demand itself.
The demand can never be characterized as other perverse or frivolous.
The conclusion so arrived at robs the & employees of an opportunity to place evidence before the Tribunal and to substantiate the reasonableness of the demand.
[1026B E] 1.4 What exactly are the conditions of service of the employees and in what manner their conditions of service could be improved are matters which are the special preserve of the appropriate Tribunals to be decided in adjudicatory processes and are not once to be decided by the Government on a prima facie examination of the demand.
The question whether the emp 1021 loyees were/were not entitled to the Chambal allowance as they are in A receipt of a consolidated pay relates to the conditions of service of the employees Further this demand also cannot be said to be either perverse or frivolous.
[1026F G] 1.5 However, there may be exceptional cases in which the State Government, may, on a proper examination of the demand, come to a conclusion that the demands are either perverse or frivolous and do not merit a reference.
Government should be very slow to attempt an examination of the demand with a view to decline reference and Courts will always be vigilant whenever the Government attempts to usurp the powers of the Tribunal for adjudication of valid disputes.
To allow the Government to do so would be to render section 10 and section 12 (5) of the Industrial Disputes Act nugatory.
[1026G H; 1027A] C Bombay Union of Journalists vs State of Bombay ; , explained and followed.
|
iminal Appeal No. 68 of 1958.
Appeal by special leave from the judgment and order dated July 11, 1957, of the Allahabad High Court (Lucknow Bench), Lucknow, in Criminal Appeal No. 515 of 1955, arising out of the judgment and order dated October 31, 1955, of the Special Judge, Anti corruption, Lucknow, in Criminal Case No. 2/3/32/45 of 1953 55.
Frank Anthony, Udai Pratap Singh and P. C. Agarwala, for the appellant.
G. C. Mathur and O. P. Lal, for the respondent.
December 15.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
This appeal by special leave Gajendragadkar j. has been filed by C. 1.
Emden (hereinafter called the appellant) who has been convicted under section 161 of the Indian Penal Code and under section 5(2) of the Prevention of Corruption Act 2 of 1947 (hereinafter called the Act).
The case against him was that he had accepted a bribe of Rs. 375 from Sarat Chandra Shukla on January 8, 1953.
The appellant was a Loco Foreman at Alambagh Loco Shed, and Shukla had secured a contract at the same place for the removal of cinders 76 594 from ash pits and for loading coal.
This contract had been given to Shukla in June 1952.
The prosecution case was that the appellant demanded from Shukla Rs. 400 per month in order that Shukla may be allowed to carry out his contract peacefully without any harassment.
Shukla was told by the appellant that he had been receiving a monthly payment from Ram Ratan who had held a similar contract before him and that it would be to his interest to agree to pay the bribe.
Shukla, however, refused to accede to this request and that led to many hostile acts on the part of the appellant.
On January 3, 1953, the appellant again asked Shukla to pay him the monthly bribe as already suggested; Shukla then requested him to reduce the demand on the ground that the contract given to him was for a much lesser amount than that which had been given to his predecessor Ram Ratan; the appellant thereupon agreed to accept Rs. 375.
Shukla had no money at the time and so he asked for time to make the necessary arrangement.
The agreement then was that Shukla would pay the money to the appellant on January 8, 1953.
Meanwhile Shukla approached the Deputy Superintendent, of Police, Corruption Branch, and gave him information about the illegal demand made by the appellant.
Shukla 's statement was then recorded before a magistrate and it was decided to lay a trap.
Accordingly, a party consisting of Shukla, the magistrate, the Deputy Superintendent of Police and some other persons went to the Loco Yard.
Shukla and Sada Shiv proceeded inside the Yard while the rest of the party stood at the gate.
Shukla then met the appellant and informed him that he had brought the money; he was told that the appellant would go out to the Yard and accept the money.
At about 3 p.m. the appellant went out to the Yard and, after making a round, came to the place which was comparatively secluded.
He then asked Shukla to pay the money and Shukla gave him a bundle containing the marked currency notes of the value of Rs. 375.
A signal was then made by Shukla and the raiding party immediately arrived on the scene.
The magistrate disclosed his identity to the 595 appellant and asked him to produce the amount paid to him by Shukla.
The appellant then took out the currency notes from his pocket and handed them over to the magistrate.
It is on these facts that charges under section 161 of the Indian Penal Code and section 5(2) of the Act were framed against the appellant.
The appellant denied the charge.
He admitted that he had received Rs. 375 from Shukla but his case was that at his request Shukla had advanced the said amount to him by way of loan for meeting the expenses of the clothing of his children who were studying in school.
The appellant alleged that since he had been in need of money he had requested Kishan Chand to arrange for a loan of Rs. 500; but knowing about his need Shukla offered to advance him the loan, and it was as such loan that Shukla paid him Rs. 375 and the appellant accepted the said amount.
Both the prosecution and the defence led evidence to support their respective versions.
The learned special judge who tried the case believed the evidence given by Shukla, held that it was sufficiently corroborated, and found that the defence story was improbable and untrue.
The learned judge also held that on the evidence led before him the presumption under section 4 of the Act had to be raised and that the said presumption had not been rebutted by the evidence led by the defence.
Accordingly, the learned judge convicted the appellant of both the offences charged and sentenced him to suffer one year 's rigorous imprisonment and to pay a fine of Rs. 500 under section 161 of the Code and two years ' rigorous imprisonment under section 5 of the Act.
Both the sentences were ordered to run concurrently.
The appellant challenged the correctness and propriety of this order by his appeal before the High Court of Allahabad.
The High Court saw no reason to interfere with the order under appeal because it held that, on the facts of the case, a statutory presumption under section 4 had to be raised and that the said presumption had not been rebutted by the appellant.
In other words the High Court did not consider the prosecution evidence apart from the presumption since 596 it placed its decision on the presumption and the failure of the defence to rebut it.
In the result the conviction of the appellant was confirmed, the sentence passed against him under section 161 was maintained but the sentence under section 5(2) of the Act was reduced to one year.
The sentences thus passed were ordered to run concurrently.
It is against this order that the present appeal by special leave has been preferred by the appellant.
This appeal has been placed before a Constitution Bench because one of the points which the appellant raises for our decision is that section 4(1) of the Act which requires a presumption to be raised against an accused person is unconstitutional and ultra vires as it violates the fundamental right guaranteed by article 14 of the Constitution.
We would, therefore, first examine the merits of this point.
The Act was passed in 1947 with the object of effectively preventing bribery and corruption.
Section 4(1) provides that where in any trial of an offence punishable under section 161 or section 165 of the Indian Penal Code it is proved that an accused person has accepted or obtained, or has agreed to accept or attempted to obtain, for himself or for 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.
Mr. Anthony, for the appellant, contends that this section offends against the fundamental requirement of equality before law or the equal protection of laws.
It is difficult to appreciate this argument.
The scope and effect of the fundamental right guaranteed by article 14 has been considered by this Court on several occasions; as a result of the decisions of this Court it is well estab.
lished that article 14 does not forbid reasonable classific ation for the purposes of legislation; no doubt it forbids class legislation; but if it appears that the 597 impugned legislation is based on a reasonable classification founded on intelligible differentia and that the said differentia have a rational relation to the object Sought to be achieved by it, its validity cannot be successfully challenged under article 14 (Vide: Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1).
In the present case there can be no doubt that the basis adopted by the Legislature in classifying one class of public servants who are brought within the mischief of section 4(1) is a perfectly rational basis.
It is based on an intelligible differentia and there can be no difficulty in distinguishing the class of persons covered by the impugned section from other classes of persons who are accused of committing other offences.
Legislature presumably realised that experience in courts showed how difficult it is to bring home to the accused persons the charge of bribery; evidence which is and can be generally adduced in such cases in support of the charge is apt to be treated as tainted, and so it is not very easy to establish the charge of bribery beyond a reasonable doubt.
Legislature felt that the evil of corruption amongst public servants posed a serious problem and bad to be effectively rooted out in the interest of clean and efficient administration.
That is why the Legislature decided to enact section 4(1) with a view to require the raising of the statutory presumption as soon as the condition precedent prescribed by it in that behalf is satisfied.
The object which the Legislature thus wanted to achieve is the eradication of corruption from amongst public servants, and between the said object and the intelligible differentia on which the classification is based there is a rational and direct relation.
We have, therefore, no hesitation in holding that the challenge to the vires of section 4(1) on the ground that it violates article 14 of the Constitution must fail.
Incidentally, we may refer ' to the decision of this Court in A. section Krishna vs The State of Madras (2) in which a similar challenge to the vires of a statutory presumption required to be raised under section 4(2) of the Madras Prohibition Act, 10 of 1937, has been repelled.
(1) ; (2) ; 598 That takes us to the question of construing section 4(1).
When does the statutory presumption fall to be raised, and what is the content of the said presumption? Mr. Anthony contends that the statutory presumpion cannot be raised merely on proof of the fact that the appellant had received Rs. 375 from Shukla; in order to justify the raising of the statutory presumption it must also be shown by the prosecution that the amount was paid and accepted as by way of bribe.
This argument involves the construction of the words " any gratification other than, legal remuneration " used in section 4(1).
It is also urged by Mr. Anthony that even if the statutory presumption is raised against the appellant, in deciding the question as to whether the contrary is proved within the meaning of section 4(1) it must be borne in mind that the onus of proof on the appellant is not as heavy as it is on the prosecution in a criminal trial.
Let us first consider when the presumption can be raised under section 4(1).
In dealing with this question it may be relevant to remember that the presumption is drawn in the light of the provisions of section 161 of the Indian Penal Code.
In substance the said section provides inter alia that if a public servant accepts any gratification whatever other than legal remuneration as a motive or reward for doing or forbearing to do any official act, he is guilty of accepting illegal gratification.
Section 4(1) requires the presumption to be raised whenever it is proved that an accused person has accepted " any illegal gratification (other than legal remuneration) or any valuable thing.
" This clause does not include the receipt of trivial gratification or thing which is covered by the exception prescribed by sub section
The argument is that in prescribing the condition precedent for raising a presumption the Legislature has advisedly used the word " gratification " and not money or gift or other consideration.
In this connection reliance has been placed on the corresponding provision contained in section 2 of the English Prevention of Corruption Act, 1916 (6 Geo. 5, c. 64) which uses the words "any money, gift, or other consideration ".
The use of the 599 word gratification emphasises that it is not the receipt of any money which justifies the raising of the presumption; something more than the mere receipt of money has to be proved.
It must be proved that the money was received by way of bribe.
This contention no doubt is supported by the decision of the Rajasthan High Court in The State vs Abhey Singh (1) as well as the decision of the Bombay High Court in the State vs Pandurang Laxman Parab (2).
On the other hand Mr. Mathur, for the State, argues that the word " gratification " should be construed in its literal dictionary meaning and as such it means satisfaction of appetite or desire; that is to say the presumption can be raised whenever it is shown that the accused has received satisfaction either of his desire or appetite.
No doubt it is conceded by now that in most of the cases it would be the payment of money which would cause gratification to the accused; but he contests the suggestion that the word " gratification " must be confined only to the payment of money coupled with the right that the money should have been paid by way of a bribe.
This view has been accepted by the Bombay High Court in a subsequent decision in State vs Pundlik Bhikaji Ahire (3) and by the Allahabad High Court in Promod Chander Shekhar vs Rex (4).
Paragraph 3 of section 161 of the Code provides that the word " gratification " is not restricted to pecuniary gratification or to gratifications estimable in money.
Therefore " gratification " mentioned in section 4(1) cannot be confined only to payment of money.
What the prosecution has to prove before asking the court to raise a presumption against an accused person is that the accused person has received a " gratification other than legal remuneration "; if it is shown, as in the present case it has been shown, that the accused received the stated amount and that the said amount was not legal remuneration then the condition prescribed by the section is satisfied.
In the context of the remuneration legally payable to, and receivable by, a (1) A.I.R. (2) xi.
(3) (4) I.L.R. 1950 All.
600 public servant, there is no difficulty in holding that where money is shown to have been paid to, and accepted by, such public servant and that the said money does not constitute his legal remuneration, the presumption has to be raised as required by the section.
If the word " gratification " is construed to mean money paid by way of a bribe then it would be futile or superfluous to prescribe for the raising of the presumption.
Technically it may no doubt be suggested that the object which the statutory presumption serves on this construction is that the court may then presume that the money was paid by way of a bribe as a motive or reward as required by section 161 of the Code.
In our opinion this could not have been the intention of the Legislature in prescribing the statutory presumption under section 4(1).
In the context we see no justification for not giving the word " gratification " its literal dictionary meaning.
There is another consideration which supports this construction.
The presumption has also to be raised when it is shown that the accused person has received any valuable thing.
This clause has reference to the offence punishable under section 165 of the Code; and there.
is no doubt that one of the essential ingredients of the said offence is that the valuable thing should have been received by the accused without consideration or for a consideration which he knows to be inadequate.
It cannot be suggested that the relevant clause in section 4(1) which deals with the acceptance of any valuable thing should be interpreted to impose upon the prosecution an obligation to prove not only that the valuable thing has been received by the accused but that it has been received by him without consideration or for a consideration which he knows to be inadequate.
The plain meaning of this clause undoubtedly requires the presumption to be raised whenever it is shown that the valuable thing has been received by the accused without anything more.
If that is the true position in respect of the construction of this part of section 4(1) it would be unreasonable to hold that the word " gratification " in the same clause imports the necessity to prove not only the payment 601 of money but the incriminating character of the said payment.
It is true that the Legislature might have used the word " money " or " consideration " as has been done by the relevant section of the English statute; but if the dictionary meaning of the word " gratification " fits in with the scheme of the section and leads to the same result as the meaning of the word " valuable thing " mentioned in the same clause, we see no justification for adding any clause to qualify the word " gratification"; the view for which the appellant contends in effect amounts to adding a qualifying clause to describe gratification.
We would accordingly hold that in the present appeal the High Court was justified in raising the presumption against the appellant because it is admitted by him that he received Rs. 375 from Shukla and that the amount thus received by him was other than legal remuneration.
What then is the content of the presumption which is raised against the appellant ? Mr. Anthony argues that in a criminal case the onus of proof which the accused is called upon to discharge can never be as heavy as that of the prosecution, and that the High Court should have accepted the explanation given by the appellant because it is a reasonably probable explanation.
He contends that the test which can be legitimately applied in deciding whether or not the defence explanation should be accepted cannot be as rigorous as can be and must be applied in deciding the merits of the prosecution case.
This question has been considered by courts in India and in England on several occasions.
We may briefly indicate some of the relevant decisions on this point.
In Otto George Gfeller vs The King(1) the Privy Council was dealing with the case where the prosecution had established that the accused were in possession of goods recently stolen and the point which arose for decision was how the explanation given by the accused about his possession of the said goods would or should be considered by the jury.
In that connection Sir George Rankin observed that the appellant did not (1) A.I.R. 1943 P.C. 211. 77 602 have to prove his story, but if his story broke down the jury might convict.
In other words, the jury might think that the explanation given was one which could not be reasonably true, attributing a reticence or an incuriosity or a guilelessness to him beyond anything that could fairly be supposed.
The same view was taken in Rex vs Carr Briant (1) where it has been observed that in any case where either by statute or at common law some matter is presumed against an accused, " unless the contrary is proved the jury should be directed that it is for them to decide whether the contrary is proved, that the burden of proof required is less than that required at the bands of the prosecution in proving the case beyond a reasonable doubt, and that the burden may be discharged by evidence satisfying the jury of the probability of that which the accused is called upon to establish " (p. 612).
In other words, the effect of these observations appears to be to relax to some extent the rigour of "the elementary proposition that in civil cases the preponderance of probability may constitute sufficient ground for a verdict " (p. 611),(Also vide: Regina vs Dunbar (2)).
It is on the strength of these decisions that Mr. Anthony contends that in deciding whether the contrary has been proved or not under section 4(1) the High Court should not have applied the same test as has to be applied in dealing with the prosecution case.
The High Court should have inquired not whether the explanation given by the appellant is wholly satisfactory but whether it is a reasonably possible explanation or not.
On behalf of the State it is urged by Mr. Mathur that in construing the effect of the clause " unless the contrary is proved " we must necessarily refer to the definition of the word " proved " prescribed by section 3 of the Evidence Act.
A fact is said to be proved when, after considering the matter before it, the Court either believes it to exist or considers its existence so probable that a prudent man ought under the circumstances of the particular case to act on the supposition that it exists.
He has also relied on section 4 which provides that whenever it is directed that the (1) (2) at p. 11.
603 court shall presume a fact it shall record such fact as proved unless and until it is disproved.
The argument is that there is not much room for relaxing the onus of proof where the accused is called upon to prove the contrary under section 4(1).
We do not think it necessary to decide this point in the present appeal.
We are prepared to assume in favour of the appellant that even if the explanation given by him is a reasonably probable one the presumption raised against him can be said to be rebutted.
But is the explanation.
given by him reasonably probable ? That is the question which must now be considered.
What is his explanation ? He admits that he received Rs. 375 from Shukla but urges that Shukla gave him this amount as a loan in order to enable him to meet the expenses of the clothes for his school going children.
In support of this the appellant gave evidence himself, and examined other witnesses, Kishan Chand and Ram Ratan being the principal ones amongst them.
The High Court has examined this evidence and has disbelieved it.
It has found that Kishan Chand is an interested witness and that the story deposed to by him is highly improbable.
Apart from this conclusion reached by the High Court on appreciating oral evidence adduced in support of the defence plea, the High Court has also examined the probabilities in the case.
It has found that at the material time the appellant was in possession of a bank balance of Rs. 1,600 and that his salary was about Rs. 600 per month.
Besides his children for whose clothing he claims to have borrowed money had to go to school in March and there was no immediate pressure for preparing their clothes.
The appellant sought to overcome this infirmity in his explanation by suggesting that he wanted to reserve his bank balance for the purpose of his daughter 's marriage which he was intending to perform in the near future.
The High Court was not impressed by this story; and so it thought that the purpose for which the amount was alleged to have been borrowed could not be a true purpose.
Besides the High Court has also considered whether it would have been probable that Shukla 604 should have advanced money to the appellant.
Having regard to the relations between the appellant and Shukla it was held by the High Court that it was extremely unlikely that Shukla would have offered to advance any loan to the appellant.
It is on a consideration of these facts that the High Court came to the conclusion that the explanation given by the accused was improbable and palpably unreasonable.
It is true that in considering the explanation given by the appellant the High Court has incidentally referred to the statement made by him on January 8, 1953, before the magistrate, and Mr. Anthony has strongly objected to this part of the judgment.
It is urged that the statement made by the appellant before the magistrate after the investigation into the offence had commenced is inadmissible.
We are prepared to assume that this criticism is wellfounded and that the appellant 's statement in question should not have been taken into account in considering the probability of his explanation; but, in our opinion, the judgment of the High Court shows that not much importance was attached to this statement, and that the final conclusion of the High Court was substantially based on its appreciation of the oral evidence led by the defence and on considerations of probability to which we have already referred.
Therefore, we are satisfied that the High Court was right in discarding the explanation given by the appellant as wholly unsatisfactory and unreasonable.
That being so it is really not necessary in the present appeal to decide the question about the nature of the onus of proof cast upon the accused by section 4(1) after the statutory presumption is raised against him.
In the result the appeal fails, the order of conviction and sentence passed against the appellant is confirmed and his bail bond cancelled.
Appeal dismissed.
| The appellant, who was working as a Loco Foreman, was found to have accepted a sum of Rs. 375 from a Railway Contractor.
The appellant 's explanation was that he had borrowed the amount as he was in need of money for meeting the expenses of the clothing of his children who were studying in school, The Special judge accepted the evidence of the contractor and held that the money had been taken as a bribe, that the defence story was improbable and untrue, that the presumption under section 4 Of the Prevention of Corruption Act had to be raised and that the presumption had not been rebutted by the appellant and accordingly convicted him under section 161 Indian Penal Code and section 5 Of the Prevention of Corruption Act, 1947.
On appeal the High Court held that on the facts of the case the statutory presumption under section 4 had to be raised, that the explanation offered by the appellant was improbable and palpably unreasonable and that the presumption had not been rebutted, and upheld the conviction.
The appellant contended (i) that section 4 was ultra vires as it contravened article 14 of the Constitution, (ii) that the presumption under section 4 could not be raised merely on proof of acceptance of money but it had further to be proved that the money was accepted as a bribe, (iii) and that even if the presumption arose it was rebutted when the appellant offered a reasonably probable explanation.
Held, that section 4 of the Prevention of Corruption Act did not violate article 14 Of the Constitution.
The classification of public servants who were brought within the mischief of section 4 was based on intelligible differentia which had a rational relation to the object of the Act, viz,, eradicating bribery and corruption amongst public servants.
Ram Krishna Dalmia vs Shri justice section R. Tendolkar; , , followed.
A. section Krishna vs The State of Madras, ; , referred to.
The presumption under section 4 arose when it was shown that the accused had received the stated amount and that the said amount was not legal remuneration.
The word " gratification ' 593 in section 4(1) was to be given its literal dictionary meaning of satisfaction of appetite or desire ; it could not be construed to mean money paid by way of a bribe.
The High Court was justified in raising the presumption against the appellant as it was admitted that he had received the money from the contractor and the amount received was other than legal remuneration.
State vs Pundlik Bhikaji Ahire, and Promod Chander Shekhar vs Rex, I.L.R. 1950 All. 382, approved.
The State vs Abhey singh, A.I.R. 1957 Raj.
138 and State vs Pandurang Laxman Parab, , disapproved.
Even if it be assumed that the presumption arising under section 4(1) could be rebutted by the accused giving an explanation which was a reasonably probable one the High Court was right in holding that the explanation given by the appellant was wholly unsatisfactory and unreasonable.
Otto George Gfeller vs The King, A.I.R. 1943 P.C. 211 and Rex vs Cary Briant, (1943) I K.B. 607, referred to.
|
minal Appeals Nos.
25 27 of 1955.
Appeals from the judgments and order dated February 1, 1955, of the Punjab High Court (Circuit Bench), Delhi in Cr.
Appeals Nos.
5 D, 6 D and 13 D of 1952, arising out of the judgments and orders dated December 22, 1951, of the 1st Class Magistrate, New Delhi in Criminal Cases Nos. 220/2, 221/2 and 223/2 of 1949.
89 Ram Lal Anand and section N. Anand, for the appellant.
H. J. Umrigar and T. M. Sen, for the respondent.
January 20.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
These three appeals have, been filed with certificates granted by the High Court of Punjab under article 134(1) (c) of the Constitution and they arise from three criminal cases filed against the appellant.
The appellant Gopi Chand was the chief cashier, and Hukam Chand was an assistant cashier, in the United Commercial Bank Ltd., New Delhi.
They were charged with the commission of offences under section 409 in three separate cases.
In the first case No. 223/2 of 1949, the prosecution case was that on or about April 8, 1948, both had agreed to commit, or cause to be committed, criminal breach of trust in respect of the funds of the Bank where they were employed; and in pursuance of the said agreement they had committed criminal breach of trust in respect of the total amount of Rs. 1,65,000.
They were thus charged under sections 408, 409 and 120B of the Indian Penal Code.
The appellant was convicted of the offence under section 409 read with section 120 and sentenced to rigorous imprisonment for seven years.
Against this order of conviction and sentence he preferred an appeal to the High Court of Punjab (No. 5 D of 1952).
The High Court confirmed his conviction but altered the sentence imposed on him by directing that he should suffer four year 's rigorous imprisonment and pay a fine of Rs. 10,000 or in default suffer rigorous imprisonment for fifteen months.
The order of conviction and sentence thus passed gives rise to Criminal Appeal No. 25 of 1955 in this Court.
In the second case (No. 221/2 of 1949) the appellant was charged with having committed an offence under sections 408 and 409 of the Indian Penal Code in that he had committed criminal breach of trust in respect of an amount of Rs. 23,772 8 6.
The trial magistrate ,convicted the appellant of the said offence and sentenced him to suffer rigorous imprisonment for five years.
12 90 On appeal (No. 6 D of 1952) the order of conviction was confirmed but the sentence imposed on him was reduced to three years ' rigorous imprisonment.
This order has given rise to Criminal Appeal No. 26 of 1955 in this Court.
In the third case (No. 220/2 of 1949) the appellant, Hukam Chand and Ganga Dayal were charged with having committed an offence under section 409/408 read with section 120B of the Indian Penal Code in that all of them had agreed to commit criminal breach of trust in respect of the sum of Rs. 10,000 belonging to the Bank and that in pursuance of the said agreement they had committed the criminal breach of trust in respect of the said amount.
The trial magistrate convicted the appellant of the offence charged and sentenced him to four year 's rigorous imprisonment.
On appeal (No. 13 D of 1952) the High Court confirmed the conviction but reduced the sentence to two years ' rigorous imprisonment.
From this order arises Criminal Appeal No. 27 of 1955 in this Court.
The appellant has obtained a certificate from the High Court under article 134(1) (c) of the Constitution because he seeks to challenge the validity of the order of conviction and sentence passe against him in the three cases on the ground that the proceedings in all the said cases are void.
He contends that, whereas the charges framed against him had to be tried according to the procedure prescribed for the trial of warrant cases, the learned trial magistrate tried all the cases according to the procedure prescribed for the trial of summons cases and that makes void all the proceedings including the final orders of conviction and the sentences.
The point arises in this way.
The East Punjab Public Safety Act, 1949 (Punj.
5 of 1949), hereinafter called the Act, which came into force on March 29, 1949, was passed to provide for special measures to ensure public safety and maintenance of public order.
It is common ground that the offences with which the appellant was charged would normally have to be tried under the procedure prescribed by ch.
XXI of the Code of Criminal Procedure for the trial of warrant 91 cases but in fact they have been tried under the procedure prescribed by ch.
XX for the trial of summons cases.
The summons procedure differs from the warrant procedure in some material points.
Under the former procedure a charge is not to be framed while under the latter a charge has to be framed under section 254 of the Code.
Similarly an accused person gets( only one chance of cross examining the prosecution witnesses under the summons procedure whereas under the warrant procedure he is entitled to cross examine the said witnesses twice, once before the framing of the charge and again after the charge is framed.
The appellant concedes that the cases against him were tried according to the summons procedure by reason of section 36 of the Act and the notification issued under it; but be contends that the relevant provisions of the Act are ultra vires and he alternatively argues that the proceedings in respect of a substantial part were continued under the summons procedure even after the Act had expired and the relevant notifications had ceased to be operative.
That is how the validity of the trial and of the orders of conviction and sentence is challenged by the appellant.
It would be relevant at this stage to refer to the material provisions of the Act and the relevant notifications issued under it.
The Act came into force on March 29, 1949.
It was passed to provide for special measures to ensure public safety and maintenance of public order.
Section ' 36 of the Act prescribes the procedure for the trial of specified offences; under sub section
(1) all offences under this Act or under any other law for the time being in force in a dangerously disturbed area, and in any other area all offences under this Act and any other offence under any other law which the Provincial Government may certify to be triable under this Act, shall be tried by the courts according to the procedure prescribed by the Code, provided that in all cases the procedure prescribed for the trial of summons cases by ch.
XX of the Code shall be adopted, subject, in the case of summary trials, to the provisions of sections 263 to 265 of the Code.
For the avoidance of doubt sub section (2) provided that 92 the provisions of sub section
(1) shall apply to the trial of offences mentioned therein committed before the com mencement of this Act, and in a dangerously disturbed area committed before the date of the notification under section 20, in respect of it.
Under section 20 the Provincial Government is authorised by notification to declare that the whole or any part of the Province as may be specified in the notification to be a dangerously disturbed area.
Four notifications were issued under section 20.
By the first notification issued on July 8, 1949, the whole of the Province of Delhi was declared to be a dangerously disturbed area by the competent authority.
It appears that on September 28, 1950, the said authority issued the second notification cancelling the first notification with effect from October 1, 1950.
This notification was followed by the third notification on October 6, 1950, which purported to modify it by inserting the words " except as respect things done or omitted to be done before the date of this notification after the words " with effect from October 1, 1950 in other words, this notification purported to introduce an exception to the cancellation of the first notification caused by the second, and in effect it purported to treat the Province of Delhi as a dangerously disturbed area in respect of things done or omitted to be done before the date of the said notification.
The last notification was issued on April 7, 1951.
This notification was issued by the Chief Commissioner of Delhi in exercise of the powers conferred by sub section
(1) of section 36 of the Act, and by it he certified as being triable under the said Act in any area within the State of Delhi not being a dangerously disturbed area the following offences, viz., any offence under any law other than the aforesaid Act of which cognisance had been taken by any magistrate in Delhi before October 1, 1950, and the trial of it according to the procedure prescribed in ch.
4 of the said Act was pending in any court immediately before the said date and had not concluded before the date of the certificate issued by the notification.
Let us now mention the facts about the trial of the 93 three cases against the appellant about which there is no dispute.
, The First Information Report was filed against the appellant on June 30, 1948.
The trial commenced on July 18, 1949, and it was conducted according to the procedure prescribed by ch.
XX of the Code '.
Some prosecution witnesses were examined and cross examined before January 26, 1950, and the ' whole of the prosecution evidence was recorded before August 14, 1951.
The evidence for the defence was recorded up to November 14, 1951, and the learned magistrate pronounced his judgments in all the cases on December 22, 1951.
For the appellant, Mr. Ram Lal Anand contends that section 36(1) of the Act is ultra vires because it violates the fundamental right of equality before law guaranteed by article 14 of the Constitution.
His argument is that since offences charged against the appellant were triable under the warrant procedure under the Code, the adoption of summons procedure which section 36(1) authorised amounts to discrimination and thereby violates article 14.
It is the first part of sub section
(1) of section 36 which is impugned by the appellant.
The effect of the impugned provisions is that, after an area is declared to be dangerously disturbed, offences specified in it would be tried according to the summons procedure even though they have ordinarily to be tried according to warrant procedure.
The question is whether in treating the dangerously disturbed areas as a class by themselves and in providing for one uniform procedure for the trial of all the specified offences in such areas the impugned provision has violated article 14.
The point about the construction of article 14 has come before this Court on numerous occasions, and it has been consistently held that article 14 does not forbid reasonable classifications for the purpose of legislation.
In order that any classification made by the Legislature can be held to be permissible or legitimate two tests have to be satisfied.
The classification must be based on an intelligible differentia which distinguishes persons or things grouped together in one class from others left out of it, and the differentia must have a 94 reasonable or rational nexus with the object sought to be achieved by the said impugned provision.
It is true that, in the application of these tests uniform approach might not always have been adopted, or, in dealing with the relevant considerations emphasis might have shifted; but the validity of the two tests that have to be applied in determining the vires of the impugned statute under article 14 cannot be doubted.
In the present case the classification has obviously been made on a territorial or geographical basis.
The Legislature thought it expedient to provide for the speedy trial of the specified offences in areas which were notified to be dangerously disturbed areas ; and for this purpose the areas in the State have been put in two categories, those that are dangerously disturbed and others.
Can it be said that this classification is not founded on an intelligible differentia.? In dealing with this question it would be relevant to recall the tragedy of the holocaust and the savage butchery and destruction of property which afflicted several parts of the border State of Punjab in the wake of the partition of India.
Faced with the unprecedented problem.
presented by this tragedy, the Legislature thought that the dangerously disturbed areas had to be dealt with on a special footing; and on this basis it provided inter alia for the trial of the specified offences in a particular manner.
That obviously is the genesis of the impugned statute.
That being the position, it is impossible to hold that the classification between dangerously disturbed areas of the State on the one hand and the non_ disturbed areas on the other was not rational or that it was not based on an intelligible differentia.
Then again, the object of the Act was obviously to ensure public safety and maintenance of public order; and there can be no doubt that the speedy trial of the specified offences had an intimate rational relation or nexus with the achievement of the said object.
There is no doubt that the procedure prescribed for the trial of summons cases is simpler, shorter and speedier; and so, when the dangerously disturbed areas were facing the problem of unusual civil commotion and strife, the Legislature was justified 95 in enacting the first part of section 36 so that the cases against persons charged with the commission of the specified offences could be speedily tried and disposed of.
We are, therefore, satisfied that the challenge to the vires of the first part of sub section
(1) of section 36 cannot be sustained.
In this connection we may refer to the recent decision of this Court in Ram Krishna Dalmia vs Justice Tendolkar (1).
The judgment in that case has considered the previous decisions of this Court on article 14, has classified and explained them, and has enumerated the principles deducible from them.
The application of the principles there deduced clearly supports the validity of the impugned provisions.
It is, however, urged by Mr. Ram Lal Anand that the decision of this Court in Lachmandas Kewalram Ahuja vs The State of Bombay (2) supports his contention that section 36(1) is invalid.
We are not impressed by this argument.
In Ahuja 's case (2) the objects of the impugned Act were the expediency of consolidating and amending the law relating to the security of the State, maintenance of public order and maintenance of supplies and services essential to the community in the State of Bombay.
These considerations applied equally to both categories of cases, those referred to the Special Judge and those not so referred; and so, on the date when the Constitution came into force, the classification on which section 12 was based became fanciful and without any rational basis at all.
That is why, according to the majority decision section 12 contravened article 14 of the Constitution and as such was ultra vires.
It is difficult to see how this decision can help the appellant 's case.
The impugned provision in the present case makes no distinction between one class of cases and another, much less between cases directed to be tried according to the summons procedure before January 26, 1950, and those not so directed.
The summons procedure is made applicable to all offences under the Act or under any other law for the time being in force; in other words, all criminal offences are ordered to be tried according to the summons procedure in the dangerously disturbed areas.
That being (1) ; (2) ; , 731.
96 so, we do not think that the decision in Ahuja 's case (1) has any application at all.
Thus we feel no difficulty in holding that the impugned provision contained in the first part of section 36(1) is constitutional and valid.
Then it is urged that the Act which came into force on March 29, 1949, was due to expire and did expire on August 14, 1951, and so the proceedings taken against the appellant under the summons procedure after the expiration of the temporary Act were invaid.
It is argued that, in dealing with this point, it would not be permissible to invoke the provisions of section 6 of the General Clauses Act because the said section deals with the effect of repeal of permanent statutes.
This argument no doubt is well founded.
As Craies has observed, " as a general rule, unless it contains some special provisions to the contrary, after a temporary Act has expired no proceedings can be taken upon it and it ceases to have any further effect " (2).
This principle has been accepted by this Court in Krishnan vs The State of Madras (3).
" The general rule in regard to a temporary statute is ", observed Patanjali Sastri J., " that, in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires".
It is true that the Legislature can and often enough does avoid such an anomalous consequence by enacting in the temporary statute a saving provision, and the effect of such a saving provision is in some respects similar to the effect of the provisions of section 6 of the General Clauses Act.
As an illustration, we may refer to the decision in Wicks vs Director of Public Prosecutions (4).
In that case ail offence against Defence (General) Regulations made under the Emergency Powers (Defence) Act, 1939, was committed during the currency of the Act and the offender was prosecuted and convicted after the expiry of the Act.
The contention raised by the offender that his prosecution and conviction were invalid because, at the relevant time, the temporary (1) ; , 731.
(2) Craies on " Statute Law ", 5th Ed., P. 377.
(3) ; , 628.
(4) [1947] A.C. 362.
97 Act had expired was rejected in view of the provisions of.,;.
11, sub section
3 of the Act.
This sub section had provided that the expiry of the Act shall not affect the operation thereof as respects things previously done or omitted to be done.
The House of Lords agreed with the view expressed by the Court of Criminal Appeal and held that it was clear that Parliament( did not intend sub section 3 to expire with the rest of the Act and that its presence in the statute is a provision which preserved the right to prosecute after the date of its expiry.
Since the impugned Act does not contain an appropriate saving section the appellant would be entitled to contend that, after the expiration of the Act, the procedure laid down in it could no longer be invoked in the cases then pending against the appellant.
We would like to add that, in the present case, we are not called upon to consider whether offences created by a temporary statute cease to be punishable on its expiration.
For the respondent, Mr. Umrigar, however, contends that the appellant is wrong in assuming that the Act in fact expired on August 14, 1951.
He has invited our attention to the provisions of Act No. I of 1951 by which the President extended some of the provisions of the earlier temporary Act in exercise of the powers conferred by section 3 of the Punjab State Legislature (Delegation of Powers) Act, 1951 (46 of 1951), The provisions of that Act extended to the whole of the State of Punjab and came into force on September 13, 1951.
Mr. Umrigar relied on section 16 of Act 46 of 1951 which repealed the East Punjab Public Safety Act, 1949 (Punj.
5 of 1949) and the East Punjab Safety (Amendment) Ordinance, 1951 (5 of 1951) but provided that notwithstanding such repeal any order made, notification or direction issued, appointment made or action taken under the said Act and in force immediately before the commencement of this Act shall, in so far as it is not inconsistent therewith, continue in force and be deemed to have been made, issued or taken under the corresponding provisions of this Act.
It must, however, be pointed out that this 13 98 Act does not continue the material provisions of the impugned Act such ass. 20 and section 36 ; and so section 16 cannot be invoked for the purpose of validating the continuation of the subsequent proceedings against the appellant in the cases then pending against him.
Besides, it is necessary to recall that section 36(1) of the Act prescribed the application of the summons procedure in the trial of specified offences only in dangerously disturbed areas; and so, unless it is shown that the relevant area could be treated as a dangerously disturbed area at the material time, section 36(1) would be inapplicable.
In other words, the adoption of the summons procedure would be justified only so long as the area in question could be validly treated ,as a dangerously disturbed area and it is therefore pertinent to enquire whether at the relevant time the area in question was duly and validly notified to be a dangerously disturbed area.
We have already referred to the four notifications issued by the competent authority.
The second notification purported to cancel with effect from October 1, 1950, the first notification which had declared the whole of the Province of Delhi as a dangerously disturbed area.
A week thereafter, the third notification sought to introduce an exception to the cancellation as notified by the second notification.
Apart from the question as to whether, after the lapse of a week, it was competent to the authority to modify the second notification, it is difficult to understand how it was within the jurisdiction of the notifying authority to say that the whole of the Province of Delhi had ceased to be a dangerously disturbed area " except as respects things done or omitted to be done before the date of this notification ".
Section 20 of the Act under which this notification has been issued authorised the Provincial Government to declare that the whole or any part of the Province was a dangerously disturbed area.
The notification could declare either the whole or a part of the Province as a dangerously disturbed area; but section 20 does not empower the notifying authority to treat any area as being dangerously disturbed in respect of certain things and not dangerously disturbed 99 in regard to others.
Authority to ' declare areas as dangerously disturbed has no doubt been validly delegated to the Provincial Government; but no authority has been conferred on the delegate to treat any area as disturbed for certain things and not disturbed for others.
We have, therefore, no doubt that in introducing the exception to the cancellation effected by the second notification the third notification has gone outside the authority conferred by section 20 and is clearly invalid.
If that be so, it must be held that the whole of the Province of Delhi ceased to be a dangerously disturbed area as from October, 1, 1950.
It was probably realised that the third notification would be invalid and hence the fourth notification was issued on April 7, 1951.
This purports to be a certificate issued by the competent authority under the second part of section 36, sub section (1).
This certificate seeks to achieve the same result by declaring that though the State of Delhi was not a dangerously disturbed area, the offences specified in the notification would nevertheless continue to be tried according to the summons procedure.
This notification is clearly not authorised by the powers conferred by the second part of section 36, sub section
What the Provincial Government is authorised to do by the second part of section 36(1) is to direct that in areas other than those which are dangerously disturbed all offences under the Act and any other offence under any other law should be tried according to the summons procedure.
It is clear that the notification which the Provincial Government is authorised to issue in this behalf must relate to all offences under the Act and any other offence under any other law.
In other words, it is the offences indicated which can be ordered to be tried under the summons procedure by the notification issued by the Provincial Government.
The Provincial Government is not authorised to issue a notification in regard to the trial of any specified case or cases; and since it is clear that the notification in question covers only pending cases and has no reference to offences or class of offences under the Indian Penal Code,, it is outside the 100 authority conferred by the second part of section 36(1).
It is obvious that the third and the fourth notifications attempted to cure the anomaly which it was apprehended would follow in regard to pending cases in the absence of a saving section in the Act.
If through inadvertence or otherwise the Act did not contain an appropriate saving section, the defect could not be cured by the notifications issued either under section 20 or under section 36(1) of the Act.
In issuing the said notifications the competent authority was taking upon itself the functions of the Legislature and that clearly was outside its authority as a delegate either under section 20 or under section 36(1) of the Act.
Mr. Umrigar, then, argues that the competent authority was entitled to modify the notification issued by it because the power to issue a notification must also involve the power either to cancel, vary or modify the same; and in support of this argument Mr. Umrigar relies on the provisions of section 19 of the Punjab General Clauses Act, 1898 (Punj. 1 of 1898) which in substance corresponds to cl. 21 of the (10 of 1897).
In our opinion, this argument is not well founded.
Section 19 of the Punjab , like section 21 of the , embodies a rule of construction, the nature and extent of the application of which must inevitably be governed by the relevant provisions of the statute which confers the power to issue the notification.
The power to cancel the notification can be easily conceded to the competent authority and so also the power to modify or vary it be likewise conceded; but the said power must inevitably be exercised within the limits prescribed by the provision conferring the said power.
Now section 20 empowers the Provincial Government to declare the whole or any part of the Province to be a dangerously disturbed area; and if a notification is issued in respect of the whole or any part of the Province it may be either cancelled wholly or may be modified restricting the declaration to a specified part of the Province.
The power to cancel or modify must be exercised in reference to the areas of the Province which it is competent for the Provincial 101 Government to specify as dangerously disturbed.
The power to modify cannot obviously include the power to treat the same area as dangerously disturbed for persons accused of crimes committed in the past and not disturbed for others accused of the same or similar A, offences committed later.
That clearly is a legislative function which is wholly outside the authority conferred on the delegate by section 20 or section 36(1).
We must, therefore, hold that the third and the fourth notifications are invalid and as a result of the second notification the whole of the Province of Delhi ceased to be a dangerously disturbed area from October 1, 1950.
This position immediately raises the question about the validity of the proceedings continued against the appellant in the three cases pending against him under the summons procedure.
So long as the State of Delhi was validly notified to be a dangerously disturbed area the adoption of the summons procedure was no doubt justified and its validity Could not be impeached; but, with the cancellation of the relevant notification section 36(1) of the Act ceased to apply and it was necessary that as from the stage at which the cases against the appellant then stood the warrant procedure should have been adopted; and since it has not been adopted the trial of the three cases is invalid and so the orders of conviction and sentence imposed against him are void.
That in brief is the alternative contention raised before us by Mr. Ram Lal Anand.
Mr. Umrigar, urges that since the trial had validly commenced under the summons procedure, it was unnecessary to change the procedure after October 1, 1950, and his case is that the trial is not defective in any manner and the challenge to the validity of the impugned orders of conviction and sentence should not be upheld.
In support of his argument Mr.
Umrigar has invited our attention to some decisions which may now be considered.
In Srinivasachari vs The Queen (1) the accused was tried by a Court of Sessions in December 1882 on charges some of which were triable by assessors and others by jury.
Before the trial was concluded the Code of Criminal Procedure, 1882, came into force (1) Mad.
336. 102 and under section 269 of the Code all the said charges became triable by jury.
Section 558 of the Code had provided that the provisions of the new Code had to be applied, as far as may be, to all cases pending in any criminal court on January 1, 1883.
The case against the accused which was pending on the date when the new Act came into force was submitted to the High Court for orders; and the High Court directed that by virtue of section 6 of the the trial must be conducted under the rules of procedure in force at the commencement of the trial.
It is clear that the decision of the High Court was based both on the specific provisions of section 558 which provided for the application of the new Code to pending cases only as far as may be and on the principles laid down in section 6 of the .
That is why that decision cannot assist the respondent since section 6 of the is inapplicable in the present case.
The decision on Mukund vs Ladu (1) is also inapplicable for the same reasons.
It was a case where one act was repealed by another and so the question as to the applicability of the provisions of the latter act had to be considered in the light of the provisions of section 6 of the .
The judgment in terms does not refer to section 6 but the decision is obviously based on the principles of the said section.
Then Mr.Umrigar relied on Gardner vs Lucas (2).
In that case section 39 of the Conveyancing (Scotland) Act, 1874, with which the court was dealing affected not only the procedure but also substantive rights; and so it was held that the said section was not retrospective in operation.
This decision is wholly inapplicable and cannot give us any assistance in the present case.
Mr. Umrigar also placed strong reliance on a decision of the Full Bench of the Punjab High Court in Ram Singh vs The Crown (3).
That decision does lend support to Mr. Umrigar 's contention that the continuation of the trial under the summons procedure did not introduce any infirmity and was in fact appropriate (1) (2) (3) A.I.R. 1950 East Punjab 25. 103 and regular.
The case against Ram Singh had been sent to the Court of Session under the provisions of section 37 (1) of the Punjab Public Safety Act, 1948 (Punj. 2 of 1948) at a time when Luahiana District was declared to be a dangerously disturbed area; before, however, the trial in the Court of Session actually commenced the District ceased to be a ' dangerously disturbed area.
Even so, it was held that the Sessions Judge should continue with the trial under the provisions of section 37 (1) of the Act and not under the ordinary provisions of the Code regarding sessions trial, and should follow the procedure prescribed for the trial of summons cases.
It appears that the judgment in the case proceeded on the assumption that the principles enacted by section 6 of the were applicable, and so, since at the commencement of the proceedings the adoption of the summons procedure was justified under section 37 (1) of the Act, the trial could continue under the same procedure even after the area had ceased to be a dangerously disturbed area.
In our opinion, it is erroneous to apply by analogy the provisions of section 6 of the to cases governed by the provisions of a temporary Act when the said Act does not contain the appropriate saving section.
Failure to recognise the difference between cases to which section 6 of the applies and those which are governed by the provisions of a temporary Act which does not contain the appropriate saving section has introduced an infirmity in the reasoning adopted in the judgment.
Besides, the learned judges, with respect, were in error in holding that the application of the ordinary criminal procedure was inadmissible or impossible after the area ceased to be dangerously disturbed.
No doubt the learned judges recognised the fact that ordinarily the procedural law is retrospective in operation, but they thought that there were some good reasons against applying the ordinary procedural law to the case, and that is what influenced them in coming to the conclusion that the summons procedure had to be continued even after the area ceased to be dangerously disturbed.
In this connection the learned 104 judges referred to the observation in Maxwell that " the general principle, however, seems to be that alterations in procedure are retrospective, unless there be some good reason against it (1) ; and they also relied on the decision of the Privy Council in Delhi Cloth and General Mills Co., Ltd. vs Income tax Commissioner, Delhi (2) in which their Lordships have referred with approval to their earlier statement of the law in the Colonial Sugar Refining Co. vs Irving (3) that " while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them".
The learned judges took the view that these principles justified their conclusion that "where the provisions of a statute dealing with matters of procedure are inapplicable to a certain proceeding pending at the time the statute came into force, they must be regarded as textually inadmissible so far as those proceedings are concerned ".
We are disposed to think that this view is not sound.
We do not think that the adoption of the ordinary warrant procedure was either inadmissible or inapplicable at the stage where the trial stood in the case against Ram Singh (4).
It was wrong to assume that the ses sions procedure would be inapplicable for the reason that the provisions of the Code in regard to the commitment of the case to the Court of Session had not been complied with.
With respect, the learned judges failed to consider the fact that the procedure adopted in sending the case to the Court of Session under section 37(1) of the relevant Act was valid and the only question which they had to decide was what procedure should be adopted after Ludhiana ceased to be a dangerously disturbed area.
Besides, it was really not a case of retrospective operation of the procedural law; it was in fact a case where the ordinary procedure which had become inapplicable by the provisions of the temporary statute became applicable as soon as the area in question ceased to be dangerously disturbed.
(1) Maxwell on " Interpretation of Statutes ", 9th Ed.
,P. 226.
(2) (3) (4) A.I.R. (1950) East Punjab 25. 105 In this connection it is relevant to refer to the decision of this Court in Syed Qasim Razvi vs The State of Hyderabad (1).
In that case this Court was dealing with the regulation called the Special Tribunal Regulation (V of 1358 Fasli) which had been promulgated by the Military Governor of the Hyderabad State.
The said regulation had provided that the( Military Governor may, by general or special order, direct that any offence or class of offences should be tried by such tribunal, and the procedure for trial laid down by it differed from the provisions of the Hyderabad Criminal Procedure Code in several material particulars.
The cases against the accused were directed to be tried by the Special Tribunal on October 6, 1949.
The accused were convicted in September 1950 and their conviction on some of the charges was upheld by the High Court in appeal in April, 1951.
The accused then appealed to this Court and also applied under article 32 of the Constitution for quashing the orders of conviction and sentence on the ground that the Special Tribunal Regulation became void on January 26, 1950, as its provisions contravened articles 14 and 21 of the Constitution which came into force on that date, and the continuation of the trial and conviction of the accused after that date was illegal.
It is true that the final decision in the case, according to the majority view, proceeded on the footing that the accused had substantially the benefit of a normal trial though there were deviations in certain particulars and so his conviction could not be set aside merely because the Constitution of India came into force before the termination of the trial.
As we will presently point out, the relevant facts in this case in regard to the deviation from the normal procedure are different from those in Syed Qasim Razvi 's case (1), but that is another matter.
What is important for our purpose is the view expressed by this Court that the regulation issued by the Military Governor of Hyderabad State could not be impeached and so the Special Tribunal must be deemed to have taken cognisance of (1) 14 106 the case quite properly and its proceedings up to the date of the coming in of the Constitution would also have to be regarded as valid.
Dealing with this point, Mukherjea, J., who delivered the judgment of the Court, quoted with approval the observations made in Lachmandas Kewalram Ahuja vs The State of Bombay(1) that ,as the Act was valid in its entirety before the date of the Constitution, that part of the proceedings before the Special Judge, which, up to that date had been regulated by the special procedure cannot be questioned ".
Unfortunately this aspect of the matter was not properly placed before the Full Bench of the Punjab High Court in the case of Ram Singh (2).
If the learned judges had proceeded to deal with the question referred to them on the basis that the initial submission of the case to the Court of Session under section 37(1) of the Act was valid they would not have come to the conclusion that the sessions procedure was inadmissible or inapplicable to the continuation of the case after Ludhiana had ceased to be a dangerously disturbed area.
That is why we think that the view taken by the Full Bench is erroneous.
The position then is that as from October 1, 1950, the three cases against the appellant should have been tried according to the warrant procedure.
It is clear that, at the stage where the trial stood on the material date, the whole of the prosecution evidence had not been led and so there was no difficulty in framing charges against the appellant in the respective cases and thereafter continuing the trial accord ing to the warrant procedure.
Having regard to the nature of the charges framed and the character and volume of evidence led, it is difficult to resist the appellant 's argument that the failure to frame charges has led to prejudice; and it is not at all easy to accept the respondent 's contention that the double opportunity to cross examine the prosecution witnesses which is available to an accused person under the warrant procedure is not a matter of substantive and valuable benefit to him.
The denial of this opportunity must, (1) ; , 731, (2) A.I.R. 1950 East Punjab 25.
107 in the circumstances of the present cases, be held to have caused prejudice to him.
We must accordingly hold that the continuation of the trial of the three cases against the appellant according to the summons procedure subsequent to October 1, 1950, has vitiated the trial and has rendered the final orders of conviction and sentence invalid.
We must accordingly set aside the orders of conviction and sentence passed against the appellant in all the three cases.
That takes us to the question as to the final order which should be passed in the present appeals.
The offences with which the appellant stands charged are of a very serious, nature; and though it is true that he has had to undergo the ordeal of a trial and has suffered rigorous imprisonment for some time that would not justify his prayer that we should not order his retrial.
In our opinion, having regard to the gravity of the offences charged against the appellant, the ends of justice require that we should direct that he should be tried for the said offences de novo according to law.
We also direct that the proceedings to be taken against the appellant hereafter should be commenced without delay and should be disposed of as expeditiously as possible.
Appeal allowed.
Retrial ordered.
| The appellants, owners of the premises in question obtained a decree of eviction against the tenant, Respondent No. 7.
While the decree was under challenge before the High Court, Respondent Nos. 1 to 5 approached the High Court under article 226 of the Constitution, claiming that, being members of Joint Hindu Family, alongwith the lather of Respondent No. 7, they were tenants in their own right under the appellants and were not bound by the decree, since they were not parties in the eviction case.
The appellants denied the claim of independent right of the respondent Nos. 1 to 5 and alleged that they had been subsequently inducted in the premises as sub tenants by respondent No. 7.
The High Court held that since the claim of the Respond ent Nos. 1 to 5 was not examined and decided in the suit and the decree was passed against Respondent No. 7 only, they could not be evicted from the premises.
Allowing the appeal preferred by the landlord appel lants, this Court, HELD: 1.1 The remedy provided under article 226 is not intended to supersede the modes of obtaining relief before a civil court or to deny defences legitimately open in such actions.
The jurisdiction to issue a writ of certiorari is supervisory in nature and is not meant for correcting errors like appellate Court.
[122 E F] State of Andhra Pradesh vs Chitra Venkata Rao, ; ; Thansingh Nathmal & Ors.
A. Mazid; , and M. Naina Mohammed vs K.A. Natarajan & Ors., [1976] 1 SCR 102, relied on.
120 1.2 The Civil Procedure Code contains elaborate and exhaustive provisions for dealing with executability of a decree in all its aspects.
The numerous rules of order XXI of Civil Procedure Code take care of different situations, providing effective remedies not only to judgment debtors and decree holders but also to claimant objectors as the case may be.
In an exceptional case, where provisions are rendered incapable of giving relief to an aggrieved party in adequate measure and appropriate time, the answer is a regular suit in the civil court.
The remedy under the Code is of superior judicial quality than what is generally available under other statutes, and the judge, being en trusted exclusively with administration of justice, is expected to do better.
It will be, therefore, difficult to find a case where interference in writ jurisdiction for granting relief to a judgment debtor or a claimant objector can be justified.
Rules 97 to 106 of Order XXI envisage questions to be determined on the basis of evidence to be led by the parties and after the 1976 Amendment, the deci sion has been made appealable like a decree.
[123C E] 1.3 In the instant case, it was necessary to adjudicate upon the dispute between the parties and record a finding on the character of possession of Respondent Nos. 1 to 7 before proceeding to consider whether the decree is executable or not against them and having not done so, the High Court has seriously erred in law in allowing the writ petition filed by them.
The decision on the disputed issue was dependent on the consideration of the evidence to be led by the parties, and while exercising the writ jurisdiction, the High Court was not expected to go into that question and ought not to have embarked upon a decision on merits, and should have refused to exercise the special jurisdiction on the ground of alternative remedy before the civil court.
[122 B D]
|
ivil Appeal No. 2597 of 1988.
From the Judgment and Order dated 17.3.1988 of the Calcutta High Court in Matter No. 2462 of 1987.
Soli J. Sorabji, R. Mahapatra, B.P. Singh and L.P. Agarwala for the Appellant.
S.K. Kapoor, section Dube, Chatterji and Mrs. Indra Sawhney for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
The appeal is disposed of by the judgment herein.
On or about 7th August, 1963 Jayshree Textiles & Industries Ltd. (hereinafter called 'the Jayshree ') was inducted as a tenant in respect of a godown in Calcutta on groundfloor at a monthly rent of Rs. 151 per month payable according to the English calendar month w.e.
f. 1.8. 1963 exclusive of electric charges.
Such induction was by the predecessor in title of the present appellant.
The said rent of Rs.151 p.m. was later enhanced from time to time and the last rent was Rs.225 p.m.
On or about 21st July, 1975, the High Court at Calcutta, in Company Petition No. 161/76 connected with company application No. 70/76 filed by the Jayshree, approved the PG NO 207 scheme of amalgamation whereby the Jayshree merged in the respondent Company.
It is alleged that on or about 4th July, 1985, the appellant for the first time came to know that the said godown was in occupation of Indian Rayon Corporation Ltd and, hence, a notice to quit was issued.
On or about 11th July, 1985, the respondent by its letter intimated the appellant.
that Jayshree was amalgamated with the respondent in accordance with the scheme sanctioned by the High Court at Calcutta on 21st July, 1976.
On 29th August, 1985, a notice under Section 106 of the Transfer of Property Act, read with Section l3(d) of the W.B. Premises Tenancy Act, 1956 (hereinafter called 'the Act '), to quit, vacate and hand over vacant possession on the last date of the following month,was issued to Jayshree.
Thereafter, on lst December, 1985 the appellant filed a suit for eviction in the City Civil Court at Calcutta against the Jayshree and the respondent herein.
On 25th March, 1986, the respondent filed a Title Suit No. 545/86 under Order 39(1) and (2) of the Civil Procedure Code praying for temporary injunction restraining the appellant from disconnecting electricity in, the said premises.
It is alleged and was also alleged before the High Court that the defendant No. 2 in the suit in the City Civil Court, took 15 adjournments to file written statement between March 1986 to May 1987.
On about 6th July, 1987, the appellant filed an application under Clause 13 of the Letters Patent in the High Court at Calcutta, praying for transfer of the two suits on the ground that the respondent had adopted dilatory tactics and had taken several adjournments and.
furthers that the original records relating to amalgamation are available in the High Court.
Rule nisi was issued by the High Court.
On 10th October, 1987 the High Court passed the following order: The Court: By consent of the parties, this application for transfer of the suit under Clause 13 of the Letters Patent is treated as on days ' list and is disposed of by the following order: By consent of the parties the title suit being Title Suit No. 345 of 1986 between Indian Rayon Corporation Ltd. and Abhay Singh Surana pending before the learned Judge 's bench in the City Civil Court and the ejectment suit being Ejectment Suit No. 1088 of 1985 between Abhay Singh Surana and Jayshree Textiles & Industries Ltd. and another pending in the City Civil Court are removed and transferred to this PG NO 208 Court and to be entertained and tried by this Court in its extraordinary original civil jurisdiction, the records be transferred to this Court by 16th September 1987.
The Registrar, Original Side, shall communicate order to the Registrar, City Civil Court.
If necessary, at the cost of the petitioner a special messenger is to be deputed for the purpose of transfer of the records from the City Civil Court to this Court.
Let the two suits appear in the for settlement on 17th September, 1987.
" It appears that the suits appeared before the learned Judge upon mentioning on 15th December, 1987.
It was represented that the suits were transferred to the High Court only on the understanding that the suits would be settled.
It was further represented that the effort settle the suits had failed and, hence, the learned Single judge of the High Court fixed a date for hearing of the two suits.
On 17th February, 1988, the respondent filed an application before the learned Trial Judge in Calcutta for recalling the order of transfer dated 10.10.1987.
On 17th March, 1987, the court passed the following order: "The Court: It appears that on 10th September, 1987, an order was passed directing transfer of the suit to this Court so that the parties could settle the matter in this Court.
It has been stated by Mr. Ranjan Dev, Advocate, that there is no possibility of settlement and the suit should be heard.
In that view of the matter, let the suit be heard by the appropriate Court.
The order dated 10th September, 1987 is hereby recalled.
Let there also be an order in terms of prayer [b] of the petition.
Since the suit is being re trans ferred to the City Civil Court, this Court cannot pass any order as to the prayers made for deposit of rent.
Liberty is given to the parties to make an appropriate application before the appropriate Court for such a direction.
" Aggrieved thereby, the petitioner had filed a special leave petition and leave was granted herein.
That is how,this appeal is here.
In order to appreciate the contentions urged in this case, it is imperative to refer to Clause 13 of the Letters Patent of 1865 of the High Court, which reads as follows: "And we do further ordain, that the said High Court of Judicature at Fort William in Bengal shall have power to PG NO 209 remove, and to tr and determine, as a Court of extra ordinary original jurisdiction of any court, whether within or without the Bengal Division of the Presidency of Fort William.
subject to its superintendence.
when the said High Court shall think proper to do so, either on the agreement of thethe parties to that effect, or for,r purposes of justice.
the reasons for so doing being recorded on the proceeding of the said High Court.
" The aforesaid clause has been the subJect matter of various adjudications and interpretations by the High Court.
It enables the High Court to exercise the extraordinary ' original civil jurisdiction.
The Letters Patent contemplates two contingencies for the High Court to exercise extraordinary jurisdiction.
namely.
on agreement of the parties to that effect.
the suits be transferred and, secondly, for the purpose of justice.
It further stipulates that the reasons for so doing to be recorded on the proceedings in the High Court.
In this case.
apparently the suits were transferred by agreement of the parties.
There is.
however, great deal of difference as to what that agreement was.
On behalf of the appellant, it is contended that there was simply an agreement to have the two suits transferred to the High Court for quick and expeditious disposal.
It was further, asserted that in view of the long delay in filling the written statements, it was, therefore, advisable to have the suits disposed by the High Court.
On the other hand, it is seriously contended that the agreement was that the suits would be settled in the High Court.
It appears that some such representations had been made to the learned Judge that the suits would be settled.
This, however.
the appellant disputes.
The suits have been transferred for settlement.
As the agreement to settle the suits has not fructified, the respondent does not want the suits to be tried in the High Court.
The appellant states that there was no such agreement that the suits would be settled.
There was, undoubtedly, a possibility for the suits being settled and the counsel for the appellant stated that the suits could more easily be settled in the High Court.
On the basis that there was some such kind of agreement and it is desirable that the suits should be tried by an appropriate Court having jurisdiction, the High Court has remitted the suits back to the City Civil Court.
There is no doubt that the City Civil Court is the appropriate Court and that there existed the agreement which, as recorded in the order of the Court, does not indicate that it was on the basis that the suits would be settled.
There PG NO 210 are factors indicating that the purpose of justice would be met if the suits are tried in the High Court.
Undoubtedly, the written statement has been long delayed in the suit in 1985 and the same has not yet been filed.
The disposal ot the suits by the High Court, would serve the purpose of justice.
It would shorten litigation in the sense that there would be lesser number of appeals to the higher Court and the possibility of settlement is there in the High Court more than anywhere else.
Suits are likely to be more expeditiously disposed of under the supervision of the High Court Judge than before the learned City Civil Court or the Court subordinate to High Court.
Hence, even though initially the agreement to transfer might have been on the basis that the suits should be settled but the agreement to transfer was note unequivocal.
The possibility of settlement might have been the motivation.
But the High Court has, undoubtedly, for the purpose of justice rightly power to dispose of the suits and in the facts of this case, in our opinion, having once transferred the suits, it would be just and fair and would also serve the purpose of justice that the suits should continue to be disposed of by the High Court.
The purpose of justice must be determined by reference to the circumstances of each case and the balance of convenience having regard to those circumstances, is one of the matters for consideration.
Counsel for the respondent contended under article 136 of the Constitution that it is not an order which should be interfered with.
We are unab1e to agree.
It is true that the suits are at a preliminary stage but it is also true that for the purpose of justice the Court, if possible, must oversee the administration of justice by the different Courts and the orders passed therein by the High Courts as well as the City Civil Courts.
In that view of the matter we think that the purpose of justice would be served by directing expeditious disposal of these suits by the High Court.
In the premises the order of the High Court is set aside and let these two suits be heard by the High Court one after the other.
The written statement as mentioned hereinbefore, has not been filed.
The written statement, if any, by the respondent may be filed within four weeks from today and further directions for expeditious disposal may be obtained from the learned Judge taking these suits.
Let these suits appear before the appropriate Bench in the High Court of Calcutta.
The appeal is disposed of as aforesaid.
No order as to costs.
N,P.V. Appeal disposed of.
| The appellant let out his godown to a Textile company, which was subsequently amalgamated with the respondent Company, under a scheme of amalgamation approved by the High Court.
On August 29, 1985 the appellant issued a notice to the erstwhile company under section 106 of the Transfer of Property Act read with section 13(6) of West Bengal Premises Tenancy Act, 1956 to quit and hand over vacant possession of the godown.
Thereafter he filed a suit for eviction in the City Civil Court against the erstwhile Company and the respondent Company.
The respondent also filed a suit under Order 39(I) and (2) of the Civil Procedure Code for temporary injunction restraining the appellant from disconnecting electricity in the said premises.
The appellant filed an application in the High Court under clause 13 of the Letters Patent for transfer of the two suits on the ground that the respondent had adopted dilatory tactics and had taken several adjournments to file written statement, and that the original records relating to amalgamation were available in the High Court.
By consent of the parties, the High Court transferred these suits to itself for trying in its extraordinary original civil jurisdiction.
PG NO 205 When the suits appeared before the Single Judge, it was represented that the suits were transferred to the High Court only on the understanding that the suits would be settled and that the efforts to settle the suit had failed.
Hence,the Judge fixed a date for hearing of the two suits.
On February 17, l9S8 the respondent filed an application for recalling the order of transfer.
Accordingly, the High Court recalled its earlier order and retransferred them to the City Civil Court.
Aggrieved, the appellant filed an appeal by special leave, contending that there was simply an agreement to have the suits transferred to the High Court for quick and expeditious disposal, in view of the long delay in filing written statements.
The Respondent, however, contended that the agreement was that the suits would be settled in the High Court.
Disposing of the appeal, HELD: 1.1 Clause 13 of the Letters Patent enables the High Court to exercise the extraordinary original civil jurisdiction.
The Letters Patent contemplates two contingencies for the High Court to exercise extraordinary jurisdiction, namely, on agreement of the parties to that effect, the suits be transferred and, secondly, for the purpose of justice.
It further stipulates that the reasons for so doing to be recorded on the proceedings in the High Court.
[209C D) 1.2 The disposal of the suits by the High Court would serve the purpose of justice.
It would shorten litigation in the sense that there would be lesser number of appeals to the higher Court and the possibility of settlement is there in the High Court more than anywhere else.
Suits are likely to be more expeditiously disposed of under the supervision of the High Court Judge than before the City Civil Court or the Court subordinate to High Court.
[2l0B] 1.3 The purpose of justice must be determined by reference to the circumstances of each case and the balance of convenience having regard to those circumstances, is one of the matters for consideration.
[2l0D] In the instant case, even though initially the agreement to transfer might have been on the basis that the suits would be settled but the agreement to transfer was not PG NO 206 unequivocal.
The possibility of settlement might have been the motivation.
But the High Court has, undoubtedly, for the purpose of justice, rightly power to dispose of the suits.
Having once transferred the suits, it would be just and fair and would also serve the purpose of justice that the suits should continue to be disposed of by the High Court.
[210C D] Though the suits are at a preliminary stage, but for the purpose of justice, the Court must oversee the administration of justice by different Courts and orders passed High Court as well as City Civil Courts.
[210E] Therefore, the purpose of justice would be served by directing expeditious disposal of the suits by the High Court.
[210F]
|
Appeal No. 2348 of 1993.
From the Judgment and Order dated 13.7.1992 of the Central Administrative Tribunal, Guahati in O.A. No. 33/91.
Ms. K. Amareswari, B.P. Sarathy and C.V. Subba Rao for the Appellants.
P.K. Goswami, Kailash Vasdev, Ms. Lira Goswami and Ms. Alpana Poddar for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
Heard counsel for the parties.
Leave granted.
Respondent is a Garden Curator in the Office of the Scientist SE, Botanical Survey of India, Eastern Circle, Shillong.
By order dated January 29, 1991 he was transferred from Shillong to Pauri (Uttar Pradesh) by the Senior Administrative Officer, office of the Director, Botanical Survey of India, (Ministry of Environment and Forests, Government of India).
As many as 19 persons were transferred under the said order including the respondent.
The respondent has been working in Shillong since the year 1979.
The respondent approached the Gauhati Bench of the Central Administrative Tribunal (Original Application No. 33 of 1991) questioning the order of his transfer.
He submitted that his wife is also employed at Shillong in and off ice of the Central Government, that his children are studying at Shillong and further that he himself had suffered back bone fracture injuries some time ago.
He submitted that the guidelines contained in Government of India O.M. dated 3.4.1986 have not been kept in mind while ordering his transfer.
tie complained that some other officials who have been serving at Shillong for a longer period, have been allowed to continue at Shillong.
He attributed 'mischief ' to his Controller Officer, Shri B.M. Wadhwa (third respondent in the O.M.).
In the counter affidavit filed by the respondents, they submitted that the transfer was ordered on administrative grounds and is unexceptionable.
The learned Single Member of the Central Administrative Tribunal quashed the order of transfer on the following reasoning: the decisions of the Courts establish that the power of transfer is not an unfettered one but is circumscribed by various circulars/guidelines contained in the administrative instructions issued 430 by the Government.
An order of transfer can be interdicted if it is discriminatory.
The said principles are applicable to the case of the respondent.
Further "in the matter of considering transfer of an individual officer, the Office Memorandum dated 3.4.1986, educational dislocation of the children and health ground, if all present, deserve special consideration not to pass the order." Having said so the learned Member recorded the following finding: "In view of the above facts and circumstances and findings it is held unhesitatingly that the transfer order No. BSI.
80/5/80 Estt.
dated 29.1.1991 in respect of applicant S.L.Abbas was malafide and liable to be quashed.
" The Union of India has preferred this appeal.
An order of transfer is an incident of Government Service.
Fundamental Rule 11 says that "the whole time of a Government servant is at the disposal of the Government which pays him and he may be employed in any manner required by proper authority".
Fundemental Rule 15 says that "the President may transfer a government servant from one post to another".
That the respondent is liable to transfer anywhere in India is not in dispute.
It is not the case of the respondent that order of his transfer is vitiated by mala fides on the part of the authority making the order, though the Tribunal does say so merely because certain guidelines issued by the Central Government are not followed, with which finding we shall deal later.
The respondent attributed"mischief"to his immediate superior who had nothing to do with his transfer.
All he says is that he should not be transferred because his wife is working at shillong, his children are studying there and also because his health had suffered a set back some time ago.
He relies upon certain executive instructions issued by the Government in that behalf.
Those instructions are in the nature of guidelines.
They do not have statutory force.
Who should be transferred where, is a matter for the appropriate authority to decide.
Unless the order of transfer is vitiated by malafides or is made in violation of any statutory provisions, the Court cannot interfere with it.
While ordering the transfer, there is no doubt, the authority must keep in mind the guidelines issued by the Government on the subject.
Similarly if a person makes any representation with respect to his transfer, the appropriate authority must consider the same having regard to the exigencies of administration.
The guidelines say that as far as possible, husband and wife must be posted at the same place.
The said guideline however does not confer upon the government employee a legally enforceable right.
The jurisdication of the Central Administrative Tribunal is akin to the jurisdiction of the High Court under Article 226 of the constitution of India in service matters.
This is evident from a persual of Article 323 A of the constitution.
The constraints and norms which the High Court observes while exercising the 431 said jurisdiction apply equally to the Tribunal created under Article 323 A. (We find it all the more surprising that the learned Single Member who passed the impugned order is a former Judge of the High Court and is thus aware of the norms and constraints of the writ jurisdiction.) The Administrative Tribunal is not an Appellate Authority sitting in judgment over the orders of transfer.
It cannot substitute its own judgment for that of the authority competent to transfer.
In this case the Tribunal has clearly exceeded its jurisdiction in interfering with the order of transfer.
The order of the Tribunal reads as if it were sitting in appeal over the order of transfer made by the Senior Administrative Officer (competent authority).
Shri Goswami, learned counsel for the respondent relies upon the decision of this Court in Bank of India vs Jagjit Singh Mehta [1992] 1 S.C.C.306 rendered by a Bench of which one of us (J.S. VermaJ.) was a member.
On a perusal of the judgment, we do not think it supports the respondent in any manner.
It is observed therein: "There can be no doubt that ordinarily and as far as practicable the husband and wife who are both employed should be posted at the same station even if their employers be different.
The desirability of such a course is obvious.
However, this does not mean that their place of posting should invariably be one of their choice, even though their preference may be taken into account while making the decision in accordance with the administrative needs.
In the case of all India services, the hardship resulting from the two being posted at different stations may be unavoidable at times particularly when they belong to different services and one of them cannot be transferred to the place of the other 's posting.
While choosing the career and a particular service, the couple have to bear in mind this factor and be prepared to face such a hardship if the administrative needs and transfer policy do not permit the posting of both at one place without sacrifice of the requirements of the administration and needs of other employees.
In such a case the couple have to make their choice at the threshold between career prospects and family life.
After giving preference to the career prospects by accepting such a promotion or any appointment in an all India service with the incident of transfer to any place in India, subordinating the need of the couple living together at one station, 'they cannot as of right claim to be relieved of the ordinary incidents of all India service and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places. . . . . . . .
No doubt 432 the guidelines requires the two spouses to he posted at one pi" as far as practicable, but that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible.
The only thing required is that the departmental authorities should consider this aspect along with the exigencies of administration and enable the two spouses to live together at one station if it is possible without any detriment to the administrative needs and the claim of other employees." (emphasis added) The said observations in fact tend to negative the respondent 's contentions instead of supporting them.
The judgment also does not support the Respondents ' contention that if such an order is questioned in a Court or the Tribunal, the authority is obliged to justify the transfer by adducing the reasons therefor.
It does not also say that the Court or the Tribunal can quash the order of transfer, if any of the administrative instructions/guidelines are not followed, much less can it be charactrised as malafide for that reason.
To reiterate, the order of transfer can be questioned in a court or Tribunal only where it is passed malafide or where it is made in violation of the statutory provisions.
For the above reasons, the appeal is allowed.
The judgment under appeal is set aside.
There shall be no order as to costs.
N.P.V. Appeal Allowed.
| The respondent, a Central Government employee, who was transferred from one place to another, challenged the order of transfer on the grounds that: his wife was also employed at the same place in a Central Government office; his children were also studying there; he himself had suffered backbone fracture injuries some time ago; the guidelines contained in Government of India O.M. dated 3.4.1986 had not been kept in mind while ordering his transfer; some other officials, who had been serving at the same place for a longer period than the respondent had been allowed to continue and his transfer was due to the mischief of his Controlling Officer.
In the counter affidavit filed by the appellants, it was submitted that the transfer was ordered on administrative grounds and was unexceptionable.
, A Single Member of the Central Administrative Tribunal quashed the order of transfer on the ground that the power of transfer was not an unfettered one, but was circumscribed by various circulars/ guidelines contained in the administrative instructions issued by the Government and an order of transfer could be interdicted if it was discriminatory, that in the matter of considering transfer of an individual officer, the Office Memorandum dated 3.4.1986, educational dislocation of the children and health ground,if present deserved special consideration and that in view of the facts and circumstances of the case the transfer order in question in respect of the respondent was mala fide.
428 Allowing the appeal, preferred by the Union of India and others, this Court, HELD: 1.1 An order of transfer is an incidence of Government servie.
Who should be transferred where is a matter for the appropriate authority to decide.
Unless the order of transfer is vitiated by malafides or is made in violation of statutory provisions, the Court cannot interfere with it.
There is no doubt that, while ordering the transfer the authority must keep in mind the guidelines issued by the Government on the subject.
Similarly, if a person makes any representation with respect to his transfer, the appropriate authority must consider the same having regard to the exigencies of administration.
The guidelines say that as far as possible, the husband and the wife must be posted at the same place.
The said guideline, however, does not confer upon the government employee a legally enforceable right.
Executive instructions issued by the Government are in the nature of guidelines.
They do not have statutory force.
[430 C E] 1.2.
There is no dispute that the respondent is liable to transfer anywhere in India.
It is not the case of the respondent that the order of his transfer was vitiated by mala fides on the part of the authority making the order, though the Tribunal says so, merely because certain guidelines issued by the Central Government were not followed.
The immediate superior of unit, against whom mischief had been attributed by the respondent, has nothing to do with his transfer.
[430 F] 2.1.
The jurisdiction of the Central Administrative Tribunal is akin to the jurisdiction of the High Court under Article 226 of the Constitution of India in service matters, as is evident from Article 323 A of the Constitution.
The constraints and norms which the High Court observes while exercising the said jurisdiction apply equally to the Tribunal created under Article 323A.
The Administrative Tribunal is not an Appellate Authority sitting in judgment over the order; of transfer.
It cannot substitute its own judgment for that of the authority competent to transfer.
[430 H,431 A] 2.2.
In the instant case, the Tribunal has dearly exceeded its jurisdiction in interfering with the order of transfer.
The order of the Tribunal reads as if it were sifting in appeal over the order of transfer made by the Senior Administrative Officer (competent authority).
[431 B] Bank of India vs Jagjit Singh Mehta, ; , explained.
|
6 etc.
Civil Appeal No. 1527 from the Judgment and Order dated 7.8.1984 of the Andhra Pradesh High Court in Writ petition No. 8173 of 1984.
A.K. Ganguly.
M.B. Shetye, A. Subha Rao, B, Kanta Rao, T.V.S.N. Chari, Ms. Bharathi Reddy and Ms. Promila for the appearing parties.
as amended by Act 24 of 1994, providing for imposition of entertainments tax it) respect of entertainments held in cinema theatres located in the State of Andhra Pradesh.
The Act has been enacted to provide for the levy of taxes on amusements and other attainments.
Prior to January 1. 1984, Section 4 of the Act provided for levy of entertainment tax at a rate fixed on the basis of percentage of the payment made by a person for admission to any entertainment.
In addition, there was a provision in Section 4 A for levy of a fixed amount, by way of "show tax", for each show.
By Act 59 of 1976, Section 4 C was introduced in the Act and Section 5 of the Act was substituted.
under Section 4 C, it was provided that in respect of entertain 623 ments held within tile jurisdiction of any local authority whose population did not exceed 25,000, a tax for every entertainment show would be levied, not on the basis of each payment for admission, but at a certain percentage of the gross collection capacity per show.
The percentages for such levy were fixed according to the population of the local authority within the jurisdiction of which the entertainments were held. 'Gross collection capacity per show was defined in the Explanation to Section 4 C to mean the notional aggregate of all payments for admission the proprietor would realise per show, if all the seats or accommodation as determined by the licensing authority under the Andhra Pradesh Cinemas (Regulation) Act, 1966 in respect of the place of entertainment are occupied, and calculated at the maximum rate of payments for admission as determined by the said licensing authority.
The levy of tax in the manner as prescribed under Section 4 C could be dispensed with if the proprietor of the theatre opted for the composition scheme contemplated by Section 5 whereunder it was open to a proprietor to enter into an agreement with the prescribed authority to compound the tax payable under Section 4 C for a fixed sum which was to be arrived at in accordance with the formula prescribed under Section 5.
According to this formula, the tax was payable on the basis of a percentage of the gross collection capacity per show for the fixed rounds of shows for the whole year and the number of shows was fixed on the basis of the number of shows exhibited in the previous year.
This arrangement continued till December 31, 1983, whereafter the provisions of Sections 4.4 A and 5 were amended by Act No. 24 of 1984.
The provisions of Sections 4,4 A and 5, as amended by Act 24 of 1984, were as follows "Section 4.
(1) There shall be levied and paid to the State Government a tax on the gross collection capacity on every show (hereinafter referred to as the entertainments tax) in respect of entertainments held in the theatres specified in column (2) of the table below and located in the located areas specified in the corresponding entry in column (1) of the said table, calculated at the rates specified in the corresponding entry in column (3) thereof.
THE TABLE __________________________________________________________ Local Area.
Theatre Rate of tax on the gross collection ca pacity per show _________________________________________________________ (1) (2) (3) _________________________________________________________ 624 (a) Municipal corporations (i)Air conditioned 29 per cent and the Secunderabad Cantonment area and (ii) Air cooled 28 per cent the contiguous area (iii)Ordinary 25 per cent thereof.
(other than air conditioned and air cooled) (b) Selection grade muni (i) Air conditioned 28 per cent cipalities and contiguors area of (ii)Air cooled 27 per cent two Kilometres (iii)ordinary (other 24 per cent thereof.
than air conditioned 27 per cent and air cooled) (c) Special tirade munici (i) Air conditioned 27 per cent palities and contiguous (ii) Air cooled 26 per cent area of two Kilometres (iii) Ordinary 23 per cent thereof.
(other than air conditioned and air cooled) (d) First grade munici palities and conti. (i) Air conditioned 26 per cent guous area of two (ii) Air cooled 25 per cent Kilometres thereof.
(iii) Ordinary (other 22 per cent than air conditioned and air cooled) (e) Second grade munici All categories 21 per cent palities and contiguous area of two Kilometres thereof.
(f) Third grade municipalities, All categories 20 per cent and contiguous area of two Kilometres thereof.
(g) Gram panchayats, selec (i) Permanent and 19 per cent tion grade gram panchayats, semi permanent 20 per cent townships and any other (ii) Touring and local areas.
temporary Explanation.
For the purpose of this section and section 5, the term 'gross collection capacity per show ' shall mean the notional aggregate of all payments for, admission, the proprietor would realise per show if all the seats or accommodation as determined by 625 the licensing authority under the Andhra Pradesh Cinemas (Regulation) Act, 1955, in respect of the place of entertainment are occupied and calculated at the maximum rate of payments for admission as determined by the said licensing authority.
The amount of tax under sub section (1) shall be payable by the proprietor on the actual number of shows held by him in a week." "Section 4 A. (1) In addition to the tax under Section 4, there shall be levied and paid to the State Government in the case of entertain ments held in the local areas specified in column (1) of the Table below, a tax calculated at the rates specified in the corresponding entry in column (2) thereof; THE TABLE Local Areas Rate of tax for every show (a) Municipal Corporation and the Six rupees Secunderabad cantonment area and contiguous area of two Kilometers thereof.
(b) Selection grade, Special grade and the Six rupees first grade municipalities and contiguous area of two kilometers thereof.
(c) Second grade and Third grade Four rupees municipalities and contiguous area of two kilometers thereof.
(d) Gram Panchayats, selection grade Two rupees.
gram panchayats, townships and any other local areas.
(2) The tax leviable under sub section (1) shall be recoverable from the proprietor.
(3) The provisions of this Act other than Sections 4, 6 and 13 shall, so far as may be, apply in relation to the tax payable under subsection (1) as they apply in relation to th e tax payable under Section 4 " 626 "Section 5.
( 1) In lieu of the tax payable under section 4.
in the case of the entertainments held in the theatres specified in column (2) of the table below and located in the local areas specified in the corresponding entry in column (1) of the said table, the proprietor thereof may, at his option and subject to such conditions as may be prescribed, pay the amount of tax to the State Government every week as specified in the corresponding entry in column (3) thereof : THE TABLE Local Area Theatre Amount of tax (1) (2) (3) (a) Municipal corpora (i) Air conditioned 24 per cent tions and the of the gross Secunderabad canton collection capacity ment area and the per show multi contiguous area of plied by 22 two kilometrers thereof.
(ii) Air cooled 23per cent of the gross collection capacity per show multiplied by 22.
(iii) Ordinary 20 per cent of the (other than air gross collection conditioned and capacity per show air cooled) multiplied by 22 (b)Selection grade muni (i) Air conditi 23 per cent of the cipalities and contiguous aned gross collection area of two kilometrers show multiplied by thereof.
(ii) Air cooled 22 per cent of the gross collec tion capacity per show multiplied by 22.
(iii) Ordinary 19 per cent of the (other than air gross collection conditioned and capacity per air cooled show multiplied by 22.
(c)Special grade munici (i) Air conditi 22 per cent of the 627 palities and contiguous oned gross show multi area of two kilo lied by 21.
metrers thereof.
(ii) Air cooled 21 per cent of the gross collection capacity per show multiplied by 21.
(iii) Ordinary 18 per cent of the (other than air gross collection conditioned and capacity per show air cooled) multiplied by 21.
(d)First grade municipali (i) Air conditi 21 per cent of ties and contiguous oned gross show area of two kilo multilied by 21.
metrers thereof.
(ii) Air cooled 20 per cent of the gross collection capacity per show multiplied by 21.
(iii) Ordinary 17 per cent of the (other than air gross collection conditioned and capacity per show air colled) multiplied by 21.
(e) Second grade muni All cate ores 16 per cent of the cipalities and conti gross collection guors area of two capacity per Kilometres there of show.
(f) Third grade muni All categores 15 per cent of the cipalities and gross Collection contiguous area of capacity per show two Kilometres multiplied by 17.
thereof.
(g) Gram panchayats, (i) Permanent 15 per cent of the selection grade gram and semi gross collection panchayats, townships permanent capacity per and any other show multi local areas.
plied by 14.
(ii) Touring 14 per cent of the and temporary gross collection capacity per show multiplied by 7. 628 Explanation.
For the purposes of computing the gross collection capacity per show in respect of any place of entertainment, the maximum seating capacity or accommodation and the maximum rate of payment for admission determined by the licensing authority under the Andhra Pradesh Cinemas (Regulation) Act, 1955, as on the date when the proprietor is permitted to pay tax under this section shall be taken into account.
(2)The amount of tax under sub section (1) shall be payable by the proprietor irrespective of the actual number of shows held by him in a week.
(3)Any proprietor who opts to pay tax under this section shall apply in the prescribed form to the prescribed authority to be permitted to pay the tax under this section.
(4)On being so permitted, such proprietor shall pay the tax for every week as specified in sub section (1).
(5)The option permitted under this section shall continue to be in force till the end of the financial year in which such option is permitted.
(6)It shall be lawful for the prescribed authority to vary the amount of tax payable by the proprietor under sub section (1) during the period of option permitted under this section any time, if there is an increase in the gross collection capacity per show in respect of the place of entertainment by virtue of an upward revision of the rate of payment for admission therein or of the seating capacity or accommodation thereof or where the local area in respect of which permission is granted is upgraded or if it is found for any reason that the amount of tax has been fixed lower than the correct amount.
(7)Every proprietor who has been permitted to pay the tax under this section shall intimate to the prescribed authority forthwith such increase in the gross collection capacity per show in respect of the place of entertainment, failing which it shall be open to the pre scribed authority by giving fifteen days notice to cancel the option so permitted.
629 (8)Where a proprietor fails to pay the amount of tax on the due date, such amount of tax shall be recoverable with interest calculated at such rate as may be prescribed.
(9) The amount of tax due under this section shall be rounded of to the nearest rupee and for this purpose, where such amount contains part of a rupee consisting of paise, then if such part if fifty paise or more it shall be increased to one rupee and if such part is less then fifty paise, it shall be ignored.
" As a result of the said amendments, the earlier mode of levy of tax on the basis of the percentage of each payment for admission prescribed in Section 4 was replaced by a mode similar to that provided in Section 4 C, i.e., on the basis as prescribed percentage of the gross collection capacity per show.
In the table appended below sub section (1) of section 4 rates were fixed on the basis of a percentage of the gross collection capacity per show varying with the category of the local area in which the theatre was situated as well as on the nature of the theatre, viz. air conditioned and air cooled or ordinary (other than air conditioned and air cooled) or permanent, semi permanent including touring and temporary theatres.
In the Explanation to sub section (1) of section 4, the term gross collection capacity per show ' was defined in the same terms as in the Explanation to Section 4 C, to mean the full collection per show if all the seats in the theatre are occupied.
In sub section (2) of section 4, it was specifically provided that the amount of tax under sub section (1) shall be payable by the proprietor on the actual number of shows held by him in a week.
Section 5 gave an option to the proprietor to pay a weekly consolidated amount irrespective of the number of shows actually held by him and the said amount was fixed on the basis of the prescribed number of shows per week.
The number of shows varied with the nature of the theatre as well as the category of the local area in which it was situate.
In section 4 A, a fixed amount was leviable by way of show tax on each show.
A number of writ petitions were filed in the High Court to challenge the validity of sections 4, 4 A and 5 of the Act, as amended by Act 24 of 1984.
The said writ petitions were decided by a division bench of the High Court by judgment dated July 19, 1984.
The constitutional validity of the provisions was challenged on three grounds, viz. : (i) the levy of entertainment tax on the basis of gross collection capacity without reference to the actual amount collected or the actual number of tickets sold or the number of persons admitted was ultra vires the legislative power 630 conferred on the State Legislature under entry 62 of List II of the Seventh Schedule; (ii) section 4 was hit by Article 14 of the Constitution inasmuch as by treating unequals as equals, it gave rise to discrirmination amongst different theatres situate within the same local area; and (iii) the levy of entertainment tax under section 4 being exproprietory amounts to an unreasonable restriction on the right guaranteed to the petitioners by Article 19 (1) of the Constitution, and was not saved by clause (6) of Article 19.
Relying upon the decisions of this Court in Western India Theatres vs Contonment Board, 1959 Supp. 2 SCR 63, Y. V. Srinivasamurthy vs State of Mysore, AIR 1959 SC 894, and State of Bombay vs R.M.D. Chamarbaugwala, ; , the High Court has held that the State Legislature was competent to levy the impugned tax under entry 62 of list 11 of the Seventh Schedule to the Constitution since the said head of legislative power empowers imposition of tax upon entertainments and amusements and not on the persons entertained or the persons provided amusement and it has to be paid by the persons who provides the entertainment or amusement.
The High Court further held that so long as the tax levied retains the character of entertainment tax, the Legislature is competent to adopt such basis or such measure, or such method of levy, as it thinks appropriate.
The High Court rejected the contention that the only method in which Legislature can levy the entertainment tax is that prescribed in the old Section 4, i.e., on the basis of the payment of admission.
The challenge on the around of Article 14 was negatived by the High Court on the view that wide discretion is allowed to the Legislature in the matter of classification and in the matter of selection of persons to be taxed and that the two fold classification made by section 4 could not be said to be either discriminatory or arbitrary much less could it be said that it metes out hostile discrimination to certain theatres.
The High Court also observed that since it was not possible to predicate absolute equality between two theatres, and also because the situation and economics of each theatre are different, it is impossible to expect, or call upon the Legislature to evolve such classification which would meet every conceivable case and which would not result in prejudice even to a single theatre.
It was observed that different rates have been prescribed for different local areas and for different types of theatres, i.e. ordinary, air cooled and air conditioned and the Legislature took note of the fact that rate of occupancy in villages will be lower compared to towns, and similarly, in bigger towns there will be greater rate of occupancy, and finally in cities, the rate of occupancy would be even higher and it could not be said that this expectation was unrealistic, or seunreasonable as to call for interference by the court.
As regards the challenge based on Article 19 (1) (g), the High Court has taken note of the letter dated July 26, 1983 addressed by the Andhra Pradesh Film Chamber of Commerce, to the Hon 'ble Chief Minister of Andhra Pradesh wherein the exhibitors not only asked 631 tax which suggestion was accepted by the Government with certain modifications varying from 2 to 4% over the rates suggested by the Association.
The High Court observed that the rates of tax that were prescribed under section 4 based on an average expected occupancy rate of less than 50 per cent to 66 per cent, could not be said to be either unreasonable or exproprietory.
The High Court, however, held that the agreements which had already been entered into by the proprietors of cinema theatres under section 5, as it stood prior to January 1, 1984, would be effective and valid for the period for which they were entered into.
The High Court has also observed that merely because the form for exercise of option, as contemplated under sub section (3) of section 5, had not been prescribed, it could not be said that section 5 had not come into operation or was unenforceable and that it was open for the proprietor to send an intimation on an ordinary paper and the authority would be bound to treat it as proper intimation.
The High Court rejected the contention that section 5 was discriminatory inasmuch as it did not provide for reduction of the composition amount in case of reduction of seating capacity of a theatre, during the period of one year for which the option was exercised although under sub section (6) of section 5 the provision had been made for enhancement of the composition amount in case the seating capacity/accommodation or the rates of payment for admission were enhanced.
The High Court observed that section 5 was only optional and no one was compelled to be governed by it or to opt for the composition scheme contained in section 5 and that according to the said scheme the option once exercised was in force till the end of the financial year in which such option was permitted and that if a person opts to be governed by section 5 he does so with his eyes open and he must be deemed to have accepted all the conditions and features of the scheme and it was not open to him to say that he would avail of the beneficial provisions of the scheme, while rejecting those features which are not advantageous to him.
C.A.Nos.
4642 47/84,193 221/85,222/85, 223/85,224 28/85. 229, 232 34/ 85, 1468/85 and 1469 70/85 have been filed against the said decision of the High Court dated July 19, 1984.
C.A. Nos. 5722/85, 1527/86, and SLP (C) No. 3127/ 85 have been filed against the decision of the High Court dated August 7, 1984 which is based on the earlier decision dated July 19, 1984 and similarly C.A. Nos.
1858/89 and 4798/89 are directed against the decisions dated February 12, 1986 and March 30, 1998 based on the earlier decision dated July 19, 1984.
During the pendency of these appeals, the Act was amended by A.P. Act 23 of 1988 and A.P. Act 16 of 1991 whereby the Tables below Sections 4,4 A and 5 were substituted and sub Section (6 A) was inserted in Section 5 whereby 632 provision was made for reduction of the amount of tax payable by the proprietor during the financial year if there is a reduction in the seating capacity or in the accommodation of the place of entertainment at any time during the period of six months commencing from the 1st day of April and ending with 30th day of September or from the 1st day of October and ending with 31st day of March of any financial year.
The learned counsel appearing for the appellants have assailed the constitutional validity of sections 4 and 5 on two grounds, viz. : (1) that the impugned provisions do not fall within the ambit of the legislative power conferred on the State Legislature under Entry 62 of List II of the Seventh Schedule of the Constitution , and (2) that the impugned provisions were violative of the right to equality guaranteed under Article 14 of the Constitution inasmuch as they treated unequals as equal by imposing tax at a uniform rate on a particular class of cinema theatres irrespective of their location and occupancy.
While considering the question as to legislative competence of the State Legislature, it is necessary to bear in mind that the impugned provisions provide fir imposition of a tax and a tax has two distinct elements, viz., subject of the tax and the measure of the tax.
The subject of the tax is the person, thing or activity on which the tax is imposed, and the measure of the tax is the standard by which the amount of tax is measured.
The competence of the Legislature to enact a law imposing a tax under a particular head of the legislative list has to be examined in the context of the subject of the tax.
If the subject of the tax falls within the ambit of the legislative power conferred by the head of legislative entry, it would be within the competence of the Legislature to impose such a tax.
It is, therefore, necessary to examine the scope of the legislative entry, viz., Entry 62 of List II, which is invoked in support of the competence of the State Legislature to impose the tax and ascertain whether the subject of the tax imposed by the impugned provisions falls within the ambit of the said entry.
Entry 62 of List 11 is as follows "62.
Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling The said entry is in pari materia with entry 50 of the Provincial List in the Seventh Schedule to the Government of India Act, 1935.
Construing the said entry, this Court, in the Western India Theatres vs Cantonment Board (supra), has rejected the contention that the entry contemplates a law imposing taxes on persons who receive or enjoy the luxuries or the entertainments or the amusements 633 and has held "The entry contemplates luxuries, entertainments and amusements as objects on which the tax is to be imposed. . .
The entry, a,,, we have said, contemplates a law with respect to the matters regarded as objects and law which imposes tax on the act of entertaining is within the entry whether it falls on the giver or the receiver of that entertainment." (p.69) In that case, the Cantonment Board had imposed entertainment tax of Rs. 10 per show on the cinema houses of the appellant in the said appeal and Rs. 5 per show on others.
Upholding the said imposition this Court has held "It is a tax imposed on every show, that is to say, on every instance of the exercise of a particular trade, calling or employment.
If there is no show, there is no tax. .
The impugned tax is a tax on the entertainment resulting in a show".
(p. 69 70) Similarly, in Y. V. Srinivasamurthy vs State of Mysore (supra), upholding the provisions of the Mysore Cinematograph Shows Act, 1951 enacted under the Constitution, which authorised levy of tax on conematograph shows at rates prescribed in a rising scale according to the seating accommodation and the cities where the cinematograph show was held, this Court following the decision in Western India Theatres case (supra) held that the said Act was validly enacted in exercise of the legislative power conferred by entry 62 of List II.
In the instant case, we find that prior to the enactment of Act 24 of 1984, Section 4 provided for levy of entertainment tax on the basis of each payment for admission to the cinema theatre and under Section 4 C, in respect of entertainments held within the jurisdiction of a local authority whose population did not exceed 25,000 the tax was levied on the basis of the prescribed percentage of the gross collection capacity per show.
In other words, there were two modes for levy of the tax, one on the basis of the actual number of persons admitted to each show and the other on the basis of the percentage of the gross collection capacity per show.
As a result of the amendments introduced by Act 24 of 1984, the system for levy of tax on the basis of number of persons actually admitted to each show was dispensed with and the tax was to be levied on the basis of the percentage of the gross collection capacity per show and different percentages were prescribed depending on the type of the theatre and the nature of the local area where it was situated.
Under section 5, an option was given to pay a tax on the basis of the 634 prescribed percentage fixed for a fixed number of shows in a week irrespective of the number of shows actually held.
It is not disputed that the tax as it was being levied prior to January 1, 1984, i.e, before the amendment of Section 4 by Act 24 of 1984, was a tax on entertainment falling within the ambit of entry 62 of List 11.
The question is whether the alteration in the said mode of levy of tax by Act 24 of 1984 has the effect of altering the nature of the tax in a way that it has ceased to be a tax on entertainments and falls beyond the field of legislative competence conferred on the State Legislature by Entry 62 of List 11.
In our view, the said question must be answered in the negative.
The fact that instead of tax being levied on the basis of the payment for admission made by the persons actually admitted in the theatre it is being levied on the basis of the gross collection capacity per show calculated on the basis of the notional aggregate of all the payments for admission which the proprietor would realise per show if all the seats or accommodation in respect of the place of entertainment are occupied and calculated at the maximum rate of payments for admission, would not, in our opinion, alter the nature of the tax or the subject matter of the tax which continues to be a tax on entertainment.
The mode of levy based on 'per payment for admission ' prescribed under Section 4(1) prior to amendment by Act 24 of 1984 necessitated enquiry into the number of shows held at the theatre and the number of persons admitted to a cinematheatre for each show and gave room for abuse both on the part of proprietor as well as other officers incharge of assessment and collection of tax.
The mode of levy or measure of the tax prescribed under section 4(1), and substituted by Act 24 of 1984, is a more convenient mode of levy of the tax inasmuch as it dispenses with the need to verify or enquire into the number of persons admitted to each show and to verify the correctness or otherwise of the return submitted by the proprietor containing the number of persons admitted to each show and the amount of tax collected.
Prior to the enactment of Act 24 of 1984, tax was leviable on the basis of either of the two modes under Section 4(1) and4 C.
On an examination of the rates prescribed under both the modes, the High Court found that under the system of consolidated levy prescribed under Section 4 C the proprietor could break even if the average rate of occupancy was 40%.
As regards the rates prescribed under Section 4 and 5 as amended by Act 24 of 1984, the High Court has observed that the said rates are based on an average expected occupancy rate of less than 50% or 66% depending upon the area in which the theatre is situated.
This would mean that the entertainment tax that would be collected over and above the average occupancy rate would constitute the profit of the proprietor.
In the circumstances, it cannot be said that the adoption of the system of consolidated levy in Section 4(1) as amended by Act 24 of 1984 alters the nature of tax and it has ceased to be a tax on entertainments.
635 It has been urged that since both the modes of levy of tax were prevalent prior to the enactment of Act 24 of 1984, an option should have been given to the proprietor of a cinema theatre to choose between either of the two modes and that under the impugned provisions the choice is confined to two modes of assessment under the same system of consolidated levy based on the gross collection capacity per show, one on the basis on the gross collection capacity per show, under Section 4(1) and other on the basis of gross collection capacity per show for a prescribed number of shows per week under section 5.
We find no substance in this contention.
Once it is held that tax on entertainment could be levied by either of the two modes, viz., per payment of admission or gross collection capacity per show, it is for the legislature to decide the particular mode or modes of levy to be adopted and whether a choice should be available to the proprietor of the cinema theatre in this regard.
The legislature does not transgress the limits of its legislative power conferred on it under Entry 02 of List 11 if it decides that consolidated levy on the basis of gross collection capacity per show shall be the only mode for levy of tax on entertainments.
We are, therefore, unable to accept the contention urged on behalf of the appellants that the impugned provisions contained in Section 4 and 5 as amended by Act 24 of 1984 are ultra vires the legislative power conferred on the State Legislature under Entry 62 of List II.
The challenge to the impugned provisions on the basis of Article 14 is grounded on the principle that discrimination would result if unequals are treated equally are reliance is placed on the decision of this Court in K. T Moopil Nair vs The State of Kerala & Anr, ; It has been urged that under section 4, as substituted by Act 24 of 1984, a uniform rate has been prescribed for cinema theatres of a particular class situate in different parts of the same local area although the average rate of occupancy in the cinema theatres located in different parts of the same local area is not the same and a cinema theatre which is located in the central part of the local area would have better rate of occupancy as compared to a theatre located in a remote part and further that the occupancy in the theatre depends on various of the factors which have not been taken into account.
We find it difficult to accept the contention.
Article 14 enjoins the State not to deny to any person equality before the law or the equal protection of the laws.
The phrase "equality before the law" contains the declaration of equality of the civil rights of all persons within the territories of India.
It is a basic principle of republicanism.
The phrase "equal protection of laws" is adopted from the Fourteenth Amendment to U.S. Constitution.
The right 636 conferred by Article 14 postulates that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed.
Since the State, in exercise of its governmental power, has, of necessity, to make laws operating differently on different groups of persons within its territory to attain particular ends in giving effect to its policies, it is recognised that the State must possess the power of distinguishing and classifying persons or things to be subjected to such laws.
It is, however, required that the classification must satisfy two conditions namely, (i) it is founded on an intelligible differentia which distinguishes those that are grouped together from others; and (ii) the differentia must have a rational relation to the object sought to be achieved by the Act.
It is not the requirement that the classification should be scientifically perfect or logically complete.
Classification would be justified if it is not palpably arbitrary.
[See: Re Special Courts Bill, at pp.
534 5361.
It there is equality and uniformity within each group, the law will not be condemned as discriminative, thou oh due to some fortuitous circumstance arising out of a peculiar situation some included in a class get and advantage over others, so long as they are not singled out for special treatment.
[See: Khandige Sham Bhat vs Agricultural Income Tax Officer, ; at p. 8 171 Since in the present case we are dealing with a taxation measure it is necessary to point out that in the field of taxation the decisions of this Court have permitted the legislature to exercise an extremely wide direcretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes.
[See: East India Tobacco Co. vs State of A.P., 19631 1 SCR 404, at p. 411, P.M. Ashwathanarayanan Shetty vs State of karnataka, 1988, Supp.
3 SCR 155, at p. 188, Federation of Hotel & Restaurant Association of India vs Union of India, , at p. 949, Kerala Hotel & Restaurant Association vs State of Kerala, ; , at p. 530, and Gannon Dunkerley and Co. vs State of Rajasthan, , at p. 3971.
Reference, in this context, may also be made to the decision of the U.S. Supreme Court in San Antonio Independent School District vs Bodrigues, 41 at p. 41, wherein Justice Stewart, speaking for the majority has observed "No scheme of taxation, whether the tax is imposed on property, income or purchases of goods and services, has yet been devised which is free of all discriminatory impact.
In such a complex arena in which no perfect alternatives exist, the court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protection Clause.
" 637 Just a difference in treatment of persons similarly situate leads of discrimination, so also discrimination can arise if persons who are unequals, i.e. differently placed, are treated similarly.
In such a case failure on the part of the legislature to classify the persons who are dissimilar in separate categories and applying the same law, irrespective of the differences, brings about the same consequence as in a case where the law makes a distinction between persons who are similarly placed.
A law providing for equal treatment of unequal objects, transactions or persons would be condemned as discriminatory if there is absence of rational relation to the object intended to be achieved by the law.
In K T Moopil Nair vs State of Kerala (supra), this Court was dealing with a law providing for imposition of uniform land tax at a flat rate without having regard to the quality of the land or its productive capacity.
The law was held to be violative of Article 14 of the constitution of the ground that lack of classification had created inequality.
The said decision in K. T Moopil Nair 's case (supra) has been explained by this Court is Jalan Trading Co. (Pvt.) Ltd. vs Mill Mazdoor Union, ; , in the context of challenge to the validity of section 10 of the providing for payment of a minimum bonus of 4% by all industrial establishments irrespective of the fact whether they were making profit.
This Court held that the judgment in Moopil Nair 's case (supra) has not enunciated any broad proposition that when persons or objects which are unequals are treated in the same manner and are subjected to the same burden or liability discrimination inevitably results.
It was observed : "It was not said by the Court in that case that imposition of uniform liability upon persons, objects or transactions which are unequal must of necessity lead to discrimination.
Ordinarily it may be predicated of unproductive agricultural land that it is incapable of being put to profitable agricultural use at any time.
But that cannot be so predicated of an industrial establishment which has suffered loss in the accounting year, or even over several years successively.
Such an establishment may suffer loss in one year and make profit in another. " (p.35) It was further observed "Equal treatment of unequal objects, transactions or persons is not liable to be struck down as discriminatory unless there is simulta 638 neously absence of a rational relation to the object intended to be achieved by the law." (p.36) The limitations of the application of the principle that discrimination would result if unequals are treated as equal, in the field of taxation, have been pointed out by this Court in Twyford Tea Co. Ltd. & Anr.
vs The State of Kerala & Anr., [1970] 3SCR 383, wherein tax at a uniform rate was imposed on plantations.
Hidayatullah, CJ, speaking for the majority, while upholding the tax, has observed "It may also be conceded that the uniform tax falls more heavily on some plantations than on others because the profits ,ire widely discrepant.
But does that involve a discrimination ? If the answer be in the affirmative hardly any tax direct or indirect would escape the same ensure for taxes touch purses of different lengths and the very uniformity of the tax and its equal treatment would become its undoing.
The rich and the poor pay the same taxes irrespective of their incomes in many instances such as the sales tax and the profession tax etc." (pp.
389 390) It was further observed : "The burden is on a person complaining of discrimination.
The burden is proving not possible 'inequality ' but hostile 'unequal ' treatment.
This is more so when uniform taxes are levied.
It is not proved to us how the different plantations can be said to be hostilely or unequally treated.
A uniform wheel tax on cars does not take into account the value of the car, the mileage it runs, or in the case of taxis, the profits it makes and the miles per gallon it delivers.
An ambassador taxi and a fiat tasi give different out turns in terms of money and mileage.
Cinemas pay the same show fee.
We do not take a doctrinaire view of equality." (p.393 94) In the instant case, we find that the legislature has prescribed different rates of tax by classifying theatres into different classes, namely, air conditioned, air cooled, ordinary (other than air conditioned and air cooled), permanent and semipermanent and touring and temporary.
The theatres have further been categorized on the basis of the type of the local area in which they are situate.
It cannot, therefore, be said that there has been no attempt on the part of the legislature to classify the cinema theatres taking into consideration the differentiating circum 639 stances for the purpose of imposition of tax.
The grievance of the appellants is that the classification is not perfect.
What they want is that there should have been further classification amongst the theatres falling in the same class on the basis of the location of the theatre is each local area.
We do not think that such a contention is well founded.
In relation to cinema theatres it can be said that the attendance in the various cinema theatres within a local area would not be uniform and would depend on factors which may very from time to time.
But this does not mean that cinema theatres in a particular category of local area will always be at a disadvantage so as to be prejudicely affected by a uniform rate as compared to cinema theatres having a better location in the local area.
It is, therefore, not possible to accept the contention that the impugned provisions are violative of right to equality guaranteed under Article 14 of the Constitution on the basis that unequals are being treated equally.
Another contention that has been urged on behalf of the appellants is that while provision was made under sub section (6) of section 5 for enhancement of the amount of tax in the event of increase in the amount of gross collection capacity, there was no corresponding provision for reduction for the amount of tax in the event of reduction in the gross collection capacity.
The said provision for enhancement contained in sub section (6) of section 5 relates to the cases where the proprietor of a cinema theatre opts for payment of weekly consolidated amount.
Since the proprietor has the option to opt for the said scheme he cannot complain that the scheme suffers from inequality on account of absence of a corresponding provision for reduction of amount of tax.
In any event the said grievance has how been removed by the introduction of sub section (6 A) in section 5 by amendments, introduced in the Act by A.P. Act 23 of 1988 and A.P. Act 16 of 199 1.
In the result, we find no merit in these appeals and the special leave petition and they are accordingly dismissed.
The parties are, however, left to bear their own costs.
V.P.R. Appeals dismissed.
| Prior to January 1, 1984, the Andhra Pradesh Entertainment Tax Act, 1989, in Section 4, provided for levy of entertainment tax at a rate fixed on the has is of percentage of payment made by a person for admission to any entertainment.
In section 4 C, in respect of entertainments held within the jurisdiction (if any local authority where population did n(it exceed 25, 000.
tax was levied at a certain percentage of the gross collection capacity per show and the percentage for such levy were fixed according to the population of the local authority within the jurisdiction of which the entertainment held.
The Amending Act 24 of 1984, replaced the earlier mode of levy of tax prescribed in Section 4 and introduced a mode of levy of tax on the has is of a prescribed percentage of the gross collection capacity per show.
The rates 617 were fixed on the basis of a percentage of the gross collection capacity per show varying with the category of the local area in which the theatre was situated as well as on the nature of the theatre, viz. air conditioned air cooled or (other than air conditioned and air cooled)or permanent,semi permanent including touring and temporary the atres.
The proprietor was given an option to pay a weekly consolidated amount irrespective of the number of shows actually held by him and the said amount was fixed on the basis of the prescribed number of shows per week.
The number of show. .
varied with the nature of the theatre as well as the category of the local area in which it was situate.
A fixed amount was also leviable by way of show tax on each show.
Before the High Court, a number of writ petitions were filed challenging the validity of sections 4,4 A and 5 of the Andhra Pradesh Entertainments Tax Act, 1939, as amended by Act 24 of 1984, on the grounds that (i) the levy of entertainment tax on the basis of gross collection capacity without reference to the actual amount collected or the actual number of tickets sold or the number of persons admitted was ultra vires the legislative power conferred on the State Legislature under Entry 62 of List 11 of the Seventh Schedule of the Constitution; (ii) section 4 was hit by Article 14 of the Constitution, as it gave rise to discrimination amongst different theatres situate within the same local area; and that (iii) the levy of entertainment tax under section 4 being exproprietory amounted to an unreasonable restriction on the right guaranteed to the petitioners by Article 19(1) (g) of the Constitution and was not saved under Article 19(6).
Relying upon the decisions in Western India Theatres vs Cantonment Board. [1959] Supp. 2 SCR 63; Y.V. Srinivasamurthy vs State of Mysor.
AIR 1959 SC 894 and State of bombay vs R.M.D. Chamarbaugwala.
A. I. R. the High Court dismissing the writ petitions held that the State Legislature was competent to levy the tax under Entry 62 of List 11 of the Seventh Schedule; that as the tax levied retained the character of entertainment tax, the Legislature was competent to adopt such basis or such measure, or such method of levy; that wide discretion was allowed to the Legislature in the matter of classification and in the matter of selection of persons to be taxed and that the two fold classification made by section 4 was neither discriminatory nor arbitrary or it did not mete out hostile discrimination to certain theatres; that the rates of tax that were prescribed under section 4 based on an average expected occupancy rate of less than 50 per cent to 66 per cent, was neither unreasonable nor expropriatory; that section 5 was only optional and no) one was compelled to be governed by it or to opt for the composition scheme and if a person opted to be governed by section 5, he must be deemed 618 to have accepted all the conditions and features of the scheme.
During the pendency of these appeals Special leave petition in this court the Act of 1939 was amended by A.P. Act 23 of 1988 and A.I. Act 16 of 1991, whereby the Tables below sections 4, 4 A and 5 were substituted and subsection (6A) was inserted in section 5.
Before this Court the appellants and the petitioners reiterated two contentions raised before the High Court while assailing the constitutional validity of sections 4 and 5 of the Act, namely, (1) that the impugned provisions did not fall within the ambit of the legislavite power conferred on the St .Ate Legislature under Entry 62 of List 11 of the Seventh Schedule of the Constitution; (ii) that the impugned provisions were violative of Article 14 of the Constitution, as they provided for imposing tax at a uniform rate (in a particular class of Cinema theaters irrespective of their location and occupancy.
Dismissing the appeal and the Special Leave petition, this Court, HELD: 1.1.
While considering the question as to legislative competence of the State Legislature, it is necessary to bear in mind that the impugned provisions provide for imposition of a tax and a tax has two distinct elements viz., subject of the tax and the measure of the tax.
The subject of the tax is the person, think or activity on which the tax is imposed, and the measure of the tax is the standard by which the amount of tax is measured.
(632 1)) 1.2.
The competence of the Legislature to enact a law imposing a tax under a particular head of the legislative list has to be examined in the context of the subject of the tax.
It the subject of the tax falls within the ambit of the legislative power conferred by the head of legislative entry, it would be within the competence of the Legislature to impose such as tax.
(632 E) 1.3.
Prior to the enactment of Act 24 of 1984, there were two modes for levy of the tax, one on the basis of the actual number of persons admitted to each show and the other on the basis of the percentage of the grows collection capacity per show.
As a result of the amendments introduced by Act 24 of 1984, the system for levy of tax on the basis of number (of persons actually admitted to each show was dispensed with and the tax was to be levied on the basis of the percentage of the gross collection capacity per show and different percentages were prescribed depending on the type of the theatre and the 619 nature of the local area where it was situated.
(633 F H) 1.4.
The question whether the alteration in the said mode of levy of tax by Act 24 of 1984 has the effect of altering the nature of the tax in a way that it has ceased to he a tax on entertainments and falls beyond the field of legislative competence conferred (in the State Legislature by Entry 62 of List 11, must he answered in the negative. 'The fact that instead of tax being levied on the basis of the payment for admission made by the persons actually admitted in the theater it is being levied on the basis of the gross collection capacity per show calculated on the basis of the notional aggregate of all the payments fair admission which the proprietor would realise per show if all the seats or accommodation in respect of the place of entertainment are (occupied and calculated at the maximum rate of payments for admission, would not alter the nature of the tax or the subject matter of the tax which continues to he a tax on entertainment.
(634 B D) 1.5.
The mode of levy based on 'per payment for admission ' proscribed under Section 4(1) prior to amendment by Act 24 of 1984 necessitated enquiry into the number of shows held at the theatre and the number of persons admitted to a cinema theatre for each show and gave room for abuse both on the part of proprietor as well as other officers incharge of assessment and collection of tax.
The mode of levy or measure of the tax prescribed under section 4(1),as substituted by Act24 of 1984, is a more convenient mode of levy of the tax inasmuch as it dispenses with the need to verify or enquire into the number of persons admitted to each show and to verify the correctness or otherwise of the returns submitted by the proprietor containing the number of persons admitted (A) each show and the amount of tax collected.
(634 E) 1.6.
On an examination of the rates prescribed under both the modes it is found that under the system (of consolidated levy prescribed under Section 4 C, the proprietor could break even if the average rate of occupancy was 40%.
As regards the rates prescribed under Sections 4 and 5 as amended by Act 24 of 1984 they are based on an average expected occupancy rate of less than 50% or 66% depending upon the area in which the theatre is situated.
This would mean that the entertainment tax that would be collected over and above the average occupancy rate would constitute the profit of the proprietor.
In the circumstances, it cannot be said that the adoption of the system of consolidated levy in Section 4(1) as amended by Act 24 of 1984 alters the nature of tax and it has ceased to be a tax on entertainments.
(634 F H) 620 1.7.
Once it is held that tax #in entertainment could be levied either of the two modes, viz., per payments of admission or gross collection capacity per show, it is for the legislature to decide the particular mode or modes of levy to be adopted and whether a choice should he available to the proprietor of the cinema theatre in this regard.
The legislature does not transgress the limit: of its legislative power confer red on it under Entry 62 of List 11 if it decides that consolidated levy on the basis of gross collection capacity per show shall be the only mode for levy of tax on entertainments (635 C) 1.8.
The impugned provisions contained in Sections 4 and 5 as amended by Act 24 of 1984 are not ultra vires the legislative power conferred on tile State Legislature under Entry 62 of List 11.
(635 D) Western India Theatres vs Cantonment Board, [1959] Supp. 2 SCR 63 and Y. V Srinivasamurthy vs State of Mysore AIR 1959 SC 894, explained. 2.01.
The right conferred by Article 14 postulates that all persons similarly circumstanced shall he treated alike both in privileges conferred and liabilities imposed, Since the State, in exercise of its governmental power, has, of necessity, to make laws operating differently on different groups of persons within its territory to attain particular ends in giving effect to its policies, it is recognised that the State must possess the power of distinguishing and classifying persons or things to be subjected to such laws.
It is, however, required that the classification must satisfy two conditions, namely, (i)it is founded on an intelligible different is which distinguishes those that are grouped together from others; and (ii) the differential must have a rational relation to the object sought to be achieved by the Act.
It is not the requirement that the classification should be scientifically perfect or logically complete.
Classification would be justified if it is not palpable arbitrary.
(636 A C) Re Special Courts Bill, at pp.
534 536 and Khandige Sham Bhat vs Agricultural Income Tax Officer, ; at p. 817.
followed.
In the field of taxation the legislature exercises an extremely wide discretion in classifying items for the purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes.
(636 E) 621 East India Tobacco Co vs State of A.P. ; at p. 411; P.M. Ashwathanarayana Shetty vs State of Karnataka.
[1988] Supp.3 SCR 155 at p.m 188; Federation of Hotel & Restaurant Association of India vs Union of India, at p. 949, Kerala Hotel & Restaurant Association vs State of Kerala; , at p. 530: Gannon Dunkerley, and Co. vs State of Rajasthan, at 397; and San Antonio Independent School District vs Bodriques; , at p. 41, referred to.
just as a difference in the treatment of persons similarly situate leads to discrimination ', so also discrimination can arise if persons who are unequals, i.e. differently placed.
are treated similarly.
In such a case failure on the part of the legislature to classify the persons who are dissimilar in separate categories and applying the same law, irrespective of the differences brings about the same consequence as in a case where the law makes a distinction between persons who are similarly placed.
A law providing for equal treatment of unequal objects transactions or persons would he condemned as discriminatory if there is absence of rational relation to the object intended to he achieved by the law.
(637 A B) K. T Moopil Nair vs The State of Kerala & Anr.
, ; , distinguished.
Jalan Trading Co. (pvt.) Ltd. vs Mill Mazdoor Union, ; and Twyford Tea Co. Ltd. & Anr vs The State of Kerala & Anr., ; , referred to.
In the instant case, the legislature has prescribed different rates of tax by classifying theatres in the different classes, namely, air conditioned,air cooled, ordinary (other than air conditioned and air cooled), permanent and semi permanent and touring and temporary.
The theatre% have further been categorized on the basis (of the type of the local area in which they are situate.
It cannot, therefore, be said that there has been no attempt on the part of the legislature to classify the cinema theatres taking into consideration the differentiating circumstances for the purpose of imposition of tax.
(638 G H) 2.05.
In relation to cinema theatres it can he said that the attendance in the various cinema theatres within a local area would not be uniform and would depend on factors which may vary from time to time.
But this does not mean that cinema theatres in a particular category of local area will always 622 be at a disadvantage so as to be prejudicially affected by a uniform rate as compared to cinema theatres having a better location in the same local area.
The contention that the impugned provisions are violative of right to equality guaranteed under Article 14 (if the Constitution on the basis that unequals are being treated equally cannot be accepted.
(639 B C) 3.
The provision for enhancement contained in sub section (16) of section 5 relates to the cases.
There the proprietor of a cinema theatre opts for payment of weekly consolidated amount.
Since the proprietor has the option to opt for the said scheme he cannot complain that the scheme suffers from inequality.
on account of absence of a corresponding provision for reduction of amount of tax.
(639 E)
|
Appeals Nos. 575 and 576 of 1966.
Appeals by special leave from the judgment and order dated October 5, 1963 of the Patna High Court in Misc.
Judicial Cases Nos. 1274 and 1275 of 1960.
D.Narasaraju, section K. Aiyar, R. N. Sachthey and B. D. Sharma, for the appellants (in both the appeals).
M.C. Chagla and U. P. Singh, for the respondent (in, both the appeals).
The Judgment of the Court was delivered by Shah, J.
The respondent Ramniklal Kothari carried on busi ness in diverse lines as a partner in four different firms.
He received from time to time income from the different registered firms as his share of profits.
For the assessment year 1955 56 the respondent declared his share of profits from the four firms at Rs. 77,027/ and he claimed an allowance of Rs. 13,283/ being payment of salary and bonus to staff, expenses for maintenance and depreciation of motor car, travelling expenses and interest.
The Income tax Officer, Hazaribagh, allowed the claim for interest as a permissible deduction and disallowed the rest.
In the view of the Income tax Officer since the respondent did not carry on any independent business, the amount, except interest, were not claimable by the respondent on his own account; if at all, the amounts should have been claimed as business ex incurred in the accounts of the four firms.
For the assessment year 1956 57 the respondent declared Rs. 53,540 as his share of the profits 'in the four firms and claimed an aggregate amount of Rs. 19,380 as admissible deduction on various grounds including Rs. 1,956 as interest paid by him.
The Income tax Officer allowed the claim for interest and disallowed the rest of the claim.
The Appellate Assistant Commissioner confirmed the orders of the Income tax Officer.
But the Income tax Appellate Tribunal set aside the orders passed by the Income tax Officer and remanded the cases for examination of the nature of expenditure claimed to have been incurred by the respondent.
In the view of the Tribunal share of the profits received by the respondent from the firms was taxable as business income, and appropriate deductions admissible under section 10(2) of the Income tax Act, 1922, were allowable in commuting the taxable income of the respondent, 862 The Tribunal then referred the following question in the two cases to the High Court of Patna for opinion under section 66(1) of the Indian Income tax Act, 1922: "Whether the expenses incurred by the assessee (who was not carrying on any independent business of his own), in earning income from various firms in which he was a partner, are allowable in law as deductions ?" The High Court of Patna answered the reference in favour of the respondent.
With special leave granted by this Court, these two appeals have been preferred by the Commissioner of Incometax.
Where a person carries on business by himself or in partner ship with others, profits and gains earned by him are income liable to be taxed under section 10 of the Indian Income tax Act, 1922.
Share in the profits of a partnership received by a partner is " profits and gains of business" carried on by him and is on that account liable to be computed under section 10, and it is a matter of no moment that the total profits of the partnership were computed in the manner provided by section 1 0 of the Income tax Act and allowances admissible to the partnership in the computation of the profits and gains were taken into account.
Income of the partnership carrying on business is computed as business income.
The share of the partner in the taxable profits of the registered firms liable to be included under section 23(5)(a)(ii) in his total income is still received as income from business carried on by him.
Counsel for the Commissioner accepted, and in our judgment counsel was right in so doing, that the share of the respondent from the profits of the firm was income from business carried on by the partner.
Business carried on by a firm is business carried on by the partners.
Profits of the firm are profits earned by all the partners in carrying on the business.
In the individual assessment of the partner, his share from the firm 's business is liable to be taken into account under section 10(1).
Being income from business, allowances appropriate under section 10(2) are admissible before the taxable income is determined.
Section 23(5)(a)(ii) provides that the share of the partner in the profits and gains of a registered firm shall be included in the total income of the partner; and section 16(1)(b) requires that salary, interest, commission or other remuneration payable by the firm beside the share in the balance of profits is to be taken into account in determining the total income.
But it is not thereby implied that expenditure Properly allowable in earning the profits, salary, interest, commission or other remuneration is not to be allowed in determining the taxable total income of the partner.
The receipt by the partner is business income for the, purpose of 863 s.10(1), and being business income, expenditure necessary for the purpose of earning that income and appropriate allowances are deductible therefrom in determining the taxable income of the partner.
The legal principles which we have endeavoured to set out are well settled by several decisions.
In Shantikumar Narottam Morarji vs Commissioner of Income tax, Bombay City(1) the High ' Court of Bombay held that it is not correct as a general legal proposition that a, partner in a registered firm is not entitled to claim any deduction against the share of the profits included in his total income, the share having been arrived at on the assessment of the firm with regard to its profits.
It would be open to the partner to claim a deduction provided he satisfies the taxing authority that such deduction represents necessary expenditure, the expenditure being incurred in order to enable him to earn the profits which are being subjected to tax.
In Basantlal Gupta vs Commissioner of Income tax, Madras(2) the High Court of Madras held that in determining the income of an assessee who is a partner, deduction under section 10(2) of the Income tax Act may be made from his share of income in the firm even after the share has been ascertained.
An allowance under section 10(2) will be permissible in proper cases even after the share has been ascertained if the expenditure sought to be deducted was incurred by the partner solely and exclusively for the purpose of earning his share in the income of the firm.
In a case decided by the High Court of Patna in Jitmal Bhu ramal vs Commissioner of Income tax, Bihar & Orissa(3) a Hindu undivided family which was a partner in a firm claimed that the salary paid to its members for attending to the business of the firm was incurred as a matter of commercial expediency and for the purpose of earning profits from the partnership business.
The Court held that in the assessment of the Hindu undivided family the expenditure would be properly claimed as an allowance under section 10(2) (xv) of the Indian Income tax Act, 1922.
Jitmal Bhuramars case(4) was brought in appeal to this Court : see Jitmal Bhuramal vs Commissioner of Income tax, Bihar & Orissa(4).
It was observed by this Court that a Hindu undivided family will be allowed to deduct salary paid to members of the family, if the payment is made as a matter of commercial or business expediency, but the service rendered must be to the family in relation to the business of the family.
Counsel for the Commissioner relied upon an unreported judgment of the High Court of Calcutta in Messrs. Iswardas Subh (1) (2) (3) (4) (sc.) 864 karan vs Commissioner of Income tax, West Bengal(1).
In that case a Hindu undivided family entered into a partnership agreement with third parties for the purpose of carrying on a rice mill business.
It was not possible for any of the members of the family to attend personally to that business and, therefore, the family employed a Munim to look after its interest.
Salary paid to the Munim was claimed as an allowance in determining the taxable income out of the share of the partnership income.
Chakravartti, C.J., delivering the judgment of the Court was of the opinion that since the Munim did not look after the interest of the assessee in the firm 's business, but only as a servant of the assessee, the amount paid to the Munim was not an allowance admissible in determining the taxable income.
In any event, observed the learned Chief Justice, the profits which have come to the assessee from the partnership have come as net profits, and after they have so come, there cannot be any further deduction on account of expenditure incurred not by the partnership but by the partner who received the share or incurred on any account whatsoever.
We are unable to agree with the view expressed by the learn ed Chief Justice.
The case was apparently not fully argued and counsel for the assessee conceded that the amount paid to the Munim was not a permissible deduction in assessing the taxable income of the family out of the share of the profits received from the firm.
The appeals fail and are dismissed with costs.
One hearing fee.
V.P.S. Appeals dismissed.
| The provisions of the Travancore Code of Civil Procedure are similar in terms to Order 47, rule 1, of the Code of Civil Procedure 1908 and an application for review is circumscribed by the definitive limits fixed by the language used therein.
The words "any other sufficient reason" mean a reason sufficient on grounds at least analogous to those specified in the rule.
It is well settled that in an ejectment suit the plaintiff must succeed on the strength of his own title and not on the weakness of the defendant 's case.
It is an error apparent on the face of the record if the judgment does not deal effectively and determine an important issue in the case on which depends the title of the plaintiff and the maintainability of the suit.
To decide against a party on matters,which do not come with in the issues on which parties went to trial clearly amounts to an error apparent on the face of the record.
Where the error complained of is that the Court assumed that a concession had been made when in fact none had been made or that the Court misconceived the terms of the concession or the scope and extent of it or the attitude taken, up by the party and has been misled by a misconception of such alleged concession, such error must be regarded as a sufficient reason analogous to an error on the face of the record within the meaning of Order 47, rule I of the Code of Civil Procedure.
Such error will not generally appear on the record and will have to be brought before the Court by means of an affidavit.
A suit filed in 1938 in the Court of the District Judge at Kottayam (Travancore) was dismissed, The plaintiff 's appeal 521 against the decree was allowed by a Full Bench of the High Court of Travancore.
A review application filed by the defendants against the judgment on the ground that it contained several mistakes or errors apparent on the face of the record was dismissed by the High Court.
The High Court declined to grant a certificate under article 133.
The defendants were granted special leave to appeal by the Supreme Court.
Consequent upon political changes in India culminating in the adoption of the new Constitution of India, there were changes in the judicial administration in the State of Travancore.
Up to the end of June, 1949, the Travancore High Court Act (Regulation IV of 1099) was in force in the State of Travancore.
Section 11 of the Regulation provided that the judgments of a Full Bench from the decrees of District Courts involving certain amount or value of subject matter in suits as well as in appeals shall be submitted to the Maharaja for confirmation by his Sign Manual.
Section 12 of the Regulation applied as far as may be the provisions of section 11 to the judgments after review.
In May, 1949, came the Covenant of Merger between the rulers of Travancore and Cochin which, inter alia, provided for a Rajpramukh.
In July, 1949, came Ordinance II of 1124 repealing Regulation IV of 1099.
Clause 25 of the Ordinance provided that a Full Bench shall hear and decide the appeals, inter alia, from the decrees of the District Courts etc.
involving certain amount or value of subject matter.
Clause 26 related to a review of the judgment by a Full Bench.
The provisions relating to the jurisdiction and powers of High Court were substantially reproduced in a later Act (V of 11 25) and were Continued by articles 214 and 225 of the Constitution of India.
The advocate for the respondents contended in the Supreme Court that the review application, in view of the changes referred to above, had become infructuous and should have been dismissed in limine, because even if the review application were allowed there would be no authority with jurisdiction and power to pronounce an effective judgment after hearing the appeal.
Again, this case was not decided by a Full Bench under section 25 of the Act, and therefore Do review was maintainable under section 26.
And even if the appeal be considered to have been filed under section 1 1 of Regulation IV of 1099, the application for review must be dealt with under section 12 of the Regulation and a fresh judgment after the review would have to be submitted under section 11 to the Maharaja for confirmation by his Sign Manual; and the present Maharaja of Travancore did not possess the power to consider and to confirm or reject the same.
Hold, (repelling the contention) that in view of the change of the laws if the appeal were revived after the admission of review, it must be disposed of under section 25 of Act V of 1125 and that section did not require any confirmation of the judgment passed on the rehearing of the appeal by the Maharaja or Rajpramukh or Any other authority.
Assuming that the appeal, if restored, 67 522 would be governed by section 12 of Regulation IV of 1099, even then section 11 would have to be applied only "as far as may be" and the portion of the section 11 requiring confirmation by the Maharaja, would be inapplicable in view of the events that had happened.
Chhajju Ram vs Neki (49 I.A. 144), Bisheshwar Pratap Sahi vs Parath Nath (61 I. A. 3 78), Hari Shankar Pal vs Anath Nath Mitter ([1949] F.C.R. 36), Sha Mulchand & Co. Ltd. vs Tawahar Mills Ltd. ([1953] S.C.R. 351)), Beg vs Pestan ji Dingha and Another , Madhu Sudan Chowdhri vs Musammat Chandrabati Chowdhraizi ( ), Bekhanti Chinna Govinda Chettiyar vs section Varadappa Chettiyar , and Rex vs Northumberland Compensation Appeal Tribunal, Ex Parte Shaw ( ) referred to.
The facts leading up to the appeal, as summarized from the Judgment, are as follows.
There were two rival sections of the Malankara Jacobite Syrian Christian community in Malabar, who came to be represented by the appellants and respondents respectively.
Certain disputes had arisen between the two sections ; and each claimed the right to possess and administer the Church properties to the exclusion of the other.
In 1938, a suit was filed in the District Court of Kottayam by the first and second respondents against the first and second appellants.
The plaintiff s contended that the defendants had committed acts of heresy and became ipso facto alien to the Malankara Jacobite Syrian Church.
They were, therefore, " 'disqualified and unfit to be the trustees of or to hold any other position in, or enjoy any benefit from, the Jacobite Syrian Church" (para 26 of the plaint).
The District Judge, who heard the suit, held, by his judgment delivered on the 18th January, 1943, amongst other things, that the acts and conduct imputed to the defendants did not amount to heresy or schism, or to voluntary separation from the Church, and that in any event, according to Canon Law, there could be no ipso facto going out of the Church in the absence of a decision of an ecclesiastical authority properly arrived at.
The conclusion arrived at by the District Judge was that the plaintiffs were not entitled to maintain the suit, which was, therefore, dismissed.
Being aggrieved by the trial Court 's dismissal of the suit, the plaintiffs appealed to the High Court of Travancore.
The appeal was heard by a Full Bench of the High Court, consisting of three Judges, one of whom expressed a dissenting view.
On the 8th of August, 1946, the High Court held, by a majority that the defendants had repudiated the fundamental principles and tenets of the Malankara Jacobite Syrian Church and had established a new Church and had thereby voluntarily separated from, and ceased to be members of, the Malankara Jacobite Syrian Church.
The majority hold that the plaintiffs and been validly elected as trustees and as such were entitled to possession of the Church 523 properties.
The appeal *as accordingly allowed and a decree was passed for possession and other reliefs in favour of the plaintiffs.
On the 22nd August, 1946, the defendants filed a petition for review of the High Court 's judgment on the ground that it contained several mistakes or errors apparent on the face of the record and that in any event there were sufficient reasons for the rehearing of the appeal.
The application for review was ultimately dealt with by the High Court on merits on the 21st of December, 1951.
The Court hearing the review rejected all the points urged in favour of review and dismissed the application, holding that there was no error apparent on the face of the record and that there were not sufficient reasons for the rehearing of the appeal.
The High Court declined to grant leave to appeal to the Supreme Court under article 133 of the Constitution; whereupon the defendants applied for, and on the 14th April, 1952, obtained, special leave of the Supreme Court to prefer an appeal against the High Court 's decision.
|
ivil Appeal No. 417 of 1984.
From the Judgment and Order dated 12.8.1981 of the Delhi High Court in C.W.P. No. 1835 of 1981.
A.K. Ganguli, A. Sharan for the Appellant.
Kapil Sibal, Additional Solicitor General, Raju Rama chandran, Rajiv Dhawan, C.V. Subba Rao and Mrs. Sushma Suri for the Respondents.
T. Prasad for the Secretary, Ministry of Defence.
The Judgment of the Court was delivered by S.C. AGRAWAL, J.
This appeal, by special leave, is directed against the order dated August 12, 1981, passed by the High Court of Delhi dismissing the writ petition filed by the appellant.
In the writ petition the appellant had challenged the validity of the finding and the sentence recorded by the General Court Martial on November 29, 1978, the order dated May 11, 1979, passed by the Chief of Army Staff confirming the findings and the sentence recorded by the General Court Martial and the order dated May 6, 1980, passed by the Central Government dismissing the petition filed by the appellant under Section 164(2) of the (hereinafter referred to as 'the Act ').
48 The appellant held a permanent commission, as an offi cer, in the regular army and was holding the substantive rank of Captain.
He was officiating as a Major.
On December 27, 1974, the appellant took over as the Officer Commanding of 38 Coy.
ASC (Sup) Type 'A ' attached to the Military Hospital, Jhansi.
In August 1975, the appellant had gone to attend a training course and he returned in the first week of November 1975.
In his absence Captain G.C. Chhabra was the officer commanding the unit of the appellant.
During this period Captain Chhabra submitted a Contingent Bill dated September 25, 1975 for Rs.16,280 for winter liveries of the depot civilian chowkidars and sweepers.
The said Contingent Bill was returned by the Controller of Defence Accounts (CDA) Meerut with certain objections.
Thereupon the appellant submitted a fresh Contingent Bill dated December 25, 1975 for a sum of Rs.7,029.57.
In view of the difference in the amounts mentioned in the two Contingent Bills, the CDA reported the matter to the headquarters for investiga tion and a Court of Enquiry blamed the appellant for certain lapses.
The said report of the Court of Enquiry was considered by the General Officer Commanding, M.P., Bihar and Orissa Area, who, on January 7, 1977 recommended that 'severe displeasure ' (to be recorded) of the General Officer Com manding in Chief of the Central Command be awarded to the appellant.
The General Officer Commanding in Chief.
Central Command did not agree with the said opinion and by order dated August 26, 1977, directed that disciplinary action be taken against the appellant for the lapses.
In view of the aforesaid order passed by the General Officer Commanding in Chief, Central Command, a charge sheet dated July 20. 1978, containing three charges was served on the appellant and it was directed that he be tried by Gener al Court Martial.
The first charge was in respect of the offence under Section 52(f) of the Act, i.e. doing a thing with intent to defraud.
the second charge was alternative to the first charge and was in respect of offence under Section 63 of the Act, i.e. committing an act prejudicial to good order and military discipline and the third charge was also in respect of offence under Section 63 of the Act.
The appellant pleaded not guilty to the charges.
The prosecution examined 22 witnesses to prove the charges.
The General Court Martial.
on November 29, 1978, found the appellant not guilty of the second charge but found him guilty of the first and the third charge and awarded the sentence of dismissal from service.
The appellant submit 49 ted a petition dated December 18, 1978, to the Chief of Army Staff wherein he prayed that the findings and the sentence of the General Court Martial be not confirmed.
The findings and sentence of the General Court Martial were confirmed by the Chief of the Army Staff by his order dated May 11, 1979.
The appellant, thereafter, submitted a post confirmation petition under Section 164(2) of the Act.
The said petition of the appellant was rejected by the Central Government by order dated May 6, 1980.
The appellant thereupon filed the writ petition in the High Court of Delhi.
The said writ petition was dismissed, in limine, by the High Court by order dated August 12, 1981.
The appellant approached this Court for grant of special leave to appeal against the said order of the Delhi High Court.
By order dated January 24, 1984, special leave to appeal was granted by this Court.
By the said order it was directed that the appeal be listed for final hearing before the Constitution Bench.
The said order does not indicate the reason why the appeal was directed to be heard by the Constitution Bench.
The learned counsel for the appellant has stated that this direction has been given by this Court for the reason that the appeal involves the question as to whether it was incumbent for the Chief of the Army Staff, while confirming the findings and the sentence of the General Court Martial, and for the Central Govern ment, while rejecting the post confirmation petition of the appellant, to record their reasons for the orders passed by them.
We propose to deal with this question first.
It may be mentioned that this question has been consid ered by this Court in Som Datt Datta vs Union of India and Others, ; In that case it was contended before this Court that the order of the Chief of Army Staff confirming the proceedings of the Court Martial under Sec tion 164 of the Act was illegal since no reason had been given in support of the order by the Chief of the Army Staff and that the Central Government had also not given any reason while dismissing the appeal of the petitioner in that case under Section 165 of the Act and that the order of the Central Government was also illegal.
This contention was negatived.
After referring to the provisions contained in Sections 164, 165 and 162 of the Act this Court pointed that while Section 162 of the Act expressly provides that the Chief of the Army Staff may "for reasons based on the merits of the case" set aside the proceedings or reduce the sentence to any other sentence which the Court might have passed, there is no express obligation imposed by Sections 164 and 165 of the Act on the confirming authority or upon the Central Government to give reasons in support of its decision to confirm the proceedings of the Court Martial.
This Court observed that no other section of the Act or any of the rules made 50 therein had been brought to its notice from which necessary implication can be drawn that such a duty is cast upon the Central Government or upon the confirming authority.
This Court did not accept the contention that apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, there is a general principle or a rule of natural justice that a statutory tribunal should always and in every case give reasons m support of its decision.
Shri A.K. Ganguli has urged that the decision of this Court in Som Datt Datta 's case (supra) to the extent it holds that there is no general principle or rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision needs reconsid eration inasmuch as it is not in consonance with the other decisions of this Court.
In support of this submission Shri Ganguli has placed reliance on the decisions of this Court in Bhagat Raja vs The Union of India and Others, ; ; Mahabir Prasad Santosh Kumar vs State of U.P. and Others, ; ; Woolcombers of India Ltd. vs Woolcombers Workers Union and Another, and Siemens Engineering & Manufacturing Co. of India Limited vs Union of India and Another, The learned Additional Solicitor General has refuted the said submission of Shri Ganguli and has submitted that there is no requirement in law that reasons be given by the con firming authority while confirming the finding or sentence of the Court Martial or by the Central Government while dealing with the post confirmation petition submitted under Section 164 of the Act and that the decision of this Court in Som Datt Datta 's case (supra) in this regard does not call for reconsideration.
The question under consideration can be divided into two parts: (i) Is there any general principle of law which requires an administrative authority to record the reasons for its decision; and (ii) If so, does the said principle apply to an order con firming the findings and sentence of a Court Martial and post confirmation proceedings under the Act? On the first part of the question there is divergence of opinion in the common law countries.
The legal position in the United States is different from that in other common law countries.
51 In the United States the courts have insisted upon recording of reasons for its decision by an administrative authority on the premise that the authority should give clear indication that it has exercised the discretion with which it has been empowered because "administrative process will best be vindicated by clarity in its exercise" Phelps Dodge Corporation vs National Labour Relations Board, [1940] 85 Law Edn. 1271 at P. 1284.
The said requirement of record ing of reasons has also been justified on the basis that such a decision is subject to judicial review and "the Courts cannot exercise their duty of review unless they are advised of the considerations underlying the action under review" and that "the orderly functioning of the process of review requires that the grounds upon which the administra tive agency acted be clearly disclosed and adequately sustained." Securities and Exchange Commission vs Chenery Corporation, ; at P. 636.
In John T. Dunlop vs Waiter Bachowski, ; 377) it has been observed that a statement of reasons serves purposes other than judicial review inasmuch as the reasons promotes thought by the authority and compels it to cover the rele vant points and eschew irrelevancies and assures careful administrative consideration.
The Federal Administrative Procedure Act, 1946 which prescribed the basic procedural principles which are to govern formal administrative proce dures contained an express provision (Section g(b) ) to the effect that all decisions shall indicate a statement of findings and conclusions as well as reasons or basis the, for upon all the material issues of fact, law or discretion presented on the record.
The said provision is now contained in Section 557(c) of Title 5 of the United States Code (1982 edition).
Similar provision is contained in the state stat utes.
In England the position at Common law is that there is no requirement that reasons should be given for its decision by the administrative authority (See: Regina vs Gaming Board for Great Britain Ex Party Benaim and Khaida, [1970] 2 Q.B. 417 at p. 431 and McInnes vs Onslow Fane and Another, at p. 1531).
There are, however, observa tions in some judgments wherein the importance of reasons has been emphasised.
In his dissenting judgment in Breen vs Amalgamated Engineering Union and Others, Lord Denning M.R., has observed that: "the giving of reasons is one of the fundamental of good administration." (P. 191) In Alexander Machinery (Dudley) Ltd. vs Crabtree, Sir John Donaldson, as President of the National Industrial Relations Court, has observed that: 52 "failure to give reasons amounts to a denial of justice.
" In Regina vs Immigration Appeal Tribunal Ex parte Khan (Mahmud), Lord Lane, CJ., while expressing his reservation on the proposition that any failure to give reasons means a denial of justice, has observed: "A party appearing before a tribunal is entitled to know either expressly stated by the tribunal or inferentially stated, what it is to which the tribunal is addressing its mind." (P. 794) The Committee on Ministers ' Powers (Donoughmore Commit tee) in its report submitted in 1932, recommended that "any party affected by a decision should be informed of the reasons on which the decision is based" and that "such a decision should be in the form of a reasoned document avail able to the parties affected." (P. 100) The Committee on Administrative Tribunals and Enquiries (Franks Committee) in its report submitted in 1957, recommended that "decisions of tribunals should be reasoned and as full as possible." The said Committee has observed: "Almost all witnesses have advocated the giving of reasoned decisions by tribunals.
We are convinced that if tribunal proceedings are to be fair to the citizen reasons should be given to the fullest practicable extent.
A decision is apt to be better if the reasons for it have to be set out in writing because the reasons are then more likely to have been properly thought out.
Further, a reasoned decision is essential in order that, where there is a right of appeal, the applicant can assess whether he has good grounds of appeal and know the case he will have to meet if he decides to appeal." (Para 98) The recommendations of the Donoughmore Committee and the Franks Committee led to the enactment of the Tribunals and Enquiries Act, 1958 in United Kingdom.
Section 12 of that Act prescribed that it shall be the duty of the Tribunal or Minister to furnish a statement, either written or oral, of the reasons for the decision if requested, on or before the giving of notification of the decision to support the deci sion.
The said Act has been replaced by the Tribunals and Enquiries Act, 1971 which contains a similar provision in Section 12.
This requirement is.
however, confined.
in its applications to tribunals and statu 53 tory authorities specified in Schedule I to the said enact ment.
In respect of the tribunals and authorities which are not covered by the aforesaid enactment, the position, as prevails at common law, applies.
The Committee of JUSTICE in its Report, Administration Under Law, submitted in 1971, has expressed the view: "No single factor has inhibited the development of English administrative law as seriously as the absence of any gener al obligation upon public authorities to give reasons for their decisions.
" The law in Canada appears to be the same as in England.
In Pure Spring Co. Ltd. vs Minister of National Revenue, at P. 539 it was held that when a Minister makes a determination in his discretion he is not required by law to give any reasons for such a determination.
In some recent decisions, however, the Courts have recognised that in certain situations there would be an implied duty to state the reasons or grounds for a decision (See: Re R D.R. Construction Ltd. And Rent Review Commission, and Re Yarmouth Housing Ltd. And Rent Review Commission, In the Province of Ontario the Statutory Powers Procedure Act, 1971 was enacted which provided that "a tribunal shall give its final deci sion, if any, in any proceedings in writing and shall give reasons in writing therefore if requested by a party." (Section 17).
The said Act has now been replaced by the Statutory Powers and Procedure Act, 1980, which contains a similar provision.
The position at common law is no different in Australia.
The Court of Appeal of the Supreme Court of New South Wales in Osmond vs Public service Board of New South Wales, had held that the common law requires those entrusted by Statute with the discretionary power to make decisions which will affect other persons to act fairly in the performance of their statutory functions and normally this will require an obligation to state the reasons for their decisions.
The said decision was overruled by the High Court of Australia in Public Service Board of New South Wales vs Osmond, and it has been held that there is no general rule of the common law, or principle of natural justice, that requires reasons to be given for administrative decisions, even decisions which have been made in the exercise of a statutory discretion and which may adversely affect the interests or defeat the legitimate or reasonable expectations, of other persons.
Gibbs CJ., in his leading judgment, has expressed the view that "the 'rules of natural justice are 54 designed to ensure fairness in the making of a decision and it is difficult to see how the fairness of an administrative decision can be affected by what is done after the decision has been made.
" The learned Chief Justice has.
however.
observed that "even assuming that in special circumstances natural justice may require reasons to be given, the present case is not such a case." (P. 568).
Deane J., gave a concur ring judgment, wherein after stating that "the exercise of a decision making power in a way which adversely affects others is less likely to be.
or appear to be, arbitrary if the decision maker formulates and provides reasons for his decision", the learned Judge has proceeded to hold that "the stage has not been reached in this country where it is a general prima facie requirement of the common law rules of natural justice or procedural fair play that the administra tive decision maker.
having extended to persons who might be adversely affected by a decision an adequate opportunity of being heard.
is bound to furnish reasons for the exercise of a statutory decision making power." (P. 572).
The learned Judge has further observed that the common law rules of natural justice or procedural fair play are neither stand ardized nor immutable and that their content may vary with changes in contemporary practice and standards.
In view of the statutory developments that have taken place in other countries to which reference was made by the Court of Ap peal, Deane, J. has observed that the said developments "are conducive to an environment within which the courts should be less reluctant than they would have been in times past to discern in statutory provisions a legislative intent that the particular decision maker should be under a duty to give reasons." (P. 573).
This position at common law has been altered by the Commonwealth Administrative Decisions (Judicial Review) Act.
Section 13 of the said Act enables a person who is entitled to apply for review the decision before the Federal Court to request the decision maker to furnish him with a statement in writing setting out the findings on material questions of fact, referring to the evidence or other mate rial on which those findings were based and giving the reasons for the decision and on such a request being made the decision maker has to prepare the statement and furnish it to the persons who made the request as soon as practica ble and in any event within 28 days.
The provisions of this Act are not applicable to the classes of decisions mentioned in Schedule I to the Act.
A similar duty to give reasons has also been imposed by Sections 28 and 37 of the commonwealth Administrative Appeals Tribunal Act.
In India the matter was considered by the Law Commission in 55 the 14th Report relating to reform in Judicial Administra tion.
The Law Commission recommended: "In the case of administrative decisions provision should be made that they should be accompanied by reasons.
The reasons will make it possible to test the validity of these deci sions by the machinery of appropriate writs." (Vol.
II P. 694).
No laws has, however, been enacted in pursuance of these recommendations, imposing a general duty to record the reasons for its decision by an administrative authority though the requirement to give reasons is found in some statutes.
The question as to whether an administrative authority should record the reasons for its decision has come up for consideration before this Court in a number of cases.
In M/s. Harinagar Sugar Mills Ltd. vs Shyam Sundar Jhunjhunwala and Others, ; , a Constitution Bench of this Court.
while dealing with an order passed by the Central Government in exercise of its appellate powers under Section 111(3) of the in the matter of refusal by a company to register the transfer of shares, has held that there was no proper trial of the appeals before the Central Government since no reasons had been given in support of the order passed by the Deputy Secretary who heard the appeals.
In that case it has been observed: "If the Central Government acts as a tribunal exercising judicial powers and the exercise of that power is subject to the jurisdiction of this Court under Article 136 of the Constitution we fail to see how the power of this Court can be effectively exercised if reasons are not given by the Central Government in support of its order." (P. 357) In Madhya Pradesh Industries Ltd. vs Union of India and Others, ; the order passed by the Central Government dismissing the revision petition under Rule 55 of the Mineral Concession Roles, 1960, was challenged before this Court on the ground that it did not contain reasons.
Bachawat, J., speaking for himself and Mudholkar, J., re jected this contention on the view that the reason for rejecting the revision application appeared on the face of the order because the Central Government had agreed with the reasons given by 56 the State Government in its order.
The learned Judges did not agree with the submission that omission to give reasons for the decision is of itself a sufficient ground for quash ing it and held that for the purpose of an appeal under Article 136 orders of courts and tribunals stand on the same footing.
The learned Judges pointed out that an order of court dismissing a revision application often gives no reasons but this is not a sufficient ground for quashing it and likewise an order of an administrative tribunal reject ing a revision application cannot be pronounced to be in valid on the sole ground that it does not give reasons for the rejection.
The decision in Hari Nagar Sugar Mills case (supra) was distinguished on the ground that in that case the Central Government had reversed the decision appealed against without giving any reasons and the record did not disclose any apparent ground for the reversal.
According to the learned Judges there is a vital difference between an order of reversal and an order of affirmance.
Subba Rao, J., as he then was, did to concur with this view and found that the order of the Central Government was vitiated as it did not disclose any reasons for rejecting the revision applica tion.
The learned Judge has observed: "In the context of a welfare State, administrative tribunals have come to stay.
Indeed, they are the necessary concomi tants of a Welfare State.
But arbitrariness in their func tioning destroys the concept of a welfare State itself.
Self discipline and supervision exclude or at any rate minimize arbitrariness.
The least a tribunal can do is to disclose its mind.
The compulsion of disclosure guarantees consideration.
The condition to give reasons introduces clarity and excludes or at any rate minimizes arbitrariness; it gives satisfaction to the party against whom the order is made; and it also enables an appellate or supervisory court to keep the tribunals within bounds, A reasoned order is a desirable condition of judicial disposal." (P. 472).
"If tribunals can make orders without giving reasons, the said power in the hands of unscrupulous or dishonest officer may turn out to be a potent weapon for abuse of power.
But, if reasons for an order are given, it will be an effective restraint on such abuse, as the order, if its discloses extraneous or irrelevant considerations, will be subject to judicial scrutiny and correction.
A speaking order will at its best be a reasonable and at its worst be at least a plausible one.
The public should not be deprived of this only safeguard." (P. 472).
57 "There is an essential distinction between a court and an administrative tribunal.
A Judge is trained to look at things objectively, uninfluenced by considerations of policy or expediency; but an executive officer generally looks at things from the standpoint of policy and expediency.
The habit of mind of an executive officer so formed cannot be expected to change from function to function or from act to act.
So it is essential that some restrictions shall be imposed on tribunals in the matter of passing orders affect ing the rights of parties; and the least they should do is to give reasons for their orders.
Even in the case of appel late courts invariably reasons are given, except when they dismiss an appeal or revision in limine and that is because the appellate or revisional court agrees with the reasoned judgment of the subordinate court or there are no legally permissible grounds to interfere with it.
But the same reasoning cannot apply to an appellate tribunal, for as often as not the order of the first tribunal is laconic and does not give any reasons." (P. 472 73).
With reference to an order of affirmance the learned Judge observed that where the original tribunal gives rea sons, the appellate tribunal may dismiss the appeal or the revision, as the case may be, agreeing with those reasons and that what is essential is that reasons shall be given by an appellate or revisional tribunal expressly or by refer ence to those given by the original tribunal.
This matter was considered by a Constitution Bench of this Court in Bhagat Raja case (supra) where also the order under challenge had been passed by the Central Government in exercise of its revisional powers under Section 30 of the read with rules 54 and 55 of the Mineral Concession Rules, 1960.
Dealing with the question as to whether it was incum bent on the Central Government to give any reasons for its decision on review this Court has observed: "The decisions of tribunals in India are subject to the supervisory powers of the High Courts under article 227 of the Constitution and of appellate powers of this Court under article 136.
It goes without saying that both the High Court and this Court are placed under a great disadvantage if no reasons are given and the revision is dismissed curtly by the use of the single word "rejected", or "dismissed".
In 58 such a case, this Court can probably only exercise its appeallate jurisdiction satisfactorily by examining the entire records of the case and after giving a hearing come to its conclusion on the merits of the appeal.
This will certainly be a very unsatisfactory method of dealing with the appeal." (P. 309).
This Court has referred to the decision in Madhya pra desh Industries case (supra) and the observations of Subba Rao, J., referred to above, in that decision have been quoted with approval.
After taking note of the observations of Bachawat, J., in that case, the learned Judges have held: "After all a tribunal which exercises judicial or quasijudi cial powers can certainly indicate its mind as to why it acts in a particular way and when important rights of par ties of far reaching consequences to them are adjudicated upon in a summary fashion, without giving a personal hearing when proposals and counter proposals are made and examined, the least that can be expected is that the tribunals shall tell the party why the decision is going against him in all cases where the law gives a further right of appeal." (P.315).
Reference has already been made to Som Datt Datta 's case (supra) wherein a Constitution Bench of this Court has held that the confirming authority, while confirming the findings and sentence of a Court Martial, and the Central Government, while dealing with an appeal under Section 165 of the Act, are not required to record the reasons for their decision and it has been observed that apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, it could not be said that there is any general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision.
In that case the Court was primarily concerned with the interpretation of the provisions of Act and the Army Rules, 1954.
There is no reference to the earlier decisions in Harinagar Sugar Mills case (supra) and Bhagat Raja case (supra) wherein the duty to record reasons was imposed in view of the appellate jurisdiction of this Court and the supervisory jurisdiction of the High Court under Articles 136 and 227 of the Consti tution of India respectively.
In Travancore Rayon Ltd. vs Union of India, 59 "The Court insists upon disclosure of reasons in support of the order on two grounds; one, that the party aggrieved in a proceedings before the High Court or this Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous; the other, that the obligation to record reasons operates as a deter rent against possible arbitrary action by the executive authority invested with the judicial power." (P. 46) In Mahabir Prasad Santosh Kumar vs State of U.P. and Others (supra) the District Magistrate had cancelled the licence granted under the ' U.P Sugar Dealers ' Licensing Order, 1962 without giving any reason and the State Govern ment had dismissed the appeal against the said order of the District Magistrate without recording the reasons.
This Court has held: "The practice of the executive authority dismissing statuto ry appeal against orders which prima facie seriously preju dice the rights of the aggrieved party without giving rea sons is a negation of the rule of law." (P. 204) "Recording of reasons in support of a decision on a disputed claim by a quasi judicial authority ensures that the deci sion is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency.
A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim.
If the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may deter mine whether the facts were properly ascertained, the rele vant law was correctly applied and the decision was just." (P. 205) In Woolcombers of India Ltd. case (supra) this Court was dealing with an award of an Industrial Tribunal.
It was found that the award stated only the conclusions and it did not give the supporting reasons.
This Court has observed: "The giving of reasons in support of their conclusions by judicial and quasi judicial authorities when exercising initial jurisdiction is essential for various reasons.
First, it is calculated to prevent unconscious unfairness or arbitrari 60 ness in reaching the conclusions.
The very search for rea sons will put the authority on the alert and minimise the chances of unconscious infiltration of personal bias or unfairness in the conclusion.
The authority will adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations.
Second, it is a well known principle that justice should not only be done but should also appear to be done.
Unreasoned conclusions may be just but they may not appear to be just to those who read them.
Reasoned conclu sions, on the other hand, will have also the appearance of justice.
Third, it should be remembered that an appeal generally lies from the decision of judicial and quasi judicial authorities to this Court by special leave granted under Article 136.
A judgment which does not disclose the reasons, will be of little assistance to the Court." (P. 507) In Siemens Engineering & Manufacturing Co. of India Limited case (supra) this Court was dealing with an appeal against the order of the Central Government on a revision applica tion under the .
This Court has laid down: "It is now settled law that where an authority makes an order in exercise of a quasi judicial function it must record its reasons in support of the order it makes.
Every quasijudicial order must be supported by reasons." (P 495) "If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative Law they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them.
Then along administrative au thorities and tribunals, exercising quasi judicial function will be able to justify their existence and carry credibili ty with the people by inspiring confidence in the adjudica tory process.
The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partera, a basic principle of natural justice which must inform every quasi judicial process and this rule must be observed in its 61 proper spirit and mere pretence of compliance with it would not satisfy the requirement of law." (496) Tarachand Khatri vs Municipal Corporation of Delhi & Others, [1977] 2 SCR 198 was a case where an inquiry was conducted into charges of misconduct and the disciplinary authority, agreeing with the findings of the Inquiry Offi cer, had imposed the penalty of dismissal.
The said order of dismissal was challenged on the ground that the disciplinary authority had not given its reasons for passing the order.
The said contention was negatived by this Court and distinc tion was drawn between an order of affirmance and an order of reversal.
It was observed: " . . while it may be necessary for a disciplinary or administrative authority exercising quasi judicial functions to state the reasons in support of its order if it differs from the conclusions arrived at and the recommendations made by the Inquiry Officer in view of the scheme of a particular enactment or the rules made thereunder, it would be laying down the proposition too broadly to say that even an ordi nary concurrence must be supported by reasons." (P. 208) In Raipur Development Authority and Others vs Mls.
Chokhamal Contractors and Others, [1989] 2 S.C.C. 721 a Constitution Bench of this Court was considering the ques tion whether it is obligatory for an arbitrator under the Arbitration Act, 194(1 to give reasons for the award.
It was argued that the requirement of giving reasons for the deci sion is a part of the rules of natural justice which are also applicable to the award of an arbitrator and reliance was placed on the decisions in Bhagat Raja case (Supra) and Siemens Engineering Co. case (Supra).
The said contention was rejected by this Court.
After referring to the decisions in Bhagat Raja case (Supra); Som Datt Datta case (Supra) and Siemens Engineering Co. case (Supra) this Court has ob served: "It is no doubt true that in the decisions pertaining to Administrative Law, this court in some cases has observed that the giving of reasons in an administrative decision is a rule of natural justice by an extension of the prevailing rules.
It would be in the interest of the world of commerce that the said rule is confined to the area of Administrative Law . .
But at the same time it has to be borne in mind that what applies generally to settlement of disputes by 62 authorities governed by public law need not be extended to all cases arising under private law such as those arising under the law of arbitration which is intended for settle ment of private disputes." (P. 751 52) The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American Courts.
An important consideration which has weighed with the Court for holding that an administrative authority exercising quasi judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the High Courts to effectively exercise the appellate or supervisory power.
But this is not the sole consideration.
The other considerations which have also weighed with the Court in taking this view are that the requirement of recording reasons would (i) guarantee consid eration by the authority; (ii) introduce clarity in the decisions; and (iii) minimise chances of arbitrariness in decisionmaking.
In this regard a distinction has been drawn between ordinary Courts of law and tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by con siderations of policy or expediency whereas an executive officer generally looks at things from the standpoint of policy and expediency.
Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi judicial func tions, would no doubt facilitate the exercise of its juris diction by the appellate or supervisory authority.
But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decision, are of no less significance.
These considerations show that the re cording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrari ness and ensures a degree of fairness in the process of decision making.
The said purpose would apply equally to all decisions and its application cannot be confined to deci sions which are subject to appeal, revision or judicial review.
In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an admin istrative authority exercising quasijudicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review.
It may, however, be added 63 that it is not required that the reasons should be as elabo rate 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 due consideration to the points in controversy.
The need for recording of 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 author ity agrees with the reasons contained in the order under challenge.
Having considered the rationale for the requirement to record the reasons for the decision of an administrative authority exercising quasi judicial functions we may now examine the legal basis for imposing this obligation.
While considering this aspect the Donough more Committee observed that it may well be argued that there is a third principle of natural justice, namely, that a party is entitled to know the reason for the decision, be it judicial or quasi judi cial.
The committee expressed the opinion that "there are some cases where the refusal to give grounds for a decision may be plainly unfair; and this may be so, even when the decision is final and no further proceedings are open to the disappointed party by way of appeal or otherwise" and that "where further proceedings are open to a disappointed party, it is contrary to natural justice that the silence of the Minister or the Ministerial Tribunal should deprive them of the opportunity." (P 80) Prof.
H.W.R. Wade has also ex pressed the view that "natural justice may provide the best rubric for it, since the giving of reasons is required by the ordinary man 's sense of justice." (See Wade, Administra tive Law, 6th Edn.
P. 548).
In Siemens Engineering Co. case (Supra) this Court has taken the same view when it observed that "the rule requiring reasons to be given in support of an order is, like the principles of audi alteram parlem, a basic principle of natural justice which must inform every quasi judicial process." This decision proceeds on the basis that the two well known principles of natural justice, namely (i) that no man should be a Judge in his own cause and (ii) that no person should be judged without a hearing, are not exhaustive and that in addition to these two princi ples there may be rules which seek to ensure fairness in the process of decision making and can be regarded as part of the principles of natural justice.
This view is in conso nance with the law laid down by this Court in A.K. Kraipak and Others vs Union of India and Others, , wherein it has been held: 64 "The concept of natural justice has undergone a great deal of change in recent years.
In the past it was thought that it included just two rules namely (i) no one shall be a Judge in his own cause (nemo dabet esse judex propria causa) and (ii) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem).
Very soon thereafter a third rule was envisaged and that is that quasi judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonably.
But in the course of years many more subsidiary rules came to be added to the rules of natural justice." (P. 468 69) A similar trend is discernible m the decisions of Eng lish Courts wherein it has been held that natural justice demands that the decision should be based on some evidence of probative value.
(See: R. vs Deputy Industrial Injuries Commissioner ex P. Moore, ; Mahon vs Air New Zealand Ltd., The object underlying the rules of natural justice "is to prevent miscarriage of justice" and secure "fairplay in action." As pointed out earlier the requirement about re cording of reasons for its decision by an administrative authority exercising quasi judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision making.
Keep ing in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by adminis trative authorities.
The rules of natural justice are not embodied rules.
The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority.
With regard to the exercise of a particular power by an adminis trative authority including exercise of judicial or quasi judicial functions the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a requirement.
It may do so by making an express provi sion to that affect as those contained in the Administrative Procedure Act, 1946 of U.S.A. and the Administrative Deci sions (Judicial Review) Act, 1977 of Australia whereby the orders passed by certain specified authorities are excluded from the ambit of the enactment.
Such an exclusion can also arise by necessary implication from the nature of the sub ject matter, the scheme and the provisions of the 65 enactment.
The public interest underlying such a provision would outweight the salutary purpose served by the require ment to record the reasons.
The said requirement cannot, therefore, be insisted upon in such a case.
For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administra tive authority exercising judicial or quasi judicial func tions is required to record the reasons for its decision.
We may now come to the second part of the question, namely, whether the confirming authority is required to record its reasons for confirming the finding and sentence of the court martial and the Central Government or the competent authority entitled to deal with the post confirma tion petition is required to record its reasons for the order passed by it on such petition.
For that purpose it will be necessary to determine whether the Act or the Army Rules, 1954 (hereinafter referred to as 'the Rules ') ex pressly or by necessary implication dispense with the re quirement of recording reasons.
We propose to consider this aspect in a broader perspective to include the findings and sentence of the court martial and examine whether reasons are required to be recorded at the stage of (i) recording of findings and sentence by the court martial; (ii) confirma tion of the findings and sentence of the court martial; and (iii) consideration of post confirmation petition.
Before referring to the relevant provisions of the Act and the Rules it may be mentioned that the Constitution contains certain special provisions in regard to members of the Armed Forces.
Article 33 empowers Parliament to make law determining the extent to which any of the rights conferred by Part Ill shall, in their application to the members of the Armed Forces be restricted or abrogated so as to ensure the proper discharge of their duties and the maintenance of discipline amongst them.
By clause (2) of Article 136 the appellate jurisdiction of this Court under Article 136 of the Constitution has been excluded in relation to any judg ment, determination, sentence or order passed or made by any Court or tribunal constituted by or under any law relating to the Armed Forces.
Similarly clause (4) of Article 227 denies to the High Courts the power of superintendence over any Court or tribunal constituted by or under any law relat ing to the Armed Forces.
This Court under Article 32 and the High Courts under Article 226 have, however, the power of judicial review in respect of 66 proceedings of courts martial and the proceedings subsequent thereto and can grant appropriate relief if the said pro ceedings have resulted in denial of the fundamental rights guaranteed under Part III of the Constitution or if the said proceedings suffer from a jurisdictional error or any error of law apparent on the face of the record.
Reference may now be made to the provisions of the Act and the Rules which have a bearing on the requirement to record reasons for the findings and sentence of the court martial.
Section 108 of the Act makes provision for four kinds of courts martial, namely, (a) general courts martial; (b) district courts martial; (c) summary general courtsmar tial and (d) summary courts martial.
The procedure of court martial is prescribed in Chapter XI (Sections 128 to 152) of the Act.
Section 129 prescribes that every general court martial shall, and every district or summary general court martial, may be attended by a judge advocate, who shall be either an officer belonging to the department of the Judge Advocate General, or if no such officer is available, an officer approved of by the Judge Advocate General or any of his deputies.
In sub section (1) of Section 131 it is pro vided that subject to the provisions of sub sections (2) and (3) every decision of a courtmartial shall be passed by an absolute majority of votes, and where there is an equality of votes on either the finding or the sentence, the decision shall be in favour of the accused.
In sub section (2) it is laid down that no sentence of death shall be passed by a general courtmartial without the concurrence of at least two thirds of the members of the court and sub section (3) provides that no sentence of death shall be passed by a summary general court martial without the concurrence of all the members.
With regard to the procedure at trial before the General and District courts martial further provisions are made in Rules 37 to 105 of the Rules.
In Rule 60 it is provided that the judge advocate (if any) shall sum up in open court the evidence and advise the court upon the law relating to the case and that after the summing up of the judge advocate no other address shall be allowed.
Rule 61 prescribes that the Court shall deliberate on its findings in closed court in the presence of the judge advocate and the opinion of each member of the court as to the finding shall be given by word of mouth on each charge separately.
Rule 62 prescribes the form, record and announcement of finding and in sub rule (1) it is provided that the finding on every charge upon which the accused is arraigned shall be recorded and, except as provided in these rules, shall be recorded simply as a finding of "Guilty" or of "Not guilty".
Sub rule (10) of Rule 62 lays down that the finding on charge shall be announced forthwith in open court as subject to confirmation.
Rule 64 lays down 67 that in cases where the finding on any charge is guilty, the court, before deliberating on its sentence, shall, whenever possible take evidence in the matters specified in sub rule (1) and thereafter the accused has a right to address the court thereon and in mitigation of punishment.
Rule 65 makes provision for sentence and provides that the court shall award a single sentence in respect of all the offences of which the accused is found guilty, and such sentence shall be deemed to be awarded in respect of the offence in each charge and in respect of which it can be legally given, and not to be awarded in respect of any offence in a charge in respect of which it cannot be legally given.
Rule 66 makes provisions for recommendation to mercy and sub rule (1) prescribes that if the court makes a recommendation to mercy, it shall give its reasons for its recommendation.
Sub rule (1) of Rule 67 lays down that the sentence together with any recommendation to mercy and the reasons for any such recommendation will be announced forthwith in open court.
The powers and duties of judge advocate are pre scribed in Rule 105 which, among other things, lays down that at the conclusion of the case he shall sum up the evidence and give his opinion upon the legal bearing of the case before the court proceeds to deliberate upon its find ing and the court, in following the opinion of the judge advocate on a legal point may record that it has decided in consequences of that opinion.
The said rule also prescribes that the judge advocate has, equally with the presiding officer, the duty of taking care that the accused does not suffer any disadvantage in consequences of his position as such, or of his ignorance or incapacity to examine or cross examine witnesses or otherwise, and may, for that purpose, with the permission of the court, call witnesses and put questions to witnesses, which appear to him neces sary or desirable to elicit the truth.
It is further laid down that in fulfilling his duties, the judgeadvocate must be careful to maintain an entirely impartial position.
From the provisions referred to above it is evident that the judge advocate plays an important role during the courts of trial at a general court martial and he is enjoined to maintain an impartial position.
The court martial records its findings after the judge advocate has summed up the evidence and has given his opinion upon the legal bearing of the case.
The members of the court have to express their opinion as to the finding by word of mouth on each charge separately and the finding on each charge is to be recorded simply as a finding of "guilty" or of "not guilty".
It is also required that the sentence should be announced forth with in open court.
Moreover Rule 66(1) requires reasons to be recorded for its recommendation in cases where the court makes a recommendation to mercy.
There is no such require 68 ment in other provisions relating to recording of findings and sentence.
Rule 66(1) proceeds on the basis that there is no such requirement because if such a requirement was there it would not have been necessary to have a specific provi sion for recording of reasons for the recommendation to mercy.
The said provisions thus negative a requirement to give reasons for its finding and sentence by the court martial and reasons are required to be recorded only in cases where the courtmartial makes a recommendation to mercy.
In our opinion, therefore, at the stage of recording of findings and sentence the court martial is not required to record its reasons and at that stage reasons are only required for the recommendation to mercy if the court mar tial makes such a recommendation.
As regards confirmation of the findings and sentence of the court martial it may be mentioned that Section 153 of the Act lays down that no finding or sentence of a General, District or summary General, Court Martial shall be valid except so far as it may be confirmed as provided by the Act.
Section 158 lays down that the confirming authority may while confirming the sentence of a court martial mitigate or remit the punishment thereby awarded, or commute that pun ishment to any punishment lower in the scale laid down in Section 71.
Section 160 empowers the confirming authority to revise the finding or sentence of the court martial and in sub section (1) of Section 160 it is provided that on such revision, the court, if so directed by the confirming au thority, may take additional evidence.
The confirmation of the finding and sentence is not required in respect of summary court martial and in Section 162 it is provided that the proceedings of every summary court martial shall Without delay be forwarded to the officer commanding the division or brigade within which the trial was held or to the prescribed officer; and such officer or the Chief of the Army Staff or any officer empowered in this behalf may, for reasons based on the merits of the case, but not any merely technical grounds, set aside the proceedings or reduce the sentence to any other sentence which the court might have passed.
In Rule 69 it is provided that the proceedings of a general court martial shall be submitted by the judge advocate at the trial for review to the deputy or assistant judge advocate general of the command who shall then forward it to the confirming officer and in case of district court martial it is provided that the proceedings should be sent by the presiding officer, who must, in all cases.
where the sentence is dismissal or above, seek advice of the deputy or assistant judge advocate general of the command before confirmation.
Rule 70 lays down that upon receiving the proceedings of a general or district Court Martial, the confirming authority may 69 confirm or refuse confirmation or reserve confirmation for superior authority, and the confirmation, non confirmation, or reservation shall be entered in and form part of the proceedings.
Rule 71 lays down that the charge, finding and sentence, and any recommendation to mercy shall, together with the confirmation or non confirmation of the proceed ings, be promulgated in such manner as the confirming au thority may direct, and if no direction is given, according to custom of the service and until promulgation has been effected, confirmation is not complete and the finding and sentence shall not be held to have been confirmed until they have been promulgated.
The provisions mentioned above show that confirmation of the findings and sentence of the court martial is necessary before the said finding or sentence become operative.
In other words the confirmation of the findings and sentence is an integral part of the proceedings of a court martial and before the findings and sentence of a court martial are confirmed the same are examined by the deputy or assistant judge advocate general of the command which is intended as a check on the legality and propriety of the proceedings as well as the findings and sentence of the court martial.
Moreover we find that in Section 162 an express provision has been made for recording of reasons based on merits of the case in relation to the proceedings of the summary courtmartial in cases where the said proceedings are set aside or the sentence is reduced and no other requirement for recording of reasons is laid down either in the Act or in the Rules in respect of proceedings for confirmation.
The only inference that can be drawn from Section 162 is that reasons have to be recorded only in cases where the proceed ings of a summary court martial are set aside or the sen tence is reduced and not when the findings and sentence are confirmed.
Section 162 thus negatives a requirement to give reasons on the part of the confirming authority while con firming the findings and sentence of a court martial and it must be held that the confirming authority is not required to record reasons while confirming the findings and sentence of the courtmartial.
With regard to post confirmation proceedings we find that subsection (2) of Section 164 of the Act provides that any person subject to the Act who considers himself ag grieved by a finding or sentence of any court martial which has been confirmed, may present a petition to the Central Government, the Chief of the Army Staff or any prescribed officer superior in command to the one who confirmed such finding or sentence and the Central Government, the Chief of the Army Staff or other officer, as the case may be, may pass such orders 70 thereon as it or he thinks fit.
In so far as the findings and sentence of a court martial and the proceedings for confirmation of such findings and sentence are concerned it has been found that the scheme of the Act and the Rules is such that reasons are not required to be recorded for the same.
Has the legislature made a departure from the said scheme in respect of post confirmation proceedings? There is nothing in the language of sub section (2) of Section 164 which may lend support to such an intention.
Nor is there anything in the nature of post confirmation proceedings which may require recording of reasons for an order passed on the post confirmation petition even though reasons are not required to be recorded at the stage of recording of findings and sentence by a court martial and at the stage of confirmation of the findings and sentence of the court martial by the confirming authority.
With regard to record ing of reasons the considerations which apply at the stage of recording of findings and sentence by the court martial and at the stage of confirmation of findings and sentence of the courtmartial by the confirming authority are equally applicable at the stage of consideration of the post confir mation petition.
Since reasons are not required to be re corded at the first two stages referred to above, the said requirement cannot, in our opinion, be insisted upon at the stage of consideration of post confirmation petition under Section 164(2) of the Act.
For the reasons aforesaid it must be held that reasons are not required to be recorded for an order passed by the confirming authority confirming the findings and sentence recorded by the court martial as well as for the order passed by the Central Government dismissing the post confir mation petition.
Since we have arrived at the same conclu sion as in Sorn Datt Datta case (Supra) the submission of Shri Ganguli that the said decision needs reconsideration cannot be accepted and is.
therefore, rejected.
But that is not the end of the matter because even though there is no requirement to record reasons by the confirming authority while passing the order confirming the findings and sentence of the CourtMartial or by the Central Government while passing its order on the post confirmation petition, it is open to the person aggrieved by such an order to challenge the validity of the same before this Court under Article 32 of the Constitution or before the High Court under Article 226 of the Constitution and he can obtain appropriate relief in those proceedings.
We will, therefore, examine the other contentions that have 71 been urged by Shri Ganguli in support of the appeal.
The first contention that has been urged by Shri Ganguli in this regard is that under sub section (1) of Section 164 of the Act the appellant had a right to make a representa tion to the confirming authority before the confirmation of the findings and sentence recorded by the court martial and that the said right was denied inasmuch as the appellant was not supplied with the copies of the relevant record of the court martial to enable him to make a complete representa tion and further that the representation submitted by the appellant under sub section (1) of Section 164 was not considered by the confirming authority before it passed the order dated May 11, 1979 confirming the findings and sen tence of the court martial.
The learned Additional Solicitor General, on the other hand, has urged that under sub section (1) of Section 164 no right has been conferred on a person aggrieved by the findings or sentence of a court martial to make a representation to the confirming authority before the confirmation of the said findings or sentence.
The submis sion of learned Additional Solicitor General is that while sub section (1) of Section 164 refers to an order passed by a court martial, sub section (2) of Section 164 deals with the findings or sentence of a court martial and that the only right that has been conferred on a person aggrieved by the finding or sentence of a court martial is that under sub section (2) of Section 164 and the said right is avail able after the finding and sentence has been confirmed by the confirming authority.
We find considerable force in the aforesaid submission of learned Additional Solicitor Gener al.
Section 164 of the Act provides as under: "(1) Any person subject to this Act who considers himself aggrieved by any order passed by any court martial may present a petition to the officer or authority empowered to confirm any tinging or sentence of such court martial and the confirming authority may take such steps as may be considered necessary to satisfy itself as to the correct ness.
legality or propriety of the order passed or as to the regularity of any proceeding to which the order relates.
(2) Any person subject to this Act who considers himself aggrieved by a finding or sentence of any court martial which has been confirmed, may present a petition to the Central Government, the Chief of the Army Staff or any prescribed officer superior in command to the one who 72 confirmed such finding or sentence and the Central Govern ment, the Chief of the Army Staff or other officer, as the case may be, may pass such orders thereon as it or he thinks fit.
" In sub section (1) reference is made to orders passed by a courtmartial and enables a person aggrieved by an order to present a petition against the same.
The said petition has to be presented to the officer or the authority empowered to confirm any finding or sentence of such court martial and the said authority may take such steps as may be considered necessary to satisfy itself as to the correctness, legality or propriety of the order or as to the regularity of any proceedings to which the order relates.
Sub section (2), on the other hand, makes specific reference to finding or sentence of a court martial.
and confers a right on any person feeling aggrieved by a finding or sentence of any court martial which has been confirmed, to present a peti tion to the Central Government, Chief of the Army Staff or any prescribed officer.
The use of the expression "order" in sub section (1) and the expression "finding or sentence" in sub section (2) indicates that the scope of sub section (1) and sub section (2) is not the same and the expression "order" in sub section (1) cannot be construed to include a "finding or sentence".
In other words in so far as the finding and sentence of the court martial is concerned the only remedy that is available to a person aggrieved by the same is under sub section (2) and the said remedy can be invoked only after the finding or sentence has been con firmed by the confirming authority and not before the con firmation of the same.
Rule 147 of the Rules also lends support to this view.
In the said Rule it is laid down that every person tried by a court martial shall be entitled on demand, at any time after the confirmation of the finding and sentence, when such confirmation is required, and before the proceedings are destroyed, to obtain from the officer or person having the custody of the proceeding a copy thereof including the proceedings upon revision, if any.
This Rule envisages that the copies of proceedings of a court martial are to be supplied only after confirmation of the finding and sentence and that there is no right to obtain the copies of the proceedings till the finding and sentence have been confirmed.
This means that the appellant cannot make a grievance about non supply of the copies of the proceedings of the court martial and consequent denial of his right to make a representation to the confirming authority against the findings and sentence of the court martial before the confirmation of the said finding and sentence.
Though a person aggrieved by the finding or sentence of a courtmar tial has no right to make a representation before the confi ramtion 73 Of the same by the confirming authority, but in case such a representation is made by a person aggrieved by the finding or sentence of a court martial it is expected that the confirming authority shall give due consideration to the same while confirming the finding and sentence of the court martial.
In the present case the representation dated December 18, 1978 submitted by the appellant to the confirming au thority was not considered by the confirming authority when it passed the order of confirmation dated May 11, 1979.
According to the counter affidavit filed on behalf of Union of India this was due to the reason that the said represen tation had not been received by the confirming authority till the passing of the order of confirmation.
It appears that due to some communication gap within the department the representation submitted by the appellant did not reach the confirming authority till the passing of the order of con firmation.
Since we have held that the appellant had no legal right to make a representation at that stage the non consideration of the same by the confirming authority before the passing of the order of confirmation would not vitiate the said order.
Shri Ganguli next contended that the first and the second charge levelled against the appellant are identical in nature and since the appellant was acquitted of the second charge by the court martial his conviction for the first charge can not be sustained.
It is no doubt true that the allegations contained in the first and the second charge are practically the same.
But as mentioned earlier, the second charge was by way of alternative to the first charge.
The appellant could be held guilty of either of these charges and he could not be held guilty of both the charges at the same time.
Since the appellant had been found guilty of the first charge he was acquitted of the second charge.
There is, therefore, no infirmity in the court martial having found the appellant guilty of the first charge while holding him not guilty of the second charge.
Shri Ganguli has also urged that the findings recorded by the court martial on the first and third charges are perverse inasmuch as there is no evidence to establish these charges.
We find no substance in this contention.
The first charge was that the appellant on or about December 1975, having received 60.61 meters woollen serge from M/s Ram Chandra & Brothers, Sadar Bazar, Jhansi for stitching 19 coats and pants for Class IV civilian employees of his unit with intent to defraud 74 got 19 altered ordnance pattern woollen pants issued to the said civilian employees instead of pants stitched out of the cloth received.
To prove this charge the prosecution exam ined Ram Chander P.W. 1 and Triloki Nath P.W. 2 of M/s Ram Chandra & Brothers, Sadar Bazar, Jhansi who have deposed that 60.61 meters of woollen serge cloth was delivered by them to the appellant in his office in December, 1975.
The evidence of these witnesses is corroborated by B.D. Joshi, Chowkidar, P.W. 3, who has deposed that in the last week of December, 1975, the appellant had told him in his office that cloth for their liveries had been received and they should give their measurements.
As regards the alteration of 19 ordnance pattern woollen pants which were issued to the civilian employees instead of the pants stitched out of the cloth that was received, there is the evidence of N/sub.
P. Vishwambharam P.W. 19 who has deposed that he was called by the appellant to his office in the last week of December, 1975 or the first week of January, 1976 and that on reaching there he found ordnance pattern woolien pants lying by the side of the room wall next to the appellant 's table and that the appellant had called Mohd. Sharif P.W. 15 to his office and had asked him to take out 19 woolien trousers out of the lot kept there in the office.
After Mohd. Sharif had select ed 19 woollen trousers the appellant told Mohd. Sharif to take away these pants for alteration and refitting.
The judge advocate, in his summing up, before the court martial, has referred to this evidence on the first charge and the court martial, in holding the appellant guilty of the first charge, has acted upon it.
It cannot, therefore, be said that there is no evidence to establish the first charge levelled against the appellant and the findings recorded by the court martial in respect of the said charge is based on no evidence or is perverse.
The third charge, is that the appellant having come to know that Capt.
Gian Chand Chhabra while officiating OC of his unit, improperly submitted wrong Contingent Bill No. 341/Q dated September 25, 1975 for Rs.16,280 omitted to initiate action against Capt.
Chhabra.
In his summing up before the court martial the judge advocate referred to the CDA letter M/IV/191 dated November 20, 1975 (Exh. 'CC ') raising cert in objection with regard to Contingent Bill No. 341/Q dated September 25, 1975 for Rs.16,280 and pointed out that the said letter was received in the unit on or about November 28, 1975 and bears the initials of the appellant with the aforesaid date and remark "Q Spk with details".
This would show that the appellant had knowledge of the Contingent Bill on November 28, 1975.
It is not the case of the appellant that he made any complaint against Captain 75 Chhabra thereafter.
It cannot, therefore, be said that the finding recorded by the court martial on the third charge is based on no evidence and is perverse.
In the result we find no merit in this appeal and the same is accordingly dismissed.
But in the circumstances there will be no order as to costs.
R.N.J. Appeal dismissed.
| The Appellant was officiating as a Major though he held a substantive rank of Captain as a permanent Commissioned Officer of the army when on December 27, 1974 he took over as the Officer Commanding 38 Coy.
A.S.C. (Sup) Type 'A ' attached to the Military Hospital, Jhansi.
In August, 1975 the Appellant went to attend a training course and returned in the first week of November.
In his absence Captain G.C. Chhabra was commanding the unit of the appellant and he submitted a Contingent Bill dated September 25, 1975 for Rs.16,280 for winter liveries of the depot civilian chowki dars and sweepers.
The said Bill was returned by the Con troller of Defence Accounts (CDA) with certain objections.
Thereupon the appellant submitted a fresh contingent Bill dated December 25, 1975 for a sum of Rs.7,029.57.
In view of the wide difference in the two Contingent Bills, the CDA reported the matter to the Headquarters for investigation and a Court Enquiry blamed the appellant for certain lapses.
After considering the said report of the Court of En quiry the General Officer Commanding, M.P., Bihar and Orissa recommended that 'severe displeasure ' (to be recorded) of the General Officer Commanding in Chief of the Central Command be awarded to the appellant.
The General Officer Commanding in Chief Central Command, however.
did not agree with the said opinion and by order dated August 26, 1977 directed that disciplinary action be taken against the appellant for the lapses.
Pursuant to the said order a charge sheet dated July 20, 1978 containing three charges was served on the appellant and it was directed that he be tried by General Court Mar tial.
The first charge was, doing of a thing with intent to defraud under section 52(f) of the Act.
The second charge was alternative to the first charge i.e. commit 45 ting an act prejudicial to good order and military disci pline under section 63 of the Act and the third charge was also in respect of offence under section 63 of the Act. 'the appellant pleaded not guilty to the charges.
The General Court Martial on November 29, 1978 found him guilty of first and third charge and awarded the sentence of dis missal from service.
Thereupon the appellant submitted petition dated December 18, 1978 to the Chief of Army Staff praying that the findings of the General Court Martial be not confirmed.
The Chief of the Army Staff by his order dated May 11, 1979 confirmed the findings and sentence of the General Court Martial.
The appellant thereafter submit ted a post confirmation petition under section 164(2) of the Act.
This was rejected by the Central Government by order dated May 6, 1980.
Thereupon the appellant filed a writ petition in the High Court of Delhi which was dismissed in limine.
Hence this appeal by special leave directed to be heard by the Constitution Bench for the reason that it involves the question as to whether it was incumbent for the Chief of the Army Staff, while confirming the findings and sentence of the General Court Martial and for the Central Government while rejecting the post confirmation petition of the appellant to record their reasons for the orders passed by them.
Dismissing the appeal, this Court, HELD: The requirement that reasons be recorded should govern the decisions of an administrative authority exercis ing quasi judicial functions irrespective of the fact wheth er the decision is subject to appeal, revision or judicial review.
It may, however, be added that 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 due consideration to the points in controversy.
[62H; 63A B] The need for recording of reasons is greater in a case where the order is passed at the original stage.
The appel late or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revision al authority agrees with the reasons contained in the order under challenge.
[63B] Except in cases where the requirement has been dispensed with expressly or by necessary implication, an administra tive authority exercising judicial or quasi judicial func tions is required to record ' the reasons for its decision.
[65B] 46 The provisions contained in the and the Army Rules, 1954 negative a requirement to give reasons for its findings and sentence by a Court Martial and reasons are not required to be recorded in cases where the Court Martial makes a recommendation to mercy.
Similarly, reasons are not required to be recorded for an order passed by the confirm ing authority confirming the findings and sentence recorded by the Court Martial as well as for the order passed by the Central Government dismissing the post confirmation peti tion.
[70E F] Sub section (1) of section 164 of the enables a person aggrieved by an order passed by a Court Martial to present a petition against the same.
The expression "order" under sub section (1) does not include a finding or sentence of the Court Martial and in so far as the finding and sen tence of the Court Martial is concerned the only remedy that is available to a person aggrieved by the same is under sub section (2) of section 164 of the and the said remedy can be invoked only after the finding or sentence has been confirmed by the confirming authority and not before the confirmation of the same.
[72B; D E] Though a person aggrieved by the finding or sentence of a Court Martial has no right to make a representation before the confirmation of the same by the confirming authority, but in case such a representation is made by a person ag grieved by the finding or sentence of a Court Martial it is expected that the confirming authority shall give due con sideration to the same while confirming the finding and sentence of the Court Martial.
[72H; 73A] Som Datt Datta vs Union of India & Ors., [1969] 2 S.C.R. 177; Bhagat Raja vs The Union of India & Ors., ; ; Mahabir Prasad Santosh Kumar vs State of U.P. & Ors., ; ; Woolcombers of India Ltd. vs Woolcombers Workers Union & Ant., [1974] I S.C.R. 503; Siemens Engineering & Manufacturing Co. of India Ltd. vs Union of India & Anr., ; Phelps Dodge Corporation vs National Labour Relations Board, [1940] 85 Law Edn. 1271 at p. 1284; Securities and Exchange Commis sion vs Chenery Corporation; , at p. 636; John T. Dunlop vs Waiter Bachewski, ; 377; Regina vs Gaming Board for Great Britain, Exparte Benaim & Khaida, ; at p. 431; Mc Innes vs Onslow Fane & Anr., at p. 1531; Breen vs Amalgamated Engineering Union & Ors., ; Alexander Machinery (Dudley) Ltd. vs Crabtree, [1974] I.C.R. 120; Regina vs Immigration Appeal Tribunal Ex Parte Khan (Mahmud), ; Pure Spring Co. Ltd. vs Minister of National Revenue, 47 at p. 539; Re R.D.R. Construction Ltd. & Rent Review Commission, 168; Re Yar mouth Housing Ltd. & Rent Review Commission, ; Osmond vs Public Service Board of New South Wales, ; Public Service Board of New South Wales vs Osmond, ; M/s. Harinagar Sugar Mills Ltd. vs Shyam Sundar Jhunjhunwala & Ors., ; ; Madhya Pradesh Industries Ltd. vs Union of India & Ors., ; ; Tranvancore Rayon Ltd. vs Union of India; , ; Tarachand Khatri vs Municipal Corporation of Delhi & Ors., [1977] 2 S.C.R. 198; Raipur Development Authority & Ors.
vs M/s. Chokhamal Con tractors & Ors., [1989] 2 S.C.C. 721; A.K. Kraipak & Ors.
vs Union of India & Ors.
, ; R. vs Deputy Industrial Injuries Commissioner ex P. Moore, [1965] 1 Q.B. 456 and Mahon vs Air New Zealand Ltd., , referred to.
|
Civil Appeal No. 1365 of 1968 From the Judgment and Decree dated the 8 12 66 of the Madras High Court in Appeal No. 609 of 1961.
K. N. Balasubrahmaniam and Miss Lily Thomas for the Appellant.
K. Jayaram for the Respondent.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This is an appeal by certificate granted by the High Court of Judicature at Madras under Article 133(1) (a) and (b) of the Constitution of India against its judgment and decree dated December 8, 1966 in A. section No. 609 of 1961.
The facts culminating in this appeal lie in a short compass and may be briefly stated thus: Kota Venkatachala Pathy whose legal representatives are the respondents herein and Kota Narayanan, the appellant herein, were real brothers being the sons of one Kota Rangaswami Chettiar.
Together with their cousin Subramanyam Chettiar, the son of Kota Kuppuswami Chettiar, the brother of Kota Rangaswami Chettiar, they formed a joint family which was a trading one.
Prior to 1927, Subramanyam Chettiar was the manager and karta of the family.
After 1927 Kota Venkatachala Pathy took over the management of the family and its properties.
By registered deed dated May 29, 1929 (Exh.
A 1) a partition of joint family properties was effected between Subramanyam Chettiar on the one hand and Kota Venkatachala Pathy and his brother, Kota Narayanan, who was then a minor, on the other, each branch taking a half share.
As karta of the joint family.
Subramanyam Chettiar had, before November 20, 1927 incurred debts to the tune of Rs. 9,506/ from several creditors.
Five items of joint family properties detailed in Schedule D 1 to the deed of partition were earmarked for the discharge of the aforesaid debts and were given over to Kota Venkatachala Pathy who was made responsible for the discharge of the debts.
These debts were discharged by Kota Venkatachala Pathy before March 26, 1934.
On September 7, 1956, Kota Venkatachala Pathy brought a suit, being No. O. section 87 of 1956, in the Court of the Subordinate Judge of Vellore, North Arcot, for partition and separate possession of 3/4th of the properties set out in Schedule 'A ' to the plaint, 1/2 of the properties set out in Schedule A 1 to the plaint and whole of the properties set out in Schedule 'B ' to the plaint.
One of the items namely, item No. 1 of Schedule 639 'B ' to the plaint which consists of four shops is what remains undisposed out of the properties mentioned in Schedule 'D 1 ' to the deed of partition which were set apart for the purpose of discharging the aforesaid debts incurred by Subramanyam Chettiar before 1927.
The case as set out by Kota Venkatachala Pathy in his plaint was that the properties set out in Schedule 'B 1 ' to the deed of partition were given over to him absolutely for the discharge of the aforesaid debts set out in Schedule 'D ' to the deed of partition and it was provided in the said deed that either he would discharge the debts mentioned in the deed or undertake to pay the same himself within a month from the registration of the document and obtain and hand over to Subramanyam Chettiar receipts from the creditors specifically mentioned there that Subramanyam Chettiar was not liable for payment of the aforesaid debts and that if the aforesaid conditions were not satisfied by him i.e. by Kota Venkatachala Pathy and any loss was occasioned to the former, the latter would be liable for those losses.
The case of Kota Venkatachala Pathy further was that since he had discharged the debts detailed in Schedule 'D ' to the deed of partition, he was entitled to the exclusive possession of item No. 1 of Schedule 'B ' to the plaint as his self acquired property by virtue of the terms of deed of partition and also to the rest of the properties detailed in the said Schedule 'B ' as he had purchased the same with his own funds.
Kota Venkatachala Pathy based his claim of 3/4th share in properties detailed in Schedule 'A ' to the plaint on the ground that he was entitled to 1/4th by birth as a coparcener and the rest of the half share allotted to Subramanyam Chettiar as he had purchased the same from auction purchasers.
The relief for accounts was based by Kota Venkatachala Pathy on the ground that there was an oral division in status in 1938 and it was the appellant who was managing the properties either as a co owner or as an agent since then.
The appellant resisted the claim of extra share made by Kota Venkatachala Pathy and contended that the latter was entitled only to half share in all the suit properties.
According to the appellant, the family debts set out in Schedule 'D ' to the aforesaid deed of partition was discharged by Kota Venkatachala Pathy not only by the sale of the properties set out in Schedule 'D 1 ' to the deed of partition but also by substantially utilising other joint family properties available for division.
It was also contended by the appellant that since Kota Venkatachala Pathy acted as Karta of his branch, the aforesaid deed of partition should be construed as meaning that any item salvaged or saved after the discharge of the aforesaid family debts would be ancestral property and not exclusive property of the plaintiff.
As regards the properties other than item No. 1 of Exhibit 'B ' of the plaint, it was contended by the appellant that they were also to be shared half and half between him and Kota Venkatachala Pathy as they were purchased from the joint family funds.
With regard to the relief for rendition of accounts, the appellant contended that he became the Karta of the joint family in 1947 and Kota Venkatachala Pathy was not entitled to the relief of rendition of account till the date of the suit when alone there was a division of status and not in 1938 as claimed by Kota Venkatachala Pathy.
640 On a consideration of the evidence adduced in the case, the Trial Court by its judgment and decree dated September 12, 1960, held that there was no division in status till the date of the suit.
With regard to item No. 1 of Schedule 'B ' to the plaint, the Trial Court held that the total amount of debts paid was Rs. 15,669 6 2 and out of D 1 Schedule properties of the estimated value of Rs. 9,506/ only Rs. 2,575/ were realized from the sale of four items thereof and the balance of the debts were discharged from out of the joint family assets like jewels, outstandings realized and other immovable properties allotted to Rangaswamy Chettiar 's branch in 1929 partition and that the conversion of such joint family assets was made by Kota Venkatachala Pathy who was managing the family till 1957.
The Trial Court accordingly held that the properties namely item No. 1 of Schedule 'B ' to the plaint should be deemed to have been salvaged by detriment to the paternal estate.
The Trial Court also found that as the defendant appellant herein was a minor at the time of 1929 partition and Kota Venkatachala Pathy, the original plaintiff had acted as his guardian, the latter must be deemed to have acted for the former also when he undertook to discharge the debts and that as between the original plaintiff and defendant to whom the properties were jointly allotted under Exhibit A 1, there was a position of implied trust in respect of properties set out in Schedule 'A ' and 'B ' to the plaint.
The Trial Court also upheld the appellant 's plea of blending of all the properties by Kota Venkatachala Pathy.
The Trial Court also found that properties covered by sale deeds Exhibit B 1 and Exhibit B 4 which originally formed part of the half share allotted to Subramanyam Chettiar though purchased by the original plaintiff in his own name were joint family properties and as such were liable to partition in equal shares.
The Trial Court negatived the claim of Kota Venkatachala Pathy for a share in excess of one half in the aforesaid properties and held that he was entitled to only one half of all the suit properties.
The Trial Court also decreed that the appellant shall render true and proper accounts in respect of the income and expenses regarding half share of the respondents in the properties mentioned in Schedule A, A 1 and to the plaint from 1947 onwards but did not give directions as to the assets and funds of capital nature withdrawn by Kota Venkatachala Pathy from out of the joint family utilised for his own separate and independent business.
Aggrieved by this judgment, Kota Venkatachala Pathy, the original plaintiff, whose legal representatives are the respondents herein, preferred an appeal to the High Court of Judicature of Madras.
By its judgment dated December 8, 1966, the High Court allowed the appeal in part, set aside the judgment and decree of the Trial Court and decreed the suit brought by the original plaintiff with regard to item No. 1 of Schedule to the plaint holding that the properties mentioned in Schedule D 1 to the partition deed were conveyed absolutely to the original plaintiff in lieu of his undertaking to be liable to discharge the entire debts mentioned in Schedule 'D ' to the partition deed whether the properties were sufficient or insufficient to discharge the same and if there was any surplus out of the properties he was to have the same absolutely, but if the properties were not sufficient, he was to dis 641 charge the debts on his own responsibility without making Subramanyam Chettiar liable for the same; that though a portion of the debts were discharged out of the joint family funds that only cast on the legal representatives of the original plaintiff a liability to account to the appellant for such drawings as the original plaintiff might have made and whatever amount was found to be so drawn would have to be debited against his i.e. the original plaintiff, after giving him credit for whatever amount he might have put into the common fund.
The High Court further held that in determining the net drawals by the original plaintiff from the joint family funds, credit would be given to him for drawings made by the appellant by way of receipts of rents from item No. 1 of Schedule 'B ' to the plaint; that the original plaintiff was not liable to account for the joint family properties as there was no proof of mismanagement, mishandling or improper application of joint family properties or funds and that the defendant was also not liable to account to the original plaintiff for the management of the properties of which he was in charge.
The High Court affirmed the judgment of the Trial Court in regard to the properties covered by Exhibits B 1 and B 4 holding that these were acquired with the common funds of the original plaintiff and the appellant which he was managing.
Dissatisfied with this judgment and decree, the defendant has come up in appeal to this Court.
The learned counsel for the appellant has, while supporting the appeal, strenuously urged that the properties mentioned in Schedule D 1 to the deed of partition (Exh.
A 1) were not intended by the parties thereto to be given to Kota Venkatachala Pathy as his separate properties but were given to him only for a specific purpose viz. for discharging the family debts; that the ancestral properties could not be converted into separate properties by means of an arrangement arrived at between Subramanyam Chettiar and Kota Venkatachala Pathy; that the character of a property has to be decided after considering whether it is saved as a result of detriment to the paternal estate and as in the instant case, property mentioned at item No. 1 of Schedule D 1 to the deed of partition was saved by using the joint family assets, the said property could not but be regarded as the ancestral property of the parties which was subject to partition.
He has further urged that in any event D 1 Schedule properties lost the character of separate properties as they were blended by Kota Venkatachala Pathy with the joint family properties.
He has lastly urged that the directions given by the High Court with regard to accounting cannot be sustained as they are neither clear nor justified.
The principal question for determination in this case is whether the properties mentioned in D 1 Schedule to the deed of partition were separate properties of Kota Venkatachala Pathy or retained the character of ancestral properties.
The answer to this question depends largely on the construction of the deed of partition (Exh.
A 1), material portion whereof is reproduced below for facility of reference: "Venkatachala Pathy the individual No. 2 shall discharge the debts described in 'D ' Schedule, the debts payable to outsiders by Subramanyam Chetti amongst us for the 642 amount borrowed for conducting the family business prior to 20 11 27 and individual No. 2 for discharging the loans, shall enjoy absolutely the properties mentioned in Schedule D 1.
Venkatachalapathi Chetti, the individual No. 2 shall either discharge the debts within a month from the date of registration of this document and obtain receipt for the creditors stating that Subramanyam Chetti is not liable to the aforesaid loans and shall give those receipts to Subramanyam Chetti.
If it is not done so and thereby any loss is caused to Subramanyam Chetti by creditors, Venkatachalapathi Chetti shall be liable for those losses.
The aforesaid Venkatachalapathi Chetti himself shall get possession of D 1 Schedule properties given to him in lieu of discharging the aforesaid debts whether those properties are adjusted to the aforesaid debts, or whether there remain any balance or any deficit".
The salient features of the deed as extracted above are: (1) sole responsibility for discharge of the debts detailed in Schedule D 1 to the deed of partition which were payable to the outsiders was placed on Kota Venkatachala Pathy.
(2) The liability cast on Kota Venkatachala Pathy for the discharge of the debts was not to the extent of the properties detailed in Schedule D 1 to the deed of partition but was irrespective of the sufficiency or otherwise of the properties and any deficit or surplus was to be met or enjoyed by him exclusively.
(3) The debts were to be discharged by Kota Venkatachala Pathy within a month of the registration of the deed and he was required to have it in writing from the creditors that Subramanyam Chettiar was no longer liable for the debts.
(4) In case, there was a default on the part of Kota Venkatachala Pathy to discharge the debts as undertaken by him and any loss was caused to Subramanyam Chettiar, to the former was to indemnify the latter.
(5) Exclusive dominion, control and enjoyment of the properties mentioned in Schedule D 1 was vested in Kota Venkatachala Pathy in consideration of the obligation undertaken by him to discharge the debts.
The aforesaid salient features leave no manner for doubt that the properties mentioned in D 1 Schedule to the deed of partition were given to Kota Venkatachala Pathy in lieu of the personal undertaking given by him to discharge the aforesaid debts.
In other words, the conveyance of the properties to Kota Venkatachala Pathy was in the nature of remuneration for the services to be rendered by him.
It will be useful in this connection to refer to the decision of this Court in Raj Kumar Singh Kukam Chandji vs Commissioner of Income tax, Madhya Pradesh where on the question whether the managing director 's remuneration received by the assessee was assessable in his individual hands or in the hands of the assessee 's Hindu undivided family, this Court expressed the view that the remuneration was assessable as the assessee 's individual income and not as the income of his Hindu undivided family.
We are, therefore, of the 643 view that Schedule D 1 properties were given absolutely to Kota Venkatachala Pathy as his separate properties.
Let us now see as to whether the aforesaid arrangement entered between the members of the Hindu undivided family whereby properties mentioned in Schedule D 1 to the deed of partition were made over to Kota Venkatachala Pathy was valid according to Hindu Law.
A reference to page 426 of Mayne 's Treatise on Hindu Law and Usage (11th Edition) makes it clear that while dividing the family estate, it is necessary for the joint family to take account of both the assets and the debts for which the undivided estate is liable and to make provision for discharge of the debts.
It is also well settled by the decisions of this Court in Sahu Madho Das vs Pandit, Mukand Ram Maturi Pullaian vs Maturi Narasimham and section Shanmugam Pillai & Ors.
vs K. Shanmugam Pillai Ors.
that if family arrangements which are governed by a special equity peculiar to themselves or entered into bonafide to maintain peace or bring about harmony in the family and the terms thereof are fair taking into consideration the circumstances of the case, every effort must be made by the Court to recognise and sustain it.
Examining the matter in the light of these principles, we find that by the aforesaid arrangement both Subramanyam Chettiar and the defendant appellant were absolved of the responsibility to discharge the family debts and liability was cast on Kota Venkatachala Pathy alone to discharge the same irrespective of the fact whether the properties mentioned in Schedule D 1 to Exhibit A 1 ultimately turned out to be sufficient or insufficient to meet the burden.
Thus the arrangement being bonafide and its terms being fair, we cannot but hold that it was valid and the properties detailed in Schedule D 1 to the deed of partition became separate properties of Kota Venkatachala Pathy from the date of the execution of the deed of partition and are not liable to partition.
This takes us to the question as to whether there was, as contended by the appellant, any blending of the properties mentioned in Schedule D 1 to the deed of partition with the rest of the properties of the joint family consisting of Kota Venkatachala Pathy and the appellant.
It is true that property separate or self acquired of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the common stock with intention of abandoning his separate claim therein but the question whether a coparcener has done so or not is entirely a question of fact to be decided in the light of all the circumstances of the case.
It must be established that there was a clear intention on the part of the coparcener to waive his separate rights such an intention cannot be inferred merely from the physical mixing of the property with his joint family or from the fact that other members of the family are allowed to use the property jointly with himself or that the income of the separate property is utilised out of generosity or kindness to support persons whom the holder is not bound to support or from the failure to maintain separate accounts for an 644 act of generosity or kindness cannot ordinarily be regarded as an admission of a legal obligation.
(See Lakkireddi Chinna Venkata Reddi & Ors.
vs Lakkireddi Lakshmama and G. Narayana Ram vs G. Chamaraju & Ors.
In the instant case we are unable to find that there was any intention on the part of Kota Venkatachala Pathy of abandoning his separate rights over the properties set out in Schedule D 1 to the deed of partition.
The mere fact that these properties were not separately entered by Kota Venkatachala Pathy in the account books or that no separate account of the earning from these properties was maintained by him cannot rob the properties of their character of self acquired properties.
We are accordingly of the view that there was no blending of the properties by Kota Venkatachala Pathy as contended by the appellant.
The mere fact that some amount out of the joint family funds was used for discharge of the debts mentioned in Schedule to the deed of partition is also of no consequence.
If any amount out of the joint family funds was used for the discharge of the outstandings payable to the outside debtors, the legal representatives of Kota Venkatachala Pathy would, as pointed out by the High Court be liable for them.
There is also no substance in the last contention advanced on behalf of the appellant.
The legal position is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager of a joint family a coparcener seeking partition is not entitled to call upon the manager to account for his past dealing with the family property.
The coparcener is entitled only to an account of the joint family property as it exists on the date he demands partition.
In the instant case there being no evidence to establish any misappropriation or fraudulent conversion of the joint family property by Kota Venkatachala Pathy during the period he acted as karta of the family, we are unable to interfere with the direction issued by the High Court which is just and proper.
For the foregoing reasons, the appeal fails and is hereby dismissed but in the circumstances of the case without any order as to costs.
V.P.S. Appeal dismissed.
| The respondents acquired appellant 's land under the Land Acquisition Act.
The Land Acquisition officer awarded compensation at the rate of Rs. 3000/ per acre.
In a reference under section 18, the Additional District Judge enhanced the compensation to Rs. 800/ per katha (1/32 of an acre).
On appeal by the State, the High Court reduced the compensation to Rs. 475/ per katha.
In an appeal by certificate the appellant contended that the High Court was in error in reducing the rate of compensation.
Dismissing the appeal, ^ HELD: (1) The Additional District Judge wrongly excluded certain sale transactions on the ground that the plots in those transactions were at some distance from the acquired land.
The High Court rightly held that the said transactions could not be excluded altogether from consideration.
The High Court also took into account 3 other sale transactions which were relied upon by the appellant.
The High Court rightly excluded from consideration certain sale deeds executed by the appellant.
These transactions related to small plots of land situated on road site and were entered into after the land in dispute had been notified for acquisition.
[586E H, 587C D] (2) Market value under section 23 means the price that a willing purchaser would pay to a willing seller for property having due regard to its existing condition with all its existing advantages and its potential possibilities when laid out in the most advantageous manner excluding any advantages due to the carrying out of the scheme for which the property is compulsorily acquired.
In considering market value the disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy should be disregarded.
[587E F] (3) There is an element of guess work inherent in most cases involving determination of the market value of the acquired land.
But, this in the very nature of things cannot be helped.
The essential thing is to keep in view the relevant factors prescribed by the Act.
The finding of the High Court is based upon consideration of the evidence adduced in the case and there are no grounds to interfere with that finding.[587F G]
|
ivil Appeal No. 3552 of 1989.
From the Judgment and order dated 24.11.87 of the Allahabad High Court in Second Appeal No. 2719 of 1987.
J.P. Goyal, R.C. Verma, M.R. Bidsar and K.K. Gupta (NP) for the Appellants.
O.P. Rana and Girish Chandra for the Respondent.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by special leave is directed against the Judgment of Allahabad High Court dated 24.11.1987.
The plaintiff respondent filed a suit on the ground that the land purchased through 4 sale deeds dated 10.6.1968, 21.6.1968, 17.1.1976 and 23.6.1977 were purchased by him alone and he was the real owner of said land.
The name of the defendants/appellants were included in the said sale deeds only as benamidar.
The defendants appellants took the plea that they had paid their part of the sale consideration and the land was jointly purchased in the name of both the parties.
It may be noted that the defendant appellant Om Prakash and plaintiff respondent Jai Prakash are brothers and defendant appellant NO.
2 Smt.
Satyawati is the wife of appellant Om Prakash.
It has come on record that the appellant NO. 1 Om Prakash was in Government service ever since 1953 and the plaintiff respondent was looking after the entire agricultural property in the village.
Consolidation proceedings also took place in the village and during the consolidation operation partition had been effected in the revenue records and chaks had been carved out in accordance with the share of the parties.
At that time no dispute was raised by the plaintiff respondent that he was owner of the entire property and the names of defendants appellants were wrongly mentioned as benami.
The learned trial court arrived at the conclusion that the names of the defendants appellants in the sale deeds were not mentioned as benamidars and further held that the claim of the plaintiff respondent could not be accepted as no objection had been taken by him even during the consolidation proceedings.
The suit as such was dismissed by the trial court by Judgment dated 24.1.1987.
The plaintiff aggrieved against the judgment of 19 the trial court, filed an appeal.
The first appellate court reversed the Judgment and decree of the trial court and decreed the suit in favour of the plaintiff.
The second appeal filed by the defendants was dismissed by the High Court.
The defendants aggrieved against the Judgment and decree of the High Court filed special leave petition before this Court on 15th March, 1988.
During the pendency of the special leave petition, the Benami Transactions (Prohibition of the right to recover property) Ordinance, 1988 was promulgated by the President of India on 19.5.1988.
The said ordinance was replaced by the Benami Transactions (Prohibition) ACt, 1988 (Hereinafter called the `Benami Act ').
The Act received the assent of the President of India on 5.9.1988.
The defendants filed an application on 1.5.1989 for allowing them to take additional grounds made available on the basis of the aforesaid `Benami Act '.
Thereafter special leave was granted by this court by order dated 21.8.1989 and it was directed that printing of record is dispensed with and appeal will be heard on the special leave petition paper books.
The parties were given liberty to file additional documents if any within four weeks and the appeal was directed to be listed on 13.12.1989 for hearing.
Pending disposal of the appeal, the parties were directed to maintain status quo as existing on that day.
In the above circumstances, the matter came up for hearing before us.
Though there is no specific order of this Court allowing the application dated 1.5.1989 filed by the appellants for raising additional grounds, the same shall be deemed to have been allowed as the special leave petition was granted subsequently on 21.8.1989 after hearing both the parties.
In any case, we further make it clear that we had permitted the defendants/appellants to argue additional grounds made available to them under the `Benami Act ', which admittedly came into force after the filing of the special leave petition in this Court.
Learned counsel appearing on behalf of the defendants appellants had contended that the suit filed by the plaintiff respondent was not maintainable and barred under Section 49 of the U.P. Consolidation of Holdings Act, 1954 as the point regarding the land in question being benami was never raised by the plaintiff respondent during consolidation proceedings and the chaks were allowed to be recorded in the name of the defendants appellants.
So far as this objection under Section 49 of the U.P. Consolidation of Holdings Act is concerned, no foundations were laid in the written statement nor any issue was raised.
The High Court was thus right in holding that in the facts of this case, no foundation had been laid for the applicability of Section 49 of U.P. Consolidation of Holdings Act.
We see no error in the order of the High Court in taking the aforesaid view and we also hold that the defendants 20 appellants cannot be allowed to take such plea for which no foundation was laid in the pleadings.
The next important and formidable question which arises for consideration is whether any suit relating to benami transactions can be decreed after the coming into force of the Benami Act.
This Court in Mithilesh Kumari and Anr.
vs Prem Behari Khare, J.T. , has already held that the expression "shall lie" in Section 4 (1) and "shall allow" in Section 4 (2) of the Benami Act are prospective and shall apply to present (future stages) and future suits, claims or actions only.
The expression "any property held benami" is not limited to any particular time, date or duration.
In a suit for recovery of benami property if any appeal is pending on the date of coming into force of Section 4, the appellate court can take into account the subsequent legislative changes.
Section 4 of the Benami Act reads as under: "(1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
" In the case of Mithilesh Kumar this Court considered the 1/30th report of the Law Commission submitted to the Government on August 14, 1988.
Benami Transaction (Prohibition) Bill, 1988 was drafted after getting the report and the Bill was introduced in the Rajya Sabha on 31st August, 1988 and then the Bill was passed.
The Law Commission devoted several pages to justify retrospective legislation and its view was that the legislation replacing the Ordinance should be retrospective in operation and that no locus penitentia need be given to the persons who had entered in the benami transaction in the past.
Learned counsel appearing for the respondent was unable to convince us to take a different view from that already taken by this Court in Mithiledsh kumari 's case.
It was vehemently contended by the learned counsel for the plaintiff respondent that even if the ratio of Mithilesh Kumari 's case is applied, it can be made available only in a case where appeal was pending before the higher Court.
It was contended that in the present case, only special leave petition 21 filed on 15th March, 1988 was pending at the time when the Benami Act came into force.
It was pointed out that the Ordinance was promulgated on 19.5.1988 and the Benami Act received the assent of the President on 5.9.1988.
It was thus contended that no appeal was pending on 19.5.1988 or 5.9.1988 as the special leave was granted much after on 21.8.1989 and thus no advantage can be taken by the defendants appellants of Section 4 of the Benami Act as no appeal was pending on the date when the benami Act came into force.
We find no force in the above contention of the learned counsel for the plaintiff respondent.
Special leave petition was filed against the Judgment of the High Court on 15.3.1988 and special leave was granted on 21.8.1989 after hearing both the parties.
In the present case the defendants having lost in High Court could have approached this Court only through a special leave petition under article 136 of the Constitution and it is only after the grant of such special leave that the appeal could be heard.
Though the special leave might have been granted subsequently on 21.8.1989 but it is a fact that the Judgment and decree of the High Court had already been challenged by the defendant appellants and it cannot be said that no appeal was pending before this Court simply on the ground that only special leave petition was pending when the Benami Act came into force.
There is a clear prohibition under Section 4 of the benami Act that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
It is well settled that an appeal is a continuation of suit and in the present case the appeal was pending before this Court.
There is no manner of dispute that the present suit had been filed by the plaintiff respondent claiming that he was the real owner of the property and the names of the defendants appellants were mentioned in the sale deeds as benami.
In our view, Section 4 of the Benami Act is a total prohibition against any suit based on benami transaction and the plaintiff respondent is not entitled to get any decree in such suit or in appeal.
As a result of the above discussion, we allow this appeal, set aside the Judgment and decree of the High Court and dismiss the suit.
In view of the fact that the suit is dismissed on account of legislative change brought about during the pendency of the appeal in this Court, there would be no order as to cost.
V.P.R. Appeal allowed.
| Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 provided that every officer was liable for transfer to any office or branch of the Bank of India or to any place in India.
The respondent was posted as a clerk in the appellant Bank at Chandigarh.
At the time of his promotion to the Junior Management Grade Scale 1, he gave an undertaking for posting anywhere in India, and was consequently posted as Branch Officer in the State of Bihar.
Thereafter, he filed a writ petition in the High Court claiming his transfer to Chandigarh Zone on the ground of his wife being employed at Chandigarh.
The writ petition was allowed.
The Bank filed appeal by special leave to this Court.
It was contended on behalf of the respondent that para 4 (vi) of Memorandum dated 3.4.1986 of the Government of India contained guidelines for posting of husband and wife at one station which were meant to be followed also by all the Public Sector Undertakings, and, according to the provisions of the Banking Compa 493 nies (Acquisition and Transfer of Undertakings) Act 1970 and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the bank was bound to follow the guidelines and directions issued by the Central Government.
Allowing the appeal of the Bank, this Court, HELD: 1.
Although the guidelines require the two spouses to be posted at one place as far as practicable the desirability of such a course being obvious yet that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible; nor does it mean that their place of posting should invaria bly be one of their choice even though their preference may be taken into account while making the decision in accord ance with the administrative needs.
The only thing required is that the departmental authorities should consider the feasibility of a suitable posting along with the exigencies of administration and enable the two spouses to live togeth er at one station if it is possible without any detriment to the administrative needs and the claim of other employees.
[pp 495 E; 496 BC] 2.
After accepting a promotion or any appointment in an All india Service, subordinating the need of the couple living together at one station, they cannot as of right claim to be relieved of the ordinary incidents of the serv ice and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
While choosing the career and a particular service the couple have to bear in mind this factor and be prepared to face such a hardship particularly when they belong to different services.
They have to make their choice at the threshhold between career prospects and family life.
[pp 495 F H; 496 A] 3.1 In the instant case, the respondent voluntarily gave an undertaking that he was prepared to be posted at any place in India and on that basis got promotion and thereaf ter sought to be relieved of that necessary incident of an All India Service on the ground that his wife had to remain at Chandigarh.
[p. 496 AB] 3.2 In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such transfer in the policy read with the notice dated March 28, 1988, the High Court 's order cannot be sustained.
[p. The High Court was in error in overlooking all the relevant aspect as well as the absence of any legal right in the respondent to claim the relief which it granted as a matter of course.
[p. 496 CD]
|
ivil Appeal No. 630 of 1963.
48 Appeal from the judgment and order dated June 8, 1959 the Assam High Court in Civil Rule No. 42 of 1957.
D.N. Mukherjee, for the appellant.
Naunit Lal, for the respondent No. 3.
The Judgment of the Court was delivered by Wanchoo, J.
This appeal on a certificate granted by the Assam High Court raises the question of the constitutionality of an annual tax levied by local boards for the use of any land for the purpose of holding markets as provided by section 62 of the Assam Local Self Government Act, No. XXV of 1953, (hereinafter referred to as the Act).
The appellant is a landholder in the district of i Kamrup.
As such landholder, he holds a hat or market on his land since the year 1936 and this market is known as Kharma hat.
In 1953 54, the local board of Barpeta, within whose jurisdiction the Kharma market is held, issued notice to the appellant to take out a licence and pay Rs. 600/ for the year 1953 54 as licence fee for holding the market.
Later this sum was increased to Rs. 700/ for the year 1955 56.
The appellant continued .protesting against this levy but no heed was paid to his protests and the amount was sought to be recovered by issue of distress warrants and attachment of his property.
Consequently, the appellant filed a writ petition in the High Court challenging the constitutionality of the impost on a number of grounds.
In the present appeal two main contentions have been urged in support of the appellant 's case that the impost is unconstitutional, namely, (i) that the Assam legislature had no legislative competence to tax markets, and (ii) that the tax actually imposed on the Kharma market infringes article 14 of the Constitution.
We shall therefore consider these two contentions only.
This attack on behalf of the appellant is met by the respondent by relying on item 49 of List 1I of the Seventh Schedule to the Constitution, and it is urged that the State legislature was competent to impose the tax under that entry, for this was a tax on land.
As to article 14, the reply on behalf of the respondent is that under section 62 of the Act, a rule has been framed prescribing Rs. 1000/ as the maximum amount of tax which may be levied by any local board in Assam on markets licensed under that section.
The rule also provides that any local board may with the previous approval of Government impose a tax within this maximum according to the size and importance of a market.
So it is submitted that the tax has been imposed by Barpeta local board in accordance with this rule, and the appellant has failed to show that there has been any discrimination in the fixation of the amount of tax on the Kharma market.
The High Court repelled the contentions raised on behalf of the appellant and dismissed the writ petition.
As however, questions of constitutional importance were involved, the High Court 49 granted a certificate under article 132 of the Constitution; and that is how the matter has come up before us.
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 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(1).
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 is 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 the tax under challenge.
It is necessary therefore to analyse the scheme of section 62 which provides for this tax.
Section 62(1) inter alia lays down that the local board may order that no land shall be used as a market otherwise than under a licence to be granted by the board.
Sub section (2) of section 62 is the charging provision and may be quoted in full: "On the issue of an order as in sub section (1), the board at a meeting may grant within the local limits of its jurisdiction a licence for the use of any land as a market and impose an annual tax thereon and such conditions as prescribed by rules.
" Sub section (3) provides that when it has been determined that a tax shall be imposed under the preceding sub section, the local board shall make an order that the owner of any land used as a market specified in the order shall take out a licence for the purpose.
Such order shall specify the tax not exceeding such amount as may be prescribed by rule, which shall be charged for the financial year.
It will be seen from the provisions of these three sub sections that power of the board to impose the tax arises on its passing a resolution that no land within its jurisdiction shall be used as a market.
Such resolution clearly affects land within the jurisdiction of the board and on the passing of such a resolution the board gets the further power to issue licences for holding of markets on lands within its jurisdiction by a resolution and also the power to impose an annual tax thereon.
Now it is urged on behalf of the appellant that when sub s (2) speaks of imposing of "an annual (1) 50 tax thereon" it means the imposition of an annual tax on the market, and that there is no provision in List II of the Seventh.
Schedule for a tax on markets as such.
"Markets and fairs" appear at item 28 of List H, and it is urged that under item 66 of the same List, fees with respect to markets and fairs can be imposed; but there is no provision for imposing a tax on markets in the entries from 45 to 63 which deal with taxes.
It may be accepted that there is no entry in List II which provides for taxes as such on markets and fairs.
It may also be accepted that entry 66 will only justify the imposition of fees on markets and fairs which would necessitate the providing of services by the board imposing the fees as a quid pro quo.
That however, does not conclude the matter, for the contention on behalf of the State is that tax under section 62 is on land and not on the market and further the tax depends upon the use of the land as a market.
It seems to us on a close reading of sub section
(2) that when that sub section speaks of "annual tax thereon", the tax is on the land but the charge arises only when the land is used for a market.
This will also be clear from the subsequent provisions of section 62 which show that the tax is on land though its imposition depends upon user of the land as a market.
Sub section (3) shows that as soon as sub section (1) and (2) are complied with, the local board shall make an order that the owner of any land used as a market shall take out the licence.
Thus the tax is on the land and it is the owner of the land who has to take out the licence for its use as a market.
The form of the tax i.e. its being an annual tax as contrasted to a tax for each day on which the market is held also shows that in essence the tax is on land and not on the market held thereon.
Further the tax is not imposed on any transactions in the market by persons who come there for business which again shows that it is an impost on land and not on the market i.e. on the business terein.
Then sub s (5) provides that the tax shall be paid by the owner of any land used as a market which again shows that it is on the land that the tax is levied, though the charge arises when it is used as a market.
Sub section (6) then lays down that on receiving the amount so fixed the board shall issue a licence to the person paying the same.
Here again the license is for the rise of the land.
Then comes sub section
(8) which provides that wherever.
being the wner or occupier of any land uses or permits the same to be used as a market without a licence shall be liable to fine.
This provision clearly shows that the tax is on the land and it is the owner or occupier of the kind who is responsible and is liable to prosecution if he fails to take cut a licence.
No liability of any kind is thrown on those who come to the market for the purpose of trade.
Sub section (9) then lays down that where a conviction has been obtained under sub section
(8), the District Magistrate or the Sub Divisional Officer, as the case may be, may stop the use of the land as a market.
Sub section (10) then provides that every, 51 owner, occupier or farmer of a market shall cause such drain to be made therein and take all necessary steps to keep such market in a clean and wholesome state and shall cause supply of sufficient water for the purpose as well as for drinking purpose.
Sub sections (ID and (12) give power to the board on the failure of any owner, occupier or farmer to comply with a notice under sub section
(10), to take possession of the land and the market thereon and execute the works itself and receive all rents, tolls and other dues in respect of the market.
This will again show that the tax provided by section 52(2) is a tax for the use of the land and it is not a tax on the market as such, for the income from the market in the shape of tools, rents and other dues is not liable to tax under section 52 and is different from tax.
The scheme of section 62 therefore shows that whenever any land is used for the purpose of holding a market, the owner,occupier or farmer of that land has to pay a certain tax for its use as such.
But there is no tax on any transaction that may take place within the market.
Further the amount of tax depends upon the area of the land on which market is held and the importance of the market subject to a maximum fixed by the State Government.
We have therefore no hesitation in coming to the conclusion on a consideration of the scheme of section 52 of the Act that the tax provided therein is a tax on land, though its incidence depends upon the use of the land as a market.
Further as we have already indicated section 62(2) which uses the words "impose an annual tax thereon" clearly shows that the word "thereon" refers to any land for which a licence is issued for use as a market and not to the word "market".
Thus the tax in the present case being on land would clearly be within the competence of the State legislature.
The contention of the appellant that the State legislature was not competent to impose this tax because there is no provision in List II of the Seventh Schedule for imposing a tax on markets as such must therefore fail.
Then we come to the contention under article 14 of the Constitution.
As to that it is well settled that it is for the person who alleges that equality before law has been infringed to show that such really is the case.
It was therefore for the appellant to produce facts and figures from which it can be inferred that the tax imposed in the present case is hit by article 14 of the Constitution.
In that connection, all that the appellant has stated in his writ petition is that the board fixed a high rate arbitrarily and thus discriminated against the appellant 's market as against the other neighbouring markets where the tax had been fixed at a much lower rate, and that this was hit by article 14.
There was certainly an allegation by the appellant that article 14 had been infringed; but that allegation is vague and gives no facts and figures for holding that the tax imposed on the Kharma market was discriminatory.
It appears that the tax was imposed for the year 1953 54.
which was continued Inter on, with some modifications.
At that time there were five 52 markets on which the tax was imposed including the Kharma market.
The lowest tax was at Rs. 400/ on two markets, then at Rs. 500/ on the third market and at Rs. 600/ on the Kharma market and finally at Rs. 1000/ on the fifth market.
Rule 300(2), flamed in accordance with section 63(3) runs thus: "Rs. 1000/ (Rupees one thousand) only per annum has been fixed as the maximum amount of tax which may be levied by the local boards in Assam on markets licensed under section 62 of the Act.
Any local board may with the previous approval of Government impose a tax within this maximum according to the size and importance of a market.
" Now the rule provides that Rs. 1000/ is the maximum tax and within that maximum the board has to graduate the tax according to the size and importance of the market.
The size of the market naturally takes into account the area of the land on which the market is held; the importance of the market depends upon the number of transactions that take place there, for the larger the number of transactions the greater is the importance of the market.
If therefore the appellant is to succeed on his plea of article 14 on the ground that the tax fixed on his market was discriminatory he had to adduce facts and figures, firstly as to the size of the five markets on which the tax was levied in the relevant years and secondly as to the relative importance of these markets.
But no such facts and figures have been adduced on behalf of the appellant.
It is true that the respondent in reply to the charge of discrimination was equally vague and merely denied that there was any arbitrary discrimination.
But it was for the appellant to show that in fixing the tax on the five markets as it did, the board acted arbitrarily and did not take into account the size and importance of the markets.
As there is no material before us by which we can judge the relative size and importance of the five markets, it is not possible to hold that there was discrimination in taxing Kharma market at Rs. 600/ per year as compared to taxing the three other markets at less than Rs. 600/ .
The attack therefore on the amount actually fixed on the ground of discrimination must fail.
We therefore dismiss the appeal with costs.
Appeal dismissed.
| The appellant as a land holder held a hat or market on his land.
The respondent, the local board, within whose jurisdiction the market was held, issued notice to the appellant to take out a licence and pay a certain sum as licence fee for holding the market.
Inspire of the continued protests of the appellant against the levy, the amount was sought to be recovered by the issue of distress warrants and attachment of his property.
The appellant file.d a writ petition in the High Court challenging on a number of grounds, the constitutionality of the impost, which was dismissed.
In appeal by certificate the appellant contended that (i)the Assam Legislature had no legislative competence to tax markets, and (ii) the tax actually imposed on this market infringed article 14 of the Constitution, because the board fixed a higher rate for the appellant 's market as compared with other neighbouring markets.
HELD:(i) The tax in the present case being on land within the meaning of Entry 49 of List II of the Seventh Schedule of the Constitution, would clearly be within the competence of the State Legislature.
[49 E C] The Scheme of section 62 of the Assam Local Self Government Act, 1953 shows that the tax provided therein is a tax on land, though its incidence depends upon the use of the land as a market and the owner, occupier or farmer of that land .has to pay a certain tax for its use as such.
But there is no tax on the transaction that may take place within the market.
Further the amount of tax depends upon the area of the land on which the market is held and the importance of the market subject to a maximum fixed by the State Government.
Section 62(2) which used the words "impose an annual tax thereon" clearly shows that the word "thereon" refers to any land for which a licence is issued for use as a market and not to the word "market".
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 the List II.
Ralla Ram vs The Province of East Punjab, , applied.
[51 C F] (ii) It was for the appellant to show that in fixing the tax on the other markets as it did, the board acted arbitrarily and did not take into account the size and importance of the markets.
As there was no material by which the relative size and importance of those markets, could be judged, it was not possible to hold that there was discrimination in taxing this market.
[52 F G]
|
Appeal No. 149 of 1956.
Appeal by special leave from the judgment and order dated December 22, 1954, of the former Nagpur High Court in Misc.
Civil Case No. 36 of 1954.
R. J. Kolah, J. M. Thakar, Ramesh A. Shroff, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, K.N. Rajagopala Sastri and R. H. Dhebar, for the respondent.
April 25.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is an appeal against the judgment of the High Court of Nagpur in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter referred to as the Act.
The appellant is the sole proprietor of a firm called Bansilal Abirchand Kasturchand, which carries on business as money lenders, dealers in shares and bullion and commission agents in Bombay, Calcutta and other places.
He is a resident of Bikaner, and manages the 692 business at the several places through agents.
During the relevant period, the agent of the firm at Bombay was one Chandratan, who held a power of attorney dated May 13, 1944, conferring on him large powers of management including authority to operate on bank accounts.
During the period, November 15, 1944, to November 23,1944, the agent withdrew from the firm 's bank account sums aggregating to Rs. 2,30,636 4 0, and applied them in satisfaction of his personal debts incurred in speculative transactions.
On November 25, 1944, the cashier of the firm sent a telegram to the appellant informing him of the true state of affairs.
Thereupon, the appellant went to Bombay on December 3, 1944, and on the 4th, cancelled the power of attorney given to the agent, and by notice dated December 6, 1944, called upon him to pay the amounts withdrawn by him.
The agent replied on December 8, 1944, admitting the misappropriation of the amounts and pleading for mercy.
On January 16,1945, the appellant filed a suit against him in the High Court of Bombay for recovery of Rs. 2,30,636 4 0 and that was decreed on February 20, 1945.
A sum of Rs. 28,000 was recovered from Chandratan and adjusted towards the decree and the balance of Rs. 2,02,442 13 9 was written off at the end of the accounting year as irrecoverable.
Before the Income tax authorities, the dispute related to the question whether this amount of Rs. 2,02,442 13 9 was an admissible deduction.
The Tribunal found that the amount in question represented the loss sustained by the appellant owing to misappropriation by his agent, Chandratan, but held on the authority of the decision in Curtis vs J. & G. Oldfield, Limited (1) that it was not a trading loss and therefore could not be allowed.
On the application of the appellant, the Tribunal referred the following question of law for the decision of the High Court, Nagpur: Whether the said sum of Rs. 2,02,442 13 9 being part of the amount embezzled by the assessee 's Munim is allowable as a deduction under the Indian Income (1) 693 tax Act either under Section 10(1) or under the general principles of determining the profit and loss of the assessee or Section 10(2)(xv) ? " The learned Judges held that the case was governed by the decision in Curtis vs J. & G. Oldfield, Limited (1), and answered the question against the appellant.
An application under section 66(A)(2) for a certificate was also dismissed and thereafter, the appellant applied for and obtained leave to appeal to this Court under article 136, and that is how the appeal comes before us.
The question whether moneys embezzled by an agent or employee are allowable as deduction in computing the profits of a business under section 10 of the Act has come up for consideration frequently before the Indian courts, and the decisions have not been quite uniform.
Before discussing them, it is necessary that we should examine the principles that are in law applicable to the determination of the question.
Three grounds have been put forward in support of the claim for deduction: (1) that the los 3 sustained by reason of embezzlement is a bad debt allowable under section 10(2)(xi) of the Act; (2) that it is a business expense falling within section 10(2)(xv) of the Act; and (3) that it is a trading loss, which must be taken into account in computing the profits under section 10(1) of the Act.
As regards the first ground, the authorities have consistently held that the deduction is not admissible under section 10(2)(xi) of the Act, and that, in our view, is correct.
A debt arises out of a contract between the parties, express or implied, and when an agent misappropriates monies belonging to his employer in fraud of him and in breach of his obligations to him, it cannot be said that he owes those monies under any agreement.
He is no doubt liable in law to make good that amount, but that is not an obligation arising out of a contract, express or implied.
Nor does it make a difference that in the accounts of the business the amounts embezzled are shown as debits, the amounts realised towards them, if any, as credits, and the balance is finally written off.
They are merely journal entries adjusting the accounts and do not import a contractual liability.
(1)(1925) 694 Nor can a claim for deduction be admitted under section 10(2)(xv), because moneys which are withdrawn by the employee out of the business till without authority and in fraud of the proprietor can in no sense be said to be " an expenditure laid out or expended wholly and exclusively " for the purpose of the business.
The controversy therefore narrows itself to the question whether amounts lost through embezzlement by an employee are a trading loss which could be deducted in computing the profits of a business under section 10(1).
It is to be noted that while section 10(1) imposes a charge on the profits or gains of a trade, it does not provide how those profits are to be computed.
Section 10(2) enumerates various items which are admissible as deductions, but it is well settled that they are not exhaustive of all allowances which could be made in ascertaining profits taxable under section 10(1).
In Incometax commissioner vs chitnavis (1), the point for decision was whether a bad debt could be deducted under section 10(1) of the Act, there having been in the Act, as it then stood, no provision corresponding to section 10(2)(xi) for deduction of such a debt.
In answering the question in the affirmative, Lord Russel observed: " Although the Act nowhere in terms authorizes the deduction of bad debts of business, such a deduction is necessarily allowable.
What are chargeable in income tax in respect of a business are the profits and gains of a year; and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred, otherwise you would not arrive at the true profits and gains.
" It is likewise well settled that profits and gains which are liable to be taxed under section 10(1) are what are understood to be such according to ordinary commercial principles.
,The word " profits. . is to be understood ", observed Lord Halsbury in Gresham Life Assurance Society vs Styles (2), " in its natural and proper sense in a sense which no commercial man would misunderstand ".
Referring to these observa (1) (1932) L. R. 59 I.A. 290, 296, 297.
(2)(1892) A.C. 309, 315 ; , 188.
695 tions, Lord Macmillan said in Pondicherry Railway Co.v.
Income tax Commissioner (1):" English authorities can only be utilized with caution in the consideration of Indian income tax cases owing to the differences in the relevant legislation, but the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance Society V. Styles (2), is of general application unaffected by the specialities of the English tax system.
" The result is that when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend on whether, having regard to accepted commercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it.
If that is established, then the deduction must be allowed, provided of course there is no prohibition against it, express or implied, in the Act.
These being the governing principles, in deciding whether loss resulting from embezzlement by an employee in a business is admissible as a deduction under section 10(1) what has to be considered is whether it arises out of the carrying on of the business and is incidental to it.
Viewing the question as a businessman would, it seems difficult to maintain that it does not.
A business especially such as is calculated to yield taxable profits has to be carried on through agents, cashiers, clerks and peons.
Salary and remuneration paid to them are admissible under section 10(2)(xv) as expenses incurred for the purpose of the business.
If employment of agents is incidental to the carrying on of business, it must logically follow that losses which are incidental to such employment are also incidental to the carrying on of the business.
Human nature being what it is, it is impossible to rule out the possibility of an employee taking advantage of his position as such employee and misappropriating the funds of his employer, and the loss arising from such misappropriation must be held to arise out of the carrying on of business and to be incidental to it.
(1) (1931) L.R. 58 I.A. 239, 252.
(2) , 315; , 188 696 And that is how it would be dealt with according to ordinary commercial principles of trading.
At the same time, it should be emphasised that the loss for which a deduction could be made under section 10(1) must be one that springs directly from the carrying on of the business and is incidental to it and not any loss sustained by the assessee, even if it has some connection with his business.
If, for example, a thief were to break overnight into ,he premises of a moneylender and run away with funds secured therein, that must result in the depletion of the resources available to him for lending and the loss must, in that sense, be a business loss, but it is not one incurred in the running of the business, but is one to which all owners of properties are exposed whether they do business or not.
The loss in such a case may be said to fall on the assessee not as a person carrying on business but as owner of funds.
This distinction, though fine, is very material as on it will depend whether deduction could be made under section 10(1) or not.
We may now examine the authorities in the light of the principles stated above.
In Jagarnath Therani vs Commissioner of Income tax (1), the facts were that the assessee who was carrying on business entrusted a sum of Rs. 25,000 to his gumastha for payment to a creditor, but he embezzled it.
The question referred for the opinion of the High Court was whether that sum could be allowed as deduction in the computation of profits.
In answering it in the affirmative, the learned Judges observed that according to the practice obtaining in England, sums embezzled by employees were allowed as deductions and referred to statements of the law to that effect from Sanders ' Income tax and Super tax, Murray and Carters ' Guide to Income tax Practice and to the following passage in Snellings ' Dictionary of Income tax and Super Tax Practice: ,,If a loss by embezzlement can be said to be necessarily incurred in carrying on the trade it is allowable as.
deduction from profits.
In an ordinary case it springs directly from the necessity of deputing (1)(1925) I.L.R. 4 Pat.
697 certain duties to an employee, and should therefore be allowed.
" They accordingly allowed the deduction as "a loss incidental to the conduct of the business".
In Ramaswami Chettiar vs Commissioner of Income Tax, Madras (1), the assessee was carrying on banking business in several places in India and in Burma.
On October 21, 1926 thieves broke into the strong room in the business premises at Moulmiengyum and stole cash and currency notes of the value of Rs. 9,335.
The question was whether this amount could be allowed as a deduction.
It was held by the majority of the Jndges that it could not be.
In the judgment of the learned Chief Justice, the law was thus stated: " If any one is paid a sum due to him as profits and he puts that in his pocket and on his way home is robbed of it, it would be, I think, difficult to contend that such a loss was incidental to his business.
Still more so when he has reached his home and put those profits in a strong room or some other place regarded by him to be a place of safety.
1 can well understand that, in cases where the collection of profits or payment of debts due is entrusted to a gumastha or servant for collection and that person runs away with the money or otherwise improperly deals with it, the assessee should be allowed a deduction because such a loss as that would be incidental to his business.
He has to employ servants for the purpose of collecting sums of money due to him and there is the risk that such servant may prove to be dishonest and instead of paying the profits over to him, convert them to his own use.
But I cannot distinguish the present case from the case of any professional man or trader who, having collected his profits, is subsequently robbed of them by a stranger to his business.
In this case, none of the thieves were the then servants of the assessee, although one of them had formerly been his cook. " These observations, while they support the right of the asssee to deduction of loss resulting from (1)(1930) I.L. R. , 906, 907.
698 embezzlement by an employee, also show the extent and limits of that right.
In Bansidhar Onkarmal V. Commissioner of Incometax (1), there was a theft of money by an accountant, but it took place after the office hours, and it was held, following the decision in Ramaswami Chettiar vs Commissioner of Income tax (2) that it could not be allowed as a deduction under section 10(1) of the Act, as it was not incidental to the carrying on of the trade.
But it was observed by Narasimham J. who delivered the leading judgment that it might have made a difference if the theft had been by the accountant during the office hours.
In Venkatachalapathy Iyer vs Commissioner of Income tax (3), the assessees were a firm of merchants engaged in the business of selling yarn.
Its accountant was one Rajarathnam lyengar, whose duty it was to receive cash on sales, make disbursements and maintain accounts.
He duly entered all the transactions in the cash book but when striking the balance at the end of each day he short totalled the receipts and overtotalled the disbursements and misappropriated the difference.
The question was whether the amounts thus embezzled could be deducted.
On a review of the authorities, Satyanarayana Rao and Raghava Rao JJ. held that the loss was incidental to the carrying on of the business and should be allowed.
The appellant contends that this decision is decisive in his favour ; but the learned Judges of the Court below were of the opinion that on the facts it was distinguishable and that the present case fell within the decision in Curtis vs J. & G. Oldfield, Limited (4).
It is necessary to examine the decision in Curtis vs
J. & G. oldfield (4) somewhat closely, as the main controversy in the Indian courts has been as to what was precisely determined therein.
There, the facts were that the managing director of a company who was in exclusive control of its business, had, availing himself of his position as such managing director, withdrawn large amounts from time to time and applied them to his own personal affairs.
This went on for (1) (3) (2) Mad. 904, 906, 907.
(4) 699 several years prior to his death, and thereafter, the fraud was discovered, and the amounts overdrawn by him were written off as irrecoverable.
The question was whether these amounts could be allowed as a deduction, and it was answered in the negative by Rowlatt J.
Now, it should be observed that the learned Judge did not say that amounts embezzled by an employee in the course of business would not be admissible deductions.
On the other hand, he observed: " I quite think, with Mr. Latter, that if you have a business. in the course of which you have to employ subordinates, and owing to the negligence or the dishonesty of the subordinates some of the receipts of the business do not find their way into the till, or some of the bills are not collected at all, or something of that sort, that may be an expense connected with and arising out of the trade in the most complete sense of the word." He went on to observe: " I do not see that there is any evidence at all that there was a loss in the trade in that respect.
It simply means that the assets of the Company moneys which the Company had got and which had got home to the Company, got into the control of the Managing Director of the Company, and he took them out.
It seems to me that what has happened is that he has made away with, receipts of the Company de hors the trade altogether in virtue of his position as Managing Director in the office and being in a position to do exactly what he likes." Thus, what the learned Judge really finds is that the embezzlement was not connected with the carrying on of the trade but was outside it, and on that finding, the decision can only be that the deduction should be disallowed.
But the learned Judges in the Court below would appear to have read the above observations as meaning that, as a rule of law, embezzlements made prior to the receipts of the amounts by the assessees would be incidental to the carrying on of the trade and therefore admissible, but that embezzlements 89 700 made after receipt are not connected with the carrying on of the trade and are therefore inadmissible.
We do not so read those observations.
It is a question turning on the facts of each case whether the embezzlement in respect of which deduction is claimed took place in the carrying on of the business, and the observations of the learned Judge that it did not so take place have reference to the facts of that case, and can afford no assistance in deciding whether in a given case the embezzlement was incidental to the conduct of the business or not.
Now, in Curtis vs J. & G. Oldfield Limited(1), the company was doing business in wine and spirit, and in such a business it is possible to hold that when once the price is realised and put into the bank, the trading has ceased and that the subsequent operations on the bank account are not incidental to the carrying on of the trade.
But here, we are dealing with a banking business, which consists in making advances, realising them and making fresh advances, and for that purpose, it is necessary not merely to deposit amounts in banks but also to withdraw them.
That is to say, a continuous operation on the bank account is incidental to the conduct of the business.
The theory that when once moneys are put into the bank they have " got home " and that their subsequent withdrawal from the bank would be de hors the business, will be altogether out of place in a business such as banking.
It will be a wholly unrealistic view to take of the matter, to hold that the realisations have reached the till when they are deposited in the bank, and that that marks the terminus of the business activities in money lending.
It should also be mentioned that in Curtis vs J. & 'G. oldfield (1) though the assessee was a company, it was found that the shares were all held by the members of the Oldfield family, that the company had no auditor and no minutes book, that there was Cc an almost entire absence of balance sheets ", and that one of the members, Mr. J. E. Oldfield, was in management with wide powers.
In view of the fact that he (1) 701 had a large number of shares in the company and that it was in substance a private company, his withdrawals would be more like a partner overdrawing his account with the firm than an agent embezzling the funds of his employer, and it could properly be held that such overdrawing has nothing to do with the trading activities of the firm, whose profits are to be taxed.
It would, therefore, be an error to suppose that the observations made by Rowlatt J. in the above context could be regarded as an authority for the broad proposition that as a matter of law, and irrespective of the nature of business, there could be no business activities with reference to moneys after they have been collected, and that, in consequence, embezzlement thereof could not be incidental to the carrying on of business.
And we should further add that it would make no difference in the admissibility of the deduction whether the employee occupies a subordinate position in the establishment or is an agent with large powers of management.
Subsequent to the decision now under appeal, the Bombay High Court had occasion to consider this question in Lord 's Dairy Farm Ltd. vs Commissioner of Income tax (1).
On a review of the authorities including the decision in Curtis vs J. & G. Oldfield, Limited (2), Chagla C. J. and Tendolkar J. held that loss caused to a business by defalcation of an employee was a trading loss, and that it could be deducted under section 10(1).
In Motipur Sugar Factory Ltd. vs Commissioner of Income tax (3), an employee who had been entrusted with the funds of a company for purposes of distribution among sugarcane growers in accordance with statutory rules, was robbed of them on the way.
It was held by Ramaswami and Sahai JJ.
that the loss was incidental to the conduct of the trade, and must be allowed.
We agree with the decisions in Venkatachalapathy Iyer vs Commissioner of Incometax (4), Lord 's Dairy Farm Ltd. vs Commissioner of Income tax (1) and Motipur Sugar Factory Ltd. vs Commissioner of Income tax(3).
(1) (1925) 9 Tax Cas. 319.
(3) 702 It was argued for the respondent that there was no evidence, much less proof, that when Chandratan withdrew funds from the bank, he did so for the purpose of making any advance, and that, therefore, the withdrawal could not be held to have been for the conduct of the trade.
That, in our opinion, is not necessary.
When once it is established that Chandratan was in charge of the business, that he had authority to operate on the bank accounts, and that he with drew the moneys in the purported exercise of that authority, his action is referable to his character as agent, and any loss resulting from misappropriation of funds by him would be a loss incidental to the carrying on of the business.
It was also contended that the power of attorney dated May 13, 1944, under which Chandratan was constituted agent related not only to the business of the appellant but also to his private affairs, and that there was no proof that the embezzlement was in respect of the business assets of the appellant and not of his private funds.
No such question was raised before the Income tax authorities, and their finding assumes that the moneys which were misappropriated were business funds.
We are also not satisfied that, on its true construction,, the authority conferred on the agent by the power of.attorney extended to the personal affairs of the appellant.
In the result, we are of opinion that the loss sustained by the appellant as a result of misappropiriation by Chandratan is one which is incidental to the carrying, on of his business, and that it should therefore deducted in computing the profits under section 10(1) of the, Act.
In this view, the order of the lower court must be set aside and the reference answered in the, affirmative.
The appellant will get his costs of this appeal and of the reference in the Court below.
appeal allowed.
| Central Reserve Police Force comprises of officers dra wn from two channels, direct recruits and Emergency Commi s sioned Officers (ECOs).
There was dispute regarding fixati on of inter se seniority of these officers which was ultimate ly resolved by the Delhi High Court by the judgment und er appeal.
The High Court by the impugned judgment held in favour of ECOs and directed implementation of its decisi on regarding seniority as also grant of benefits to ECOs.
As a result of the High Court 's judgment 37 direct recruits, w ho are at present holding the posts of Commandants, that is to say, 22 as Commandants (Selection Grade) and 15 as Comma n dants (Non Selection Grade) by virtue of upgradation of 88 posts of Commandants (Non Selection Grade) will have to be reverted.
Being aggrieved by the High Court 's judgment, th ey have appealed to this Court, after obtaining Special Leave .
The main contention advanced by the appellants is th at as they were not parties in the Contempt Proceedings where in the High Court has rendered the judgment in question, th at order is not binding upon them and as such the matter be remitted back to the High Court.
To avoid delay that will be caused in the matter if the case is sent back, the Court as also the parties desired that the dispute be amicably se t tled.
Accordingly both the direct recruits and ECOs he ld negotiations amongst themselves with a view to arrive at an acceptable settlement and after a great deal of endeavou r, they put up the terms of agreement before the Court.
T he Court thereupon gave time to the Union of India to consid er the acceptability of the agreement reached between t he contesting parties.
The Union of India conveyed to the Cou rt that the agreement was not acceptable to it though it was in favour of amicable settlement.
It suggested two other alte r natives, which were not found to be favourable to ECOs.
15 This Court considered the respective terms of the se t tlement and disposing of the appeals in terms thereof, HELD:.
Central Reserve Police Force is a sensitive for ce and there should not be any dispute and differences amo ng the members of such force.
It is the duty of the Governme nt to maintain peace and harmony in the force by trying to resolve any dispute among the members of the force in publ ic interest.
[17B] While it may be desirable that the present position of the direct recruits should be protected, the giving of su ch protection should not be to the prejudice of the ECOs.
[17 E] In order to establish peace and amity between the co n tending parties and for ends of justice, the Court direct ed that in modification of the judgment of the High Court, t he appeals be disposed of in accordance with the terms of settlement, as agreed to by the direct recruits and t he ECOs, set out in this Court 's judgment hereinbelow.
[17E F ]
|
Prevention of Corruption Act , 1947 , the minimum sentence that can be imposed is imprisonment for One year and the maximum sentence is seven years.
However , the Court , for any special reasons to be recorded in writing.
may impose a sentence of imprisonment of less than one year.
There is no special circumstance in this case justifying the court to take a lenient view.
Corruption has become so rampant in the country and the offence in this particular case cannot be considered trivial at all.
This is not a case of a petty clerk or a peon accepting a small amount as a bribe for doing some little favour.
The Court can lot take a lenient view of the conduct of an Income tax officer , who accepts a large amount as a bribe for causing loss to public revenue.
[742A C] & CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.180 of 1976.
D From the Judgment and Order dt.
17.10.1974 of the Gujarat High Court in Crl.
Appeal No. 750 of 1973.
N. L. Kakar , and R.N. Poddar for the Appellant.
S.K. Dholakia , R.C. Bhatia and P.C. Kapur for the Respondent.
He was tried and convicted by the Additional Special Judge , Ahmedabad of offence under Section 161 , Indian Penal Code and Section 5(2) read with Section 5(1) (d) of the Prevention of Corruption Act.
He was sentenced to undergo rigorous imprisonment for one year and to pay a fine of Rs. 2,000 on each of the two counts.
On appeal , the High Court of Gujarat acquitted the accused of both the offences.
The State of Gujarat has preferred this appeal by special leave of this Court under Article 136 of the Constitution.
The case of the prosecution briefly was as follows: One Shashi Kant Mansukh Lal Sheth (P.W. 2) was the 736 Managing partner of a firm known as M/s Hind Fertilizers , Bhavnagar.
The assessments for the years 1968 69 , 1969 70 , 1970 71 and 1971 72 were pending before the accused income tax Officer.
Between June and October 1971 , there were nine hearings of the case.
On 3.5.72 , Laxmikant Sheth (p.W. 7) the Income tax practioner who was representing the firm , received a notice directing the firm 's representative to attend his office on 14.3.72 with the firm 's books of account and to show cause why sums totaling Rs. 1,94,378 should not be added to their returns of income for the years in question.
The firm felt that the notice was not justified As P.W. 7 would be busy on 14.3.72 , it was decided that they would go to the income tax office with their books of account on 13th itself.
On 10.3.72 , Shashi Kant Sheth (P.W. 2) contacted the income tax officer on the telephone and the latter asked him to meet him at his residence at 2.00 P.M. Shashi Kant went to the house of accused at Bhavnagar that afternoon.
He was told to come again on the evening of 13th.
On the 13th , P.Ws 2 and 7 went to the office and submitted the reply to the show cause notice.
The accused wanted them to meet him again on 14th.
P.W.7 said he was busy on 14th.
The accused then asked P.W. 2 to come alone.
As previously agreed on 10th , Shashi Kant went to the house of the accused on the night of 13th when the accused told him that the clarification given by the firm was not satisfactory and that they would have to pay a sum of about Rs. 12,500 by way of tax unless a sum of Rs. 40,000 was given to him as a bribe.
On P.W. 2 pleading his inability to pay such a large sum , it was settled that a sum of Rs. 12,500 should be paid.
P.W. 2 wanted to consult his partner.
He was told by the accused that he should bring the amount to his house on the evening of 14th March , 1973.
There after , Shashi Kant contacted Shri Judeja , Deputy Superintendent of police , CBI who was camping at Bhavnayar Shashi Kant complained to him about the demand of bribe of Rs. 12,500 by the accused.
Shri Judeja then took the necessary steps for laying a trap.
Two officers of the postal department Shri Parikh , Manager , Postal Store Depot , Ahmedabad (P.W. 3) who was staying in the guest house , and Shri Panchal , an officer of the Postal Department stationed at Bhavnagar itself were requested to serve as panch witnesses.
Shashi Kant was asked to bring currency notes of the value of Rs. 12,500.
The notes were treated with phenol phethelen powder.
Shashi Kant put the notes in his pocket.
He was instructed to go to the house of the accused accompanied by Parikh and to tender 737 the amount to the accused.
On the accused receiving the amount Shri Parikh was to come out of the house and signal the police party to come.
A panchnama stating all these facts was duly prepared at the guest house.
Thereafter , as arranged , the raiding party proceeded towards the house of the accused.
Shahsi Kant and Parikh , P.Ws 2 and 3 , went inside.
Shahsi Kant introduces Parikh to him as a member of his staff.
They chatted generally for some time.
The accused then mentioned about the amount to be paid to him whereupon Shashi Kant handed over the bundle of currency notes him.
The currency notes were received by the accused who carefully put them in a newspaper and folded the newspaper.
Parikh then went out and signalled to the police party.
Judeja , Dy.
Supdt.
Of Police P.W. 9 , the other panch witness Panchal and the rest of the police party rushed inside.
The notes were seized.
The accused was asked to dip his fingers in a solution of bicarbonate.
The solution turned pink Thereafter , the panchnama was prepared.
After the investigation was duly completed , the respondent was charge sheeted for the two offences of which he was ultimately convicted.
The defence of the accused was that the prosecution case was false.
Shashi Kant came to his house with a stranger on the night of 14.3.72.
He was surprised at his visit , but for the sake Of courtesy , he asked him to sit down and asked him the purpose of his visit.
Instead of replying him , Shashi Kant and the stranger started talking about politics to him.
He told him that he was a public servant and he was not interested in politics He also told them that he wanted to go to bed.
He went to the toilet for a few minutes and when he returned , Shahsi Kant and the stranger stood up and went away after shaking hands with him.
A few moments later they returned with the police party.
They must have planted the notes in the newspaper which was lying on the table when he had gone to the toilet.
It is seen from the facts narrated above that meeting of Shashi Kant and Parikh with the accused on the night of 14.3.72 at 8.00P.M. is not disputed.
It is also not disputed that Shashi Kant and Parikh talked to the a accused for quite considerable time , nearly 40 minutes.
It is further not disputed that within a few moments after Shashi Kant and Parikh left the accused , Judeja , Panchal and rest of 738 police party entered the house of the accused and currency notes of the value of Rs. 12,500 were seized from in a fold of a newspaper laying on the table.
The accused was present all the time and there was no protest by him.
That the fingers of the accused were also dipped in some solution is not disputed.
The only question is whether the amount of Rs. 12,500 was received by the accused as a bribe or whether the amount was planted by Shashi Kant and Parikh during the brief visit of the accused to the toilet.
The learned Sessions Judge accepted the evidence of Shashi Kant , Parikh and Judeja and convicted the accused as aforesaid.
The High Court , however , took are markably curious view of the evidence and acquitted the accused.
The High Court narrated several circumstances , one after an other , why the prosecution case should not be accepted.
We have considered every one of the circumstances and we find that there is not a single satisfactory circumstance reasonably justifying the acquittal.
On the other hand we find that everyone of the circumstances is overstated and fanciful.
The most important circumstance which seems to have weighed heavily with the High Court , almost to the point of obsession , was that Parikh and Panchal were not independent witnesses as they were both government servants and as they had some previous acquaintance with Inspector Sharma who was assisting Judeja in the investigation , The High Court was of the view that some other respectable residents of Bhavnagar should have been called as Panch witnesses to be associated with the raid.
We are afraid the High Court has entirely misdirected itself in appreciating the evidence.
In their approach to the evidence , the High Court has done injustice to the witnesses and this has resulted in a grave miscarriage of justice.
In appreciating oral evidence , the question in each case is whether the witness is a truthful witness and whether there is anything to doubt his veracity in any particular matter about which he deposes Where the witness is found to be untruthful on material facts that is an end of the matter.
Where the witness is found to be partly truthful or to spring from tainted sources , the Court may take the precaution of seeking some corroboration , adequate and reasonable to meet the demands of the situation , but a court is not entitled to reject the evidence of a witness merely because they are government servants , who , in the course of their duties or even otherwise , might have come into contact with inves 739 tigating officers and who might have been requested to assist the investigating agencies.
If their association with the investigating agencies is unusual , frequent or designed , there may be occasion to view their evidence with suspicion.
But merely because they are called in to associate themselves with the investigation as they happened to be available or it is convenient to call them , it is no ground to view their evidence with suspicion.
Even in cases where officers who , in the course of their duties , generally assist the investigating agencies , there is no need to view their evidence with suspicion as an invariable rule.
For example , in rural areas , investigating officers would ordinarily think of calling in the village officers , such as , the Headman , the Patel or Patwari to act.
as punch witnesses , as they are expected to be respectable persons of the locality.
It does not mean that their evidence should be viewed with suspicion because they are government servants or because they are generally associated with investigating agencies whenever there is a crime in the village.
For that matter it would be wrong to reject the evidence of police officers either on the mere ground that they are interested in the success of the prosecution.
The court may be justified in looking with suspicion upon the evidence of officers who have been , demonstrated to have displayed excess of zeal in the conduct and success of the prosecution.
But to reject the evidence of all official witnesses as the High Court has done in the present case , is going far too far.
We think that it is extremely unfair to a witness to reject his evidence by merely giving him a label.
There were two panch witnesses Parikh and Panchal of whom Parikh has been examined as PW.3 while Panchal has not been examined.
We have been taken through the whole of the deposition of Parikh and we find nothing whatever to doubt his veracity.
Nothing was suggested to him as to why he should give false evidence to implicate the accused.
All that was elicited from him was that he had worked as departmental inquiry officer and also to defend delinquents in such inquiries in his department.
He had become acquainted with Inspector Sharma fifteen days before March 14 , 1972 as he was defending a delinquent at Bhavnagar in a case in which Shri Sharma was the prosecuting officer.
Shri Panchal , who was Assistant Superintendent of Post Offices , Bhavnagar was the Inquiry Officer in that case.
This is stated to be the "close association" of the two panch witnesses 740 with the investigating agency in this case.
It is impossible to subscribe to this view.
When Judeja , Deputy Superintendent of Police asked Inspector Sharma to get two independent panch witnesses , Parikh was readily available in the guest house and he had known Panchal as the Inquiry Officer in a departmental inquiry in the Postal Department.
Both of them being Government Servants belonging to a different department , if Inspector Sharma thought that they could be called as independent punch witnesses , we are unable to impute any motives to the investigating agency or to cast aspersions on the witnesses Parikh and Panchal.
We do not have any doubt in accepting the evidence of Parikh as that of an independent witness.
Having examined his evidence in detail , we find his evidence to be truthful.
His evidence substantiates the evidence of PWs 2 about the acceptance of the bribe by the accused and his keeping the money in a folded newspaper.
If we accept the evidence of PWs 2 and 4 , the prosecution case that the money was given as a bribe must be accepted and the defence version that the money was planted must be rejected.
The other circumstances upon which the High Court relied Court are very trivial and it is unnecessary to burden this judgment with a seriatim discussion of those circumstances.
For example , one of the circumstances was that if the accused had arranged that PW 2 should come to him on.
the evening of 14th with the bribe , he would have been waiting in his house to receive him with the doors of the house open so that the bribe giver may walk in straight and he was not likely to have kept the doors closed and wait for the bribe giver to knock at the door.
We consider it needless even to comment upon this circumstance.
Another circumstance upon which the High Court relied was that the accused was not likely to have talked with PWs 2 and 3 for as long as 40 minutes if he was accepting a bribe.
He would have merely received the money and sent them away.
The very fact that he was talking to them for nearly 40 minutes indicated that no bribe was given or taken.
On the other hand , we consider that this is a strong circumstance against the accused.
The accused knew that PW 2 was an assessee who had a pending case before him.
If the assessee paid him a visit after 8.00 PM at his residence , one would expect the accused to immediately suspect the reason for the visit and to turn him away at once or at least 741 within a few minutes after his coming to his house.
Instead of that , he takes them inside the house , talks to them for nearly 40 minutes.
This conduct of the accused is clearly against his innocence.
Some question was raised that the solution which according to the investigating officer and the panch witness turned pink when the accused was asked to dip his fingers in it , had become yellowish when the chemical examiner examined the solution.
Nothing really turns on this in view of the evidence of PWs 2 , 4 and that of the investigating officer PW 9.
A point was sought to be made in this court of the failure of the prosecution to examine Inspector Sharma as a witness.
All that Inspector Sharma did in the case was to assist Judeja , Deputy Superintendent of Police and to fetch the two panch witnesses when he was asked to do so.
He could not by any means be called a material witness.
As some comment was made during the course of the trial about the failure of the prosecution to examine Inspector Sharma , the prosecution offered him for cross examination and kept Inspector Sharma ready in court.
The counsel for the accused stated that since the witness had already been dropped by the prosecution , he did not want to examine him unless the court directed him to do so.
After the failure of the counsel of the accused to take advantage .
Of the offer made by the prosecution , we do not think that it is open to the accused to comment upon the so called failure of the prosecution to examine inspector Sharma as a witness.
Nor can we draw any adverse inference against the prosecution.
On this question , the High Court took the same view as we do.
From the evidence of PWs 2 , 3 and 9 , we do not have the slightest doubt that a sum of Rs. 12,500 was paid to and received by the accused as a bribe.
The learned Sessions Judge was clearly right in convicting the accused and the High Court was wronging acquitting the accused.
We do not think that this is a case where two views were reasonably possible.
The only possible view was J that the accused was guilty and we hold him guilty of both the offences under section 161 IPC and section 5 (2) read with section 5 (1) (d) of the Prevention of Corruption Act , 1947.
The learned counsel for the accused argued that in view of the long time that has elapsed since the commission of the offence and in view of the circumstance that the accused has also retired from service , 742 we may take a lenient view and not sentence the accused to any term of imprisonment.
13th under sec 5 (2) of the Prevention of Corruption Act , 1947 , the minimum sentence that can be imposed is imprisonment for one year and the maximum sentence is seven years.
However , the court , for any special reasons to be recorded in writing , may impose a sentence of imprisonment of less than one year.
We are unable to find any special circumstance in this case justifying our taking a lenient view.
Corruption has become so rampant in the country and the offence in this particular case cannot be considered trivial at all.
This is not a case of a petty clerk or a peon accepting a small amount as a bribe for doing some little favour.
We cannot possibly take a lenient view of the conduct of an income tax officer , who accepts a large amount as a bribe for causing loss to public revenue.
We think that the sentences imposed by the learned Session Judge were the right sentences to be imposed on the accused.
The judgment of the High Court is set aside and that of the learned Special Judge is restored.
The accused will surrender to his bail.
| Respondents are owners of sugar mill situated in erstwhile Jaora State which merged in the State of Madhya Bharat.
After the merger, the Madhya Bharat Essential Supplies (Temporary Powers) Act, 1948 came into force.
By a notification dated 5th September, 1949 the said Act included 'sugar ' in the list of articles as an essential commodity.
By another notification dated 5th September, 1949 the Government delegated its powers to the Director, Civil Supplies to issue orders under the Act.
The Director of Civil Supplies by a notification dated 14th January, 1950 fixed ex factory prices for different sugar factories, which were to supply and despatch sugar of Grade E 27 at Rs. 32.400 per maund F.O.R. destination.
The supply price was higher than ex factory price.
The difference between the supply price and the ex factory price was to be credited to Madhya Bharat Government Sugar Fund.
On demand by appellants, the respondents deposited a sum of Rs. 50,000 under protest in the said Sugar Fund.
The respondents instituted a suit for the refund of the amount deposited by them towards Sugar Fund and Rs. 10,000 towards interest.
Tho suit was dismissed.
On appeal, the High Court set aside the Judgment and Decree of the trial Court and decreed the suit.
Allowing the appeal of the State, ^ HELD: 1.
The respondents had not to pay the amount from their coffers.
The burden of paying the amount in question was transferred by the respondents to the purchasers and, therefore, they were not entitled to get a refund.
Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same.[568C] 562 2.
The amount deposited towards the Fund was to be utilised for the development of sugarcane.
If it is not possible to identify the persons on whom had the burden been placed for payment towards the Fund, the amount of the Fund can be utilised by the Government for the purpose for which the Fund was created, namely, the development of sugarcane.
There is no question of refunding the amount to the Respondents who had not eventually paid the U amount towards the Fund.
Doing so would virtually amount to allow the respondents unjust enrichment.
[568D E] The Orient Paper Mills Ltd. vs The State of Orissa & Ors.
[1962] I SCR 549.
State of Bombay vs The United Motors (India) Ltd. , Shiv Shankar Dal Mills etc.
vs State of Haryana ; , Newabganei Sugar Mills vs Union of India & Ors. ; , Sales Tax Officer, Banaras & Ors.
vs Kanhaiya Lal Mukundlal Saraf, , M s Amar Nath Om Parkash & Ors.
vs The State of Punjab & Ors., ; , relied upon.
|
N: Civil Appeal No. 748 of 1975.
From the Judgment and Order dated 3.12.1971 of the Allahabad High Court in Special Appeal No. 289 of 1963.
R.K. Maheshwari for the Appellant.
Rachna Gupta, (NP) and Mrs. Rani Chhabra for the Re spondent.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This appeal by special leave is from the Judgment and order dated 3.12.1971 of the Allahabad High Court in Special Appeal No. 289 of 1963 dismissing the appeal and consequently the writ petition.
The appellant is a (Pacca Arahatiya) commission agent engaged in the sale and purchase of grains, rice, oil seeds and jaggery in the town of Chirgaon, District Jhansi.
On March 4, 1933, the Government of U.P. published a Notification purported to have been issued under section 38(1) of the United Provinces Town Areas Act 1914 (Act II of 1914), hereinafter referred to as 'the Town Areas Act ', which read as under: "No. 090/XI 158 T.
It is hereby notified that the Governor acting with his Ministers, in exercise of the powers con ferred by section 38(1) of the United Provinces Town Areas Act 1914 (II of 1914) is pleased to extend the provisions of section 298(2)(F)(d) of the United Provinces Municipalities Act 19 16 to the Town Area of Chirgaon in the Jhansi District in the modified form set forth below: Modified section of the United Provinces Munici palities Act, 1916 (II of 1916) section 298(2)(F)(d) "The Pan chayat may make bye laws for the establishment, regulation and inspection of market and for the proper and cleanly Conduct of business therein.
" Later by section 4 of the United Provinces Town Area (Amendment) Act, 1934 (U.P. Act II of 1934) the word 'Pan chayat ' wherever 16 it occurred in the Principal Act was substituted by the word 'Committee '.
It may be noted that the Town Area Panchayat was super seded for a period of one year with effect from 20.10.1933 to 19.10.1934 and was revived thereafter.
The District Magistrate, Jhansi promulgated a set of bye laws dated 18.11.1934 for the establishment, regulation and inspection of the market in the Town Area of Chirgaon and for the proper and cleanly conduct of business therein.
Under Bye law (1), sellers and purchasers of the commodities mentioned thereunder were required to pay weighing dues.
It said: "1(a) Weighing dues shall be charged at the rate of 1/4/6 per cent (eight /8/ annas per cent from the sellers and twelve and a half annas per cent from the purchaser) on the following articles which comes to the Town Area for sale: Grains, oil seeds, oil cakes, cotton, vegetables for whole sale, Dhania for wholesale and gur etc.
(b) Weighing dues on Ghi shall be charged at the rate of /2/6/two and half annas per maund half from the seller and half from the purchaser.
In recovery of weighing dues fraction of a pie shall be omitted and more the figure adjusted to the nearest price.
(c) The purchaser shall be responsible for the full amount of weighing dues.
He shall deduct the seller 's share from the price.
(d) No weighing dues shall be charged on any article import ed by rail nor on rice, salt, gur and sugar imported from Jhansi and Moth by rail or road.
(e) On refusal to pay the weighing dues it shall be recover able as arrears of tax on circumstances and property.
" Since the appellant was a dealer in some of these commodities, was served with a notice dated 27.7.1962 de manding Rs. 1892.26 as weighing dues for the period from 1.5.1962 to 30.6.1962.
17 The appellant challenged the aforesaid notice filing a writ petition on 18.8.1962 in the Allahabad High Court being Civil Misc.
Writ Petition No. 2400 of 1962.
A learned Single Judge by his order dated 29.4.1963, dismissed the same taking the view that the demand made by the respondent was purely a measure of taxation.
The appellant filed therefrom Special Appeal No. 289 of 1963, which was dismissed by the impugned judgment and order.
Before the High Court the appellant contended, inter alia, that the Bye laws were invalid as the Town Area Com mittee, shortly 'the TAC ', did not frame them; that the TAC had no power to impose such tax; that the U.P. Town Areas (Amendment) Act 1952 did not empower the TAC to levy and collect weighing dues; that the weighing dues were discrimi natory because of the exemptions; that the weighing ' dues were not a tax but a fee which could not be charged without quid pro quo; that there was double taxation; and in the alternative, that the weighing dues amounted to neither a fee nor a tax but an illegal extraction without the authori ty of law.
All the arguments were rejected by the High Court.
Before us Mr. R.K. Maheshwari, the learned counsel for the appellant, submits, inter alia, that the Bye laws were invalid at the time when those were framed and could not have been validated by mere adoption by the TAC in 1935; that the weighing dues were merely in the nature of purchase tax and were illegal inasmuch as the TAC had no right or authority to levy the same when it had already been imposed by the State of Uttar Pradesh under section 128(1)(xiv) of the U.P. Municipalities Act; that the TAC did not render any special service to the 'Arhatias ' or farmers who came to the town to conduct their business, nor did it incur any expend iture in this regard; that the charging of weighing dues was discriminatory inasmuch as there were no weighing charges on some articles imported from Jhansi or Moth Tehsil by rail and on rice, salt, jaggery or sugar brought either by road or by rail; that goods coming from villages situate between Chirgaon and Jhansi were not required to pay weighing dues while goods from other places in the State of U.P. were being subjected to the dues; that similar tax had already been imposed by the State Legislature under the Provisions of the U.P. Sales tax Act under Entries 52 and 54 of List II and there was double taxation by the TAC; that the goods arriving by car have been subjected to the weighing dues while goods arriving by rail from Jhansi and Moth were exempted; that the levy of weighing dues by the Town Area Committee Chirgaon is arbitrary and discriminatory and is grossly violative of Article 14 of the Constitution; 18 that the levy, though called tax is actually a fee and is collected in the disguise of tax; that double taxation in the form of sales tax by the State Government and weighing dues by the TAC is unjustified and it imposes unreasonable restriction on the rights guaranteed under Article 19(1)(g) of the Constitution; and that the High Court erred in dis missing the appeal and the writ petition.
The learned counsel for the respondent refutes all the submissions of the appellant and supports the impugned judgment.
The first question that needs examination is the validi ty of the Bye laws promulgated by the District Magistrate on 18.11.1934 after the Notification published by the Govern ment of U.P. issued under section 38(1) of the Town Areas Act.
That section, as it stood at the relevant time, empow ered the Provincial Government to extend, by notification in the Gazette, to all town areas or to any town area or to any part of a town area any enactment for the time being in force in any municipality in the United Provinces subject to such restrictions and modifications, if any, as it thought fit.
By the instant Notification dated March 4, 1933 the Provincial Government extended the Provisions of section 298(2)(F)(d) of the United Provinces Municipalities Act, 1916, hereinafter referred to as the Municipalities Act, to the town area of Chirgaon in the Jhansi District in the modified form set forth in the Notification itself.
The word 'Panchayat ' was substituted by the word 'Committee ' by section 4 of the United Provinces Town Areas (Amendment) Act.
There could, therefore, be no doubt that the TAC could make the Bye laws.
The question then is the nature and extent of the empo werment under the above Notification.
The empowerment would naturally be what a Municipality could do under that provi sion, namely, section 298(2)(F)(d).
Section 298 was includes in Chapter IX of the Municipalities Act and it dealt with rules, regulations and bye laws.
There could, therefore, be no doubt that the TAC was empowered to make bye laws "for the establishment, regulation and inspection of market and for the proper and cleanly conduct of business therein.
" The Bye laws dated 18.11.1934 were promulgated by the District Magistrate.
The contention that the District Magis trate had no power to promulgate the Bye laws was rightly rejected by the learned courts below holding that the Dis trict Magistrate was at that time functioning as TAC as it then remained suspended and those were ratified on 9.1.1935 by the TAC after it was revived.
19 Section 298(2)(F)(d) as modified in the Notification did not ex facie authorise the imposition of any tax.
The Munic ipalities Act, Chapter V, (Sections 128 to 165) dealt with municipal taxation, imposition and alteration of taxes.
Chapter VII of that Act which included section 298(2)(F)(d) did not deal with taxation.
section 298(2)(F)(d) dealt with markets, slaughter houses, sale of food etc.
Clause (d) thereunder did not ex facie envisage imposition of any tax.
The Town Areas Act, Chapter III (Sections 14 to 25) dealt with taxation and town fund.
Under section 14, subject to any general rules or special orders of the Provincial Gov ernment in that behalf, the taxes which a TAC could impose had been stated.
It did not mention weighing dues as such.
The Bye laws envisaged by section 298((2)(F)(d), there fore, could not ex facie be said to have empowered the TAC to impose a tax on the subject matter of that clause.
It was contended before the High Court that the U.P. Town Areas (Amendment) Act, 1952 (U.P. Act 5 of 1953) cured the defects in the bye laws, if any, inasmuch as section 12 of that Amending Act added clause (g) to section 14(1) of the Town Areas Act in the following terms: "Any other tax being one of the taxes mentioned in subsec tion (1) of section 128 of the U.P. Municipalities Act, 19 16.
" Section 128(1) of the Municipalities Act did not mention weighing dues as such.
But Clause (xiv) of that section provided: "Any other tax which the State Legislature has power to impose in the State under the Constitution." At the relevant time, after the amendment of section 14(1)(g) of the Town Areas Act, the TAC was thus empowered to levy any other tax, being one of the taxes mentioned in sub section (1) of section 128 of the U.P. Municipalities Act, 1916.
The High Court on the basis of the above provision concluded that the TAC became empowered to levy all those taxes which the State Government could levy under sub sec tion (1) of section 128 of the Municipalities Act; and the TAC could impose any tax which the State legislature could impose under the Constitution.
Further, it was concluded that Entry 52 of list II empowered the State Government to impose tax on the entry of goods into local area for con sumption, use 20 or sale therein and Entry 54 of list II empowered the State Government to impose a tax on the sale or purchase of goods and hence the TAC could impose tax on the entry of goods as well as on the sale or purchase of goods in view of the Entries 52 and 54 of list II.
Referring to the Bye law No. 1, the High Court concluded that this imposition was upon the entry of the mentioned articles into Town area for sale and it was clearly covered by entry 52 of list II of the 7th schedule and hence it could not be said that the TAC did not possess the requisite power to levy this tax.
In other words, the weighing dues were construed as entry tax and sale or purchase of goods tax combined.
The High Court also held that the defect, if any, in this regard was cured by section 13 of the U.P. Town Areas (Amendment) Act, 1952 as section 13 of that Act provided: "Notwithstanding anything contained in the principal Act, (1) where any tax of the nature described in clause (g) of Sub section (1) of Section 14 of the Principal Act & by whatever name or description called has been imposed, levied or assessed by any Town Area Committee prior to the com mencement of this Act, the same shall be and is hereby declared to be good and valid in law as if this Act had been in force on all material dates and the tax had been imposed, levied and assessed under and in accordance with the appro priate provision in that behalf." (Emphasis supplied by us) The High Court concluded, and we think rightly, that the imposition of this tax (weighing dues) had been validated retrospectively, as if the Amending Act had been in force even in 1934, when the bye laws were framed.
The validity of the provision having not been challenged, it cannot be held that the imposition of this tax was without authority of law if it could be brought within any of the taxation entries of List II of the Seventh Schedule of the Constitution.
Howev er, if the weighing dues did not amount to a tax but a fee, then the question would be whether the TAC could levy such a fee.
In fact one of the submissions of the appellant is that it was a fee and not a tax as claimed by the respondent.
A fee is paid for performing a function.
A fee is not ordinarily considered to be a tax.
If the fee is merely to compensate an authority for services performed or as compen sation for the services rendered, it 21 can hardly be called a tax.
However, if the object of the fee is to provide general revenue of the authority rather than to compensate it, and the amount of the fee has no relation to the value of the services, the fee will amount to a tax.
In the words of Cooley, "A charge fixed by statute for the service to be performed by an officer, where the.
charge has no relation to the value of the services per formed and where the amount collected eventually finds its way into the treasury of the branch of the Government whose officer or officers collect the charge is not a fee but a tax.
" Under the Indian Constitution the State Government 's power to levy a tax is not identical with that of its power to levy a fee.
While the powers to levy taxes is conferred on the State Legislatures by the various entries in list II, in it there is Entry 66 relating to fees, empowering the State Government to levy fees "in respect of any of the matters in this List, but not including fees taken in any Court.
" The result is that each State Legislature has the power, to levy fees, which is co extensive with its powers to legislate with respect to substantive matters and it may levy a fee with reference to the services that would be rendered by the State under such law.
The State may also delegate such a power to a local authority.
When a levy or an imposition is questioned, the Court has to inquire into its real nature inasmuch as though an imposition is labelled as a fee, in reality it may not be a fee but a tax, and vice versa.
The question to be determined is whether the power to levy the tax or fee is conferred on that authority and if it falls beyond, to declare it ultra rites.
We have seen that a fee is a payment levied by an au thority in respect of services performed by it for the benefit of the payer, while a tax is payable for the common benefits conferred by the authority on all tax payers.
A fee is a payment made for some special benefit enjoyed by the payer and the payment is proportional to such benefit.
Money raised by fee is appropriated for the performance of the service and does not merge in the general revenue.
Where, however, the service is indistinguishable from the public services and forms part of the latter it is necessary to inquire what is the primary object of the levy and the essential purpose which it is intended to achieve.
While there is no quid pro quo between a tax payer and the author ity in case of a tax, there is a necessary co relation between fee collected and the service intended to be ren dered.
Of course the quid pro quo need not be understood in mathematical equivalence but only in a fair correspondence between the two.
A broad co relationship is all that is necessary.
22 Where it appears that under the guise of levying a fee the authority is attempting to impose a tax, the Court has to scrutinise the scheme to find out whether there is a real co relation between the services and the levy whether it is so co extensive as to be a pretence of a fee but in reality a tax, and whether a substantial portion of the fee collect ed is spent in rendering the service.
In the instant case replying to paragraph 9 of the writ petition in paragraph 6 to 9 of the Counter Affidavit in the High Court the TAC stated that it used to realise the amount of weighing dues as tax and not as a fee and that no ques tion of quid pro quo was involved in the matter.
Most of the carts of the cultivators who brought their produce were parked in the cart park which was on the land of the TAC 'and it maintained sanitary staff in order to keep the place clean as bullocks and carts made the place dirty.
Arrange ment for lighting the patromax lamps and for keeping the place clean was made by the TAC.
To ensure correct weighment and to prevent cheating and defrauding bakshis and peons of TAC were deputed to supervise the daily weighing of the goods and the TAC maintained standard weights and measures in case of any dispute which were to be settled.
The weights of persons were also checked and verified by the TAC and its seal was affixed to those weights in order to prevent cheat ing.
In paragraph 12 it was stated that TAC employed about 40 sweepers out of which about half were especially deputed for keeping the places where the sale transactions took place clean.
One bakshi, one jamadar and one peon were also deputed to supervise the selling in order to see that the bye laws in respect of weighment were carried out and that there was no cheating.
Thus, the TAC justified the charging of weighing dues, but conceded that the same was a tax as there was no quid pro quo.
The respondent having thus conceded that there was no quid pro quo, we have to hold, as also was rightly held by the High Court, that the weighing dues constituted a tax and not a fee.
We do not find any merit in the appellant 's submission that there was double taxation in this case.
The expression "double taxation" is often used in different senses, namely, in its strict legal sense of direct double taxation and in its popular sense of indirect double taxation.
Double taxa tion in the strict legal sense means taxing the same proper ty or subject matter twice, for the same purpose, for the same period and in the same territory.
To constitute double taxation, the two or more taxes must have been (1) levied on the same property or subject matter, (2) by the same Govern ment or authority, (3) during 23 the same taxing period, and (4) for the same purpose.
"There is no double taxation, strictly speaking" says Cooley, "where (a) the taxes are imposed by different States, (b) one of the impositions is not a tax, (c) one tax is against property and the other is not a property tax, or (d) the double taxation is indirect rather than direct.
" In the instant case there cannot be said to be double taxation as there is no such taxation imposed by the TAC for the same period on the same goods at the same time and for the same purpose.
Where more than one legislative authority, such as the State Legislature and a local or municipal body possess the power to levy a tax, there is nothing in the Constitution to prevent the same person or property being subject to both the State and municipal taxation or the same legislature exercising its power twice for different purposes.
In Avind er Singh vs State of Punjab, ; , the State of Punjab in April, 1977 required the various municipal bodies in the State to impose tax on the sale of India made foreign liquor @ Rs. 1 per bottle w.e.f. 20.5.1977.
The municipal authorities having failed to take action pursuant to the directive the State of Punjab directly issued a Notification under section 90(5) of the Punjab Municipal Corporation Act, 1976 and similar provision of the Municipal Act 1911.
The petitioner challenged the Constitutional validity of the said statutes and the levy on the, inter alia ground of double taxation.
Krishna Iyer, J. speaking for the Court held: "There is nothing in Article 265 of the Constitution from which one can spin out the Constitutional vice called double taxation.
(Bad ' economics may be good law and vice versa).
Dealing with a somewhat similar argument, the Bombay High Court gave short shrift to it in Western India Theatres (AIR 1954 Bom. 261).
Some undeserving contentions die hard, rather survive after death.
The only epitaph we may inscribe is: Rest in peace and don 't be re born.
If on the same sub ject matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist.
" We do not find materials in this case to allow the contention to be re born.
The submis sion is accordingly rejected.
The contention that the tax is discriminatory in view of the exemptions granted to some of the products and to those that enter the TAC by rail or motor transport is equally untenable.
It is for the legislature or the taxing authority to determine the question of need, the policy and to select the goods or services for taxation.
The courts cannot review these decisions.
In paragraph 16 of the counter affidavit 24 the TAC tried to explain the reason of not taxing salt, sugar and rice stating that they were not local produce but were imported from distant places and that the tax was levied only on the local produce which came from the neigh bouring places.
Courts cannot review the wisdom or advisa bility or expediency of a tax as the court has no concern with the policy of legislation, so long they are not incon sistent with the provisions of the Constitution.
It is only where there is abuse of its powers and transgression of the legislative function in levying a tax, it may be corrected by the judiciary and not otherwise.
Taxes may be and often are oppressive, unjust, and even unnecessary but this can constitute no reason for judicial interference.
When taxes are levied on certain articles or services and not on others it cannot be said to be discriminatory.
Cooley observes: "Every tax must discriminate; and only the authority that imposes it can determine how and in what directions." The TAC having decided to impose weighing dues on the goods mentioned in the Bye Laws it is not for the court to ques tion it on the ground that some similar commodities or commodities arriving by rail or road were not subjected to the tax.
The tax having not been found to have been discriminato ry or otherwise illegal we do not find any force in the submission that it imposed any unreasonable restriction on the appellants ' rights guaranteed under Article 19(1)(g) of the Constitution of India.
In the result, we find no merit in this appeal and it is accordingly dismissed.
Considering the facts and circum stances of the case we, however, make no order as to costs.
Interim orders, if any, stand vacated.
Y. Lal Appeal dismissed.
| The appellant is a commission agent, engaged in the business of sale and purchase of grains, rice, oil seeds etc.
in Chirgaon, District Jhansi.
By a notification issued under section 38(1) of the United Provinces Town Areas Act, 1914, the provisions of Section 298(2)(F)(d) of the U.P. Munici palities Act, 1916 were extended to the Town Area of Chirg aon, as a result of which, the Panchayat of Chirgaon was empowered to make bye laws for the establishment, regulation 'and inspection of market and 1or the proper and cleanly conduct of business therein.
Later by Section 4 of the U.P. Provinces Town Area (Amendment) Act, the word "Panchayat" wherever it occurred in the Principal ' Act was substituted by the word 'Committee '.
In pursuance of the powers con ferred on him the District Magistrate, Jhansi framed bye laws dated 18.11.1934 for the regulation of the market.in Chirgaon which inter alia provided that weighing dues shall be charged at different rates on various articles that came to the Town Area for sale at rates specified therein.
Since the appellant was a dealer in some of these commodities, he was served with a notice calling upon him to pay Rs.1892/26 as weighing dues for the period from 1.5.1962 to 30.6.1962.
The appellant challenged the notice by means of a writ petition in the Allahabad High Court.
A learned single Judge of the High Court dismissed the writ petition taking the view that the demand made by the respondent was purely a measure of taxation.
Special Appeal against the said order was also dismissed by the High Court.
Hence this appeal by special leave.
The main contentions of the appellant, as urged before the High Court, as have been repeated before this Court are; (i) that the bye laws were invalid; (ii) that the Town Area Committee had no power to impose such tax; as the Act did not empower the TAC to levy and collect weighing dues; (iii) that the weighing dues were discriminatory because of the exemptions; (iv) that the weighing dues were not a tax but a fee which could not be charged without quid pro quo and (v) that there was 14 double taxation.
It was also urged that the imposition of weighing dues is tantamount to illegal extraction without the authority of law.
The respondent, on the other hand, supported the judgment of the High Court; Dismissing the appeal, this Court, HELD: Under the Indian Constitution the State Govern ment 's power to levy a tax is not identical with that of its power to levy a fee.
While the powers to levy taxes is conferred on the State Legislatures by the various entries in List 11, in it there is Entry 66 relating to fees, empow ring the State Government to levy fees 'in respect of any of the matters in this List, but not including fees taken in any Court '.
The result is that each State Legislature has the power, to levy fees, which is co extensive with its powers to legislate with respect to substantive matters and it may levy a fee with reference to the services that would be rendered by the State under such law.
The State may also delegate such a power to local authority.
[21C D] A fee is a payment levied by an authority in respect of services performed by it for the benefit of the payer, while a tax is payable for the common benefits conferred by the authority on all tax payers.
[21F] 'While there is no quid pro quo between a tax payer and the authority in case of a tax, there is a necessary co relation between fee collected and the service intended to be rendered.
Of course the quid pro quo need not be under stood in mathematical equivalence but only in a fair corre spondence between the two, a broad co relationship is all that is necessary.
[21G] Courts cannot review the wisdom or advisability or expediency of a tax as the court has no concern with the policy of legislation, so long they are not inconsistent with the provisions of the Constitution.
It is only where there is abuse of its powers and transgression of the legis lative function in leving a tax, it may be corrected by the judiciary and not otherwise.
[24B] Taxes may be and often are oppressive, unjust and even unnecessary but this can constitute no reason for judicial interference.
When taxes are levied on certain articles or services and not on others it cannot be said to be discrimi natory.
[24C] Avinder Singh vs State of Punjab, ; , referred to.
|
l Appeals Nos, 1761 of 1967.
Appeal from the judgment and decree, dated the 14th April, 1964 of the Allahabad High Court in Income tax Reference No. 130 of 1960 and Civil Appeal No. 1762 of 1967.
Appeal from the judgment and decree, dated May 5, 1964 of the Allahabad High Court in Income tax Reference No. 777 of 1961.
538 B. Sen, B.D. Sharing and R.N. Sachthey, for the appellant (in both the appeals).
G.C. Sharma, V.C. Rishi and P.K. Mukherjee, for the respondent (in C.A. No. 1761 of 1967).
The Judgment of the Court was delivered by Grover, J.
The common question which arises in these appeals by certificate, is whether speculative losses can be set off against profits from any other business activity under section 10 in spite of the first proviso to.
section 24(1) of the Income Tax Act, 1922.
The facts in C.A. 1761/67 in which the question in the above form was referred, the language of the question being somewhat different in the other appeal, may be stated.
The assessee who is an individual derived income from three sources i.e., property, shares in joint stock companies and commission agency business and shares in partnership firms.
The accounting year relevant to the assessment year 1953 54 was the period from October 20., 1951 to October 8, 1952.
In the personal business of commission agency, the assessee returned a net profit of Rs. 2,761.
In arriving at this figure the net share of loss of Rs. 11,075 from the firm of Kamta Prasad Raghunath Prasad in which the assessee was a partner, was Claimed.
The Income Tax Officer did not go into the details but ignored the figure in the absence of information from the Income tax Officer assessing the aforesaid firm.
Before the Appellate ASsistant Commissioner it was submitted that the actual share of loss was Rs. 13,232 and it included a sum of Rs. 8,669 representing loss suffered in speculative dealings in silver paid through the firm Kamta prasad Raghunath Prosad.
The Appellate Assistant Commissioner, after examining the details of the loss, directed the Income Tax Officer to exclude a profit of Rs. 1,415 from the speculative transactions and to carry forward the net loss of Rs. 7,254 for setting it off against the income of the assessee from speculative dealings in subsequent years.
Before the Appellate Tribunal there was no dispute about these figures.
What was contended was that the loss of Rs. 7,254 should be set off against profit from other business.
The Tribunal rejected this contention following the decision in Keshavlal Pramchand vs Commissioner of Income tax.
Ahmedabad(1).
Thereafter the assessee moved the Tribunal for making a reference to the High Court.
The High Court did not accept the view in Keshavlal Pramchand 's(1) case which has been followed in several other decisions by other High Courts.
Now certain provisions of the Act may be noticed before the case law is discussed.
Section 6 gives the heads of income (1) 539 chargeable to income tax which are six in number.
Section 7 deals with the first head "salaries"; Section 8 with the second head "interest on securities"; section 9 with "income from property" and section 10 provides for liability to tax under the head "profits and gains of business, profession or vocation" which is the fourth head given in section 6.
It is unnecessary to go to the 5th and 6th heads.
Section 24 provides that where any assessee sustains.
a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year.
In the year with which we are concerned in the present case there was a proviso which was, at that time, the second proviso but it became the first proviso after the enactment of the Taxation Laws (Extension to Jammu & Kashmir) Act 1954.
This proviso, at the material time, stood as follows: "Provided further that in computing the profits and gains chargeable under the head 'Profits and gains of business, profession or vocation ', any loss sustained in speculative transactions which are in the nature of a business shah not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions".
In Keshavlal Pramchand 's(1) case the assessee had suffered a loss in speculative business carried on by him in the year of account.
His contention was that he was entitled to take this loss into account in arriving at the profits and gains of his business (of non speculative nature).
Mr. Palkhiwala, who argued the case before the Bombay court, put forward the view that section 24( 1 ) read with proviso referred only to a case where the assessee was claiming the right to set off the loss which he had suffered under one head against a profit which he had earned in another head.
The section therefore had no application when the assessee wanted to adjust or set off a loss against a profit under the same head.
It was urged by him that the assessee in claiming to.
set off his speculative loss against his business profits under the same head was not claiming the benefit of any right conferred by section 24(1) and therefore the proviso had no application.
The argument was elaborated further by referring to the true nature and function of a .proviso which was to except or take out a particular portion from the field dealt with by the section.
Chagla, C.J., who delivered the judgment of the Bombay Bench, had no difficulty in coming to the conclusion that on the language of the proviso itself and on the scheme of the Act the Legislature in enacting the so called proviso was enacting a substantive provision dealing with the mode of computing the profits and gains charge (1) 540 able under the head "profits and gains of business profession or vocation" and that the Legislature had provided that when profits and gains.
were computed the loss sustained in a speculative transaction must not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions.
The learned Chief Justice further referred to the mischief which was aimed at by the Legislature in enacting the proviso.
In recent times businessmen were known to buy speculative losses in order to reduce their profits and the Legislature wanted to put an end to that mischief which could only be done by preventing the assessee from reducing his profits by speculative losses.
Bombay decision was followed by the Madhya Pradesh High Court in Commissioner Income Tax, Nagpur vs Ram Gopal Kanhaiya Lal(1) as also by the Division Bench of the Punjab High Court in Manohar Lal Munshi Lal vs Commissioner of Income ' Tax, New Delhi(").
The matter ultimately went to a Full Bench of the Punjab High Court in Commissioner of Income Tax vs Ram Swarup(") in which after reviewing the entire case law and examining the various aspects relevant to the questio,n the view exp.
ressed by Chagla, C.J. in the Bombay case was accepted as correct.
Similarly in Jummar Lal Surajkaran vs Commissioner of Income Tax(4), Hanuman Investment Company vs Commissioner of Income Tax(5), and Joseph ' John vs Commissioner of Income Tax(6), the considerations which prevailed in Keshavlal Pramchand 's(7) case were accepted as correct.
It would appear that so far as this Court is concerned the matter now stands concluded by the following observations in Commissioner 07 Income ' Tax, Gujarat vs Kantilal Nathu Chand(8): "Section 24 is, thus, a provision laying clown the manner of computation of total income.
The principal clause of section 24( 1 ) lays down that, if there.
ben loss of profits or gains in any year under any of the heads mentioned in section 6, that loss has to be set off against the income, profits or gains of the assessee under any other head in that year.
If this provision had stood by itself without any provisos, the result would.
have been that all losses incurred by an assessee under any of the heads mentioned in section 6 would be adjusted against profits under all other heads, and then the total income.
of the assessee would be worked out on that basis.
The first ' proviso.
to this.
sub section, (1) (2) (3) (4) (5) (6) (7) (8) ; , 321.
541 however, lays down an exception to this general rule contained in the principal clause.
The exception relates to income from business sustained in speculative transactions and places the limitation that losses sustained in speculative transactions are not to be taken into account in computing the profits and gains chargeable under the head "Profits and gains of business, profession or vocation", except to the extent that they will be set off against profits and gains in any other business which itself consists of speculative transactions.
The effect of the proviso is that if there are profits in speculative business, those profits are added to income under the other heads mentioned in section 6 for purposes of computing the total income of the assessee in order to determine the tax under section 23 of.
the Act.
On the other hand, losses in speculative business are not to be taken into account when computing the total income, except to the extent to which they can be set off against profits from other speculative business.
The first proviso, thus, clearly limits the applicability of the principal clause of section 24 ( 1 ); and, when applied, it governs.
the manner in which the total income of the assessee is to be corn .
puted.
In the case before us, the Income Tax Officer was clearly right in the assessment years 1958 .59 and 1959 60 in not setting off the losses in the speculative business against the income earned in those years either from property or from ready business in kappas".
The learned counsel for the assessee sought to press the reasons which prevailed with the learned Judges of the High Court and has sought to characterise the above observation as obiter.
It is neither necessary to.
deal with the reasoning of the High Court nor can that reasoning stand in view of what has been laid down in Kantilal Nathu Chand 's(1) case by this Court which cannot be regarded as obiter becau 'se it has been clearly stated that the question of the applicability of the proviso with which we are concerned arose directly in that case in respect of the assessment years 1958 59 and 1959 60.
The concluding portion of the passage extracted leaves.
no room or doubt in this matter.
Moreover we are of the opinion that where the language is quite clear and no other view is possible it is futile to go into the question whether the proviso to.
section 24( 1 ) operates as a substantive provision or only by way of an exception to section 24( 1 ).
The proviso says in unmistakable and unequivocal terms that any losses sustained in speculative transactions which are in the nature of a business shall not be taken into account except to the extent (1) ; 542 of the amount of profits or gains in any other business consisting of speculative transactions.
This has to be read with Explanation (1) according to which where the speculative transactions carried on are of such a nature as to constitute a business the business shall be deemed to be distinct and separate from any other busi In the above view of the matter the answer to the questions referred in both the appeals will be in the negative, namely, against the assessee and in favour of the Department.
The appeals are accordingly allowed with costs.
There will be one hearing fee.
V.P.S. Appeals allowed.
| C was the lessee of a plot which consisted of agricultural land as well as a homestead.
The homestead was later leased to the appellants.
The respondents purchased the rights of C and brought a suit against the appellants for possession of the homestead.
The contention of the appellants in defence was that the suit had not been brought according to the provisions of the Bihar Tenancy Act and hence was not maintainable.
The contention of the respondents was that the lease of the homestead was not an agricultural lease within the meaning of section 117 of the Transfer of Property Act and was invalid under the provisions of the latter Act.
The trial court decreed the suit.
The first appellate court however dismissed it.
In doing so it relied on earlier rulings of the Patna and Calcutta High Courts which had held the field for over 55 years, to the effect that if the main lease is a lease for agricultural purposes all sub leases of portions of that leasehold should also be considered as agricultural leases despite the fact that a particular lease may he that of a homestead only.
The High Court in further appeal departed from the view taken in the earlier cases and decided against the appellants, who came to this Court.
The main question for consideration was whether the High Court was justified in departing from the settled view.
HELD: The rule laid down in the earlier decisions was never departed from in the past.
The Tenancy Act was amended a number of times but yet the legislature did not think it necessary to alter or modify the said rule.
In law finality is of the utmost importance.
Unless so required in public interest questions of law firmly 'settled by a long course of decisions should not ordinarily be disturbed and it is all the more so in the ease of an interpretation affecting property rights.
[471 C E] The rule that where the terms of a statute or ordinance are clear then even a long and uniform course of judicial interpretation of it may be overruled, if it is ' contrary to the clear meaning of the enactment is inapplicable to decisions on the basis of which titles and transactions must have been rounded [477 D] Case law referred to.
|
ivil Appeals Nos.
357/77 and 1142 1143/78.
Appeals by Special Leave from the Judgment and Order dated 28 8 75 and 17 9 75 of the Allahabad High Court in Special Appeal Nos. 233, 254 and 264 of 1975.
L. N. Sinha, Santosh Chatterjee, Vineet Kumar and P. P. Singh for the Appellant in CA 357/77.
section N. Kacker, Sol.
General, M. V. Goswami and Rajiv Dutt for the Appellants in CA 1142 1143/78 and RR 4 and 5 in CA 357/77 A. K. Sen, section C. Patel and Bishamber Lal for Respondent No. 1 in All the appeals.
V. M. Tarkunde, section C. Patel and Bishamber Lal for R. 2 in all appeals G. L. Sanghi, section C. Patel and Bishamber Lal for R. 3 in all appeals.
Rajiv Dutt and P. C. Kapur for R. 6 in CA 357/77.
Santosh Chatterjee and Vineet Kumar for R. 6 in CA 1142/78.
The Judgment of the Court was delivered by DESAI, J.
Respondents Nos. 1, 2 and 3 in Civil Appeal No. 357/77 filed writ petition No. 5462/74 challenging the selection by U.P. Public Service Commission ( 'Commission ' for short) and subsequent appointment by U.P. State Government of appellant and respondent No. 6 to the post of Professor in Medicine in State Government Medical Colleges.
A learned single Judge of the High Court quashed the selec 855 tions.
Four appeals came to be preferred against the judgment quashing selections.
Special Appeal No. 232/75 was filed by Dr. R. N. Tandon, respondent No. 6; Special Appeal No. 233 of 1975 was preferred by the present appellant Dr. M. C. Gupta; Special Appeal No. 264 of 1975 was preferred by the State of U.P.; and Special Appeal No. 256 of 1975 was filed by respondents Nos. 1, 2 and 3 in Civil Appeal No. 357/77 against that part of the judgment of the learned single Judge by which appointment of appellant Dr. M. C. Gupta and respondent No. 6, Dr. R. N. Tandon, was not quashed.
The appellate Bench partly allowed the appeals and while confirming the order quashing the selection of Dr. M. C. Gupta and Dr. R. N. Tandon, also quashed their appointment and remitted the matter to the Commission directing it to re examine the relative merits of all candidates in the light of the interpretation put upon the relevant regulations by the Court.
Arising from this common judgment, three appeals by special leave are preferred to this Court.
Civil Appeal No. 357/77 is preferred by Dr. M. C. Gupta and Civil Appeals Nos. 1142 & 1143 of 1978 are preferred by the State of U.P. To focus the attention on the contention raised at the hearing of these appeals, a brief resume of facts would be advantageous.
The Commission invited applications for two posts of Professor of Medicine in the State Medical Colleges as per its advertisement dated 8th September 1973, subsequently extending the last date for receipt of applications to 30th March 1974, Dr. M. C. Gupta and Dr. R. N. Tandon (referred to as the 'appellants ') along with Dr. A. K. Gupta, Dr. Brij Kishore and Dr. section N. Aggarwal (referred to as 'respondents 1, 2 and 3), applied for the post.
The advertisement set out the prescribed qualifications for the post under Regulations made under section 33 of the ( 'Act ' for short).
They were in respect of the academic attainments, teaching/research experience, upper age limit, etc.
The Commission was assisted by four medical experts in the matter of interview, selection and recommendation of suitable candidates satisfying the requisite qualifications for the post.
The Commission selected Dr. M. C. Gupta and Dr. R. N. Tandon for the two posts of Professor in Medicine and recommended their names to the State Government, Respondents 1, 2 and 3 who were also candidates for the post, presumably came to know about the recommendation and moved the High Court on 13th September 1974 by way of a writ petition questioning the selection.
The petition was admitted and rule nisi was issued.
An ex parte interim stay restraining the Government from making the appointments was granted but sub 856 sequently it was vacated.
The State Government accepted the recommendations of the Commission and appointed Dr. M. C. Gupta and Dr. R. N. Tandon as Professors of Medicine on 30th October 1974.
The petition was subsequently amended questioning the order of appointment.
As already stated above, the learned single Judge held that neither Dr. M. C. Gupta nor Dr. R. N. Tandon had the requisite teaching experience and that neither of them was qualified for selection as Professor of Medicine and accordingly allowed the writ petition and quashed the selection.
By a common judgment in the appeals arising from the judgment of the learned single Judge, the appellate Bench confirmed the order quashing the selections and further quashed the order of appointment and remitted the matter to the Commission directing it to make fresh selection in consonance with the interpretation put upon the relevant regulations by the Court.
Three appeals are before us.
These three appeals obviously were heard together and are being disposed of by this common judgment.
The selection and appointment of Dr. M.C. Gupta and Dr. R. N. Tandon were questioned only on one ground in that each of them did not satisfy the requisite teaching/research experience.
The controversy in these appeals centres round the question of teaching/research experience and the relevant regulation in this behalf may be extracted: ___________________________________________________________ Post Academic Subject Teaching/ Qualification Research experience ___________________________________________________________ (b) Professor/ M.D., M.R.C.P., Medicine (b) As Reader/ Associate F.R.C.P., Asst.
Professor Professor Speciality in Medicine for Board of 5 years in a Internal Medicine Medical College (USA) or an after requisite equivalent post graduate qualification in qualification.
the subject.
___________________________________________________________ Regulation 4 of General Regulations provides as under: "4.
50% of the time spent in recognised research under the Indian Council of Medical Research or a University or a Medical College, after obtaining the requisite post graduate qualification be counted towards teaching experience in the same or an allied subject provided that 50% of the teaching experience shall be the regular teaching experience.
" The teaching/research experience claimed by each of the appellants may be set out and then the comments of each side in respect of each item may be examined: 857 Experience of Dr. M. C. Gupta.
I. 25th January 1965 to 19th About 6 years and July 1971 Lecturer in Cardio 6 month 's teaching logy in the Dept. of Medicine experience.
II July 71 upto the date of About 3 years, 2 appointment as Professor months ' teaching Reader in Medicine in S.N. experience.
Medicine College, Agra.
Experience of Dr. R.N. Tandon I. 1st October 1965 to 31st One years ' teaching October, 1966 Post doctoral experience.
teaching fellow, Dept. of Medicine, State University of New York at Buffalo, USA.
II 1st February, 1967 to 31st One year 's teaching 1968 As a Lecturer while experience.
posted as Pool Officer Dept. of Medicine in GSVM Medical College, Kanpur.
III 5th April 1968 to 4th July 15 Months ' teaching 1969 Post doctoral research experience.
fellow, Dept. of Medical in GVSM Medical College, Kanpur.
IV 29th July 1969 to 30th October Over 5 years teaching 1974 (date of appointment as experience.
Professor) Asst.
Professor of Medicine, State University of New York, at Buffalo USA.
Before the rival comments are probed and analysed, it would be necessary to keep in view the twilight zone of Court 's interference in appointment to posts requiring technical experience made consequent upon selection by Public Service Commission, aided by experts in the field, within the framework of Regulations framed by the Medical Council of India under section 33 of the , and approved by the Government of India on 5th June 1971.
When selection is made by the Commission aided and advised by experts having technical experience and high academic qualifications in the specialist field, probing teaching/research experience in technical subjects, the Courts should be slow to interfere with the opinion expressed by experts unless there are allegations of mala fides against them.
It would normally be prudent and safe for the Courts to leave the decision of academic matters to experts who are more familiar with the problems they face than the Courts generally can be.
Undoubtedly, even such a body if it were to contravene rules and regulations binding upon it in making the selection and recommending the selectees for appointment, the Court in exercise of extraordinary jurisdiction to enforce rule of law, may interfere in a writ petition under Article 226.
Even then the Court, while enforcing the rule of law, should give due weight 858 to the opinions expressed by the experts and also show due regard to its recommendations on which the State Government acted.
If the recommendations made by the body of experts keeping in view the relevant rules and regulations manifest due consideration of all the relevant factors, the Court should be very slow to interfere with such recommendations (see, The University of Mysore & Anr.
vs C. D. Govinda Rao & Anr.,(1).
In a more comparable situation in State of Bihar & Anr.
vs Dr. Asis Kumar Mukherjee, and Ors.
,(2) this Court observed as under: "Shri Jagdish Swaroop rightly stressed that once the right to appoint belonged to Government the Court could not usurp it merely because it would have chosen a different person as better qualified or given a finer gloss or different construction to the regulation on the score of a set formula that relevant circumstances had been excluded, irrelevant factors had influenced and such like grounds familiarly invented by parties to invoke the extraordinary jurisdiction under article 226.
True, no speaking order need be made while appointing a government servant.
Speaking in plaintitudinous terms these propositions may deserve serious reflection.
The Administration should not be thwarted in the usual course of making appointments because somehow it displeases judicial relish or the Court does not agree with its estimate of the relative worth of the candidates.
Is there violation of a fundamental right, illegality or a skin error of law which vitiates the appointment".
With these blurred contours of periphery of jurisdiction under Article 226 to interfere with selections made by an independent body like Public Service Commission not attributed any mala fides, assisted by four experts in the field who presumably knew what constituted teaching/research experience, what institutions are treated prestigious enough, in which teaching/research experience would be treated valuable, we may examine the rival contentions.
Two contentions which have found favour with the High Court must engage our attention: (1) In order to satisfy the experience qualification for the post of Professor in Medicine, the teaching/research experience must be in medicine and stricto sensu Cardiology being a separate branch, experience of teaching/research in Cardiology cannot be availed of, and (2) any such experience to satisfy the regulation must be acquire while holding the post of Reader or Assistant Professor (including the post of Lecturer) in Medicine.
The controversy centres round the connotation of the expression 859 'medicine '.
Does it include Cardiology or Cardiology is a separate Branch ? Section 2(f) of the Act defines medicine to mean modern scientific medicine in all its branches and includes surgery and obstetrics, but does not include veterinary medicine and surgery.
This is too wide a definition to assist us in the problem posed for the decision of the Court.
In the world of medical science there are general subjects and specialities.
Medicine and surgery are general subjects.
To wit, Cardiology is a speciality in medicine and orthopaedics is a speciality in surgery.
Even the regulation from page 8 onwards bears the heading 'Specialist Branch under Medicine and Surgery '.
Cardiology finds its place as a specialist branch under medicine.
The relevant regulation requires teaching/research experience in medicine.
Contention is, if any one who has teaching/research experience in Cardiology, could he be said to have such experience in medicine ? In this context we must recall regulation 4 which provides that 50% of the time spent in recognised research after obtaining the requisite post graduate qualification shall be counted towards teaching experience in the same or allied subject provided that 50% of the teaching experience shall be the regular teaching experience.
If research in allied subject can be taken to satisfy the requisite experience, teaching experience in a speciality under the general head could not be put on an inferior footing.
Undoubtedly, if the post is in a specialist department, the requisite teaching/research experience will have to be in the speciality.
To illustrate, if one were to qualify for being appointed as Professor/ Associate Professor of Cardiology, his teaching experience must be in Cardiology though his research experience could as well be in Cardiology or allied subject.
A person having such experience in the general subject medicine cannot qualify for the speciality.
That it what distinguishes the speciality from the general subject.
This becomes clear from the fact that in a number of hospitals there may not be posts in specialist branches and someone working in the general department may be assigned to do the work of specialist branches.
If a particular hospital has not got Cardiology as a specialist branch, a Reader or Assistant Professor in the Department of Medicine may be required to look after Cardiology cases and teaching of Cardiology as a subject.
In that event he is certainly a Reader/Assistant Professor in Medicine teaching one of the subjects, viz., Cardiology which again forms part of the general curriculum of the subject of medicine.
Therefore, it is not proper to divorce a specialist branch subject from the general subject.
It cannot be seriously contended that medicine does not include Cardiology.
To be qualified for the specialist branch of Cardiology, the minimum academic qualification is M.D. (Medicine).
This would clearly show that after acquiring the general qualification one can take the specialist branch.
If any other approach is adopted it would work 860 to the disadvantage of the person who while being posted in the Department of Medicine, is asked to teach a subject which is necessary for being taught for qualifying for M.D. but which can be styled as speciality.
He would simultaneously be denied the teaching experience in the subject of Medicine.
An extreme argument was urged that in adopting this approach it may be that somebody may be working in different specialist branches such as Neurology, Gastroenterology, Psychiatry, etc.
and each one would qualify for being appointed as Professor of Medicine without having even a tickle of experience on the subject of general medicine.
This wild apprehension need not deter us because it should be first remembered that any one going into specialist branch under medicine has to be M.D. (Medicine).
Thereafter, if he wants to become a Professor in the specialist branch such as Cardiology, the academic qualification required is to hold a degree of D.M. in the Specialist Branch.
This becomes clear from a perusal of the regulations.
It is not necessary, therefore, to go into the dictionary meaning of the expression 'medicine ' to determine whether it includes Cardiology.
The Medical Council of India, a body composed of experts have in the regulations clearly manifested their approach when they said that Cardiology is a specialist branch under medicine.
Ipso facto, medicine includes Cardiology.
It was not disputed that one qualifying for M.D. (Medicine) has to learn the subject of Cardiology.
And it must be remembered that the four experts aiding and advising the Commission have considered teaching experience in Cardiology as teaching experience in Medicine.
The counter affidavit on behalf of the Commission in terms states that medicine is a wide and general subject and includes Cardiology whereas for the post of Professor of Cardiology a further two years ' special training in Cardiology or D.M. in Cardiology after M.D. in Medicine has been laid down as a requisite qualification by the Medical Council.
It is further stated that teaching experience in Cardiology will make the person eligible for the post of Professor of Medicine.
That was the view of the experts who assisted the Commission.
Incidentally it may be mentioned that Mr. V. M. Tarkunde, learned counsel for respondents 1, 2 and 3 took serious exception to giving any weight to the counter affidavit because it has not been sworn to by any expert aiding or advising the Commission or by any officer or Member of the Commission but by an Upper Division Assistant whose source of knowledge is the legal advice tendered to him.
In paragraph 1 of the affidavit the deponent says that he has been deputed by the Commission to file the counter affidavit on their behalf and as such he is fully acquainted with the facts deposed to in the affidavit.
It is our sad experience that responsible authorities avoid filing affidavits in courts when it behoves them to assist the Court and facilitate the decision of the questions brought before the Court 861 but on this account alone we would not wholly ignore the counter affidavit.
Some documents were brought to our notice showing that in State University of New York at Buffalo, U.S.A. the Assistant Professor of Cardiology is designated as Assistant Professor of Medicine.
Further, in the Agra University Calendar, Cardiology is included in the Department of Medicine.
Similarly it was also pointed out that the Department of Medicine in the University of Manchester includes Lecturer in Cardiology.
Apart from this administrative arrangement, it could not be seriously disputed that Cardiology is a specialist branch under medicine and it could not be wholly divorced from medicine.
Under the general head 'medicine ' number of subjects are to be taught, one such being Cardiology.
If a teacher is asked to teach Cardiology as one of the subjects for general medicine, could he be at a disadvantage by being treated as having not acquired teaching experience in medicine ? Even under general medicine, apart from medicine as a subject, there are numerous other subjects and papers and there would be one or more persons incharge of one or more subjects and papers and indisputably each one would be gaining experience in general medicine.
If general medicine is to be restricted only to the paper on medicine, it would lead to a startling as result, as startling as it was sought to be urged when it was said that a person teaching Neurology could not be said to be gaining teaching experience in medicine.
The matter has to be looked at from this angle, viz., that where general subject such as medicine or surgery is being dealt with in a regulation, the specialist branch under it would be covered, though not vice versa, because if one wants to hold a post in the specialist branch he must be of necessity have teaching experience in the specialist branch.
In reaching this conclusion the seniority list maintained branch wise would hardly be helpful.
Therefore, it is not possible to agree with the High Court that the subject of medicine under the regulation is exclusive of the other subjects mentioned therein and, therefore, does not include Cardiology.
The second contention which found favour with the High Court was that the requisite teaching or research experience must be acquired while holding the post set out in the regulation in that subject.
In other words, the view of the High Court is that the teaching/research experience must be acquired while holding the post of Reader/Assistant Professor in Medicine for five years in a Medical College.
The High Court placed the emphasis on the experience acquired while holding the post.
The relevant regulation requires teaching/research experience as Reader/Assistant Professor (which includes Lecturer) 862 in Medicine for five years in a Medical College.
Regulation 4 has to be read along with specific regulation.
Regulation 4 clearly shows that 50% of the time spent in recognised research in the same or allied subject will be given credit provided that 50% of the teaching experience shall be regular teaching experience.
The specific regulation prescribing the qualification will have to be read subject to the general regulation prescribed under regulation 4 because the experience qualification prescribed in specific regulation must be calculated according to the formula prescribed in general regulation No. 4.
The specific regulation requires 5 years ' teaching/research experience.
In calculating the research experience in the light of regulation 4, 2 1/2 years ' experience shall be specifically teaching experience and credit can be given to the extent of 50% of the time spent in recognised research as prescribed in the regulation, which experience can be in the same subject, viz., the subject for which the recruitment is being made or in allied subject.
So far there is no dispute.
The question is: while acquiring research experience, is it incumbent that the person conducting research must also hold of necessity designated post in the regulation ? Now, if general regulation 4 is properly analysed for the purposes of computing research experience, the pre requisite is that the research must be done after obtaining requisite post graduate qualification.
It has no reference to the post held by the person engaged in research at the time of conducting the research.
The heading is 'teaching/research experience '.
The dichotomy will have to be applied to teaching and research experience for the purpose of computation.
So far as teaching experience is concerned, it must be acquired while holding the post specified in the regulation.
But to say that holding of the post is a pre requisite while conducting research is to read in regulation 4 what is not prescribed thereunder.
The specific regulation prescribing qualification will have to be read subject to general regulation 4 and not vice versa.
This also becomes manifest from the fact that general regulation 4 also provides that 50% of the teaching experience shall be regular teaching experience meaning thereby that if someone is engaged exclusively in research, he cannot claim to satisfy the teaching experience qualification prescribed in the regulation.
Reading specific regulation with general regulation 4, it emerges that teaching experience shall be acquired while holding the particular post specified therein and the research experience can be taken into account if the person is engaged in research after obtaining post graduate qualification and it has nothing to do with the holding of the post.
One may be engaged as a research scholar and holds no teaching post.
The research is hardly related to post though capacity for research is directly related to academic attainment.
That has been 863 taken care of.
Teaching it indisputably related to the post because a higher post may entail greater responsibility for coaching in higher classes.
This conclusion is reinforced by the language of general regulation 4 which permits recognised research under the Indian Council of Medical Research which body may not have such hierarchical posts of Lecturer or Assistant Professor or Reader.
These three designations are to be found in teaching institutions and not in research institutions.
If it were, therefore, to be held that even while acquiring research experience one must hold the post of either Reader or Assistant Professor, it would discourage many persons conducting research under the Indian Council of Medical Research.
It is, therefore, not possible to agree with the generalisation made by the High Court that teaching/research experience to qualify for the post of Professor must be acquired while working as a Reader or Lecturer.
Having cleared the ground about the interpretation of requisite regulations, we must now turn to examine the two individual cases.
In re :Dr. M. C. Gupta.
The experience qualification of Dr. M.C. Gupta has been extracted above.
There is no dispute between the parties that he was appointed and was working as Reader in Medicine in S.N. Medical College, Agra, from 28th July 1971 till 30th March 1974 which was the last date by which applications had to be submitted to the Commission.
This would give him a teaching experience of 2 years 8 months and 10 days.
Dr. Gupta also claims teaching experience, being a Lecturer in Cardiology in the Department of Medicine, section N. Medical College, Agra, from 25th January 1965 to 19th July 1971, in the aggregate period of 6 years, 6 months and 24 days.
There is a serious dispute between the parties whether Dr. Gupta is entitled to get credit for teaching experience while working as Lecturer in Cardiology.
On the view that we have taken that Cardiology is a specialist branch under medicine and, therefore, a Lecturer in Cardiology could be said to be a Lecturer in one of the subjects under general medicine and hence he had requisite experience as Lecturer in Medicine.
However, Dr. Gupta has produced a certificate issued by the Principal and Chief Superintendent, S.N. Medical College & Hospital, Agra, dated 19th September 1974 in which it is stated that 'Dr. Gupta joined the Department of Medicine as Lecturer in Cardiology on 25th January 1965 and continued till July 19, 1971 when he was appointed as Reader in Medical by Public Service Commission '.
It is further certified by 864 the Principal & Chief Superintendent that 'Dr. Gupta was actively involved in patient care, teaching of undergraduates and post graduates in general medicine in addition to conducting Cardiac Out Patient, looking after cardiac beds and taking Cardiology lectures during his tenure as Lecturer in Cardiology, as Cardiology forms a part of general medicine in this college and there is no separate Department of Cardiology here '.
There is another certificate issued by Dr. K. section Mathur, Professor & Head, Department of Medicine (RD), dated 17th September 1974, in which it is in terms stated that Dr. Gupta was actively involved in the patient care and teaching of undergraduates and postgraduates in General Medicine in addition to Cardiology during this period.
Further, Dr. Gupta used to be the Senior Physician to attend to Emergencies of all medical cases on a particular day of week and he looked after indoor beds of general medical units during leave arrangements.
He was also incharge of T.B. Clinic for a period of one month.
It was further stated that Dr. Gupta had been assigned 'Special Clinics ' to 5th year and 3rd year and 'Long Clinics ' to final year students from time to time in addition to Cardiac Clinics and Cardiology lectures.
He was also taking regular classes in clinical methods for third year and has also been called upon to teach them kidney diseases.
There are further references in the certificate which we may ignore for the time being.
Dr. Gupta also produced a certificate issued by Professor of Clinical Medicine, section N. Medical College, Agra, which, inter alia, states that Dr. Gupta was associated from time to time with teaching and patient care in general medicine and he was also actively associated with teaching of post graduates in general medicine in the way of clinical conferences, seminars, etc.
He was also incharge of beds in general medicine in Professors ' Unit in the leave vacancy.
A notice dated 24th October 1970 issued by the Department of Medicine, section N. Medical College, Agra, was also brought to our notice in which it was shown that Dr. Gupta was to be the Senior Physician on call on every Tuesday.
It would thus appear that even if Dr. Gupta was designated as Lecturer in Cardiology for the period 25th January to July 19, 1971, undoubtedly he was teaching general medicine to undergraduate students and to some post graduate students also and this is testified by persons under whom he was working.
It would be unwise to doubt the genuineness of these certificates.
Therefore, even apart from the fact that Cardiology is a part of medicine, the teaching experience acquired while holding the post of Lecturer in Cardiology, was teaching experience in subject which substantially formed part of general medicine and over and above the same, he was also working as Lecturer in Cardiology and, therefore, the Commission was amply justified in reaching the conclusion that Dr. Gupta 865 had the requisite teaching experience qualification and the High Court was in error in quashing the selection of Dr. M. C. Gupta on this ground.
Mr. L. N. Sinha, learned counsel, also wanted us to examine the research experience of Dr. M. C. Gupta when he pointed out that Dr. Gupta had published as many as 40 research papers in leading medical journals in India during 10 years he worked as Lecturer/Reader and that he had also been a recognised appraiser for the thesis submitted for the award of Doctor of Medicine.
Mr. Sen seriously objected to our examining this contention because Dr. Gupta himself never claimed any credit for research experience.
Undoubtedly, the counter affidavit on behalf of the Commission refers to having taken into consideration the research experience of Dr. Gupta but the affidavit is blissfully vague on the question which research experience was examined by the Commission.
Therefore, we would not take into account the research experience claimed on behalf of Dr. Gupta.
In re: Dr. R. N. Tandon.
We have already extracted above the teaching/research experience qualification claimed on behalf of Dr. Tandon.
Mr. Kacker, learned Solicitor General requested us to start examining each item of experience commencing from the last one as first.
Before we proceed to examine each item of experience claimed by Dr. Tandon, one contention raised on behalf of the respondents must be dealt with.
It was urged that wherever the regulations prescribe teaching or research experience, it must be one acquired in an institution in India or in any foreign institution recognised by the Medical Council of India or the Government of India.
It is not necessary to examine this argument in depth because the point could be said to have been concluded by A. K. Mukherjee 's case, wherein same set of regulations came in for consideration of this Court and in which it was seriously contended that the teaching experience specified in regulations in question must be acquired in teaching institutions in India and, therefore, any teaching experience in a foreign country cannot be taken into consideration.
This contention was in terms negativated simultaneously negativing the other extreme submission that teaching experience from any foreign institution is good enough, and after referring to sections 12, 13, and 14, it was held that those which are good enough for the aforementioned sections, are good enough for the teaching experience gained therefrom being reckoned as satisfied.
The matter undoubtedly was not further pursued by this Court because the final decision was left to the Commission.
866 Proceeding in the order suggested by Mr. Kacker it is claimed that Dr. Tandon worked as Assistant Professor of Medicine, State University of New York at Buffalo from 29th July 1969 to 30th October 1974.
This includes some period subsequent to the last date for submitting application to the Commission and we would exclude that part of the experience claimed by Dr. Tandon.
Therefore, Dr. Tandon claims to be working as Assistant Professor of Medicine from 29th July 1969 to 30th March 1974 which was the last date for submitting the application to the Commission.
Computing the period, he would have teaching experience of four years, six months and one day.
It was also said that even if teaching experience in foreign teaching institution is to be taken into account, they must be some recognised institutions of repute and not any institution outside the territory of India.
That of course is true.
In A. K. Mukherjee 's case the pertinent observation is as under: "Teaching institutions abroad not being ruled out, we consider it right to reckon as competent and qualitatively acceptable those institutions which are linked with, or are recognised as teaching institutions by the Universities and organisations in Schedule II and Schedule III and recognised by the Central Government under section 14.
Teaching institutions as such may be too wide if extended all over the globe but viewed in the perspective of the , certainly they cover institutions expressly embraced by the provisions of the statute.
If those institutions are good enough for the important purposes of sections 12, 13 and 14, it is reasonable to infer they are good enough for the teaching experience gained therefrom being reckoned as satisfactory.
" But it could hardly be urged with some confidence that the State University of New York at Buffalo would not be an institution of repute.
An attempt was made to refer to the Schedules, not upto date, to the Act published by the Medical Council of India showing recognised institutions.
In fact, the Schedules set out recognised degrees, certificates and diplomas of various Universities and certain examining Boards of U.S.A. being recognised by the Medical Council of India.
This brochure hardly helps in coming to conclusion one way or the other.
It refers to degrees and the Boards awarding the degrees and diplomas.
It does not refer to teaching institutions.
It nowhere shows that the certificates and diplomas issued by the State University of New York at 867 Buffalo would not be under one of the American Boards and, therefore, it is not recognised.
Such a contention was not even urged before the High Court or specifically in affidavits so that factual material could have been more carefully examined.
The experts aiding and advising the Commission must be quite aware of institutions in which the teaching experience was acquired by Dr. Tandon and this one is a reputed University.
It was, however, contended that there is no proof in support of the submission that Dr. Tandon was working as Assistant Professor of Medicine at State University of New York at Buffalo, commencing from 29th July 1969.
Dr. Tandon has produced a certificate, Annexure CA.
5 issued by Associate Professor of Medicine, Director Angiology Department, Buffalo General Hospital dated 3rd June 1971, in which it is stated that Dr. Tandon is an Assistant Professor of Medicine in the Department of Medicine on the full time staff of the Buffalo General Hospital having an annual salary of $ 15,000.
Mr. Tarkunde urged that this certificate does not show that Dr. Tandon was appointed effective from 29th July 1969.
Further, exception was taken to the certificate in that it is issued by the Buffalo General Hospital which the certificate does not show to be a teaching institution.
If it was not a teaching institution, one would fail to understand how it had a post of Assistant Professor of Medicine.
In a nonteaching hospital there could not be a post of Assistant Professor.
Therefore, the very fact that Dr. Tandon was shown to be an Assistant Professor of Medicine, by necessary implication shows that Buffalo General Hospital was a teaching institution under State University of New York.
In this connection reference may be made to a certificate dated 12th September 1974 issued by James P. Nolan, Professor of Medicine and Head, Department of Medicine, Buffalo General Hospital, in which it is stated that since July 1969 Dr. Tandon has been a teacher in general medicine at the Buffalo General Hospital.
This removes any doubt about the commencement of appointment of Dr. Tandon as Assistant Professor at the Buffalo General Hospital.
Mr. Tarkunde however urged that the certificate does not appear to be genuine in view of the inquiry made by a telegram (p. 257, Vol.
II of the record) from the authorities incharge of the Buffalo General Hospital and the reply received that Dr. Tandon is in India and, therefore, cannot get any information as he left instructions not to release it.
Who has sent this telegram is left to mere speculation.
And who sent the reply is equally unknown.
It would be improper to reject the certificate on such nebulous ground and we 868 can do no better than reject the contention of Mr. Tarkunde as unworthy of consideration as was done in A. K. Mukherjee 's case where in it was observed as under: "There are 6 certificates now on record and the 1st respondent is stated to have taken part in teaching work as Registrar.
You cannot expect to produce those surgeons in Patna in proof and unless serious circumstances militating against veracity exist fair minded administrators may, after expert consultations, rely on them".
Therefore, we see no justification for rejecting the certificates.
It would appear that Dr. Tandon had the teaching experience while holding the post of Assistant Professor of Medicine for a period of four years, six months and one day.
The minimum requirement is five years.
We would next examine one more item of experience claimed by Dr. Tandon in that he was post doctoral teaching fellow, Department of Medicine, State University of New York at Buffalo from 1st October 1965 to 31st October 1966.
Now, undoubtedly this was teaching experience in the same University where he was subsequently Assistant Professor.
The grievance is that he was a Fellow and neither a Lecturer nor an Assistant Professor.
What does 'Fellow ' in the University connote ? A certificate has been produced, Annexure CA.
(page 50, Vol.
IV) by Dr. Tandon issued by Eugine I. Lippasch, Professor & Administrative Associate Chairman of the Department of Medicine, State University of New York at Buffalo, dated 13th October 1966, in which it is stated that Dr. Tandon completed one year teaching fellowship in the Division of Cardiology of the Department of Medicine at the State University of New York at Buffalo and the Buffalo General Hospital on October 31, 1966.
It is not very clear what is the equivalent of a Fellow in teaching Hospitals in India but Dr. Tandon has also claimed teaching experience from 5th April 1968 to 4th July 1969, being posted as post doctoral research fellow, Department of Medicine in G. section V. M. Medical College, Kanpur.
In this connection, Annexure R 2, produced by none other than some of the contesting respondents shows that during the tenure of Fellowship, Dr. Tandon was expected to take part in the teaching and research activities of the College though he would not be treated as part of the regular establishment of the College.
Now, if the certificate produced by Dr. Tandon shows that Fellowship included teaching work, it would be unwise to doubt it.
Even if 50% of the time spent in these two places is given credit, Dr. Tandon had certainly 869 more than five years ' teaching experience.
The Court is not competent to work out figures with mathematical precision.
It can broadly examine the question whether the requirement is satisfied or not.
Therefore, he had the requisite teaching/research experience and the Commission was fully justified in treating Dr. Tandon as having requisite teaching/research experience.
It thus clearly appears that both Dr. M. C. Gupta and Dr. R. N. Tandon had the requisite qualifications, both academic and experience, and they were eligible for the post for which they had applied and if they were selected by the Commission and appointed by the Government, no exception can be taken to the same.
The High Court was, therefore, in error in interfering with the same.
Accordingly, all the three appeals are allowed and the writ petition filed by respondents 1, 2 and 3 in the High Court is dismissed with no order as to costs in the circumstances of the case.
M.R. Appeals allowed.
| The appellant Dr. M. C. Gupta and the sixth respondent Dr. R. N. Tandon, were appointed to the post of 'Professor in medicine in State Government Medical Colleges.
The appointments were made by the State Government, on the recommendation of U.P. Public Service Commission, which had earlier with the assistance of four medical experts, selected them through an interview.
The respondents No. 1, 2 and 3 who were also candidates for the post filed a writ petition in the High Court, challenging the selection and appointment of Dr. M. C. Gupta and Dr. R. N. Tandon, though no mala fides were attributed to the Commission.
A Single Judge of the High Court issued a writ quashing the selection, on the ground that neither of the two selected doctors had the requisite teaching experience and that neither of them was qualified for selection as Professor of Medicine.
In appeal, the appellate Bench of the High Court confirmed the order quashing the selections, and further quashed the order of appointment, remitting the matter to the Commission, directing it to make fresh selection in consonance with the interpretation put upon the relevant regulation, by the court.
Allowing the three connected appeals, one by Dr. M. C. Gupta, and two by the State of U.P., the Court ^ HELD .
I. Medicine includes cardiology.
The Medical Council of India, a body composed of experts, have in the regulations clearly manifested their approach when they said that cardiology is a specialist branch under medicine.
Where general subject such as medicine or surgery is being dealt with, in a regulation, the specialist branch under it would be covered, though not vice versa, because if one wants to hold a post in the specialist branch, he must of necessity have teaching experience in the specialist branch.
[859 G, 860 D, 861 E].
If general regulation 4 is properly analysed for the purpose of computing research experience, the prerequisite is that the research must be done after obtaining the requisite post graduate qualification.
It has no reference to the post held by the person engaged in research at the time of conducting the research, and, to say that holding of the post specified in the regulation, is a pre requisite while conducting research, is to read in regulation 4, what is not prescribed thereunder.
[862 D F].
Teaching experience in foreign teaching institutions can be taken into account, but, they must be some recognised institutions of repute and not any institution outside the territory of India.
865 G, 866 C].
854 State of Bihar & Anr.
vs Dr. Asis Kumar Mukherjee & Ors., ; ; followed.
Vade Mecum : In view of the twilight zone of Court 's interference in appointment to posts requiring technical experience made consequent upon selection by Public Service Commission, aided and advised by experts having technical experience and high academic qualifications in the specialist field, probing teaching/research experience in technical subjects, within the framework of Regulations framed by the Medical Council of India, under section 33 of the and approved by the Government of India, the courts should be slow to interfere with the opinion expressed by the experts, unless there are allegations of mala fides against them.
[857E G].
University of Mysore & Anr.
vs C. D. Govinda Rao & Anr., ; applied.
State of BIhar & Anr.
vs Dr. Asis Kumar Mukherjee & Ors., ; ; explained.
|
: Civil Appeals Nos. 14 and 15 of 1955.
Appeals by special leave from the decision dated September 30, 1953, of the Labour Appellate Tribunal of India, Lucknow in Civil Appeals Nos.
111 198 of 1953 and III 321 of 1953.
section section Dhawan, G. C. Mathur and C. P. Lal, for the appellants and respondent No. 2 (Unions) in both the Appeals.
H. N. Sanyal, Additional Solicitor General of India, and section P. Varma, for the respondent No. I in C. A. No. 14 of 1955.
N. C. Chatterjee and Radhey Lal Aggarwala, for the respondent No. 1 in C. A. 15 of 55.
November 20.
The following Judgment of the Court was delivered by IMAM J.
These two appeals by special leave have been heard together as they arise out of a single judgment of the Labour Appellate Tribunal of India, Lucknow, dated September 30, 1953, passed in seven appeals before it.
As the question for consideration in the appeals before this Court is the same, this judgment will govern both the appeals before us.
Civil Appeal Nos.
14 and 15 of 1955 arise out of Appeal Nos. 111 198 of 1953 and 111 321 of 1953 respectively before the Labour Appellate Tribunal.
The question for consideration before the Labour Appellate Tribunal was whether the awards from which the seven appeals had been filed before that Tribunal were valid in law and made with jurisdiction.
It is this very question which arises in the appeals before us.
Before dealing with the question raised in these appeals it is necessary to state certain facts.
On March 15, 1951, the Governor of Uttar Pradesh made a, General Order consisting of numerous clauses under 974 powers conferred on him by cls.
(b), (c), (d) and (g) of section 3 and section 8 of the Uttar Pradesh (Act XXVIII of 1947), hereinafter referred to as the Act, in supersession of the general Order No. 781 (L)/XVIII dated March 10, 1948.
The Order of March 15, 1951, was numbered 615 (LL)/ XVIII 7 (LL) of 1951, hereinafter referred to as Order No. 615.
Under cl. 16 of Order No. 615, the decision of the Tribunal or Adjudicator was to be pronounced within 40 days, excluding holidays but not annual vacations observed by courts subordinate to the High Court, from the date of reference made to it by the State Government concerning any industrial dispute.
The proviso to it authorised the State Government to extend the period for the submission of the award from time to time.
On February 18, 1953, this clause was amended and the time of 40 days was altered to 180 days.
On December 17, 1952, the judgment of this Court in the case of Strawboard Manufacturing Co., Ltd. vs Gutta Mill Workers ' Union (1), was pronounced.
In consequence of this decision the Act was amended by the Uttar Pradesh Industrial Disputes (Amendment) Ordinance, 1953 (Ordinance No 1 of 1953), hereinafter referred to as the Ordinance, promulgated by the Governor of Uttar Pradesh.
The Ordinance came into force on May 22, 1953.
By the provisions of section 2 of the Ordinance section 6 A was introduced into the Act.
Section 2 of the Ordinance states "After section 6 of the U. P. (hereinafter referred to as the Principal Act), the following shall and be deemed always to have been added as section 6 A "6 A. Enlargement of time for submission of awards.
Where any period is specified in any order made under or in pursuance of this Act referring any industrial dispute for adjudication within which the award shall be made, declared or submitted, it shall be competent for the State Government, from time to time, to enlarge such period even though the period originally fixed or enlarged may have expired." (1)[1953] section C. R. 439.
975 Section 3 of the Ordinance states : "Removal of doubts and validation For the removal of doubts it is hereby declared that : (1)any order of enlargement referred to in section 6A made prior to the commencement of this Ordinance under the Principal Act or any order passed thereunder which would have been validly and properly made under the Principal Act if section 6 A had been part of the Act shall be deemed to be and to have been validly and properly made thereunder; (2)no award whether delivered before or after the commencement of this Ordinance in any industrial dispute referred prior to the said commencement for adjudication under the Principal Act shall be invalid oil the ground merely that the period originally specified or any enlargement thereof had already expired at the date of the mkaing, declaring or submitting of the award and any action or proceeding taken, direction issued or jurisdiction exercised in pursuance of or upon such award be good and valid in law as if section 6 A had been in force at all material dates; (3)every proceeding pending at the commencement of this Ordinance before any court or tribunal against an award shall be decided as if the provisions of section 6 A bad been in force at all material dates.
" The following chart will show the date of reference, the date on which the period of 40 days expired, the dates and the periods of enlargement, the date of submission of the award and the date of filing of the appeal, in the seven appeals before the Labour Appollate Tribunal: 124 976 Date on which 40 Appeal No. Date of days, available for Date & Period reference the initial sub of enlargement mission of the if any award expired * $ 111 186/53 13 2 1953 3 4 1953 Nil 6 4 1953 5 5 1953 111 187/53 28 1 1953 18 3 1953 Nil 13 4 1953 5 5 1953 111 321/53 28 1 1953 18 3 1953 Nil 26 6 1953 18 7 1953 111 183/53 28 1 1953 18 3 1953 Nil 13 4 1953 4 5 1953 111 323/53 9 2 1953 29 3 1953 Nil 22 6 1953 20 7 1953 111 209/53 15 1 1953 5 3 1953 13 3 1953 9 4 1953 8 5 1953 (up to 31 3 1953) 17 4 1953 111 198/53 19 8 1952 10 10 1953 (i) 4 11 1952 13 5 1953 up to 11 11 1952 (ii) 26 12 1952) (up to 31 12 1952) (iii) 13 1 1953 (up to 31 1 1953) (iv) 11 2 1953 (up to 10 3 1953) *) Date of submission of the award.
$) Date of filing of the appeal.
125 977 The Labour Appellate Tribunal found that the award in appeal No. 111 198 of 1953 was made not only on the expiry of the period of enlargement but also long after the expiry of 180 days from the date of reference.
In the case of the other appeals the awards were made on the expiry of 40 days but within 180 days of the reference.
Appeals Nos. 111 321 and 323 of 1953 were filed after the commencement of the Ordinance and the others before its commencement.
In the case of the Swadeshi Cotton Mills Co., Ltd. (Civil Appeal No. 14 of 1955), the Governor by an order dated August 19, 1952, referred the dispute between the said Mills and its workmen to the Additional Regional Conciliation Officer, Kanpur for adjudication, on the issue stated therein, in accordance with the provisions of Order No. 615.
In the case of Kamlapat Motilal Sugar Mills (Civil Appeal No. 15 of 1955), the Governor by his order dated January 28, 1953, referred the dispute between the said Mills and its workmen, on the issue mentioned therein, to the Regional Conciliation Officer, Lucknow for adjudication in accordance with the provisions of Order No. 615.
In both these orders of reference no date was specified within which the Regional Conciliation Officers of Kanpur and Lucknow were to submit their awards.
All that was stated in these orders was that they shall adjudicate the dispute in accordance with the provisions of Order No. 615.
It is only by reference to cl. 16 of Order No. 615 that it is possible to say that the decisions of these Conciliation Officers were to be pronounced within the time specified in the Orders of reference and that would be 40 days from the date of reference.
In the case of the Swadeshi Cotton Mills, there were several periods of enlargement of time but in the case, of the Kamlapat Motilal Sugar Mills there was no enlargement of time, as will appear from the above mentioned chart.
Under section 3 of the Act the State Government, for the purposes mentioned therein, could, by general or special order, make provisions for appointing Industrial Courts and for referring any industrial dispute for conciliation or adjudication in the manner provided 978 in the order.
Order No. 615 was a general order made by virtue of these provisions.
Clause 10 of that Order authorized the State Government to refer any dispute to the Industrial Tribunal or if the State Government, considering the nature of the dispute or the convenience of the party, so decided, to any other person specified in that behalf for adjudication.
Clause 16 specified the time within which the decision of the Tribunal or the Adjudicator had to be pronounced, provided the State Government could extend the period from time to time.
Section 6(1) of the Act specifically stated that when an authority to which an industrial dispute had been referred for award or adjudication had completed its enquiry, it should, within such time as may be specified, submit its award to the State Government.
It would appear therefore, that the Act required the submission of the award to be made within a specified time, which time, in the absence of a special order of reference of an industrial dispute for conciliation or adjudication under section 3 of the Act, would be determined by the provisions of a general order made by the Government in that behalf.
An order of reference of an industrial dispute for adjudication without specifying the time within which the award had to be submitted would be an invalid order of reference.
In fact, the orders of reference in the cases under appeal specified no time within which the award had to be submitted.
All that they directed was that the dispute shall be adjudicated in accordance with the provisions of Order No. 615.
If these orders of reference are read along with cl. 16 of Order No. 615, then it must be deemed that they specified the time within which the award had to be submitted as 40 days from the dates of reference.
The proviso to cl. 16 of Order No. 615 empowering the State Government to extend the period from time to time within which the award had to be submitted was found to be an invalid provision, having regard to section 6(1) of the Act, by this Court in the case of Strawboard Manufacturing Co. Ltd. vs Gutta Mill Workers ' Union (1).
If the matter had stood there (I) ; 979 only, the awards, having been submitted beyond forty days from the dates of reference, would be invalid as the periods of extension granted from time to time by the State Government for their submission could not be taken into consideration.
The Act, however, was amended by the Ordinance and section 6 A was added to the Act and according to the provisions of section 2 of the Ordinance, section 6 A of the Act must be deemed to have formed a part of the Act at the time of its enactment.
Section 6(1) and section 6 A of the Act must therefore be read together.
Section 6(1) of the Act specifically stated that the award must be submitted within a specified date in an industrial dispute referred for adjudication after the completion of the enquiry.
Under section 6 A, however, the State Government was empowered from time to time to enlarge the period even though the period originally fixed or enlarged might have expired.
The orders of reference in these appeals, as stated above, specified 40 days within which the awards had to be submitted.
The State Government could, however, enlarge the periods within which the awards had to be submitted under section 6 A by issuing other orders in the case of each reference extending the time within which the awards had to be submitted.
Admittedly, .no such order was, in fact, passed in the case which is the subject of Civil Appeal No. 15 of 1955, and in the case which is the subject of Civil Appeal No. 14 of 1955, although orders extending the time for the submission of the award were made and the last order extended the time to March 10, 1953, yet the award was submitted on May 13, 1953.
The awards in these cases were, therefore, made in the one case beyond the time specified in the order of reference and in the other beyond the extended period within which the award had to be submitted.
It was urged on behalf of the appellant, the State of Uttar Pradesh, that as cl. 16 of Order No. 615 had been amended whereby 180 instead of 40 days had been provided as the period within which an award had to be submitted, the orders of reference in the cases before as must be construed as specifying 980 180 days within which the awards had to be submitted.
In other words, cl. 16, although amended on February 18, 1953, was retrospective in operation.
Order No. 615 is a general order under which conciliation boards and industrial tribunals may be set up to deal with industrial disputes.
It is true that el.
16 enjoins that the decisions by the tribunal or the adjudicator must be pronounced within a specified number of days but this is a general direction.
An order of reference is a special order.
It could have stated the manner in which the industrial dispute was to be adjudicated and it could also have specified the time within which the decision had to be pronounced.
As the orders of reference in the cases before us merely stated that they were to be decided in accordance with the provisions of Order No. 615, the disputes had to be adjudicated in the manner so provided and the orders of reference must, accordingly, be read as having specified 40 days as the time within which the awards had to be submitted.
Subsequent amendment of cl. 16, whereby 180 days instead of 40 days was provided as the time within which the award had to be submitted, could not affect an order of reference previously made according to which the award had to be submimitted within 40 days.
We cannot agree with the submission made on behalf of the appellant that cl. 16, as amended, must be given retrospective effect and the orders of reference previously issued must be regarded as specifying the time of 180 days for the submission of the awards.
Section 6(1) of the Act is to the effect that the authority to which an industrial dispute has been referred for adjudication must submit its award within such time as may be specified.
This section read with section 6 A of the Act, on a proper interpretation of their provisions, makes it clear that the time within which the award shall be submitted is the period specified in the order of reference.
Mere amendment of cl. 16 would not, therefore, affect the period already specified in the order of reference.
It seems to us, therefore, that the amendment to el.
16 did not materially affect the position and the awards in the cases before us had to be submitted within 981 40 days from the dates of the orders of reference or within the enlarged time for the submission of the awards.
What is the effect of section 3 of the Ordinance is a matter which now remains to be considered.
This section purported to remove doubts and to validate orders of extension of time for the submission of an award.
It also purported to validate certain awards.
There is no difficulty in construing cl.
(1) of this section.
It validates all orders of extension made prior to the commencement of the Ordinance as if section 6 A of the Act had been a part of the Act always.
In other words, orders of extension of time made under the general order, promulgated under section 3 of the Act, would be regarded as made under section 6 A. Clause (3) of section 3 of the Ordinance also does not present any difficulty in construing its provisions.
It directs that every proceeding pending before any Court or Tribunal at the commencement of the Ordinance against an award shall be decided as if section 6 A of the Act had been in force at all material dates.
Clauses (1) and (3) of this section merely re emphasise the provisions of section 6 A of the Act, which, in our opinion, are clear enough even in the absence of the aforesaid clauses.
It is cl.
(2) of section 3 of the Ordinance which requires careful examination.
Learned Counsel for the appellants contended that el.
(2) was sufficiently wide in its terms to include all awards and not merely awards which bad become final as held by the Labour Appellate Tribunal.
The words at the end of the clause " as if section 6 A had been in force at all material dates " were redundant and they should be ignored.
Indeed, according to him, there was no need for the existence of el.
(3) in view of the provisions of cl.
Clause (2) validated all awards whether made before or after the commencement of the Ordinance even if the period specified within which they were to be submitted or any enlargement thereof had already expired in so far as they could not be questioned merely on that ground alone and this would cover even a proceeding pending in any Court or Tribunal at the commencement of the Ordinance against an award, 982 Mr. N. C. Chatterjee, appearing for respondent No. 1, in Civil Appeal No. 15 of 1955, contended that the Labour Appellate Tribunal took the correct view that cl.
(2) of section 3 of the Ordinance covered cases where the awards had become final.
He further developed his argument in support of the decision of that Tribunal on the following lines.
Such clarification, as was sought to be made, by section 3 of the Ordinance must be construed in relation to section 6 A of the Act and not independently of it.
If an award were made outside the ambit of section 6 A then the whole of section 3 of the Ordinance could not apply to such a case.
Section 3(1) of the Ordinance validated all orders of enlargement of time which were made prior to the commencement of the Ordinance.
Such orders should be deemed to have been validly made as if section 6 A had been a part of the Act.
Section 3(2) of the Ordinance was enacted to prevent the validity of an award being questioned when it had been submitted after the specified period for its submission or any enlargement thereof.
The words " as if section 6 A had been in force at all material dates " merely connote that there must be an order of enlargement made by the Government in the exercise of its powers under section 6 A of the Act.
Section 3(2) of the Ordinance had no application to a case where an award was made independently of the exercise of the powers of the Government under section 6 A. Section 3(2) and (3) of the Ordinance were subservient to section 6 A of the Act.
The Tribunal apparently took the view that there was repugnance between sub sections
(2) and (3) of section 3 of the Ordinance and so it made an attempt to avert that repugnance by putting an artificial restriction on the scope of sub section
(2) of section 3.
In holding that section 3(2) applied only to awards that have become final, the Tribunal overlooked the fact that this sub section referred to awards which may be made even after the commencement of the Ordinance and it is not easy to appreciate how finality could be said to attach to these awards on the date when the Ordinance was promulgated.
The Tribunal also felt impressed by the argument that if section 6 A applied to appeals or 983 proceedings against awards pending at the date of the commencement of the Ordinance, there was no reason why the same provision should not apply to appeals or proceedings which may be taken against the awards after the commencement of the Ordinance.
In giving expression to this view, however, the Tribunal clearly overlooked the fact that section 3 (3) is deliberately confined to proceedings against an award pending at the commencement of the Ordinance and no others.
There can be little doubt, in our opinion, that the main purpose of the Ordinance was to validate orders of extension of time within which an award had to be submitted as well as to prevent its validity being questioned merely on the ground that it had been submitted beyond the specified time or any enlargement thereof.
Apart from an order of extension of time the Ordinance purported to deal with at least three situations so far as the submission of an award was concerned.
One was where an award was submitted before the commencement of the Ordinance and against which no proceeding was pending before any Court or Tribunal at the commencement of the Ordinance; another was where an award was submitted after the Ordinance came into force.
These cases were dealt with by cl.
(2) of section 3 of the Ordinance.
The third was the case where an award was submitted before the commencement of the Ordinance against which a proceeding was pending before a Court or a Tribunal before the Ordinance came into force.
Section 3(3) of the Ordinance was so drafted that it should not interfere with judicial proceedings already pending against an award.
It merely directed that such a proceeding must be decided as if section 6 A had been a part of the Act from the date of its enactment.
Where, however, no judicial proceedings against an award were pending it was the intention of the Ordinance that the award shall not be questioned merely on the ground that it was submitted after the specified period for its submission or any enlargement thereof.
Although section 3(2) of the Ordinance is not happily worded and appears to have been the result of hasty legislation, we think, that upon a reasonable construction of 125 984 its provisions its meaning is clear and there is no real conflict between its provisions and the provisions of cl.
(3) of the section.
The words " as if section 6 A had been in force at all material dates " have to be given some meaning and they cannot be regarded as redundant as suggested on behalf of the appellants.
Grammatically they should be regarded as referring to any action or proceeding taken, direction issued or jurisdiction exercised in pursuance of or upon an award.
Section 6 A of the Act, however, has nothing to do 'With this and these words car not apply to that part of the clause.
These words also cannot refer to a case where the award has been made beyond the specified period and in which there has been no order of enlargement of time as section 6 A of the Act does not apply to such a lase.
The words in question, therefor, can only apply to that part of the clause which refers to an enlargement of time for the submission of the award, which is the only purpose of section 6 A of the Act.
In our opinion, if section 3(2) of the Ordinance is read in this way an intelligible meaning is given to it which is consistent with section 6 A of the Act and not in conflict with section 3(3) of the Ordinance.
The awards referred to in section 3(2) are awards against which no judicial proceeding was pending at the commencement of the Ordinance.
In our opinion, the provisions of section 3(2) and (3) are not in conflict with each other.
We cannot accept the view of the Labour Appellate Tribunal that section 3(2) refers only to awards that had become final.
Having construed the provisions of section 3 of the Ordinance, it is now necessary to deal specifically with the appeals before us.
Appeal No. III 198/53 of the Labour Appellate Tribunal, out of which Civil Appeal No. 14 of 1955 arises, was filed before the commencement of the Ordinance and by virtue of section 3(3) of the Ordinance the appeal had to be decided as if the provisions of section 6 A had been in force at all material dates.
To such an appeal the provisions of cl.
(2) of section 3 of the Ordinance would not apply.
This appeal would, therefore, be governed by cl.
As in this case, the award had been submitted on May 13, 1953, 985 and the last date of enlargement gave time for the submission of the award up to March 10, 1953, the award was submitted beyond time and, therefore, was invalid as having been made without jurisdiction.
In Civil Appeal No. 15 of 1955, arising out of Appeal No. 111 321 of 1953 of the Labour Appellate Tribunal, the appeal was filed before that Tribunal after the commencement of the Ordinance.
The award was submitted long after the period, namely, 40 days, within which it had to be submitted and there were no orders of enlargement of time.
Section 3(2) of the Ordinance and not section 3(3) would, therefore, apply to this appeal.
The award in this case consequently has been validated by virtue of the provisions of section 3(2) of the Ordinance and its validity cannot be questioned merely on the ground that it was submitted after the period within which it should have been submitted.
In the result, Civil Appeal No. 14 of 1955 is dismissed with costs and Civil Appeal No. 15 of 1955 is allowed with costs and the decision of the Labour Appellate Tribunal in Appeal No. 111 321/53 before it is set aside.
Appeal No. 14 of 1955 dismissed.
Appeal No. 15 of 1955 allowed.
| The appellants were the trustees of a charity fund known as The Charity Fund founded by Sir Sassoon David, Baronet of Bombay ".
Clause 13 Of the deed of trust, after declaring that the trustees should apply the net income for all or any of the following purposes, namely, (a) the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world either by making payments to them in cash or providing them with food and 924 clothes and/or lodging or residential quarters or in giving education including scholarships to or setting them up in life or in such other manner as to the said Trustees may seem proper or (b) the institution maintenance and support of hospitals and schools, colleges or other educational institutions or (c) the relief of any distress caused by the elements of nature such as famine, pestilence, fire, tempest, flood, earthquake or any other such calamity or (d) the care and protection of animals useful to mankind or (e) the advancement of religion or (f) other purposes beneficial to the community not falling under any of the foregoing purposes I added by way of provisos (i) that in applying the net income for the purposes mentioned in sub cl.
(a) the trustees must give preference to the poor and indigent relations or members of the family of Sir Sassoon David, including distant and collateral relatives, (2) that for the said purpose the trustees must apply not less than half of the income for the benefit of the members of the Jewish community of Bombay only, including the said relatives of Sir Sassoon David and Jewish objects.
The question for determination was whether the income from the trust fund was exempt from taxation under section 4(3)(i) Of the Indian Income tax Act.
The High Court came to the conclusion that the trust fund could nut be said to be held, wholly or partly, for religious or charitable purposes involving an element of public utility and answered the question in the negative.
Held, that there could be no doubt that each one of the pri mary purposes mentioned in the deed of trust, including the one mentioned in sub cl.
(a), properly construed, involved an element of public utility and thus they constituted a valid charitable trust.
Although it was open to the trustees to spend the entire income for the purpose mentioned in sub cl.
(a), that could not detract from the validity of the trust since the relations or family members of the founder did not come in directly under any of the other purposes and could do so only under sub cl.
(a) as preferential beneficiaries to be selected from out of the class of primary beneficiaries prescribed by it, in terms of the provisos.
The test of the validity of such a public charitable deed of trust should be whether or not at the primary stage of eligibility it could be said to possess that character.
In re Koettgan 's Will Trusts, , applied.
Trustees of Gordhandas Govindram Family Charitable Trust vs Commissioner of Income tax (Central), Bombay, [1952]21 I.T.R.231, distinguished and held inapplicable.
The circumstance that in selecting the actual beneficiaries 925 from the primary class of beneficiaries under sub cl.
(a), the trustees had to give preference under the provisos, to the relations or members of the family of Sir Sassoon David, could not therefore affect the public charitable trust constituted under sub cl.
(a) and the income from the trust properties was entitled to exemption under section 4(3)(i) Of the Indian Income tax Act.
|
ivil Appeal No. 202 of 1562.
Appeal from the judgment and order dated March 10, 1961, of the Andhra Pradesh High Court in Writ Petition No. 677 of 1958.
A.V. Viswanatha Sastri, Jayaram and R. Ganpathi lyer, for the appellant. ' 102 V.K. Krishna Menon, M. K. Ramamurthi, R.K. Garg, section C. Agarwal and D.P. Singh, for the respondent No. 1.
K. R. Chaudhuri and P.D. Menon, for respondent No. 2 1963.
April 18.
The principal question which arises in this appeal is whether the respondent B. Somayajulu is a working journalist under section 2(b) of the Working Journalists Industrial Disputes Act 1955, (No. 1 of 1955) (hereinafter called 'the Act ').
That question arises in this way.
On February 19, 1935, the respondent was appointed a Correspondent at Guntur by the appellant, the management of the Express Newspapers Ltd. He did that work continuously until October, 20, 1955 on which date his services were terminated.
The Andhra Union of Working Journalists, Elluru, then took up the respondent 's cause and alleged that his services had been terminated by the appellant without any justification and that as a working journalist, he was entitled to reinstatement and compensation for the period during which he was not allowed to work by the appellant in consequence of the order passed by the appellant terminating his services.
This dispute was referred by the Government of Andhra Pradesh for adjudication to the Labour Court, Guntur.
The question referred for adjudication was whether the termination of services of Mr. B. Somayajulu, Correspondent of Indian Express Newspapers at Guntur was justified? If not, to what relief was he entitled? Before the Labour Court, the respondent claimed that in addition to reinstatement, compensation should be awarded to him from October 13, 1955 to May 1, 1956 at Rs. 75/ per mensem and thereafter up to the 103 date of reinstatement at the rate prescribed by the Wage Board for Working Journalists under the provisions of the Act.
The appellant disputed this claim on several grounds.
It urged that the Labour Court had no jurisdiction to entertain the reference, because the appointment of the respondent had been made at Madras, the money due to him was sent from Madras, and so, the appropriate Government which could have made the reference was the Madras Government and not the Government of Andhra Pradesh.
This argument has been rejected by the Labour Court.
It was also urged that the reference was invalid since the order of reference in terms did not refer to section 10 (1) (c) 01 ' the Industrial Disputes Act under which the power to refer had been exercised.
The Labour Court repelled this contention as well.
Then it was alleged that the dispute referred to the Labour Court for its adjudication was an individual dispute and had not been properly sponsored by any Union.
The Labour Court was not impressed even by this plea.
That is how the preliminary objections raised by the appellant were all rejected.
On the merits, the appellant urged that the respondent was not a working journalist under section 2(b) of the Act.
In support of this plea the appellant averted that the respondent was a part time correspondent unattached to any particular newspaper establishment that a year or so later he was appointed as a selling agent of the publications of the appellant, such as the Express Newspapers, Dinamani and Andhra Pradesh at Guntur which assignment was given to him on his depositing Rs. 6,000/which was later raised to Rs. 7,000/ .
According to the appellant, as such selling agent, the respondent was making on an average about Rs. 1,500/ per mensem as commission, whereas, as a correspondent he was first paid on lineage basis and later an honorarium was fixed at Rs. 50/ which was subsequently 104 raised to Rs. 75/ p.m.
This latter amount was paid to him until his services were terminated.
The appellant, therefore, contended that the avocation of a moffusil correspondent was not the respondent 's principal avocation, and so, he could not claim the benefit of the status of a working journalist under section 2(b) of the Act.
The Labour Court took the view that parttime workers were outside the purview of the Act.
It also referred incidentally to the commission which the respondent received as a selling agent and made some observations to the effect that the payment to the respondent for his work as a correspondent was very much less than the commission which he received from the appellant as its selling agent.
It is common ground that some time before the respondent 's services as a correspondent were terminated, his selling agency had also come to an end.
From the award made by the Labour Court, it is clear that the Labour Court decided the matter against the respondent solely on the ground that as a part time worker he could not be regarded as a working journalist, and it made no finding on the question as to whether his principal avocation at the time when his services were terminated could be said to satisfy the test prescribed by the definition under section 2(b).
The award made by the Labour Court was challenged by the respondent before the Andhra Pradesh High Court by a writ petition under Articles 226 and 227 of the Constitution.
The High Court has held that the respondent is a working journalist under section 2(b) and so, it has set aside the award passed by the Labour Court.
There is no specific direction issued by the High Court remanding the proceedings between the parties to the Labour Court for disposal on the merits in accordance with law, but that clearly is the effect of the order.
It is against this decision that the appellant has come to this Court with a 105 certificate issued by the said High Court; and on behalf of the appellant, the principal contention raised by Mr. Sastri is that the High Court was in ,error in holding that the respondent was a working journalist under section 9,(b).
The Act which applied to the proceedings between the parties was the Act No. 1 of 1955.
This Act came into force on March 12, 1955.
It consists of only 3 sections.
Section 1 gave the title of the Act; section 2 defined 'newspaper ' and 'working journalist ' by clauses (a) and (b); and section 3 made a general provision that the provisions of the applied to, or in relation to, working journalists as they applied to, or in relation to workmen within the meaning of that Act.
In other words, the scheme of the Act was to define newspaper and working journalist and to make the provisions of the applicable to working journalists.
This Act was followed by the working Journalists (Condition of Service) and Miscellaneous Provisions Act, 1955 (No. 45 of 1955).
This Act consists of 21 sections and makes some specific provisions applicable to working journalists, different from the relevant provisions of the .
Section 2 (f) of this Act defines a working journalist.
The definition prescribed by section 2 (f) of this Act is identical with the definition prescribed by section 2 (b) of the earlier Act, and so, for the purposes of the present appeal, whatever we say about the scope and effect of the definition.
of section 2 (b)in the earlier Act will apply to the definition prescribed by section 2 (f)of the latter.
Section 3 of this latter Act makes the provisions of the , applicable to working.
journalists.
Sections ,4 and 5 make special provisions in respect of retrenchment and gratuity.
Section 6 prescribes the hours of work; section 7 deals with problem of leave 106 section 8 provides for the constitution of a Wage Board; section 9 deals with the fixation of wages; section 10 requires ' the publication of the decision of the Board and its commencement, while section 11 deals with the powers and procedure of the Board.
Section 12 makes the decision of the Board binding and section 13 gives power to the Government to fix interim rates of wages.
These provisions are contained in Chapter II.
Chapter III consists of 2 sections 14 and 15 and they make applicable to the newspaper employees the provisions of the and the Employees ' Provident Funds Act, 1952.
Chapter IV contains miscellaneous provisions, such as those relating to the recovery of money due from an employer under section 17, penalty under section 18 and indemnity under section 19.
Section 20 confers the rule making power on the Central Government, and section 21 repeals the earlier Act.
In dealing with the question as to whether the respondent can be said to be a working journalist, iris necessary to read the definition prescribed by section 2 (b) of the Act: "Working journalist ' means a person whose principal avocation is that of a journalist and who is employed as such in, or in relation to, any establishment for the production or publication of a newspaper or in, or in relation to, any news agency or syndicate supplying material for publication in any newspaper, and includes an editor, a leader writer, news editor, subeditor, feature writer, copy tester, reporter, correspondent, cartoonist, news photographer and proof reader, but does not include any such person who (i) is employed mainly in a managerial or administrative capacity, or 107 (ii) being employed in a supervisory capacity, exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
" It is plain that the definition prescribed by s.2 (b)consists of two parts; the first part provides what a working journalist means, and the second part brings within its purview by an artificial extension certain specified categories of newspaper employees.
It would be noticed that the first part provides for two conditions which must be satisfied by a journalist before he can be .held to be a working journalist.
The first condition is that he must be a journalist whose principal avocation is that of a journalist, and the second condition is that he must be employed as such in, or in relation to, any establishment as there specified.
The first question which arises for our decision is whether the two conditions thus prescribed by the first part of the definition govern the categories of newspaper employees included in the definition by the artificial extention made by the including clause.
The High Court has taken the view that the categories of employees who are included in the definition by name, need not satisfy the two conditions prescribed by the first part.
The argument is that since a correspondent, for instance, has been named in the second clause, the whole object of the legislature was to make him a working journalist without requiring him tO satisfy the two conditions prescribed by the first part.
In our opinion, this construction is plainly erroneous.
The object of the second clause was to make it clear that the employees specified in that clause are journalists and nothing more.
The word "journalist" has not been defined in the Act and the legislature seems to have thought that disputes may arise as to whether a particular newspaper employee was a journalist or not.
There Can, of course, be no difficulty about an editor or 108 a leader writer, or a news editor or a sub editor being regarded as a journalist; but it was apparentIy apprehended that a difficulty may arise, for instance, in the case of a correspondent, a proof reader, a cartoonist, a reporter, a copy tester, or a feature writer, and so, the legislature took the precaution of providing specifically that the employees enumerated in the latter clause are to be regarded as journalists for the purpose of the definition prescribed by section 9, (b).
The object of the artificial extension made by the including clause is not to dispense with the two main conditions prescribed by the definition before a journalist can be regarded as a working journalist.
There can be no doubt that even the employees falling under the extended meaning must be employed as such.
It is thus obvious that the second requirement prescribed by the first clause that the journalist must be employed as such in, or in relation to, any establishment for the production or publication of a newspaper, as therein specified, has to be satisfied by the employees falling under the latter clause, because unless there was an employment by the newspaper establishment, no relationship of employer and employee can arise, and the journalists specified in the latter clause could not, therefore, claim the status of working journalist qua the employer who manages the journal in question.
Once it is realised that the. test of employment must govern the employees specified in the latter clause, it would become clear that the High Court was in error in assuming that the extended artificial definition of the working journalist dispensed with both the conditions prescribed by the first part of the said definition.
That is why we think the extension was made by the word "includes" only for the purpose of removing any doubt as to whether the persons specified in the said clause are journalists or not.
What is true about the condition as to employment is equally true about the other condition that a journalist can be a working journalist only where it is 109 shown that journalism is his principal avocation.
In other words, the position is that whenever an employee working in the newspaper establishment claims the status of a working journalist he has to establish first that he is a journalist, and then that journalism is his principal avocation and he has been employed as such journalist.
In proving the fact that he is a journalist, the employees specified in the latter clause need not prove anything more than this that they fall under one or the other category specified in the said clause.
But that only proves their status as journalist; they have still further to show that their principal avocation is that of a journalist and that they have been employed as such by the newspaper establishment in question.
That takes us to the question as to what is meant by avocation? The High Court thought that the dictionary meaning of the word "avocation" which showed that it meant "a distraction or diversion from one 's regular employment", could be adopted in the context of section 2 (b).
In support of this view, the High Court has cited a passage from Fowler in Modern English Usage.
Fowler says "Avocation originally a calling away, an interruption, a distraction, was for some time commonly used as a synonym for vocation or calling, with which it is properly in antithesis.
This misuse is now less common, and the word is generally used in the plural, a person 's avocations being the things he devotes time to, his persuits or engagements in general, the affairs he has to see to; his vocation as such is neither excluded from, nor necessarily included m, his avocation." Applying this.
dictionary meaning of the word ' 'avocation" the High Court has held that even if the respondent has to satisfy the first condition prescribed by the first part of section 2 (b), it can be held that he satisfied the said test, because the work of a correspondent in his case can be safely said to be his principal avocation in the sense of 110 distraction or diversion from his regular employment.
In our Opinion, in applying mechanically the dictionary meaning of the word "avocation"without due regard to the context of section 2 (b) the High Court has adopted a somewhat pedantic approach.
One has merely to read the definition to realise the word "avocation" used in section 2 (b) cannot possibly mean a distraction or diversion from one 's regular employment.
On the contrary, it plainly means one 's vocation, calling or profession.
The plain idea underlying section 2 (b) is that if a person is doing the work, say of a correspondent, and at the same time is pursuing some other calling or profession, say that of a lawyer, it is only where his calling as a 'journalist can be said to be his principal calling that the status of a working journalist can be assigned to him.
That being the plain object of section 2 (b), it would, think, be, on the whole, inappropriate to adopt the dictionary or the etymological meaning of the word "avocation" in construing section 2 (b).
We ought to add that Mr. Menon who appeared for the respondent did not attempt to support the approach adopted by the High Court in dealing with this point.
Therefore, when a question arises as to whether a journalist can be said to be a working journalist, it has to be shown that journalism of whatever kind contemplated by section 2 (b) is the principal avocation of the person claiming the status of a working journalist and that naturally would involve an enquiry as to the gains made by him by pursuing the career of a journalist as compared with the gains made by him by the pursuit of other callings or professions.
It is obvious that this test will be merely academic and of no significance in the case of full time journalists, because in such cases the obvious presumption would be that their full time employment is their principal avocation and no question of comparing their income from journalism with income from other sources can arise.
In fact, the status of such full time journalists as 111 working journalists will not be affected even if in some cases the income received by them from such employment may be found to be less than, say, for instance, the income from their ancestral property.
This test assumes significance and importance only in the case of journalists who are employed on parttime basis.
Reverting to the second requirement of employment which we have already seen must obviously govern the employees failing under the latter part of section 2 (b) if they seek the status of working journalists, it is plain that an employment must be proved, because that alone will create a relationship of employer and employee between them and the newspaper establishment.
Unless there is an employ ment, there can be no conditions of service and there would be no scope for making any claim under the Act.
Thus the requirement of employment postulates conditions of service agreed between the parties subject to which the relationship of master and servant comes into existence.
In the context, employment must necessarily postulate exclusive employment, because a working journalist cannot serve two employers, for that would be inconsistent with the benefits which he is entitled to claim from his employer under the Act.
Take the benefit of retrenchment compensation, or gratuity, or hours of work, or leave; how is it possible for a journalist to claim these benefits from two or more employers? The whole scheme of the Act by which the provisions of the have been made applicable to working journalists, necessarily assumes the relationship of employer and employee and that must mean exclusive employment by the employer on terms and conditions of service agreed between the parties.
Normally, employment contemplated by section 2(b) would be full time employment; but part time employment is not excluded from section 2(b) either.
Most of the employees 112 falling under the first clause of section 2 (b) or even under the artificial extension prescribed by the later clause of section 2(b) would be full time employees.
But it is theoretically possible that a news photographer, for instance, or a cartoonist may not necessarily be a full time employee.
The modern trend of newspaper establishments appears to be to have on their rolls full time employees alone as working journalists; but on a fair construction of section 2(b), we do not think it would be possible to hold that a part time employee who satisfies the test prescribed by section 2(b) can be excluded from its purview merely because his employment is part time.
The position, therefore, is that the Labour Court was m error in making a finding that the respondent was not a working journalist on the ground that he was a part time employee, whereas the High Court is in error in holding that the respondent is an employee because he has not to satisfy the test that journalism is his principal avocation.
As we have held, the respondent can be said to be a working journalist only if he satisfies the two tests prescribed by the first part of section 2(b).
The test that he should have been employed as a journalist would undoubtedly be satisfied because it is common ground that since 1935 he has been working as a correspondent of the appellant at Guntur and the payment which the appellant made to him by whatever name it was called was also regulated by an agreement between the parties; in its pleadings, the appellant has, however, disputed the fact that the respondent was exclusively employed.
by it and so, that is one question which still remains to be tried.
The further question which has to be considered is whether the respondent satisfies the other test: "was his working as a correspondent his principal avocation at the relevant time"? The definition requires that the respondent must show that he was a working journalist at the time when his services were terminated; 113 and that can be decided only on the evidence adduced by the parties.
Unfortunately, though the Labour Court has made certain observations on this point, it has not considered all the evidence and has made no definite finding in that behalf.
That was because it held that as a part time employee, the respondent was outside section 2(b).
The High Court has no doubt purported to make a finding even on this ground in the alternative, but, in our opinion, the High Court should not have adopted this course in dealing with a writ petition under Articles 226 and 227.
Even in dealing with this question, the High Court appears to have been impressed by the fact that in discharging his work as a correspondent the respondent must have devoted a large part of his time; and it took the view that the test that journalism should be the principal avocation of the journalist implied a test as to how much time is spent in doing the work in question? The time spent by a journalist in discharging his duties as such may no doubt be relevant, but it cannot be decisive.
What would be relevant, material and decisive is the gain made by the part time journalist by pursuing the profession of journalism as compared to the gain made by him by pursuing other vocations or professions.
In dealing with this aspect of the matter, it may no doubt be relevant to bear in mind the fact that some months before his services as a correspondent were terminated, the respondent 's selling agency had come to an end, and so, the Labour Court may have to hold an enquiry into the question as to whether the respondent proves that the work of correspondent was his principal avocation at the relevant time in the light of the relevant facts.
The onus to prove this issue as well as the issue as to whether he was in the exclusive employment of the appellant lies on the respondent, because his claim that he is a working journalist on these grounds is disputed by the appellant, and it is only if he establishes the fact that he is a working journalist that the 114 question as to determining the relief to which he is entitled may arise.
We, therefore, allow the appeal, set aside the order passed by the High Court and remand the case to the Labour Court with a direction that it should deal with the dispute between the parties in accordance with law in the light of this judgment.
There would be no order as to costs.
Before we part with this appeal, however, we would incidentally like to refer to the fact that the test of the principal avocation prescribed by section has presumably been adopted by the legislature from the recommendations made by the Press Commission in its report.
In paragraph 505, dealing with the question of working journalists, the Commission observed that it thought that "only those whose professed avocation and the principal means of livelihood is journalism should be regarded as working .journalists," and it added that "we have deliberately included the words "professed avocation" because we have come across cases where persons belonging to some other professions, such as law, medicine, education, have devoted part of their time to the supply of news to and writing articles for, newspapers.
It may be that in the case of some of them, particularly during the earlier years of their professional career, income from the practice of their own profession.
But it would not, on that account, be correct to classify them as working journalists.
so long as their professed avocation is other than journalism.
" It would be noticed that the expression "professed avocation" has not been adopted by the legislature instead, it has used the words "principal avocation".
That is why we are inclined to take the view that the time taken by a person in pursuing two different.professions may not be decisive; what would be decisive is the income derived by him from the different professions respectively.
It does appear that the legislature was inclined to take the view that if a person following the profession of law in 115 the early years of his career received more money from journalistic work and satisfied the other tests prescribed by section 2(b), he may not be excluded from the definition merely because he is following another profession.
To that extent, the provision of section 2(b) departs from a part of the recommendation made by the Press Commission.
In regard to part time employees who, as we have held, are not necessarily excluded from section 2(b) the position appears to be that the report by the Wage Committee appointed by the Union Government under the provisions of Act 45 of 1955, shows that the Committee treated some part time employees as working journalists.
In paragraph 103, the committee has observed that it had provided a regular scale or retainer for part time correspondents, and it has added that the remuneration in accordance with that scale will be available to the part time correspondents only if, in accordance with the definition in paragraph 23, Part II, of its recommendations, their principal avocation is journalism.
The Committee noticed the fact that many of the part time correspondents employed by newspaper establishments would not fall within the definition if their principal avocation is something else and journalism is only a side business, and it added that the problem of the said class of part time correspondents was not within the purview of its terms of reference, and so, it made no recommendations in regard to that class.
Appeal allowed.
Case remanded.
| The reapondent 's services as a correspondent at Guntur under the appellant were terminated.
The Andhra Union of Working Journalists, Elluru, took up the respondent 's cause and alleged that his services had been terminated by the appellant without any justification and that as a working journalist, he was entitled to reinstatement and compensation.
the dispute was referred to the Labour Court, Gunrut, by the Government of Andhra Pradesh.
The appellant raised preliminary objections before the Labour Court, which were all rejected.
On the merits, the appellant contended that the avocation of a moffusil correspondent was not the respondent 's principal avocation, and so, he could not claim the benefit of the status of a working journalist under section 2 (b) of the Act.
The Labour Court decided the matter against the respondent solely on the ground that as a part time worker he could not be regarded as a working journalist, and it made no finding on the question as to whether his principal avocation at the time when his services were terminated could be said to satisfy the teat prescribed by the definition under section 2 (b) of the Act.
The award was challenged by the respondent by a writ petition before the High Court of Andhra Pradesh.
The High Court held that the respondent was a working journalist under section 2 (b) of the Act and so it set aside the award.
On appeal by certificate the appellant 's principal contention in this Court was that the High Court was in error in holding that the respondent was a working journalist under section 2 (b) of the Act.
Held that whenever an employee working in a newspaper establishment claims the status of a working journalist, 101 he has to establish first that he is a journalist, and then that journalism is his principal avocation and he has been employed as such journalist.
In proving the fact that he is a journalist, the employees specified in the latter clause of section 2 (b) of the Act need not prove anything more than this that they fail under one or the other category specified in the said clause.
But that only proves their status as journalist; they have still further to show that their principal avocation is that of a journalist and that they have been employed as such by the newspaper establishment in question.
The object of the artificial extention made by the including clause is not to dispense with the two main conditions prescribed by the definition before a journalist can be regarded as a working journalist.
Having regard to the context of section 2 (b) it would be inappropriate to adopt the dictionary or the etymological meaning of the word "avocation" in construing s 2 (b)of the Act.
Held further that normally employment contemplated by 2 (b) would be full time employment but part time employment is not excluded from section 2 (b) either.
On a fair construction of section 2 (b), it would be impossible to hold that a part time employee who satisfies the test prescribed by section 2 (b) can be excluded from its purview merely because his employment is part time.
In the present case, the onus to prove the issue as to whether the work of a correspondent was his principal avocation at the relevant time in the light of the relevant facts.
as well as, the issue as to whether he was in the exclusive employment of the appellant lies on the respondent and it is only if he establishes the fact that he is a working journalist, the question as to determining the relief to which he is entitled may arise.
|
Civil Appeal No. 440 (N) of 1970.
Appeal by special leave from the judgment and order dated the 18th June 1969 of the Bombay High Court in Misc.
Civil Appln.
No. 139 of 1968.
290 Naunit Lal, for the Appellant.
A.G. Ratnaparkhi for Respondents Nos.
M.N. Shroff, for Respondents Nos.
17 19.
The Judgment of the Court was delivered by PATHAK, J.
This appeal by special leave is directed against the judgment of the Nagpur Bench of the Bombay High Court quashing the grant of Nazul land to the appellants on a writ petition filed by the respondents Nos. 1 to 16.
The respondents Nos. 1 to 16 applied on March 15, 1963 for the grant of sixteen plots of land included in Government Nazul Plot No. 31/1 (Sheet No. 49 D) in Yeotmal Town for the purpose of constructing shops thereon.
They alleged that they had not been allotted any land yet for carrying on business at Yeotmal, and inasmuch as land sites were being released to refugees or displaced persons they claimed that having been compelled to migrate from West Pakistan to India during the partition of 1947 they were entitled to the grant of such plots.
The appellants made a similar application on May 16, 1964 and it is their case that they had also applied earlier in the same behalf on February 27, 1962.
There were applications from other claimants also.
The State Government, acting on the report of the Commissioner, Nagpur Division, rejected all the applications.
The appellants say that they sought a review of the order of the Government, and on June 28, 1965 the Government reversed its order and decided to grant plots on permanent lease to the appellants.
The Collector, Yeotmal submitted a report to the Government pointing out that each plot would be 192 sq.
in area and having regard to its market value each allottee should be required to pay a premium of Rs. 960.
The State Government granted the plots to the appellants as shop sites in Bhumidhari right without auction on payment of premium, and the decision was conveyed in a Memorandum dated March 3, 1966.
The allotment was assailed by the respondents, and they represented to the State Government that after further inquiry the land should be reserved for deserving claimants.
The respondents filed a writ petition before the Nagpur Bench of the Bombay High Court challenging allotment made by the Government in favour of the appellants.
They urged that no reason 291 able opportunity had been given to them to press their claims for grant of plots after the Government had reversed its earlier decision not to grant land, that the appellants had been unduly favoured and that the order was bad in law because the plots had been granted without holding an auction.
It was also contended that the power to grant the plots was vested in the Collector and not the State Government.
During the pendency of the writ petition a statement was made on behalf of the State Government that it was prepared to consider the claims of the respondents.
The appellants, however, maintained that they had acquired a right to the land in terms of the order dated March 3, 1966 and that they could not be divested of those rights.
By its judgment dated March 14, 1968 the High Court allowed the writ petition, quashed the order granting plots to the appellants and directed the State Government and its officers to take appropriate action on the several claims for allotment of land.
The High Court held that in view of sub section
(2) section 149 read with sub section
(3) of section 164 of the Madhya Pradesh land Revenue Code, 1954, as applied to the Vidharba region of Maharashtra, and rules 22 and 26 framed under the Code, it was not open to the State Government to dispose of the plots without holding a public auction unless there were reasons recorded in writing for doing so, and that after initially deciding not to grant the plots the subsequent decision to allot them to the appellants was contrary to law inasmuch as the claims of others had not been considered.
In this appeal, it is urged by the appellants that the High Court erred in applying sub section
(3) of section 164 and rule 26, and therefore in holding that the lease of the plots without auction and without recording any reasons was invalid.
When the Government decided to grant land to the appellants, it thought that the grant should take the form of a permanent lease in their favour.
The Collector was requested to frame suitable proposals and to submit them to the Government.
The Collector submitted a report dated November 23, 1965 suggesting the allotment of plots for the construction of shops on the footing that each plot would measure 192 sq.
and its market value, worked out on the basis of recorded sale transactions, and taking into regard the commercial purpose for which the land was intended, indicated a premium of Rs. 960.
He recommended further that the plots may 292 be granted without auction and in Bhumidhari right on payment of premium for constructing shops thereon for carrying on business.
On March 3, 1966 the State Government made an order accordingly.
Now section 149 of the Madhya Pradesh Land Revenue Code 1954 provides: "149.
(1) Subject to rules made under this Code, land belonging to the State Government, not being land herein after mentioned in sub section (2), shall be disposed of in Bhumidhari or Bhumiswami rights by the Deputy Commissioner who may require payment of a premium for such right or sell the same by auction.
(2) The land referred to in sub section (1) shall be the following, namely: (a) land situate in the bed of a river of a tank; (b) land reserved for communal purposes such as common grazing ground and cremation grounds; (c) land given out on favourable terms for the promotion of religious, charitable, educational, public or social purposes; (d) land given out to persons on the condition that it shall be used only for grazing cattle; (e) land given out for temporary purposes or for limited periods or for mining and purposes subsidiary thereto or for industrial or commercial purposes; (f) land given out to persons on favourable terms for rendering service as a kotwar; (g) any other land which the State Government may, by notification issued in this behalf, specify.
" Section 164 of the Code may also be set forth: 293 "164.
(1) Every person who holds land from the State Government or to whom a right to occupy land is granted by the State Government or the Deputy Commissioner and who is not entitled to hold land as a tenure holder shall be called a Government lessee in respect of such land.
(2) The Government lessee shall, subject to any express provision in this Code, hold his land in accordance with the terms and conditions of the grant which shall be deemed to be a grant within the meaning of the .
(3) The State Government or the Deputy Commissioner may, subject to rules made under this Code, dispose of the right to occupy the land specified in sub section (2) of section 149 on payment of a premium or by auction or on such terms and conditions as may be prescribed.
" It is apparent that the grant cannot be attributed to clause (c) of sub section
(2) of section 149.
The land was disposed of in Bhumidhari right.
Moreover, it was not given on favourable terms to the appellants; the market value of the plots was taken for fixing the premium.
From the nature of the grant, it is clear that action under sub section
(1) of section 149 was intended.
Now Part III of the Notification No. 1118 1832 55 XXVIII dated May 22, 1956 sets forth the rules framed with reference to sub section (1) of section 149.
These rules provide for the grant of Bhumiswami and Bhumidhari rights in nazul land for dwelling houses and ancillary purposes.
Rule 24 defines the expression "Nazul Land" to mean land belonging to the State Government which is used for building on, or for roads, markets and other public purposes.
Rule 26 applies the provisions of rules 18 to 36 contained in Part V of the Notification No. 1119 1832 55 XXVIII dated May 22, 1956 to the disposal of nazul land under Part III.
The provise to rule 26 declares that where nazul land is put to auction it should normally be granted in Bhumiswami right, and where it is disposed of without auction it should normally be granted in Bhumidhari right.
Rule 22 of Part V defines the power of the State Government and of the Collector to dispose of nazul plots with or without auction.
Rule 22 provides: 294 "22.
Power to dispose of nazul plots with or without auction shall be exercised in accordance with these Rules (1) by the State Government in the case of (i) plots of which the freehold market value is not less than Rs. 5,000; (ii) plots within the limits of the Municipal Corporation of the City of Nagpur, whether or not included in the Schemes of Nagur Improvement Trust; (iii) plots reserved for specific purposes under rule 20; (iv) strips of land not being independent plots to be settled with the occupants of adjoining land where the freehold value of the strip is not less than Rs. 5,000; (v) small strips of land adjacent to occupied plot, which cannot be disposed of as a separate site and in respect of which there is a difference of opinion between the Collector and the Officer in charge, Town Planning and Valuation: (vi) independent plots not included in the approved lists where there is a difference of opinion between the Collector and the Officer in charge, Town Planning and Valuation; (vii) plots granted without auction.
(2) by the Collector, in case of the other plots.
" Sub rule (1) of rule 26 in Part V declares: "26. (1) Leasehold rights in nazul land shall be disposed of by public auction except when in any particular case the State Government or as the case may be, the Collector thinks for reasons to be recorded in writing that there is good reason for granting the land without auction." 295 It seems indisputable that under the Rules as a general principle leasehold rights in nazul land are to be disposed of by public auction.
If in any particular case the State Government or, as the case may be, the Collector considers that there is good reason for granting the land without auction the reasons must be recorded in writing.
The existence of good reason for departing from the general principle, and the recording of the reason in writing are essential prerequisites which must be satisfied before leasehold rights are granted without auction.
It is pointed out that under clause (vii) of sub rule (1) of rule 22 the State Government is empowered to dispose of nazul plots without auction.
We have no doubt it can do so, but only after full compliance with sub rule (1) of rule 26.
The sub rule (1) controls the power of the State Government conferred by clause (vii) of sub rule (1) of rule 22.
To hold otherwise would be to confer an arbitrary power on the State Government to dispose of nazul plots.
It would be in the absolute discretion of the State Government to decide whether nazul plots should be granted with auction or without auction.
If that construction is accepted, it is clear that sub rule (1) of rule 26 would be negatived.
The only reasonable construction, it seems to us, is to read the two provisions together.
In the present case there is no evidence that the State Government has recorded any reasons in writing for preferring the mode of disposing of the land without auction and we are not satisfied that it had good reason for favouring that mode.
In the circumstances the grant of land to the appellants has been rightly quashed by the High Court.
There is also sufficient justification in the grievance of the respondents that the State Government did not consider the claims of other persons, including the respondents, when making an allotment of the plots.
The State Government had decided earlier, as a matter of policy, not to allot nazul land to displaced persons, and pursuant to that decision all the applications for allotment were rejected.
The applications were not rejected on the merits of the respective claims set out therein.
Subsequently when the State Government made an allotment of the plots to the appellants, it was consequent to a decision which analytically must be regarded as a composite of two decisions, one, a policy decision to throw open 296 the land to allotment in reversal of the earlier policy and, two, to allot the land to the appellants.
It will be remembered that the applications of the respondents for allotment of plots were rejected on the ground that the land was not available for allotment.
That was a policy decision.
When it was reversed, it was incumbent on the State Government to reconsider those applications or to notify that the land was available for allotment and to invite fresh applications in that behalf.
It was not open to the State Government to allot the plots to the appellants in disregard of the claims of others who had also applied for allotment.
In quashing the order granting plots to the appellants and directing the State Government or its appropriate officers to consider the several claims for allotment the High Court, in our opinion, did that which was plainly right.
The appellants say that the respondents must be taken to have accepted the rejection of their applications for allotment, and it was only the appellants who pursued the matter and obtained a reversal of the order of the Government and therefore the appellants alone were entitled to the allotment of plots.
The submission would have had force but for the circumstance that the State Government effected what was a change of general policy.
The change of policy altered the situation completely, and all the claimants were entitled to the benefit of that change.
By adopting the new policy, the State Government must be taken to have declared that the land was now open to allotment to the claimants who were found most deserving.
There were several applicants for allotment, and a selection had to be made.
It cannot be contended, as indeed it is urged before us, that the appellants constitute a distinct and separate class from the respondents only because the appellants agitated against the rejection of their applications while the respondents did not.
The controversy which remains is whether it is the State Government or the Collector who has power to dispose of the plots in view of their market value.
That is a matter on which we need express no opinion, having regard to the quashing of the entire allotment proceeding from its inception.
It will be for the Govern 297 ment or the appropriate authority to decide what should be the nature of the rights to be conferred on the allottees and, therefore, what should be the premium to be fixed.
In the result, the appeal is dismissed with costs.
N.V.K. Appeal dismissed.
| Respondents Nos. 1 to 16 applied for the grant of plots of land for purposes of constructing shops, alleging that they were displaced persons and entitled to the grant of plots.
The appellants also made a similar application.
There were applications from other claimants.
The State Government acting on the report of the Commissioner rejected all the applications.
Subsequently the Government at the instance of the appellants who had sought a review, reversed its earlier order and decided to grant plots on permanent lease to the appellants.
The decision was conveyed in a memorandum by the State Government, who granted the plots to the appellants as shop sites in Bhumidhari rights without auction on payment of premium.
The allotment was assailed by the respondents and they represented to the State Government that only after further inquiry should the land be reserved for deserving claimants.
The respondents filed a writ petition in the High Court challenging the allotment made by the Government in favour of the appellants contending that no reasonable opportunity had been given to them to press their claim for grant of plots, after reversal of the earlier decision not to grant land, that the appellants had been unduly favoured, and that the power to grant plots was vested in the Collector and not in the State Government.
The appellants contested alleging that they had acquired a right to the land that they could not be divested of those rights.
The High Court quashed the order granting plots to the appellants and directed the State Government to take appropriate action on the several claims for allotment of land.
It held that under sub section (2) of section 149 read with sub section (3) of section 164 of the Madhya Pradesh Land Revenue Code, 1954, and rules 22 and 26 framed under the Code it was not open to the State Government to dispose of the plots without holding a public auction unless there were reasons recorded in writing for doing so and that after initially deciding not to 289 grant the plots, the subsequent decision to allot them was contrary to law as the claims of others had not been considered.
Dismissing the appeal, ^ HELD :1.
The High Court was right in quashing the order granting plots to the appellants and directing the State Government to consider the several claims for allotment.
[296 C D] 2.
The grant cannot be attributed to clause (c) of sub section (2) of section 149.
The land was disposed of in Bhumidhari right.
It was not given on favourable terms to the appellants, the market value of the plots was taken for fixing the premium.
From the nature of the grant, it was clear that action under subsection (1) of section 149 was intended.
[293 E] 3.
Under Rules 24 to 26 of the Land Revenue Code, lease hold rights in nazul land are to be disposed of by public auction.
If in any particular case the State Government or the Collector considers that there is good reason for granting the land without auction the reasons must be recorded in writing.
The existence of good reason for departing from the general principle and the recording of the reason in writing are essential prerequisites which must be satisfied before lease hold rights are granted without auction.
[295 A C] In the instant case there is no evidence that the State Government has recorded any reasons in writing for preferring the mode of disposing of the land without auction.
It had also no good reason for favouring that mode.
In these circumstances the grant of land to the appellants was rightly quashed by the High Court.
[295 E F] 4.
The State Government had decided earlier, as a matter of policy, not to allot nazul land to displaced persons, and pursuant to the decision all the applications for allotment were rejected.
The applications were not rejected on the merits of their respective claims.
Subsequently, when the State Government made an allotment of the plots to the appellants, it was consequent to a decision, which must be regarded as a composite of two decisions, one a policy decision to throw open the land to allotment in reversal of the earlier policy and, two, to allot the land to the appellants.
The applications of the respondents for allotment of plots were rejected on the ground that the land was not available for allotment.
That was a policy decision.
When it was reversed it was incumbent on the State Government to reconsider those applications or to notify that the land was available for allotment and to invite fresh applications in that behalf.
It was not open to the State Government to allot the plots to the appellants in disregard of the claims of others who had also applied for allotment.[295 G H; 296 A B]
|
Civil Appeal No. 254 (N) of 1974.
Appeal by special leave from the judgment and order dated the 30th November, 1972 of the High Court of Orissa in O.J.C. No. 129 of 1970.
Gobind Das and B. Parthasarathi, for the appellant.
B. P. Maheshwari and Suresh Sethi, for respondent No. 1.
The Judgment of the Court was delivered by UNTWALIA, J.
The State of Orissa has preferred this appeal by special leave from the judgment and order of the High Court passed in Writ Petition filed by respondent No. 1.
Respondent No. 2 was appointed by promotion to the post of Joint Director of Industries, Government of Orissa in supersession of the claim of respondent No. 1.
The High Court has quashed the said order and directed the appellant to consider the case of respondent No. 1 for promotion to the post of Joint Director according to his seniority in the combined cadre formed by Resolution dated 2 10 1967.
Rule 3(1) (ii) of the Orissa Industries Service Rules, 1971 has been struck down as being violative of Article 16 of the Constitution of India.
Respondent No. 1 was appointed as a lecturer in Mining in the Orissa School of Mining Engineering? Keonjhargarh on 6 2 1960.
The said School was brought under the administrative control of the Industries Department of the Government of Orissa in pursuance of a Resolution dated 18 2 1960.
The service of respondent No. 1 thereupon stood transferred under the administrative control of the Industries Department with effect from 21 3 1960.
The post of the lecturer in the Mining Engineering School was upgraded by order of the State Government made in August, 1960.
The petitioner was brought into the common cadre of the Industries Department of Government of Orissa and while he was so continuing, he was appointed as Principal of the Mining Engineering School.
The provisional appointment made was regularized by the Industries Department by a notification dated 19 12 1962, a copy of which was Annexure D/2 to the Writ application.
This notification clearly shows that at that time respondent No. l was treated as an officer of the Industries Department.
Then came a Resolution of the Government dated 21 4 1964.
The common cadre of the Industries department was bifurcated into two.
A separate cadre was created for teaching posts of Engineering Schools in Orissa including the Mining Engineering School.
Respondent No. 1 exercised his option to remain in the teaching cadre of the Industries Department.
As per Resolution of the Government dated 2 10 1967 the two separate cadres in the Industries Department were again amalgamated and merged into one.
Consequently the cadre of the teaching staff of the Engineering Schools including the Mining Engineering School and that of the administrative state became a single combined cadre.
6 L 839 Sup Cl/75 302 Even then respondent No. I was not considered for promotion to the post of Joint Director when respondent No. 2 who was junior to him was promoted to the post.
Feeling aggrieved by the non consideration of his case for promotion, respondent No. 1 filed the writ application in the year 1970.
During the pendency of the writ application, the Governor of Orissa framed the orissa Industries Service Rules, 1971 hereinafter called the Rules, under proviso to Article 3()9 of The Constitution.
Respondent No. 1 amended his writ application, 1 made out a case of discrimination in the framing of the Rules and attacked them as being violative of Articles 14 and 16 of the Constitution.
In paragraph S of the counter filed by the appellant the formatio of a combined cadre by Resolution dated 2 10 1967 was admitted.
But it was asserted that in spite of the merger of the two cadres into one the intention of the Government was to treat the post of the Principal cf a Mining Engineering School as an ex cadre post under the Industries Department.
The Mining Engineers were excluded from the junior grade of service under the Industries Department in accordance with the Rules of 1971.
Earlier also, respondent No. 1 got class I post out of turn treating him as belonging to ex cadre post.
The High Court has come to the conclusion that before 21 4 1964 there were no separate cadres for the teaching and the administrative staff of the Industries Department.
The cadre was one.
It was bifurcated in 1964 and the two bifurcated cadres were again united and merged into one on and from 2 10 1967.
There was, therefore, no justification at all in not considering the case of respondent No. 1 for promotion to the post of Joint Director as all persons in the combined cadre eligible for promotion had to be considered.
Respondent No. 1 was senior to respondent No. 2 in the combined cadre and yet his claim was ignored on a ground which was not substantiated.
The relevant rule was discriminatory and had no reasonable nexus with the object of the Rules.
The judgment of the High Court was handed down on the 30th November, 1972 long before the issuance of the notification dated 27th June, 1975 by the President of India under Article 359(1) of the Constitution.
The rule was declared ultra vires on the ground of J violation of Articles 14 and 16.
The State of orissa was the appellant before us.
It was, therefore, agreed on all hands that this appeal was not a proceeding pending in this Court for the enforcement of the right under Article 14 of the Constitution and was, therefore, not suspended.
The enforcement of the right was made by the delivery of the High Court judgment and the State merely wanted in this appeal a deletion of that enforcement.
Mr. Gobind Das, learned counsel for the appellant, submitted that the posts of the teachers in the Mining Engineering School in Orissa including the posts of the Principal have always been treated as ex cadre posts in the Industries Department.
The teachers and the Principal of the Mining Engineering School were not considered for promotion to the posts of Administrative Department because few persons 303 were available to man the posts in the Mining Engineering School.
It was because of this reason that the case of respondent No. 1 was not considered and the Rules were also framed with that object in view.
In any view of the matter, counsel submitted, that the whole of Rule 3(1) (ii) ought not to have been declared as void and only the offending portion ought to have been struck down.
The main part of the argument put forward on behalf of the appellant does not stand scrutiny and must be rejected.
It could not be seriously disputed that respondent No. 1 was an officer of the Industries Department and appointed to the post of the Principal of the Mining Engineering School in that Department.
There is nothing to indicate that the post of the Principal or of the teacher of any Engineering School or of the Mining Engineering School was an ex cadre post.
Then came the Resolution date(l 21st April, 1964.
The new scales of pay were fixed for the teachers in Engineering in The Engineering Schools including the Mining Engineering School in the State of Orissa The contention of Mr Das that this fixation of scales was only for the Engineering Schools and not for Mining Engineering School is not correct.
Clearly all Engineering Schools were placed on the same looting and paragraph 3 of` this Resolution runs as follows: "The teaching posts in Engineering Schools which till now were included in common cadre with other posts in the Directorate of Industries will be placed in a separate cadre to which the above scale of pay will apply.
Then came the merger resolution after about three years on the 2nd October, 1967 a copy of which was Annexure I to the writ application.
The subject of the notification, Annexure l, is ' 'formation of a combined cadre for the officers of the Industries Department".
It was clearly mentioned hl This notification that after the teaching posts were placed in a separate cadre "it was felt that the promotion prospects would be bleak due to the formation of a separate cadre for teachers in view of the limited posts available for promotion".
Hence formation of separate cadre for teachers was considered not to be beneficial to them.
So the combined cadre was brought into force with effect from the date of the issue of the Resolution dated 2nd October, 1967 in supersession of the earlier decision to have a separate cadre for teachers.
Lastly it was stated in this Resolution "The conditions of service of all the officers will be governed by a set of cadre rules to be framed later on".
No rules were framed until the framing of the Rules in 1971.
As against a categorical statement in the Resolution dated 2 10 1967 there was nothing whatever to show that the post of a teacher or the Principal in the Mining Engineering School was treated as an ex cadre post and on a separate footing for the purpose of promotion to the administrative posts.
The non consideration of the case of respondent No. 1 at the time respondent No. 2 was promoted to the post of Joint Director in or about the year 1969 was wholly arbitrary, unjustified and illegal.
The High Court was right in making the order which it did on the writ application of respondent 304 As against the purpose and object of the merger of the cadre mentioned in the Resolution dated 2 10 1967 we find Rule 3 of the Rules going contrary to them.
Rule 9(1) of the Rules says: "Promotions to the posts of Senior grade in Class I shall be made from among the members of the Junior grade in Class I :" Constitution of the service is provided in Rule 3.
We are concerned with Rule 3(1).
It reads as follows: "3 ( 1 ) The cadre of the service shall consist of two branches, viz., Class I and Class ii, the former comprising two grades, viz., the Senior grade and the Junior grade, as indicated below: (i) The Senior grade shall include posts of Joint Directors and officers of equivalent status as may be declared by Government from time to time.
(ii) The Junior grade shall include the posts of Deputy Directors, Senior Lecturers in Engineering Schools and such other posts as may be declared by Government from time to time to be of equivalent status, besides the posts of Principal.
Engineering Schools (except Mining Engineering) and Polytechnics which carry a special scale of pay.
Clause (ii) of the Rules when it says in the first part that the "junior grade shall include the posts of Deputy Directors, Senior Lecturers in Engineering Schools" it means clearly Senior Lecturers in Engineering Schools not excluding Mining Engineering School.
But in the last part when in the junior ;grade were included the posts of Principals, Engineering Schools by the words "except Mining Engineering" given in the parenthesis, the post of the Principal of the Mining Engineering School was excluded.
It was so done during the pendency of the writ application of respondent No. 1 and without any reasonable and sound basis for making a discrimination a propos the post of the Principal of the Mining Engineering School.
We find no justification for making the distinction in the junior grade of Class I service in the case of the Principal of Mining Engineering School.
The rule in that regard has rightly been held to be violative of Articles 14 and 16 of the Constitution by the High Court.
But striking down of the whole of clause (ii) of Rule 3(1) of the Rules was not necessary.
Only the words in parenthesis had to be deleted and struck down on that account.
That would serve 305 the purpose of making the posts of Principal of all Engineering Schools including the Mining Engineering School being the posts in the junior grade, Class I.
For the reasons stated above, we find no merit in this appeal.
It is accordingly dismissed but subject to the clarification made above with costs payable to respondent No. 1.
V.P.S. APPeal dismissed.
| The appellants challenged the validity of fixation of price of levy the high Court.
During the pendency of the petitions, the appellants a stay order from the High Court for charging the price in eyes price fixed by the State on furnishing Bank guarantees for the excess price Ultimately, the High Court upheld the control of price and directed appellants to restore the excess money recovered from the consumer to the through the State Government.
The appellants filed the present Special Leave against the said order of the High Court and contended that since the Sugar Industry had lean year, the excess amount should be allowed to retained by the appellant or that the excess amount should be to be utilised for stabilising the sugarcane growers ' economic position alternative, it was prayed that the excess amount could remain with the appellant unite a suitable scheme for the return of the excess amount to the was made.
Dismissing the appeals, ^ HELD : 1.
The appellants had doubt business use of these crores of rupees for nearly a year even after the High Court 's final judgment.
The money of the many little men got by the few millers by selling an essential commodity to the community at what is frankly black market price under the umbrella of court order of stay shall get back to the scattered crowd of small consumers as early and as inexpensively as possible.
A public injury perpetrated by calling in aid court process must waken judicial conscience to improvise an ad hoc procedure to restore through the court 's authority what has been nibbled from the numerous buyers.
The handling of small claims is probably a must deplorable features of the administration of civil justice and yet small claims are in many respect more signification than large ones, involving large numbers and inter class disputes.
If the confidence of the community in the justice system especially consumer protection.
is to be created, radical reform of the processual law is needed now and here.
The inherent power of the court has its roots in the necessity and its breadth is co extensive with the necessity.
The Court directed that the Bank guarantees furnished by the appellants should be encashed by the Registrar and kept in short term deposit.
That he claims of the consumers should be settled by the Registrar of the High Court under the order of the High Court through an easy and cheap machinery.
That wide publicity should be given about the method of returning and that small claims might be accepted by cost and money also returned by post.
[804 C E. 806 A. D 807 BD]
|
Appeal No. 830 of 1993.
From the Judgment and Order dated 6.4.87 of the Allahabad High Court in Civil Misc.
W.P. No. 20544 of 1986.
section Markandeya for the Appellant 152 Pankaj Kalra for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
The appeal is directed against the judgment and order of a Division Bench of the Allahabad High Court allowing Writ Petition 20544 of 1986 with certain directions.
The first respondent Gem Cap (India) Pvt. Ltd. is a private limited company.
Second respondment is its Managing Director.
At the request of the respondents, the appellant, U.P. Financial Corporation, sanctioned a loan of Rs. 29.70 lakhs.
The terms and conditions of loan and the manner of repayment of the loan are contained in the agreement and hypothecation deeds executed in 1981.
Suffice it to note that loan was repayable in certain specified instalments alongwith interest.
A sum of Rs. 26, 29, 578 was released to the respondents.
The first respondent went into production in December 1982.
Within a few months i.e., in March 1983 its operations ceased.
By an order dated February 21, 1984 the first respondent unit was declared a sick unit.
The respondents did not make any repayment as stipulated in the agreement and hypothecation deeds whereupon the Corporation took steps to take over the unit under Section 29 of the for recovering an amount of Rs. 38.57 lakhs due to it by that date vide notice dated July 10, 1984.
Then started a series of Writ Petitions by the respondents, all designed to stall the appellant from taking over and/or recovering the amount due to it.
It is not necessary to trace the course of the several writ petitions except the one from which the present appeal arises.
Writ Petition 20544 of 1986 was filed questioning the taking over of the first respondent unit by the appellant Corporation under Section 29 of the Act and for a direction to the appellant to reschedule the repayment of debt in accordance with the earlier orders of the High Court.
The writ petition has been allowed with the following directions : "(1) Having regard to the discussion made above we direct the U.P. Financial Corporation : (1) to consider expeditiously the resolution dated 29.1.1986aimed at the rehabilitation of the industrial concern in question in the light of the feasibility report of the U.P. Industrial Consultants Ltd. the Financial aid 153 forthcoming from the Bank of Baroda and other financial institutions and the reports of the managing director of the corporation dated 18.12.85 and 29.1.1986; (2) to restore back possession of the unit to the petition No. 1 forthwith.
The notice dated 11.6.1986 issued by the Corporation under Section 29 of the State Financial Corporation Act, 1951 shall, however, remain alive it being open to the Corporation to proceed further in pursuance thereof in case the rehabilitation deal is given a fair trial but does not bear fruit.
The petition is allowed accordingly with no order, however, as to costs." With great respect to the Learned Judges who allowed the writ petition we feel constrained to say this : a reading of the judgment shows that they have not kept in mind the well recognised limitations of their jurisdiction under Article 226 of the Constitution.
The judgment reads as If they were setting as an Appellate Authority over the appellate Corporation.
Not a single provision of law is said to have been violated.
The exclusive concern of the court appears to be to revive and resurrect the respondent Company, with the aid of public funds, without giving any thought to the interest of public financial institutions.
The approach is : "the Corporafion is supposed to act in the best interest of the industrial concern with the object primarily to promote and advance the industrial activity without, of course, undue involvement or risk of its financial commitment 'section .
It needs no emphasis to say that the Corporation is conceived '.Regional Development Bank with the principal object to accelerate the industrial growth in the State by providing financial assistance mainly to small and smaller of the medium scale industries.
The approach has to be business like in conformity with the declared policy of the State Govt.
If the unit is potentially viable or such as maY be capable of being rehabilitated, it would deserve being administered proper treatment and not lead to its liquidation.
" Here was a company which drew substantial public funds and became sick within three months of its going into production.
One of the main reasons for its sickness appears to be the inter necine fight between the two groups controlling the Company.
The 154 unit was closed.
It was not paying a single pie in repayment of the loan neither the principal nor the interest.
Already a huge amount was due to the appellant.
There was no prospect of its recovery.
And yet other financial corporations were being asked by the court, four years after its closure, to sink more money into the sick unit.
Though a passing reference is made to the financial risk of appellant.
this concern was not translated into appropriate directions.
The Corporation was not allowed to sell the unit when it wanted to in 1984 85.
Now, it is difficult to sell it, because it has been lying closed for about 8 years and more.
The machinery must have become junk.
While the Company could not be revived, the appellant corporation now stands to lose more than a crore of rupees all public money in this one instance.
To continue the factual narration against the judgment of the Allahabad High Court aforesaid (dated April 6, 1987) the appellant filed this appeal and on May 8, 1987 this Court while issuing notice on the SLP directed stay of operation of the judgment of the High court.
After the respondents filed a counter affidavit this Court made the following order on September 18, 1987 : "Stay made absolute with the direction that there shall be no sale of the industrial unit.
Hearing expedited.
To be heard alongwith Civil Appeal No. 568 of 1987.
" The S.L.P. could not be heard finally though it was posted for hearing on certain dates.
On November 13, 1991, the counsel for the respondents made an offer which is recorded in the order of that date.
It reads "This matter is adjourned for 11.12.91.
Mr. Shanti Bhushan, Sr.
Adv., suggests that in view of the lapse of time of more than 5 years the position has changed and the Corporation should now consider the feasibility of taking over the assets in liquidation of the dues by making an assessment and consider relieving the directors from their personal responsibilities to the corporation and the other creditors.
" The subsequent order dated December 12, 1991, however, shows that the appellant corporation refused to bite the bait.
The amount due to it had risen to over a crore of rupees by now.
Whereupon, this Court passed 155 the following order : "The appellant in consultation with the other creditors is permitted to put up the industrial undertaking of the firstrespondent for sale.
It may do so either by public auction or by inviting tenders or by an combination of both.
It may proceed to do so within a period of two months from today.
While permitting the appellant to take steps for the sale, we make it clear that before accepting the offers, the appellant should obtain prior permission of this Court.
List this matter after 10 weeks, i.e., in the first week of March, 92.
" It is clear as to why the unit could not be sold .
On March 13, 1992, this Court passed the following further order: "We have heard learned counsel on both sides.
Apart from the merits of the issues raised, it appears to us that the present impasse is to nobody 's advantage.
The dispute has to be resolved in some meaningful way.
We accordingly direct the respondent Company and Sri K.P. Chaturvedi, who claims to be in charge of the affairs of the Company, to confirm in writing to the petitioner Cor poration within three weeks from today that they unconditionally agree to settle the claims of the.
Financial Corporation at a figure which would represent the principal amount said to be Rs. 26.30 lacs and interest thereon from the inception at 13.5% per year with half yearly rests calculated upto 25.7.1986.
If such an offer is made, the Financial Corporation will assess the merit and acceptability of that offer and take within six weeks thereafter, an appropriate decision including the manner in which and the period over which the payment should be completed, and if the Financial Corporation agrees to grant time for payment, the rate of interest for the deferred period.
The decision taken by the Corporation will be placed before this Court.
156 If, however, any offer, as indicated above, is not communicated by the company or Sri Chaturvedi within a period of three weeks from today, then the Financial Corporation shall be at liberty to initiate, with notice to the respondents, steps for the sale by public auction of the subjectmatter of the security in its favour and to treat and hold the proceeds of sale as substituted security in the place of the subject matter of the security, subject to the final result of this S.L.P. Call this matter in the 3rd week of May, 1992.
" Pursuant to the said order the second respondent, Managing Director of the first respondent Company merely wrote a letter addressed to the appellant Corporation, to the following effect : "We, herewith, attach a photo copy of the captioned order which is self explicit.
We, however, unconditionally agree to abide with the directions given to us by the Hon 'ble Supreme Court.
Further, as the Corporation is aware that the Unit (Company) as well as The Registered Office of the Company, both are in possession of the Corporation, we shall feel obliged if you kindly communicate your views to us at the below given address.
" It is evident that the letter written by the second respondent is not in terms of the order to this Court dated March 13, 1992.
No figure is mentioned nor is it mentioned as to how and in what manner the said huge debt is sought to be repaid by the respondents.
Evidently, the appellant corporation could not pay any heed to such a letter.
When the matter came before this Court the second respondent appeared in person stating that he has discharged his advocate and that he will argue the matter himself.
The matter again came up before us on 19.2.1993 when we heard the appellant 's counsel and the second respondent in person.
We allowed the appeal stating that the reasons would follow.
There are the reasons for the order.
It is true that the appellant Corporation is an instrumentality of the 157 State created under the State Finance Corporation Act, 1951.
The said Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan.
We agree that the Corporation is not like an ordinary money lender or a Bank which lends money.
It is a lender with a purpose the purpose being promoting the small and medium industries.
At the same time, it is necessary to keep certain basic facts in view.
The relationship between the Corporation and the borrower is that of creditor and debtor.
The corporation is not supposed to give loans once and go out of business.
It has also to recover them so that it can give fresh loans to others.
The Corporation no doubt has to act within the four corners of the Act and in furtherance of the object underlying the Act.
But this factor cannot be carried to the extent of obligating the Corporation to revive and resurrect every sick industry irrespective of the cost involved.
Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account.
The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what is due to it.
While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness.
Fairness is not a one way street, mote particularly it? matters like the present one.
The above narration of facts shows that the respondents have no intention of repaying any part of the debt.
They are merely putting forward one or other ploy to keep the Corporation at bay.
Approaching the Courts through successive writ petitions is but a part of this game.
Another circumstance.
These Corporation are not sitting on King Solomon 's mines.
They too borrow monies from Government or other 'financial corporation.
They too have to pay interest thereon.
The fairness required of it must be tempered nay, determined, in the light of all these circumstances.
Indeed, in a matter between the Corporation and its debtor, a writ court has no say except in two situation : (1) there is a statutory violation on the part of the Corporation or (21) Where the Corporation acts unfairly i.e., unreasonably.
While the former does not present any difficulty, the latter needs a little reiteration of its precise meaning.
What does acting unfairly or unreasonably mean? Does it mean that the High Court exercising its jurisdiction under Article 226 of the Constitution can sit as an Appellate Authority over the acts and deeds of the corporation and seek 158 to correct them ? Surely, it cannot be.
That is not the function of the High Court under Article 226.
Doctrine of fairness, evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities.
The constraints self imposed undoubtedly of writ jurisdiction still remain.
Ignoring them would lead to confusion and uncertainty.
The jurisdiction may become rudderless.
The obligation to act fairly on the part of the administrative authorities was evolved to ensure the Rule of Law and to prevent failure of justice.
This doctrine is complementary to the principles of natural justice which the Quasi Judicial Authorities are bound to observe.
It is true that the distinction between a quasi judicial and the administrative action has become thin, as pointed out by this Court as far back as 1970 in A.K. Kraipak & Ors.
vs Union of India & Ors., AIR 1970 S.C. 150.
Even so the extent of judicial scrutiny/judicial review in the case of administrative action cannot be larger than in the case of quasi judicial action.
If the High Court cannot sit as an appellate authority over the decisions and orders of quasi judicial authorities it follows equally that it cannot do so in the case of administrative authorities.
In the matter of administrative action, it is well known, more than one choice is available to the administrative authorities; they have a certain amount of discretion available to them.
They have "a right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred ' (Lord Diplock in Secretary of State for Education vs Tameside Metropolitan Borough Counsel, ; at 1064).
The Court cannot substitute its judgment for the judgment of administrative authorities in such cases.
Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene.
To quote the classic passage from the judgment of Lord Greene MR in Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, (1948) 1 KB at 229.
"It is true the discretion must be exercised reasonably.
Now what does than mean ? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word "unreasonable" in a rather comprehensive sense.
It has frequently been used and is frequently used as a general description of the 159 things that must not be done.
For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law.
He must call his own attention to the matters which he is bound to consider.
He must exclude from his consideration matters which are irrelevant to what he has to consider.
If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably '.
Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. ' While this is not the occasion to examine the content and contours of the doctrine of fairness, it is enough to reiterate for the purpose of this case that the power of the High Court while reviewing the administrative action is not that of an appellate court.
The judgment under appeal precisely does that and for that reason is liable to be and is herewith set aside.
On behalf of the appellant reliance has been placed upon the decision of this court in Mahesh Chandra vs Regional Manager, U.P. Financial Corporation & Ors., (1992) 2 J.T. 326.
We have perused the decision.
That was a case where the debtor was anxious to pay off the debt and had been taking several steps to discharge his obligation.
On the facts of that particular 'case it was found that the corporation was acting reasonably.
In that context certain observations were made.
The decision also deals with the procedure to be adopted by the Corporation while selling the units taken over under Section 29.
That aspect is not relevant in this case.
We are, therefore, of the opinion that the said decision is of no help to the appellant herein.
The appeal is accordingly allowed.
The respondents shall pay the .costs of the appellant assessed at Rs. 10,000 consolidated.
T.N.A. Appeal allowed.
| The respondent Company obtained loan from the appellant Financial Corporation.
Soon after obtaining the loan it ceased to, operate and was declared a sick unit.
Consequently, it did not make any repayment of loan as stipulated in the agreement and the hypothecation deeds.
Thereafter, the appellant Corporation issued notice under section 29 of the for taking over the respondent 's unit for recovery of the amount due Rs.38.57 lakhs.
Ile respondent Company filed a writ petition in the Allahabad High Court questioning the appellant 's action.
Ile High Court allowed the petition and directed (1) expeditious rehabilitation of the concern and (2) to restore back the 150 possession of the unit to the respondent Company.
Against the judgment of the High Court the Financial Corporation riled an appeal in this Court.
Allowing the appeal and setting aside the order of the High Court, this Court, HELD : 1.
It is true that the appellant Corporation which Is an instrumentality of the State created under the is not like an ordinary money lender or a Bank which lends money.
It is a lender with a purpose the purpose being promoting the small and medium industries.
At the same time, It is necessary to keep certain basic facts In view.
The relationship between the Corporation and the borrower is that of creditor and debtor.
the Corporation is not supposed to give loans once and go out of business.
It has also to recover them so that it can give fresh loans to others.
Corporations too borrow monies from Government or other financial corporations and they too have to pay interest thereon.
No doubt it has to act within the four corners of the Act and in furtherance of the object underlying the Act.
But this factor cannot be carried to the extent of obligating the Corporation to revive and resurrect every sick industry irrespective of the cost involved.
[156H, 157A C,F,] Promoting industrilisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account.
The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what Is due to it.
While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled band and foot in the name of fairness.
Fairness is not a one way street more particularly in matters like the present one.
The fairness required of it must be tempered nay, determined in the light of all these circumstances.
In the instant case the respondents have no intention of repaying any part of the debt.
They were merely putting forward one or other ploy to keep the Corporation at bay.
[157D F] Mahesh Chandra vs Regional Manager, U.P. Financial Corporation Ors., (1992) 2 J.T. 326, held Inapplicable.
In a matter between the corporation and Its debtor, a writ court has no say except in two situations : (1) there is a statutory violation on the part of the Corporation or (2) where the Corporation acts unfairly i.e. 151 unreasonably.
The High Court exercising its jurisdiction under Article 226 of the Constitution cannot sit as an Appellate Authority over the acts and deeds of the Corporation and seek to correct them.
Doctrine of fairness.
evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities.
The constraints self imposed undoubtedly of writ jurisdiction still remain.
Ignoring them would lead to confusion and uncertainty.
The jurisdiction way become rudderless.
[157G H, 158A] 2.1.
The obligation to act fairly on the part of the administrative authorities was evolved to ensure the Rule of law and to prevent failure of justice.
This doctrine is complementary to the principle of natural justice which the Quasi judicial Authorities are bound to observe.
It is true that the distinction between a quasi judicial and the administrative action has become thin.
But even so the extent of judicial scrutiny/judicial review in the case of administrative action cannot be larger than in the case of quasi judicial action.
If the High Court cannot sit as an appellate authority over the decisions and orders of quasi judicial authorities it follows equally that it cannot do so in the case of administrative authorities.
The Court cannot substitute its judgment for the judgment of administrative authorities in such cases.
Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervenes.
[158C F] A.K Kraipak & Ors.
vs Union of India & Ors.
, A.I.R. 1970 S.C. 150; Secretary of State for Education vs Talimeside Metropolitan Borough Council, ; and Associated Provincial Picture Houses Ltd., vs Wednesbury Corporation, ; , relied on.
While passing the impugned order the High Court has not kept in mind the well recognised limitations of its jurisdiction under Article 226 of the Constitution.
While reviewing the administrative action it was not justified in acting as an appellate court.
[153D,159C]
|
Criminal Appeal No. 605 of 1986.
From the Judgment and Order dated 27.5.1985 of the Kerala High Court in Crl.
Case No. 211 of 1985.
Mrs. Geeta Luthra and D. Goburdhan for the Appellants.
S.C. Birla for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
Is a Muslim wife whose husband has married again worse off under law than a Muslim wife whose husband has taken a mistress to claim maintenance from her husband? Can there be a discrimination between Muslim women falling in the two categories in their right to claim maintenance under Section 125 of the Code of Criminal Procedure, 1973 (for 'short the "Code")? These fundamental questions of a startling nature run as undercurrents beneath the placid waters of this seemingly commonplace action for maintenance by a 777 Muslim wife against her husband.
We have projected these fundemental issues in the prefatory itself because these larger questions also arise for consideration in this ap peal.
Now for a resume of the facts.
The appellant was married to the respondent on 11.5.80 and she begot him a girl child on 9.5.81.
On grounds of neglect and failure to provide maintenance she filed a petition under Section 125 of the Code in the Court of the Judicial First Class Magistrate, Kasargod to seek maintenance for herself and the child at Rs.500 and Rs.300 per month respectively.
The Magistrate dismissed the petition saying the appellant had failed to establish adequate justification for living separately.
A revision was preferred to the Sessions Judge of Tellicherry.
During the pendency of the revision the respondent married one Sahida Begum on 18.10.84, as his second wife.
It was, therefore, urged in the revision that irrespective of the other grounds the second marriage of the respondent was by itself a ground for grant of maintenance.
The Sessions Judge skirted the issue by taking a devious view that since the respondent had contracted the second marriage after giving the appellant sufficient time and opportunity to rejoin him and since he had offered to take her back even after the second marriage, the appellant was not entitled to claim maintenance.
However, in so far as the child is concerned the Sessions Judge granted maintenance to it at Rs.100 per month.
The appellant then preferred a petition to the High Court under Section 482 of the Code for grant of maintenance to her and for enhancing the maintenance awarded to the child.
The High Court declined to interfere saying that the concurrent findings of the courts below precluded the appel lant from agitating her claim any further.
The aggrieved appellant has approached this Court of last resort under Article 136 of the Constitution for redressal of her griev ance.
The principal controversy in the appeal centres round the rights of liabilities of the parties in the context of the second marriage entered into by the respondent on 18.10.84.
The appellant 's case is that the second marriage has added a new dimension to her maintenance action and she has become entitled under law to live separately and claim maintenance.
The counter argument of the respondent is that he was driven to the necessity of marrying again because the appellant failed to rejoin him but even so he had offered to take her back and maintain her and the said offer exonerated him from his liability to pay maintenance.
The main defence, however, urged is that since he is permitted by Muslim Law to take more than one wife his second marriage cannot afford a legal ground for the appellant to live 778 separately and claim maintenance.
These rival contentions fall for our determination in this appeal.
The justification put forward for the second marriage cannot be taken as a tenable defence, even if such a defence is open, because there is no evidence to show that the respondent had asked the appellant to rejoin him and she had declined to do so before the respondent took his second wife.
Therefore, what really needs consideration is whether the second marriage of the respondent confers a right upon the appellant to live separately and claim maintenance and secondly whether her rights stand curtailed in any manner because of the personal law governing the parties permitting a husband to marry more than one wife.
The further question to be decided is whether even if the respondent is liable to pay maintenance, he stands absolved of his liability after his offer to take back the appellant and maintain her.
For adjudicating the rights of the parties we must construe the Explanation and determine its scope and effect.
The Explanation reads as follows: "If a husband has contracted marriage with another woman or keeps a mistress, it shall be considered to be just ground for his wife 's refusal to live with him.
" Before entering upon our discussion, we may refer to some of the decisions rendered by the High Courts on the scope and effect of the Explanation.
We are setting out only some of the cases and not making an exhaustive reference because the purpose of the reference is only to show the divergent views taken by several High Courts.
Furthermore, we have grouped the cases on broad classifications and not with reference to the line of reasoning adopted in each case.
In the following cases it was held that the second marriage of the husband entitled the wife to an order of maintenance under Section 488, Code of Criminal Procedure, 1898: (1) Bayanna vs Devamma, [1953] Mad.
W.N. Crl.
243 = AIR 1954 Mad. 226.
(2) Kundaswami vs Nachammal, AIR 1963 Mad.
263 (3) SyedAhmedv.
N.P. TajBegum, AIR 1958 Mys 128 779 (4) Shambu vs Ghalamma, AIR 1966 Mys 311 (5) Tela Bai vs Shankarrao, AIR 1966 Bom 48 (6) Mohammed Haneefa vs Mariam Bi, AIR 1969 Mad 414.
In the following cases a contrary view was taken holding that the mere fact that a husband has contracted marriage with another wife or keeps a mistress cannot without more be said to amount to neglect or refusal on the part of the husband to maintain his wife within the meaning of sub section (1) of Section 488: (7) Bala Rani vs Bhupal Chandra, AIR 1956 Cal 134 (8) Rupchand vs Charubala, AIR 1966 Ca183 (9) Ishar vs Soma Devi, AIR 1959 Pun} 295 (10) Dhan Kaur vs Niranjan Singh, AIR 1960 Punj 595.
A third line of view was taken in Ramji Malviya vs Munni Devi, AIR 1959 All. 767 where it was held that ordinarily remarriage will be a sufficient ground for refusing to live with the husband but if the remarriage had been occasioned by the wife 's unjust refusal to live with her husband she cannot take advantage of her own wrong and claim mainte nance.
There are two decisions, one of the Kerala High Court rendered by V.R. Krishna Iyer, J., as the then was, and the other of the Andhra Pradesh High Court rendered by Chinnappa Reddy, J., as he then was, which require mention because they pertain to maintenance actions by Muslim wives whose husband had married again.
Krishna lyer, J. held as follows in Sabulameedu vs Subaida Beevi, [1970] Kerala Law Times Page 4.
"It behoves the Courts in India to enforce Section 488(3) of the Code of Criminal Procedure in favour of Indian women, Hindu, Muslim or other.
I will be failing in my duty if I accede to the argument of the petitioner that Muslim women should be denied the advantage of para.
2 of the proviso to Section 488(3).
" Chinnappa Reddy, J. held in Chand Begum vs Hyderabaig, [1972] Crl.
Law Journal 1270 as under: "Therefore, a husband who married again cannot expect the court to come to his rescue if he wants the first wife to 780 share the conjugal home with a co wife.
If she decides to live separately he is bound to provide a home for her and maintain her.
If he does not do that, he neglects or refuses to maintain her within the meaning of Section 488(1) Cr.
Thus the offer of a husband who has taken a second wife, to maintain the first wife on condition of her living with him cannot be considered to be a bona fide offer and the husband will be considered to have neglected or refused to maintain the wife.
" Lastly, we must also refer to the decision of this Court in Mohd. A. Khan vs Shah Bano Begum, [1985] 3 scr 844 at 856 wherein the Explanation came to be scanned by the Court while examining the larger question regarding the rights of divorced Muslim wives to claim maintenance under Section 125 of the Code.
The relevant observation of the Court is in the following terms: "The conclusion that the right conferred by Section 125 can be exercised irrespective of the personal law of the parties is forti fied, especially in regard to Muslims, by the provision contained in the Explanation to the second proviso to Section 125(3) of the Code.
That proviso says that if the husband offers to maintain his wife on condition that she should live with him, and she refuses to live with him, the Magistrate may consider any grounds of refusal stated by her, and may make an order of maintenance notwithstanding the offer of the husband, if he is satisfied that there is a just ground for passing such an order . .
The explanation confers upon the wife the right to refuse to live with her husband if he contracts another marriage, leave alone 3 or 4 other marriages.
It shows, unmistakably, that Section 125 overrides the personal law, if there is any conflict between the two." Having referred to the views taken by some of the High Courts and this Court about the ambit of the Explanation, we will now proceed to consider its terms and its operative force.
Though we stand benefited by the enlightenment de rived from the decisions referred to above, we are of opin ion that the Explanation calls for a more intrinsical exami nation than has been done hitherto.
Sub section (1) of Section 125 inter alia provides that if a person having sufficient means neglects or refuses to maintain his wife who is unable to maintain herself, the Magistrate may, upon proof of such neglect or refusal, 781 order the person to make a monthly allowance for the mainte nance of his wife.
The second proviso to sub section (3) lays down that if a person liable to pay maintenance offers to maintain his wife on condition of her living with him, and she refuses to live with him, the Magistrate may consid er the grounds of refusal, and may make an order for mainte nance notwithstanding the husband 's offer, if he is satis fied that there is just ground for ordering maintenance.
Then comes the Explanation which says that if a husband has contracted marriage with another woman or keeps a mistress, it shall be considered to be just ground for the wife 's refusal to live with him.
In the reported decisions where the Explanation has been construed, as entitling a Muslim wife to claim maintenance on the basis of the Explanation, the courts have only taken into consideration the first limb of the Explanation viz. "If a husband has contracted mar riage with another woman." Focussing attention on that part of the Explanation, the courts have held that the Explana tion is of common application to all wives whose husbands have contracted another marriage irrespective of the fact the personal law governing the parties permits another marriage during the subsistence of the earlier marriage.
We would like to point out that the Explanation contemplates two kinds of matrimonial injury to a wife viz. by the hus band either marrying again or taking a mistress.
The Expla nation places a second wife and a mistress on the some footing and does not make any differentiation between them on the basis of their status under matrimonial law.
If we ponder over the matter we can clearly visualise the reason for a second wife and a mistress being treated alike.
The purpose of the Explanation is not to affect the rights of a Muslim husband to take more than one wife or to denigrate in any manner the legal and Social Status of a second wife.
to which she is entitled to as a legally married wife, as compared to a mistress but to place on an equal footing the matrimonial injury suffered by the first wife on account of the husband marrying again or taking a mistress during the subsistence of the marriage with her.
From the point of view of the neglected wife, for whose benefit the Explanation has been provided, it will make no difference whether the woman intruding into her matrimonial life and taking her place in the matrimonial bed is another wife permitted under law to be married and not a mistress.
The legal status of the woman to whom a husband has transferred his affections cannot lessen her distress or her feelings of neglect.
In fact from one point of view the taking of another wife portends a more permanent destruction of her matrimonial life than the taking of a mistress by the husband.
Be that as it may, can it be said that a second wife would be more tolerant and symapthetic than a mistress so as to persuade the wife to rejoin her husband and lead life 782 with him and his second wife in one and the same house? It will undoubtedly lead to a strange situation if it were to be held that a wife will be entitled to refuse to live with her husband if he has taken a mistress but she cannot refuse likewise if he has married a second wife.
The Explanation has to be construed from the point of view of the injury to the matrimonial rights of the wife and not with reference to the husband 's right to marry again.
The Explanation has, therefore, to be seen in its full perspective and not dis junctively.
Otherwise it will lead to discriminatory treat ment between wives whose husbands have lawfully married again and wives whose husbands have taken mistresses.
Ap proaching the matter from this angle, we need not resort to a comparison of Muslim wives with Hindu wives or Christian wives but can restrict the comparison to Muslim wives them selves who stand affected under one or the other of the two contingencies envisaged in the Explanation and notice the discrimination.
It is this aspect of the matter which we feel has not been noticed hitherto.
Even if the Explanation is viewed in the larger context of the provisions of Section 125 the conclusion reached above is inescapable.
Section 125, its fore runner being Section 488, has been enacted with the avowed object of preventing vagrancy and destitution.
The Section is intended to ensure the means of subsistence for three categories of dependents viz. children, wives and parents who are unable to maintain themselves.
The three essential requisites to be satisfied before an order of maintenance can be passed are that (1) the person liable to provide maintenance has suffi cient means; (2) that he has neglected or refused to main tain and (3) the dependent/dependents is/are unable to maintain himself/herself/themselves as the case may be.
The Legislature being anxious that for the sake of maintenance, the dependents should not resort to begging, stealing or cheating etc.
the liability to provide maintenance for children has been fixed on the basis of the paternity of the father and the minority of the child and in the case of major children on the basis of their physical handicap or mental abnormality without reference to factors of legitima cy or illegitimacy of the children and their being married or not.
In the case of wives, whether their ties of marriage subsist or not, the anxiety of the Legislature is that they should not only not resort to begging, stealing or cheating etc.
but they should also not feel compelled, for the sake of maintaining themselves, to resort to an adulterous life or in the case of divorced women, to resort to remarriage, if they have sentimental attachment to their earlier mar riage and feel morally bound to observe their vows of fidel ity to the persons whom they had married.
This position emerges when we take an overall view of sub sections (1), (4) and (5).
783 While sub section (4) provides that a wife shall not be entitled to receive maintenance from her husband if she is living in adultery or if without sufficient reason she refuses to live with her husband or if She lives separately by mutal consent, sub section (5) provides that an order of maintenance already passed can be cancelled for any of the abovesaid reasons.
Thus by reason of sub sections (4) and (5) a husband can avoid his liability to pay maintenance if his wife is living in adultery.
Correspondingly a right has been conferred on the wife under the Explanation to live separately and claim maintenance from the husband if he breaks his vows of fidelity and marries another woman or takes a mistress.
As already stated it matters not whether the woman chosen by the husband to replace the wife is a legally married wife or a mistress.
Therefore, the respond ent 's contention that his taking another wife will not entitle the appellant to claim separate residence and main tenance cannot be sustained.
The Explanation is of uniform application to all wives including Muslim wives whose hus bands were either married another wife or taken a mistress.
It only now remains for us to consider the further defence of the respondent that in view of his offer to take back the appellant and maintain her he stand absolved of his liability to pay maintenance.
The offer to take back the appellant had been made only before the Revisional Court and that too after the second marriage had taken place.
The offer was not to the effect that he would set up a separate residence for the appellant so as to enable her to live in peace and with dignity.
As has been pointed out in Chand Begum vs Hyderbaig (supra) a husband, who marries again cannot compel the first wife to share the conjugal home with the co wife and as such unless he offers to set up a sepa rate residence for the first wife, any offer to take her back cannot be considered to be a bona fide offer.
It is, therefore, obvious that the offer was only a make believe one and not a genuine and sincere offer.
On the basis of such an insincere offer the appellant 's rights cannot be negated or defeated.
It is highly unfortunate that the Sessions Judge and the High Court should have declined to grant maintenance to the appellant in spite of the appel lant 's case falling squarely under the Explanation.
As the record contains evidence regarding the earnings of the respondent we are in a position to determine the quantum of maintenance for the appellant in this appeal itself instead of remitting the matter to the Trial Court or the Revisional Court.
The respondent has stated in his counter affidavit in the special leave petition that his income is only Rs.1,000 per month.
The appellant has stated in her 784 petition for maintenance that the respondent was getting Rs. 1,500 per month by way of salary and Rs.500 per month by way of income from properties.
In the four years that have gone by since the maintenance action was instituted the respond ent 's income must have certainly increased.
Therefore, taking all factors into consideration we fix the quantum of maintenance for the appellant at Rs.300 per month.
This amount will be paid with effect from 18.10.84 when the respondent married a second wife.
The arrears of maintenance will be paid by the respondent in five equal instalments, the first of such instalments to be paid during the first week of June 1987.
The subsequent instalments will be paid at intervals of three months thereafter i.e. during the first week of September 1987, first week of December 1987, first week of March 1988 and first week of June 1988.
Future maintenance must be paid before the cloth of every succeed ing month.
We also enhance the maintenance to the minor girl (second appellant) to Rs.200 per month from Rs. 100 per month with effect from 1.1.1987.
Default in payment of future maintenance or any instalments of the arrears will entitle the appellant to levy execution against the respond ent under Section 125(3) of the Code and realise the amount.
The appeal will stand allowed accordingly.
N.P.V. Appeal al lowed.
| The appellant was married to the respondent on May 11, 1980.
A girl was born on May 9, 1981.
On grounds of neglect and failure to provide maintenance, the appellant filed a petition under Section 125 of the Code of Criminal Proce dure, 1973, seeking maintenance for herself and the child at Rs.500 and Rs.300 per month respectively.
The Magistrate dismissed the petition on the ground that the appellant had failed to establish adequate justification for living sepa rately.
The appellant preferred a Revision Petition to the Sessions Judge.
During the pendency of the said petition the respondent married again on October 18, 1984.
It was urged on behalf of the appellant in the revision petition that irrespective of the other grounds, the second marriage of the respondent was by itself a ground for grant of mainte nance.
The Sessions Judge, however, held that the appellant was not entitled to claim maintenance since the respondent had contracted the second marriage after giving the appel lant sufficient time and opportunity to rejoin him and since he had offered to take her back even after the second mar riage.
Insofar as the child was concerned the Sessions Judge granted maintenance at Rs.100 per month.
The appellant preferred a Petition to the High Court under Section 482 for grant of maintenance to her and for enhancing the maintenance awarded to the child and the High Court declined to interfere on the ground that the concur rent findings of the Court below precluded the appellant from agitating her claim.
In the appeal to this Court by special leave the appellant con 774 tended that the second marriage of the respondent had added a new dimension to her maintenance action and that she had become entitled under law to live separately and claim maintenance.
The appeal was contested by the respondent on the ground that he was driven to the necessity of marrying again because the appellant failed to rejoin him and he had offered to take her back to maintain her and the said offer exonerated him from his liability to pay maintenance.
It was further contended that as he was permitted by Muslim Law to take more than one wife his second marriage cannot afford a legal ground for the appellant to five separately and claim maintenance.
On the questions whether the second marriage of the respondent confers a right upon the appellant to live sepa rately and claim maintenance and whether the appellant 's rights stand curtailed in any manner because of the personal law governing the parties permitting a husband to marry more than one wife, and whether, even if the respondent is liable to pay maintenance, he stands absolved of his liability after his offer to take back the appellant and maintain her.
Allowing the Appeal, HELD: 1.1 Section 125 of the Criminal Procedure Code, 1973, its fore runner being section 488 of the Criminal Procedure Cede 1898, has been enacted with the avowed object of preventing vagrancy and destitution.
It is intended to ensure the means of subsistence for three categories of dependents viz. children.
wives and parents who are unable to maintain themselves.
[782D E] 1.2.
Before an order of maintenance can be passed the three essential requisites to be satisfied are that: (1) the person liable to provide maintenance has sufficient means; (2) that he has neglected or refused to maintain; and (3) the dependent/dependents is/are unable to maintain himself/herself/themselves as the case may be.
[782E F] 1.3 The Legislature being anxious that for the sake of maintenance, the dependants should not resort to begging, stealing or cheating etc.
, the liability to provide mainte nance for children has been fixed on the basis of the pater nity of the father and the minority of the child and in the case of major children on the basis of their physical handi cap or mental abnormality without reference to factors of legitimacy or illegitimacy of the children and their being married or not.
[782F G] 1.4 In the case of wives, whether their ties of marriage subsist or 775 not, the anxiety of the Legislature is that they should not only not resort to begging, stealing or cheating etc.
but they should also not feel compelled, for the sake of main taining themselves, to resort to an adulterous life or in the case of divorced women, to resort to remarriage, if they have sentimental attachment to their earlier marriage and feel morally bound to observe their vows of fidelity to the persons whom they had married.
[782G H] 2.1 By reason of sub sections (4) and (5) a husband can avoid his liability to pay maintenance if his wife is living in adultery.
Correspondingly a right has been conferred on the wife under the Explanation to live separately and claim maintenance from the husband if he breaks his vows of fidel ity and marries another woman or takes a mistress.
It mat ters not whether the woman chosen by the husband to replace the wife is a legally married wife or a mistress.
[783B C] 2.2 The Explanation is of uniform application to all wives including Muslim wives whose husbands have either married another wife or taken a mistress.
[783C D] 2.3 The purpose of the Explanation is not to affect the rights of a Muslim husband to take more than one wife or to denigrate in any manner the legal and social status of a second wife to which she is entitled to as a legally married wife, as compared to a mistress but to place on an equal footing the matrimonial injury suffered by the first wife on account of the husband marrying again or taking a mistress during the subsistence of the marriage with her.
[781E F] 2.4 This Explanation has to be construed from the point of view of the injury to the matrimonial rights of the wife and not with reference to the husband 's right to marry again.
[782B] 3.
The offer to take back the wife and maintain her does not absolve the husband of his liability to pay maintenance.
A husband who marries again cannot compel the first wife to the conjugal home with the co wife and as such unless he offers to set up a separate residence for the first wife, any offer to take her back cannot be considered to be a bona fide offer.
[783D F] Chand Begum vs Hyderbaig, [1972] Crl.
Law Journal 1270, referred to.
In the instant case, the offer to take back the appellant had been 776 made only before Revisional Court and that too after the second marriage had taken place.
The offer was not to the effect that he would set up a separate residence for the appellant so as to enable her to live in peace and with dignity.
The offer was only a make believe one and not a genuine and sincere offer.
On the basis of such an insincere offer the appellant 's rights cannot be negated or defeated.
[783D F] The Court granted maintenance to the appellant wife Rs.300 per month and enhanced the maintenance to the minor girl to Rs.200 per month.
[784B; C] Bayanna vs Devamma, [1953], Mad.
W.N. Crl.
243 = AIR 1954 Mad. 226; Kundaswami vs Nachammal, AIR 1963 Mad. 263; Syed Ahmed vs
N.P. Taj Begum, AIR 1958 Mys 128; Shambu vs Ghalamma, AIR 1966 Mys 311; Teja Bai vs Shankarrao, AIR 1966 Bom 48; Mohammed Haneefa vs Mariam Bi, AIR 1969 Mad 414; Bela Rani vs Bhupal Chandra, AIR 1956 Cal 134; Rupchand vs Charubala, AIR 1966 Cal 83; Ishar vs Soma Devi, AIR 1959 Punj 295; Dhan Kaur vs Niranjan Singh, AIR 1960 Punj 595; Ramji Malviya vs Munni Devi, AIR 1959 All.
767; Sahulmmeedu vs Subaida Beevi, [1970] Kerala Law Times Page 4; and Mohd. A. Khan vs Shah Bano Begum, ; at 856, re ferred to.
|
Civil Appeal No. 1083 of 1969.
Appeal from the Judgment and Order dated 5 12 1967 of the Allahabad High Court in Special Appeal No. 1068 of 1967.
J. P. Goyal and Sobhagmal Jain for the Appellant.
G. N. Dikshit and O. P. Rana for Respondents 1 3.
Yogeshwar Prashad and Mrs. section Bagga for Respondent No. 4.
The Judgment of the Court was delivered by TULZAPURKAR, J.
This appeal by certificate is directed against the judgment rendered by the Allahabad High Court on December 5, 1967 in Special Appeal No. 1068 of 1967 and raises a short question whether the appellant is entitled to the benefit of certain concessions (deductions) in the minimum price notified by the Cane Commissioner in his order issued on June 1, 1955 ? The appellant (Shri Janki Sugar Mills & Company) is a partnership firm carrying on the business of manufacturing sugar.
By an order passed on November 1, 1954 under section 15 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Act 1953, the Cane Commissioner reserved certain sugarcane centres for the appellant 's sugar 781 factory.
On November 12, 1954 (i.e. within 14 days of the reservation of the sugarcane centres) the respondent No. 4 (Laskar Co operative Cane Development Union Ltd.) made an offer for the 1954 55 crushing season for the supply of 6 lac maunds of sugarcane out of a total estimated yield of 12 lac maunds of sugarcane from certain centres.
This offer was accepted by the appellant firm on November 27, 1954 (i.e. within 14 days of the receipt of the offer) and an agreement in the prescribed Form 'C ' was duly executed on February 9, 1955.
It contained the usual term that the appellant firm will pay for the sugarcane supplied to it "at the minimum price notified by the Government subject to such deductions, if any, as may be notified by the Government from time to time".
On March 22, 1955 the respondent No. 4 made another offer for supplying additional quantity of 2 lac maunds of sugarcane to the appellant firm, which offer was also accepted on May 4, 1955 and a composite agreement in prescribed Form 'C ' was entered into on that very day for the supply of 8 lac maunds of sugarcane (inclusive of the initial 6 lac maunds).
This agreement also contained the usual term with regard to the payment being made "at the minimum price subject to such deductions as may be notified by the Government from time to time".
By a Press Note dated May 23, 1955 the Government of India notified its decision that certain deductions in the minimum cane price, on the basis of recovery of sugar from sugarcane, will be allowed to sugarcane factories in Uttar Pradesh on the cane supplied to them on and after May 1, 1955 but that the deductions will be allowed only on "unbonded cane" crushed by each factory and not on "bonded cane", the latter of which shall have to be purchased by each factory at the minimum cane price already fixed for the season.
In exercise of the powers under section 3 of the , (delegated to him by the Government of India under a Notification dated April 25, 1955), the Cane Commissioner, Uttar Pradesh issued a Notification on June 1, 1955 whereunder "the producers of sugar by vacuum pan process were allowed to make deductions as specified in the Schedule thereto from the minimum price of per maund of cane fixed for the season 1954 55 in respect of the unbonded sugarcane crushed on and after May 1, 1955".
The appellant firm taking advantage of this Notification granting concessions in the minimum price, made payments to Respondent No. 4 after making deductions in respect of the two lac maunds of sugarcane supplied to it, in respect whereof the offer had been made to it on March 22, 1955.
However, a Recovery Certificate under sections 17 and 18 of Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1953 against the appellant firm for a sum of Rs. 53,878/10/ being the amounts deducted by the 782 appellant firm while making payments to Respondent No. 4.
The appellant firm disputed the legality of the Recovery Certificate on the ground that it had the right to make the deductions in view of the Cane Commissioner 's Notification dated June 1, 1955.
The said dispute was referred by the Cane Commissioner to the District Cane Officer, Bulandshahr as the sole arbitrator under Rule 108 of the U.P. Sugarcane (Regulation of Supply & Purchase) Rules, 1954.
By his award dated May 30, 1962, the District Cane Officer held that the appellant firm had wrongly made the deductions in respect of the supply of two lac maunds of sugarcane which was "bonded cane" and that the appellant firm was liable to pay the minimum price therefor.
Aggrieved by the award the appellant firm preferred an appeal to the Divisional Commissioner, Meerut under Rule 118 of the said Rules, but the appeal was dismissed on March 30, 1963.
The appellant firm challenged the legality of the award of the District Cane Officer as also the appellate order of the Divisional Commissioner by means of a writ Petition in the Allahabad High Court being Civil Miscellaneous Writ No. 2003 of 1963.
The learned Single Judge who heard the writ petition dismissed the same by his judgment and order dated October 24, 1967.
A further Special Appeal No. 1068 of 1967 carried by the appellant firm to the Division Bench of that Court also proved unsuccessful on December 5, 1967.
The appellant firm has come up in appeal to this Court.
The only contention that was urged by counsel for the appellant firm before us in this appeal was that the supply of two lac maunds of sugarcane made by respondent No. 4 to the appellant firm was not bonded sugarcane at all and as such the appellant firm was entitled to the concessions (deductions) in the minimum price payable in respect thereof to respondent No. 4 in view of the Cane Commissioner 's Notification dated June 1, 1955.
In support of this contention counsel relied upon sub cls.
(2) and (3) of cl. 3 of the U.P. Sugarcane Supply and Purchase Order, 1956 issued under section 16 of the Uttar Pradesh Sugarcane (Regulation of Supply & Purchase) Act, 1953 and it was pointed out that under sub cl.
(2) within 14 days of issue of the reserving certain areas for a factory a cane grower or a Cane growers ' Cooperative Society has to make an offer to supply cane grown in the reserved area to the occupier of the factory and under sub cl.
(3) it was obligatory upon the occupier of the factory for which such area has been reserved to accept the same within 14 days of the receipt of the offer and enter into an agreement in the prescribed form and it was urged that unless such offer was made within 14 days as prescribed 783 by sub cl.
(2) and was accepted within 14 days as prescribed by sub cl.
(3) the supply of sugarcane thereunder could not be regarded as supply of bonded sugarcane.
Counsel pointed out that the offer of two lac maunds of sugarcane in the instant case was made by respondent No. 4 long after the expiry of 14 days from the issuance of the order reserving certain areas for the appellant firm 's factory and that offer had been accepted not within the limit prescribed in sub cl.
(3) and, therefore, the sugarcane so supplied by respondent No. 4 to the appellant firm was not bonded sugarcane but ought to be classified as 'unbonded sugarcane ' and as such the appellant firm was entitled to the concessions in the minimum price notified in the Cane Commissioner 's Notification dated June 1, 1955.
It was further pointed out that though under sub cl.
(4) of cl. 3 of the U.P. Sugarcane supply and Purchase Order, 1954, the Cane Commissioner had the power to extend the date for making offers in respect of any reserved area, no such extension had been granted by the Cane Commissioner in the instant case, and, therefore, the offer of two lac maunds of sugarcane which was made by respondent No. 4 on March 22, 1955, long after the expiry of 14 days from the issuance of the order of the Cane Commissioner on November 1, 1954 reserving certain sugarcane centres for the appellant 's factory under section 15 of the Act, could not culminate into an agreement under the statute or the U.P. Sugarcane Supply and Purchase Order, 1954, that the agreement entered into between the parties on May 4, 1955 in respect of the said supply must be regarded as an ordinary contract under the Indian Contract Act and that the sugarcane supplied under such ordinary contract must be regarded as unbonded sugarcane.
In other words, the contention was that only such sugarcane as would be supplied by a cane grower or a Cane growers ' Cooperative Society under an agreement made in strict compliance of sub cls.
(2) and (3) of cl. 3 of the U.P. Sugarcane Supply and Purchase Order, 1954 could be regarded as bonded sugarcane.
The question raised in the appeal really turns upon what is meant by the expression "unbonded sugarcane" occurring in the Cane Commissioner 's Notification dated June 1, 1955 and the true effect of sub cls.
(2) and (3) of cl. 3 of the U.P. Sugarcane Supply and Purchase Order, 1954.
It must be stated, however, that neither the expression "bonded sugarcane" nor "unbonded sugarcane" has been defined either in the statute or in the U.P. Sugarcane Supply and Purchase Order 1954 and, therefore, regard must be had to the ordinary dictionary meaning of the said expressions.
In Shorter Oxford English Dictionary the legal and technical meaning of the expression ' "bond" 784 is given as "a deed by which the Obliger binds himself, his heirs, executors, or assigns to pay a certain sum to the obligee".
In Stroud 's Judicial Dictionary (4th Edn.) the expression "bond" is explained as: "an obligation by deed".
It will thus be clear that the expression "bonded sugarcane" must mean sugarcane secured by a bond or deed.
Under the Notification of the Cane Commissioner dated June 1, 1955 certain deductions from the minimum price per maund of cane fixed for the season 1954 55 had been notified in respect of the "unbonded sugarcane" crushed on or after May 1, 1955.
In other words, the concession is granted in respect of the supply of 'unbonded sugarcane ' in contradistinction with supply of 'bonded sugarcane '.
There is nothing in the Notification to suggest that any particular bond or a bond in accordance with the provisions of the U.P. Sugarcane Supply and Purchase Order 1954 was intended and therefore supply of 'bonded sugarcane ' would mean supply of sugarcane which has been secured by a bond or an agreement and such supply will not be entitled to the concession.
On a plain reading of the Notification in question, therefore, it will appear clear that since the supply of two lac maunds of sugarcane made by respondent No. 4 to the appellant firm had been secured by the agreement that was entered into between the parties on May 4, 1955 the said supply will have to be regarded as supply of "bonded sugarcane" and as such the appellant firm was not entitled to the concession in the minimum price payable in respect thereof to respondent No. 4.
Considering the question in the context of sub cls.(2) and (3) of cl.3 of the U.P. Sugarcane Supply and Purchase Order 1954 also we are clearly of the view that the appellant firm was not entitled to the benefit of the Cane Commissioner 's Notification dated June 1, 1955.
For this purpose it will be necessary to refer to section 15 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 and set out Cl.
3 of the U.P. Sugarcane Supply and Purchase Order, 1954.
Under s.15(1) of the Act power has been conferred upon the Cane Commissioner after consulting the factory and the cane grower/Canegrowers ' Co operative Society to (a) reserve any area (hereinafter called the reserved area) or, (b) assign any area (hereinafter called an assigned area) for the purpose of the supply of sugarcane to a factory in accordance with the provisions of s.16 during one or more crushing seasons as may be specified.
It was under this provision that the Cane Commissioner has passed order dated November 1, 1954 reserving certain sugarcane centres (reserved area) for the appellant firm for the 1954 55 season.
785 Clause 3 of the U.P. Sugarcane Supply and Purchase Order 1954 runs thus: "3.
Purchase of cane in reserved areas. (1) The occupier of a factory shall estimate or cause to be estimated by the 31st day of October or such later date in a crushing season as, on an application being made to the Cane Commissioner by the occupier of a factory, may be fixed by the Cane Commissioner, the quantity of cane with each grower enrolled in the Grower 's Register and shall on demand submit the estimate to the Cane Commissioner and the Collector.
(2) A cane grower or a Cane growers ' Co operative Society may within 14 days of the issue of an order reserving an area for a factory, offer in Form A of the Appendix, to supply cane grown in the reserved area, to the occupier of the factory.
(3) The occupier of the factory for which an area has been reserved, shall, within fourteen days of the receipt of the offer enter into an agreement in Form B or Form C of the Appendix, with the Cane grower or the Canegrowers ' Cooperative Society, as the case may be, in respect of the cane offered: Provided that any purchase of cane made before the execution of the prescribed agreement shall be deemed to have been made in accordance with such agreement.
(4) The Cane Commissioner may, for reasons to be recorded in writing, extend the date for making offers in respect of any reserved area.
On a fair reading of the sub cls.(2) & (3) of cl. 3 of the Order two or three things become at once clear.
In the first place sub cl.(2) uses the expression 'may ' and provides that a cane grower or Canegrowers ' Co operative Society may within 14 days of the issue of an order reserving an area for a factory make an offer to supply the cane grown in the reserved area to the factory.
That the period of 14 days mentioned in this sub clause is not imperative or mandatory is also clear from sub cl.(4) which confers power upon the Cane Commissioner to extend the date for making offer in respect of any reserved area.
Secondly, sub cl.(3) uses the expression 'shall ' indicating that an imperative obligation is cast upon the factory to accept the offer 786 within 14 days from the receipt of the offer.
Reading the two sub clauses together, it becomes clear that if a cane grower or Canegrowers ' Cooperative Society makes an offer within 14 days mentioned in sub cl.(2) it is obligatory upon the occupier of the factory to accept that offer within 14 days of the receipt of the offer, this only means that if the offer is made by the cane grower or Cane growers ' Cooperative Society beyond the period specified in sub cl.(2) or the extended time under sub cl.(4) it would not be obligatory but optional for the occupier of the factory to accept the said offer but if such offer made beyond the prescribed or extended period is accepted by the occupier of the factory a binding agreement comes into existence between the parties and sugarcane supplied thereunder would be 'bonded sugarcane ', more so when the agreement is entered into in the prescribed form.
Merely because the offer from the cane grower or Cane growers ' Co operative Society emanates after the expiry of the period mentioned in sub cl.(2) it does not mean that the parties are prevented from entering into an agreement in the prescribed form and if they do enter into an agreement in the prescribed form, as was the case here, the sugarcane supplied thereunder would be 'bonded sugarcane '.
It is not possible to accept the contention of learned counsel for the appellant that sugarcane supplied by the cane growers or Canegrowers ' Cooperative Society could be regarded as 'bonded Sugar Cane ' only if offer of the Cane grower or the Cane Growers ' Co operative Society emanates within the period prescribed by sub cl.(2) and the same is accepted by the occupier within the period prescribed by sub cl.
As stated earlier, the true effect of sub cls.
(2) and (3) read together is that the compulsion or obligation to accept the offer on the part of the occupier of the factory arises only when the offer is made by the cane grower or Cane growers ' Co operative Society within the time prescribed by sub cl.(2) or the extended time under sub cl.(4) but if the offer is made after the expiry of that period it is optional for the factory occupier to accept it or not but in cases where he accepts such offer a binding agreement comes into existence, and the sugarcane supplied thereunder becomes "bonded sugarcane".
In the instant case the offer of additional quantity of two lac maunds of sugarcane was undoubtedly made long after the expiry of the period of sub cl.(2) but the same was accepted by the appellant firm and a binding agreement came into existence and what is more that a binding agreement was executed by the parties in the prescribed Form 'C '.
Further the conduct on the part of the appellant firm in referring the dispute to arbitration and filing an appeal against the arbitrator 's award under the relevant Rules clearly shows that the parties, particularly the appellant firm, treated the agreement dated May 4, 1955 787 as one under the Act and the U.P. Sugarcane and purchase Order, 1954.
We are, therefore, of the view that the authorities below were right in coming to the conclusion that the said additional supply of two lac maunds of sugarcane by respondent No.4 to the appellant firm was the supply of "bonded sugarcane" and, therefore, the appellant firm was not entitled to the benefit of the Cane Commissioner 's Notification dated June 1, 1955.
In the result the appeal fails and is dismissed with costs.
V.D.K. Appeal dismissed.
| On receipt of information that smuggled gold was stored in it, a large number of senior officials of the Customs Department surrounded the flat belonging to the brother in law of the appellant and started searching it.
According to the prosecution, while the search was on, the appellant was found peeping from outside through the grille forming part of the flat, and started running away, on seeing that the search was being carried on in the flat.
He was chased by the Customs Staff and caught.
Later his confession was recorded.
Along with the appellant several other persons had also been tried for the same offence.
The trial court convicted and sentenced the appellant of an offence under section 120B IPC read with section 135(1)(a) of the Customs Act.
On appeal the High Court found that the charge under section 135(1)(a) and (b) of the Customs Act was not sustainable but holding that the offence under other heads was proved, it upheld the appellant 's conviction and sentence.
It was contended on behalf of the appellant that the confession was the result of an assault on him by the Customs Officials, which not being voluntary was inadmissible in evidence under section 24 of the Evidence Act.
Allowing the appeal.
^ HELD: 1.
(i) It is unsafe to regard the appellant 's confession as voluntary and therefore trustworthy.
The concerned Customs Officials were "persons in authority" within the meaning of that expression used in section 24 of the Evidence Act.
The confession may well have been obtained in a manner which would bring it within the ambit of section 24 of the Evidence Act.
The appellant has been able to prove the existence of circumstances which make it highly probable that his confession is hit by the mandate in section 24.
[1169H 1170A, 1166C] (ii) Although there is no direct evidence that force was used on the appellant to extract a confession the surrounding circumstances prevalent at the relevant time in the Customs House where the statement was recorded indicate that all was not well with the manner in which the interrogation of various accused was being carried on.
They indicate that the Customs Officials did not stick to ethical standards in the performance of their duties and exhibited much zeal in bringing the captives to book and had transgressed the limit set by law.
[1166E, 1169B] (iii) One of the accused in this case was found to have seven injuries on his person.
The stand of that accused that he was coerced into making a confession, received support from the testimony of the doctor who examined 1161 him so that the probability appears to be that the accused received his injuries on the hands of the Customs staff.
In the absence of an explanation of the prosecution as to the situation in which he was beaten, it is reasonable to presume that the stand taken by him was correct and that the injuries were inflicted as a measure of coercion adopted to secure his confession.
Taking these circumstances into consideration, it is unsafe to regard the appellants confession too as voluntary.[1166F, 1168C, 1169G] Besides, the plea that he had been coerced into making the confession was taken at the earliest opportunity i.e. on the day following his release from custody on bail.
[1169D] 2.
Being a close relation of the owner of the flat, the appellant was perhaps sharing the flat with him and so had duplicate set of keys; his brother in law might have given the Bandi found on the appellant not for the purpose of carrying the gold but just for use as an ordinary raiment.
It is also possible that the appellant became nervous, that he thought that he would be implicated in the crime and therefore, might have started running away on seeing the Customs Officers in the house.
Therefore, these factors on which the High Court relied for sustaining his conviction cannot be regarded as incriminating circumstances.
[1165F 1166A]
|
Civil Appeal Nos.
42 and 43 of 1961.
Appeals by special leave from the judgments and orders dated September 7, 1960 of the Chief Commissioner, Pondicherry in Appeals Nos.
56 and 57 of 1960.
WITH Petitions Nos. 297 and 298 of 1960.
Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights.
A. V. Viswanatha Sastri R. K. Garg, M.K. Ramamurthy, S.C. Agrawal and D. P. Singh, for the appellants/petitioners (In both the appeals and the petitions.) C. K. Daphtary, Solicitor General of India, B. Sen, B. R. L. Iyengar and T. M. Sen, for the 983 respondent No. 1 (in both the appeals) and respondents Nos. 1 and 2 (in both the petitions).
A. section R. Chari, K. R. Choudhri and R. Mahalingier, for respondent No. 2 (in both the appeals).
R. Gopalakrishnan, for respondent No. 3 (in both the petitions).
December, 8.
The Judgment of Gajendragadkar, Wanchoo and Ayyangar, JJ., was delivered by Ayyangar, J.
The judgment of Sarkar and Das Gupta, JJ., was delivered by Sarkar, J. AYYANGAR, J. The two Civil Appeals are by special leave of this Court and the two Writ Petitions have been filed by the respective appellants seeking the same relief as in the appeals, the relief sought being the setting aside of orders passed by the Chief Commissioner of Pondicherry as the State Transport appellate authority (under the Motor Vehicles Act).
All these four have been heard together because of a common point raised regarding the jurisdiction of this Court to entertain the appeals and the petitions.
It is manifest that the preliminary point about the jurisdiction of this Court should have first to be considered before dealing with the merits of the contentions raised in the appeals and petitions.
It might be convenient to state a few facts to appreciate the context in which the questions debated before us arise and the point concerned in the order now passed.
Sivarama Reddiar the appellant in Civil Appeal 43 of 1961 and the petitioner in Writ Petition 298 of 1960, is a citizen of India and is engaged in the business of motor transport.
By a notification dated December 27, 1958 in the Official Gazette of Pondicherry the State Transport Commission of Pondicherry invited applications for the grant of stage carriage permits to be submitted before February 27, 1959, including the route from Pondicherry to Karaikal, the latter being another 984 former French possession.
In response to this notification, Sivarama Reddiar as well as one Gopal Pillai who is the second respondent to the appeal and the second respondent in the Writ Petition were two of the 19 persons who made applications for the grant of this permit to them.
Before the State Transport Commission dealt with these applications, the Government of India in the exercise of its powers under section 4 of the published a notification in the Official Gazette of Pondicherry extending the provisions of the Indian as in force in Delhi to Pondicherry with effect from June 19, 1959.
Rules 3(4) and 4 of this order promulgated under the provided: "3(4).
Any Court, tribunal or authority required or empowered to enforce the said Act in Pondicherry may for the purpose of facilitating its application in relation to Pondicherry construe the said Act with such alteration not affecting the substance as may be necessary or proper with respect to the matter before the Court, tribunal or authority as the case may be.
" Rule 4 effected a repeal of existing laws in these terms: "Repeal of existing laws: All laws in force in Pondicherry immediately before the commencement of the Order which correspond to the Act and the rules, notifications and 'Orders applied to Pondicherry by this order shall, except in so far as such laws relate to the levy of any fee, cease to have effect save as respects things done or omitted to be done before such commencement.
" On July 21, 1959, the Chief Commissioner of Pondicherry, in exercise of the powers conferred on him by section 44 of the constituted a State Transport Authority for Pondicherry The 985 State Transport Authority, Pondicherry thus created, issued a notification on August 1, 1959 by which it required persons who had applied for Stage Carriage permits in response to the notification dated December 27, 1958 to furnish particulars with regard to a number of matters which were relevant for being considered for the grant of a Stage Carriage permit under the .
Both the appellant petitioner Sivarama Reddiar as well as inter alia the respondent Gopal Pillai furnished the required particulars.
The Particulars supplied by the parties were checked and verified by designated authorities and thereafter the State Transport Authority by an order on April 30, 1960 directed the grant of the permit to the appellant petitioner Sivarama Reddiar rejecting the claims of all others including the respondent Gopala Pillai.
Though the which had been extended to Pondicherry included section 64, whereby persons aggrieved by an order of a State Transport Authority could file appeals against such order, no appellate authority had been constituted by the Chief Commissioner.
This situation was remedied by a notification by the Chief Commissioner dated May 4, 1960 whereby he constituted himself under section 68 of the Act as the appellate authority for the purpose of exercising jurisdiction under section 64 thereof.
Several of the aggrieved operators including Gopala Pillai preferred appeals to the Chief Commissioner.
By an order dated September 5, 1960 the Chief Commissioner, Pondicherry allowed the appeal of the respondent Gopala Pillai, set aside the order of the State Transport Authority granting the permit to the appellant Sivarama Reddiar and directed that the permit for the route Pondicherry to Karaikal be issued in favour of the respondent Gopala Pillai.
Writ Petition 293 of 1960 has been filed to secure the setting aside of this order of the Chief Commissioner on the ground that the order violates the fundamental rights guaranteed to the petitioner by 986 of the Constitution and Civil Appeal No. 43 of 1961 is directed to obtain the same relief.
It is not necessary at this stage to set out the facts of the other appeal and petition by Masthan Sahib, because except that the route is different and so, are the grounds on which the order of the Chief Commissioner is sought to be impugned, the other material facts relevant for the consideration of the preliminary point to which we adverted are exactly the same.
The preliminary objection that is raised to the entertainment of the appeal is shortly as follows: article 136 (1) of the Constitution under which the appellant has obtained special leave reads: "136 (1).
Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India.
" In order, therefore, that this Court might have jurisdiction to entertain the appeal it is a prerequisite that the Court or tribunal from whose judgment or order the appeal is preferred should be one in the territory of India.
It is urged on behalf of the respondent that Pondicherry is not part of the territory of India, with the consequence that the Chief Commissioner whose order is impugned in the appeal is not "a Court or tribunal in the territory of India.
" The question thus raised is of great political and constitutional significance and it is not disputed that if this area were not part of the territory of India, this Court would have no jurisdiction in the absence of any legislation by Parliament under article 138 (1), and the Civil Appeal would have to be dismissed as incompetent.
It was common ground that this was the position in regard to the maintainability of the appeal 987 but in regard to the Writ Petition Mr. Vishwanatha Shastri learned Counsel for the petitioner sought to sustain its maintainability on slightly different grounds.
He invited our attention to the terms of article 12 of the Constitution which reads: "In this Part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India." Learned Counsel pointed out that for the purpose of the exercise of this Court 's powers under article 32 of the Constitution for the enforcement of the fundamental rights its jurisdiction was not limited to the authorities functioning within the territory of India but that it extended also to the giving of directions and the issuing of orders to authorities functioning even outside the territory of India, provided that such authorities were subject to the control of the Government of India.
This submission appears to us well founded and that the powers of this Court under article 32 of the Constitution are not circumscribed by any territorial limitation.
It extends not merely over every authority within the territory of India but also those functioning outside provided that such authorities are under the control of the Government of India.
The power conferred on this Court by Part III of the Constitution has, however, to be read in conjunction with article 142 of the Constitution which reads: "142 (1) The Supreme Court in the exercise of the jurisdiction may pass such decree or makes such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be enforceable throughout the territory 988 of India in such manner as may be prescribed by or under any law made by Parliament and until provision in that behalf is so made, in such manner as the President may by order prescribe.
(2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself.
" It would be seen that article 142 brings in a limitation as regards the territory which the orders or directions of this Court could be enforced.
It is manifest that there is an anomaly or a discordance between the powers of this Court under article 32 read with article 12 and the executability or enforceability of the orders under article 142.
It is possible that this has apparently arisen because the last words of article 12 extending the jurisdiction of this Court to authorities "under the control of the Government of India" were added at a late stage of the constitution making while articles 142 and 144, the latter reading: "All authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court".
were taken, in whole or in part, from section 210 of the Government of India Act, 1935 and that no necessary changes were made in article 142 to bring it into line with article 12 as it finally emerged and the powers of this Court under article 32.
But this however offers us no solution to the question which is whether, in view of the limitation imposed by article 142 on the area within which alone the directions or orders of this Court could be directly 989 enforced, the Court could issue a writ in the nature of certiorari or other appropriate writ or direction to quash a quasi judicial order passed by an authority outside the territory of India, though such authority is under the control of the Government of India.
If the order of the authority under the control of the Government of India but functioning outside the territory of India was of an executive or administrative nature, relief could be afforded to a petitioner under article 32 by passing suitable orders against the Government of India directing them to give effect to the decision of this Court by the exercise of their powers of control over the authority outside the territory of India.
Such an order could be enforceable by virtue of article 144, as also article 142.
But in a case where the order of the outside authority is of a quasi judicial nature, as in the case before us, we consider that resort to such a procedure is not possible and that if the orders or directions of this Court could not be directly enforced against the authority in Pondicherry, the order would be ineffective and the Court will not stultify itself by passing such an order.
In these circumstances it becomes imperative that we should ascertain the constitutional and political status of Pondicherry in relation to the Union of India.
Certain documents have been placed before us and in particular an agreement dated October 21, 1954 entered into between the Government of India and of France by which the administration of Pondicherry was ceded to the Government of India.
Mr. Viswanatha Sastri learned Counsel for the appellant petitioner contended that on the terms and conditions contained in this agreement, Pondicherry was a part of the territory of India.
On the other hand, Mr. Chari learned Counsel for the respondents urged that the reservations contained in the agreement were such as to preclude the Court from reaching the conclusion 990 that there had been a transfer of complete sovereignty, which according to him was necessary in order to constitute the area as part of the territory of India.
The learned Solicitor General who appeared in response to the notice to the Union of India, submitted that the Union Government was agreeable to the respective contentions urged by the parties being decided by the Court.
We have considered the matter urged before us with great care and desire to make the following observations: So far as the Constitution of Indian is concerned, we have an express definition of what the phrase "territory of India" means.
article 1 (3) enacts: "1.
(3) The territory of India shall compromise (a) the territories of the States; (b) the Union territories specified in the First Schedule; and (c) such other territories as may be acquired.
" There might be little difficulty about locating the territories which are set out in cls.
(a) & (b) but when one comes to (c) the question arises as to when a territory is "acquired" and what constitutes "acquisition".
Having regard to the subject dealt with, the expression "acquired" should be taken to be a reference to "acquisition" as understood in Public International Law.
If there were any public notification assertion or declaration by which the Government of this country had declared or treated a territory as part and parcel of the territory of India, the Courts would be bound to recognise an "acquisition" as having taken place, with the consequence that that territory would be part of the territory of the Union within Art.1(3)(c).
In the present case, we have this feature that the administration of the territory is being conducted under the powers vested in the Government under the .
The preamble to that Act recites that it was: 991 "An Act to provide for the exercise of certain foreign jurisdiction of the Central Government".
and accordingly the expression "foreign jurisdiction" is defined in its section 2(a) to mean "the jurisdiction which the Central Government has for the time being in or in relation to any territory outside India.
" Thus this would prima facie show that Pondicherry has not been "acquired" but still continues to be outside the territory of India.
In our opinion, however, though this might be very strong evidence that the territory has not been "acquired" and so not part of the "territory of India", it is still not conclusive.
In this state of circumstances two courses would be open to us: (1) to decide for ourselves on the material that has been placed before us in the shape of the agreement between the two Governments etc.
Whether Pondicherry has been "acquired" so as to become part of the territory of India, or (2) to invoke the assistance of the Government of India by inviting them to state whether the territory has been acquired within article 1(3) of the Constitution and whether Pondicherry is thus now part of the "territory of India".
We originally proposed to avail ourselves only of the procedure indicated in s.6 of the which enacts: "6.
(1) If in any proceeding, civil or criminal, in a Court established in India or by the authority of the Central Government outside India, any question arises as to the existence or extent of any foreign jurisdiction of the Central Government, the Secretary to the Government of India in the appropriate department shall, on the application of the Court, ' send to the Court the decision of the Central Government on the question, and that decision shall for the purposes of the proceeding be final.
992 (2) The Court shall send to the said Secretary in a document under the seal of the Court or signed by a Judge of the Court, questions framed so as properly to raise the question, and sufficient answers to those questions shall be returned to the Court by the Secretary and those answers shall on production thereof be conclusive evidence of the matters therein contained." But the learned Solicitor General very properly pointed out that an answer to the question which could be referred under this provision would relate merely to "the existence or extent of jurisdiction" and that information on these points might not be sufficient to solve the problem posed by the preliminary question raised in the appeals and petitions as to whether Pondicherry is a part of the "territory of India" or not.
We agree with the learned Solicitor General that information relating to the "existence or extent" of the jurisdiction exercisable by the Union Government in the territory might not completely solve the question for our decision as to whether Pondicherry is part of the territory of India or not, but still if the extent of the jurisdiction vested in the Union Government by the arrangements entered into between the two Governments virtually amounts to a transfer of sovereignty for every practical purpose, it would be possible to contend that such a transfer or cession was so incompatible with the existence of any practical sovereignty in the French Government as to detract from the surrender or transfer being other than complete.
It is for this reason that we consider it proper to exercise the powers vested in the Court under section 6 of the .
It would be observed from what has been stated above that it would be more satisfactory and more useful for the disposal of the proceedings 993 before us if we ascertain from the Union Government an answer to the question whether they do or do not consider that Pondicherry is part of the territory of India.
We have only to add that on the decisions in England, the Court has jurisdiction to invite the Government to assist it by information as to whether according to Government any territory was part of Her Majesty 's Dominion or not (vide The Fagernes L. R. 1927 Probate 311).
Besides, the learned Solicitor General agreed that the Government would assist us by answering our reference.
In view of the matters set out above we direct that the following questions shall be forwarded to the Union of India under the seal of this Court for the submission of their answers: (1) Whether Pondicherry which was a former French Settlement is or is not at present comprised within the territory of India as specified in article 1(3) of the Constitution by virtue of the Articles of the Merger Agreement dated October 21, 1954 between the Governments of India and France and other relevant agreements, arrangements, acts and conduct of the two Governments.
(2) If the answer to Question 1 is that Pondicherry is not within the territory of India, what is the extent of the jurisdiction exercised by the Union Government over the said territory and whether it extends to making all and every arrangement for its civil administration, its defence and in regard to its foreign affairs.
The Government of India might also state the extent of jurisdiction which France possesses over the area and which operates as a diminution of the jurisdiction ceded to or enjoyed by the Government of India.
On the receipt of the answers to these questions the appeals will be posted for further hearing.
SARKAR J. Four matters came up for hearing together.
Two of these are appeals brought with leave 994 granted by this Court and two are petitions under article 32 of the Constitution.
One appeal and one petition are by one party and the other appeal and petition are by another.
The appeal and the petition by each party challenge an order made by the Chief Commissioner of Pondicherry under the .
Each of the two orders challenged was made on applications for the grant of bus permits.
By one of the orders a permit for a certain route had been given to a person other than one of the parties who has moved us, in preference to him.
By the other order, similarly, the claim of the other party moving us to a permit for a different route was rejected.
All the matters raise substantially the same question concerning the validity of the Chief Commissioner 's orders.
Now, Pondicherry was earlier a French possession administered by the Government of France.
By an agreement between the Governments of India and France, the administration of Pondicherry was transferred to the Government of India as from November 1, 1954.
The Government of India had been exercising power in Pondicherry since, under the .
The Chief Commissioner of Pondicherry is an officer of the Government of India appointed under the powers derived as a result of the agreement.
With regard to the appeals, question arose at the hearing before us as to whether they were competent.
The appeals had been filed with leave granted under article 136 of the Constitution.
It was said that the appeals were incompetent because Pondicherry was outside the Indian territories and under article 136 no appeal from any court outside such territories lay to this Court.
It was, however, contended on behalf of the appellants that since the Indo French agreement or very soon thereafter, Pondicherry became part of the Indian territories as a territory acquired by India and, therefore the appeals who 995 competent.
As the most satisfactory way of deciding the question whether Pondicherry is within India or not is to seek information from the Government on the point, the majority of the members of the bench are of opinion that the Government of India should be approached to enlighten us about it.
The learned Solicitor General, appearing for the Government, has not objected to this procedure being adopted.
With regard to the Petitions under article 32, it was contended that the Chief Commissioner of Pondicherry was a State within the meaning of article 12 of the Constitution as under that article any authority under the control of the Government of India outside the territory of India was a State for the purpose of Part III of the Constitution.
On this basis it was contended on behalf of the petitioners that the petitions under article 32 asking for certain writs to quash the orders of the Chief Commissioner of Pondicherry were also competent.
A further question then arises as to whether in view of article 142 of the Constitution the writs, if issued, could be enforced against an authority under the control of Government of India at Pondicherry, if Pondicherry was outside India and if they could not, whether the Court should issue the writs as it would only be stultifying itself by doing so.
It seems to us that it is unnecessary to decide these questions at this stage, for we are going to ask the Government to inform us whether Pondicherry was at the relevant time part of Indian territories.
If the Government inform us that Pondicherry was part of India, then no question would arise concerning the powers or jurisdiction of this court in any of the matters now before us.
If the information from the Government is that Pondicherry is not within the territories of India, that will, in our opinion, be the 996 proper time to consider whether the Court can still give the petitioners the relief which they ask.
These cases involve other questions of difficulty and importance on which it would be proper, in our view, to make a pronouncement after the Government of India 's answer to our request is received.
As to none of these are indeed any question arising in these cases we express any opinion at this stage.
We wish, however, to observe now that it seems to us exceedingly strange that if this Court finds that a party 's fundamental right has been violated, from which it would follow that that party has a right to move this Court under article 32 and to obtain the necessary writ, this Court could refuse to issue it for the reason that it would thereby be stultifying itself.
If a party is entitled to a writ under article 32, then we are not aware that there is any discretion in the Court to refuse the writ on the ground that the writ cannot be enforced.
Even assuming that in view of article 142 of the Constitution, a writ cannot be enforced outside India as to which we pronounce no opinion now might is not be said with justification that it is not necessary for us to be unduly pressed by considerations of the difficulties of the enforcement of the writ and that if would be reasonable for us to think that the Government of India has sufficient respect for this Court to do all that is in its power to give effect to this Court 's order, whether or not there might be technical difficulties in the way of its enforcement by this Court.
In view of these doubts, we are unable, as at present advised, to concur in the opinion expressed in the Judgment of the majority of the learned Judges constituting the Bench that article 142 stands in the way of this Court issuing a writ under article 32 in this case.
We would reserve our opinion till a later stage and till it becomes necessary to express any opinion at all.
997 BY COURT : We direct that the two questions set out in the majority judgment be forwarded to the Union of India under the seal of this Court for submission of their answers.
On receipt of the answers to the questions the appeals will be posted for further hearing.
The Judgment of Gajendragadkar, Wanchoo and Ayyangar, JJ., was delivered by Ayyangar J. The Judgment of Sarkar and Das Gupta, JJ., was delivered by Sarkar J. AYYANGAR, J.
In compliance with our directions the two questions were forwarded to the Union Government and they submitted their answers to them in the following terms: "Question No. (1) Whether Pondicherry which was a former French Settlement is or is not at present comprised within the territory India as specified in Article 1(3) of the Constitution by virtue of the Articles of the Merger Agreement dated October 21, 1954 between the Governments of India and France and other relevant agreements arrangements, acts and conduct of the two Governments.
Answer The French Settlement (Establishment) of Pondicherry is at present not comprised within the territory of India as specified in clause (3) of Article 1 of the Constitution by virtue of the Agreement dated the 21st October, 1954, made between the Government of France and the Government of India or by any other agreement or arrangement.
By the aforesaid Agreement, dated the 21st October, 1954, the Government of France transferred, and the Government of India took over, administration of the territory of all the French Establishments in India, including Pondicherry, with effect from the 1st November, 1954.
A copy of the Agreement is enclosed.
This is expressed to be a de facto transfer and was intended to be 998 followed up by a de jure transfer.
A treaty of Cession providing for de jure transfer has been signed by the Government of France and the Government of India on the 28th May, 1956, but has not been so far ratified in accordance with the French Law as well as in accordance with the article 31 of the Treaty.
A copy of the Treaty is also enclosed.
The Government of India has been administering Pondicherry under the , on the basis that it is outside India and does not form part of the territory of India.
Question No.(2) If the answer to question 1 is that Pondicherry is not within the territory of India, what is the extent of the jurisdiction exercised by the Union Government over the said territory and whether it extends to making all and every arrangement for its civil administration, its defence and in regard to its foreign affairs.
The Government of India might also state the extent of jurisdiction which France possesses over the area and which operates as a diminution of the jurisdiction ceded to or enjoyed by the Government of India.
Answer The Government of India has been exercising full jurisdiction over Pondicherry in executive, legislative and judicial matters in accordance with .
In doing so it has followed the aforesaid Agreement.
The Government of France has not also exercised any executive, legislative or judicial authority since the said Agreement.
The jurisdiction of the Government of India over Pondicherry extends to making all arrangements for its civil administration.
The administration of the territory is being carried on under the , and in accordance with the French Establishments (Administration) Order, 1954, 999 and other Orders made under sections 3 and 4 of that Act.
The Government of India have been aiming at conducting the administration of Pondicherry so as to conform to the pattern of administration obtaining to in India consistent with the said Agreement.
Accordingly a large number of Acts in force in India have already been extended to Pondicherry.
The Government of India hold the view that the sole responsibility in regard to arrangements for the defence of Pondicherry devolves on themselves.
Pondicherry has no foreign relations of its own.
No claims have been made by the Government of France in this matter nor have the Government of India recognized the existence of any such claim.
The Government of France do not possess any de facto jurisdiction over Pondicherry which would imply any diminution of the jurisdiction exercised by the Government of India.
" The appeals and the writ petitions were thereafter posted for further hearing before us on October 9, 1961.
Mr. N. C. Chatterji learned Counsel for Shri Masthan Sahib, appellant in Civil Appeal No. 42 of 1961 and petitioner in writ petition No. 297 of 1960, urged before us two contentions.
The first was that the answer to the second question clearly established that the French establishments including Pondicherry were part of the territory of India, having been acquired by the Union Government within the meaning of article 1(3)(c) and that in view of this position it was not necessary to consider nor proper for us to accept the views expressed by the Union Government in their answer to the first question wherein they had expressly stated that they did not consider the French "establishments" covered by the agreement between the Union Government and the Government of France dated October 21, 1954 as being within the territory of India within 1000 Art.1(3) of the Constitution of India.
Secondly, a point which was necessarily involved in the first one just set out that this Court was not bound by the statement of the Government of India in its answer to Question No. 1 and that it should disregard such an answer and investigate for itself on the materials placed before it as to whether Pondicherry was part of the territory of India or not.
In support of the first submission Mr. Chatterji placed considerable reliance on the passage in our judgment rendered on April 28, 1961 reading: "Still if the extent of the jurisdiction vested in the Union Government by the arrangements entered into between the two Governments virtually amounts to a transfer of sovereignty for every practical purpose, it would be possible to contend that such a transfer or cession was so incompatible with the existence of any practical sovereignty in the French Government as to detract from the surrender or transfer being other than complete.
" The argument was that the answer to the second question showed (1) positively that the Government of India exercised complete jurisdiction over the territory executive, legislative and judicial, its authority being plenary and extending to the making of laws.
Their execution and the administration of justice with complete power over its defence and foreign affairs and (2) negatively that the Government of France possessed no authority in the territory, so much so that it could not be predicated that there had been any retention of even a vestigial sovereignty to detract from the completeness of the transfer.
In the circumstances, learned Counsel urged that he was justified in inviting us to ignore or disregard the answer to the first question and instead answer the question as to whether these French establishments were within the territory of India or not on the basis of the second question.
1001 Having regard to the nature of this argument it is necessary to state briefly the circumstances in which we felt it necessary to frame the two questions that we did.
At the stage of the hearing of the petitions on the first occasion, notice was issued to the Union Government and the learned Solicitor General appearing in response to the notice did not convey to us any definite views on the part of the Government as to whether Pondicherry was or was not considered by them to be part of the territory of India but invited the Court to decide the question on the materials that might be placed the parties before us.
At that stage therefore we were not quite certain whether Government would be prepared to make a formal statement about their views on this question.
If therefore the Government were inclined still to leave the matter to the Court, we desired to have complete information as to the factual position regarding the government of the territory.
It was in view of that possibility that Question No. 2 was framed.
It was, of course, possible that Government might communicate their views to the Court and with a view to enable this to be done we framed Question No. 1.
In these circumstances nothing is gained by reference to the passage in our judgment dated April 28, 1961.
The passage extracted is certainly not an authority for the position as to whether if Question No. 1 was answered, the Court could properly consider any implications or inferences arising on the answer to Question No. 2.
We shall therefore proceed to consider the principal question that arises at this stage, viz., whether the answer of the Government is reply to a specific and formal enquiry by the Court that it did not consider a particular area to have been "acquired" by the Indian Government and therefore not a part of the territory of India was binding on the Court or not.
A number of decisions of the English and Australian Courts in which the point 1002 has been considered were placed before us and we shall proceed to refer to the more important of them.
In Duff Development Company vs Government of Kelantan(1) the question related as to whether the Sultan of Kelantan was the ruler of an independent sovereign State, such that the Courts in England had no jurisdiction over the Sultan or the Government of that State.
The Secretary of State for the Colonies who was requested by the Court to furnish information as regards the status of the ruler and of the Government stated that the Sultan was the head of an independent sovereign state.
The binding character of this statement was however questioned and it was argued before the House of Lords on foot of certain public documents that Kelantan was merely a dependency of the British Government and not a sovereign State.
On the other side; it was pressed upon the House, that the statement of the Secretary of State was binding and this latter submission was unanimously accepted by the House.
In doing so Viscount Cave observed: "If after this definite statement a different view were taken by a British Court, an undesirable conflict might arise; and in my opinion it is the duty of the Court to accept the statement of the Secretary of State thus clearly and positively made as conclusive upon the point." Viscount Finlay expressed himself thus: "It has long been settled that on any question of the status of any foreign power course is that the Court should apply to His Majesty 's Government, and that in any such matter it is bound to act on the information given to them through the proper department.
Such information is not in the nature of 1003 evidence; it is a statement by the Sovereign of this country through one of his Ministers upon a matter which is peculiarly within his cognizance." Lord Sumner said: "Where such a statement is forthcoming no other evidence is admissible or needed.
" There is one other decision of the House of Lord to which reference may usefully be made Government of the Republic of Spain vs Arantzazu, Mendi.(1) The question for decision was whether it was General Franco 's Government that was the Government in Spain or the Republican Government.
The Secretary of State for Foreign Affairs had, in a formal communication to the Court in reply to a letter forwarded under the direction of Bucknill J., stated that His Majesty 's Government had recognised the Nationalist Government as the Government which had administrative control over a large portion of Spain and particularly over the Basque Provinces wherein the ship, title to which was in question, had been registered.
Lord Wright in his speech said: "The Court is, in my opinion, bound without any qualification by the statement of the Foreign office, which is the organ of His Majesty 's Government for this purpose in a matter of this nature.
Such a statement is a statement of fact, the contents of which are not open to be discussed by the Court on grounds of law.
" No doubt, these decisions were in relation to the status of or recognition by the Government of foreign sovereign and are therefore not ad idem with the point which now arises for consideration viz., whether a particular piece of territory is or is not part of the territory of India.
A statement by Government in relation to a similar question 1004 came up before the Court of Appeal in Fagernes (1) The question for the Court 's consideration was whether the Bristol Channel, particularly at the point where a collision was stated to have taken place, was or was not part of British territory.
Hill J. before whom an action for damage caused by the alleged collision came up held that the waters of the Bristol Channel were part of British territory and therefore within the jurisdiction of the High Court.
The defendants appealed to the Court of Appeal and at that stage the Attorney General appeared and in response to a formal enquiry by the Court as to whether the place where the collision was stated to have occurred was within the realm of England, replied that "the spot where the collision is alleged to have occurred is not within the limits to which the territorial sovereignty of His Majesty extends." On the basis of this statement the Court of Appeal unanimously reversed the judgment of Hill J. An argument was raised before the Court as regards the binding character of the statement by the Attorney General and in regard to this Akin L.J. said: "I consider that statement binds the Court, and constrains it to decide that this portion of the Bristol Channel is not within British jurisdiction, and that the appeal must be allowed.
I think that it is desirable to make it clear that this is not a decision on a point of law, and that no responsibility rests upon this Court save that of treating the statement of the Crown by its proper officer as conclusive." Lawrence L.J. observed: "It is the duty of the Court to take judicial cognizance of the extent of the King 's territory and, if the Court itself is unacquainted with the fact whether a particular place is or is not within the King 's territory, the Court is entitled to inform itself of that fact by making 1005 such inquiry as, it considers proper.
As it is highly expedient, if not essential, that in a matter of this kind the Courts, of the King should act in unison with the Government of the King, this Court invited the Attorney General to attend at the hearing of the appeal and at the conclusion of the arguments asked him whether the Crown claimed that the spot where the collision occurred was within the territory of the King.
The Attorney General in answer to this inquiry, stated that he had communicated with the Secretary of State for Home Affairs, who had instructed him to inform the Court that "the spot where this collision is alleged to have occurred is not within the limits to which the territorial sovereignty of His Majesty extends.
" In view of this answer, given with the authority of the Home Secretary upon a matter which is peculiarly within the cognizance of the Home office, this Court could not, in my opinion, properly do otherwise than hold that the alleged tort was not committed within the jurisdiction of the High Court".
Bankes L.J., though he agreed with his colleagues in allowing the appeal, however struck a slightly different note saying: "This information was given at the instance of the Court, and for the information of the Court.
Given under such circumstances, and on such a subject, it does not in my opinion necessarily bind the Court in the sense that it is under an obligation to accept it" The entire matter is thus summarised in Halsbury 's Laws of England, Third Edition, Volume 7: "There is a class of facts which are conveniently termed 'facts of state '.
It consists of matters and questions the determination of which is solely in the hands of the Crown or 1006 the government, of which the following are examples: (1) . . . . . . . . . (2) Whether a particular territory is hostile or foreign, or within the boundaries of a particular state." Mr. Chatterji, however, invited our attention to certain observations contained in two decisions of the High Court of Australia Jolley vs Mainka and Frost vs Stevenson (2).In both these cases the point involved was as to the status of the territory of New Guinea which Australia was administering as mandatory territory under a mandate from the League of Nations.
There are, no doubt, observations in these cases dealing with the meaning of the word 'acquired ' in section 122 of the Commonwealth of Australia Act, but the point to be noticed however is that there was no statement by the Government of the Commonwealth of Australia as to whether this area was or was not part of the territory of Australia, such as we have in the present case.
We do not, therefore, consider that these observations afford us any assistance for the solution of the question before us.
Both Mr. Chatterji and Mr. Viswanatha Sastri learned Counsel who appeared for Sivarama Reddiar, the appellant and petitioner in the other cases, stressed the fact that what we were called upon to decide was the meaning of the expression 'acquired ' in article 1 (3) (c) of the Constitution and that in the case of a written constitution such as we had to construe, jurisdiction of this Court was not to be cut down and the enquiry by it limited by reasons of principles accepted in other jurisdictions.
In particular, learned Counsel stressed the fact that it would not be 1007 proper for the Court to ignore patent facts and hold itself bound by the statement of Government in cases where, for instance, the Government of the day for reasons of its own desiring to exclude the jurisdiction of this Court denied that a part of territory which patently was within article 1(3) was within it.
It is not necessary for us to examine what the position would be in the contingency visualized, but assuredly it is not suggested that the case before us falls within that category.
The proposition laid down in the English decisions that a conflict is not to be envisaged between the Executive Government and the judiciary appears to us to rest on sound reasoning and except possibly in the extreme cases referred to by the learned Counsel, the statement of the Government must be held binding on the Court and to be given effect to by it.
There is one other matter which was specially pressed upon us during the course of argument to which is necessary to refer.
The submission was that the answer by the Union Government to the two questions were really contradictory and that whereas the answer to the second question made it out that the French establishments had been acquired and were part of the territory of India, the Government had in relation to the first question made a contradictory answer.
We do not consider this argument well founded.
In cases where the only fact available is the de facto exercise of complete sovereignty by one State in a particular area, the sovereignty of that State over that area and the area being regarded as part of the territory of that State would prima facie follow.
But this would apply normally only to cases where sovereignty and control was exercised by unilateral action.
Where however the exercise of power and authority and the right to administer is referable to an agreement between two States, the question whether the territory has become integrated with and become part 1008 of the territory of the State exercising de facts control depends wholly on the terms upon which the new Government was invited or permitted to exercise such control and authority.
If the instruments evidencing such agreements negatived the implication arising from the factual exercise of Governmental authority then it would not follow that there is an integration of the territory with that of the administering power and that is precisely what has happened in the present case.
As annexures to their reply the Union Government have included The Treaty of Cession dated May 28, 1956, which is a sequel to the agreement dated October 21, 1954, transferring the powers of the Government of the French Republic to the Government of the Indian Union.
Under the terms, this Treaty would become operative and full sovereignty as regards the territory of the establishments of Pondicherry, Karikal, Maha and Yanam would be ceded to the Indian Government only when the treaty comes into force.
It is not necessary to refer to all the clauses of this Treaty except the one which stipulates that it would come into force on the day of ratification by the two Governments concerned.
According to the Constitution of France an Act of the France Assembly is required for the validity of a Treaty relating to or involving the cession of French territory.
It is common ground that the Treaty has not been ratified yet.
The resulting position therefore is that by the agreement dated October 21,1954, though complete administrative control has been transferred to the Government of India, this transfer of control cannot be equated to a transfer of territory, that being the common intention of the parties to that agreement.
Unless a ratification takes place there would legally be no transfer of territory and without a transfer of territory there would not be in the circumstances an "acquisition of territory", with the consequence that at present Pondicherry has to be treated as not part 1009 of the territory of India.
It is unnecessary to consider what the position would have been if the Union Government had, notwithstanding the terms of the Treaty, treated the former French establishments as having become part of the territory of India.
There was one minor submission made by Mr. Viswanatha Sastri to which a passing reference may be made.
He suggested that the term "territory of India" in article 142 might not represent the same concept as 'the territory of India ' within article 1(3) and that in the context of article 142 the term 'territory of India might include every territory over which the Government of the Union exercised de facto control.
We are not impressed by this argument.
The term 'territory of India ' has been used in several Articles of the Constitution and we are clearly of the opinion that in every Article where this phraseology is employed it means the territory of India for the time being as falls within article 1(3) and that the phrase cannot mean different territories in different Articles.
We have already dealt with the question as to what the effect on the maintainability of the appeals and the petitions would be if Pondicherry were not part of the territory of India.
In view of Pondicherry not being within the territory of India we hold that this Court has no jurisdiction to entertain the appeals.
The appeals therefore fail and are dismissed.
The writ Petitions must also fail and be dismissed for the reason that having regard to the nature of the relief sought and the authority against whose orders relief is claimed they too must fail.
They are also dismissed.
We would add that these dismissals would not include the petitioners from approaching this Court if so desired, in the event of Pondicherry becoming part of the territory of India.
In the peculiar circumstances of this case we direct that that the parties bear their respective costs.
1010 Before leaving this case, we desire to point out that the situation created by the French establishments not being part of the territory of India is somewhat anomalous.
Thier administration is being conducted by the extension of enactments in India by virtue of the power conferred by the .
We have had occasion to point out that though technically the areas are not part of Indian territory, they are governed practically as part of India.
But so far as the orders of the courts and other authorities judicial and quasi judicial within that area are concerned, the Superior Courts in India have not, subject to what we have stated as regards the limited jurisdiction of the court, any appellate or revisional jurisdiction over them and this might in a large number of cases lead to injustice and a sense of grievance.
There is enough power in Government even at the stage of the de facto transfer to remedy the situation.
By appropriate action under the , or by Parliamentary Legislation under the entry 'Foreign Jurisdiction ' the appellate Jurisdiction of the High Court or of this Court could be enlarged under articles 225 and 138 [1] respectively so as to afford an adequate remedy for the inhabitants of these areas.
To this aspect of the matter we consider that the attention of Government should be drawn.
SARKAR, J.
On the earlier occasion when these cases came up before this Court, we postponed further hearing of them till we received the answers of the Government of India to two questions which we then referred to it.
These questions substantially were, (a) whether Pondicherry is or is not within the territories of India and (b) if it is not, the extent of the jurisdiction exercised by the Union Government over it and the jurisdiction which France still possesses in regard to it.
These questions were put because considerable doubt was felt as to the real status of Pondicherry.
If it 1011 was a foreign territory, no appeal could lie to this Court under article 136 of the Constitution from any tribunal in Pondicherry and two of these matters were such appeals.
The other two matters were petitions asking for writs against certain authorities in Pondicherry and the majority held that no writ could issue to a foreign territory in view of article 142 of the Constitution and therefore for the purposes of these petitions also it was necessary to ascertain the status of pondicherry.
We however then felt some difficulty about the question whether we could refuse to issue writs to an officer of the Government of India outside the territory of India and expressed our inability to concur in the opinion of the majority.
We said that the proper time to discuss that question would be when on receipt of the Government 's answers to our questions, it had to be held that Pondicherry was a foreign territory and reserved our final decision on the question till then.
The Government 's answers to our questions have now been received.
On the basis of these answers, for the reasons hereafter mentioned, it has to be held that Pondicherry is a foreign territory.
We, therefore, now wish to say a few words on the question on which we reserved our opinion on the former occasion.
The opinion of the majority no doubt prevails in spite of what we shall say.
Before we discuss the question which we reserved we desire to observe in regard to the appeals that it must be held that they are not maintainable as Pondicherry is a foreign territory.
Now, the writs are sought to quash the orders of a quasi judicial authority functioning in Pondicherry on the ground that they violate certain fundamental rights of the petitioners This authority however is an officer of the Government of India.
How far writs can be issued under article 32 of the Constitution of India to quash a quasi judicial order even if made in India, itself a 1012 question of considerable difficulty on which there has been a difference of opinion in this Court.
That question was recently discussed before another Bench but the judgment in that case has not yet been delivered.
For the present purpose however we will assume that writs can be issued under article 32 to quash a quasi judicial order.
The First observation that we wish to make is that it has now been finally held by this Court, dealing with an application under article 32 that "the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part III of the Constitution is itself a guaranteed right": Kavalannara Kottarthill Kochunni vs The State of Madras.
(1) A right to move this Court by a petition under article 32 is, therefore, a fundamental right.
That being so, a right to obtain a writ when the petition establishes a case for it, must equally be a fundamental right.
For, it would be idle to give a fundamental right to move this Court and not a similar right to the writ the issue of which the petition might clearly justify.
If then a fundamental right to a writ is established, and that is the assumption on which we are examining the present question the party who establishes such right must be entitled ex debito justitiae to the issue of the necessary writ.
There would then be no power in the Court to refuse in its discretion to issue it.
But it is said that if a writ was issued in the present case, it could not in view of article 142 which says that an order of this Court shall be enforced throughout the territory of India, be enforced Pondicherry.
Let us assume that is so.
Then it is said that if the Court were to issue the writ it would only be stultifying itself and should not therefore issue it.
We are unable to accede to this contention.
If a party has been given by the 1013 Constitution a fundamental right to a writ, there is no power in the Court to refuse that right.
Supposed practical considerations of incapacity to in force the writ issued cannot be allowed to defeat the provisions of the Constitution.
No authority has been cited to us in support of the proposition that when a party in entitled as of right to an order, a court can refuse to make that order on the ground that it would thereby be stultifying itself.
So far as we have been able to ascertain orders are refused on this ground when the matter is one for the discretion of the Court.
Such cases have, for instance, frequently occurred in proceedings relating to the issue of injunctions, to grant or not to grant which is well known, in the discretion of the Court.
The discretion has no doubt to be judicially exercised as indeed all discretions have, but none the less the right to the relief is in the discretion of the Court as opposed to a relief to which a party is entitled ex debito justitiae, a distinction which is well understood.
Thus, dealing with a case of the issue of an injunction restraining a person from.
proceeding with an action in a foreign court, Jessel M.R. Observed, in In re International Pulp and Paper Co. Ltd.(1), "Therefore, as to a purely foreign country, it is of no use asking for an order, because the order cannot be enforced".
Take another case.
In England an information in the nature of quo warranto is not issued as a matter of course as a matter of course [R.V. Stacey and therefore the courts there refused to issue it when in information would be futile in its results.
Halsbary Laws of England (3rd ed.) Vol.
11 p. 148.
So in Reg.
v Fox(2) the Court refused to issue the information for the reason that the person sought to be removed by it could be reappointed at once.
These however are cases in which a Court would be inclined not to make 1014 a discretionary order on the ground that the Court would thereby be stultifying itself.
Instances might be multiplied but it is unnecessary to do so.
We do not think that the principle of these cases can be applied where a court has no option but to make the order which we think is the present case.
It would clearly be less applicable to a case like the present where, as we shall immediately show, it would be wrong to think that the order would not be carried out.
Lastly, can we be certain that the Court would be stultifying itself by issuing the writ in this case ? That would be only if our order is sure to be ignored.
We think that this Court would be fully justified in proceeding on the basis that any order made by it would be carried out by any officer of the Government of India to whom it is directed wherever he may be, out of respect for the Constitution and this Court and this without requiring to be forced to do so.
In this connection the case of R.v.
Speyer, R. vs Cassel(1) is of interest.
There Speyer and Cassel had been called upon by the court by rules nisi to show cause why an information in the nature of quo warranto should not be exhibited against them to show by what authority they respectively claimed to be members of His Majesty 's Privy Council for Great Britain.
Speyer and Cassel were naturalised British subjects and the question was whether under certain statutes they were not disqualified from being appointed to the Privy Council.
One of the arguments on behalf of the respondents was that the court would be powerless to enforce a judgment of ouster for it could not prevent the immediate reinstatement of the names of these persons in the roll of Privy Councillors if the King though fit to alter it.
The answer that Reading C.J. gave to this argument was 1015 "Although it may be interesting and useful for the purpose of testing the propositions now under consideration to assume the difficulties suggested by the Attorney General, none of them would in truth occur.
This is the King 's Court; we sit here to administer justice and to interpret the laws of the realm in the King 's name.
It is respectful and proper to assume that once the law is declared by a competent judicial authority it will be followed by the Crown.
" The other members of the Bench also took the same view, Lush J. observing, "The consequences he suggests are argumentative and not real, and we cannot regard them as fettering the exercise of our jurisdiction".
Now this was a case of a discretionary order.
Even so, the Court felt that it would be wrong to stay its hand only on the ground that it could not directly enforce its order.
This salutary principle has been acted upon in our country by Das J. who later became the Chief Justice of this Court, in In re Banwarilal Roy(1) There Das J. issued an information in the nature of quo warranto in spite of the fact that he could not command the Governor of Bengal to comply with his order which might therefore have become futile.
We think it is a very healthy principle and should be followed.
We do not think that we can allow our powers for the protection of fundamental rights to be fettered by considerations of the enforcement of orders made by us; we must assume that the authorities in Pondicherry will willingly carry out our order.
We turn now to the other questions arising on the Government 's answers.
Pondicherry was admittedly a French possession but under an agreement with France, the Government of India is now administering it.
The Government has definitely stated that Pondicherry is not comprised 1016 within the territory of India.
It has also said that it has full jurisdiction over Pondicherry under that agreement, that the liability for defence of Pondicherry is on it and that Pondicherry has no foreign relations.
It has further said that France does not possess any de facto jurisdiction over Pondicherry which would imply a diminution of the jurisdiction exercised by it.
It was contended that we are not bound by the Government 's answer to the first question, namely, that Pondicherry is outside India and that on the basis of the answer to the second question we should hold, in spite of the Government 's view, that Pondicherry is a part of Indian territory.
It was said that since India had admittedly full jurisdiction over Pondicherry and France exercised none, it must be held the India has acquired sovereignty over it and that it had, therefore, become Indian territory by acquisition.
We are entirely unable to accept this contention.
We think that we are bound by the Government 's decision at least in a case where we have referred to it for our guidance.
That is the view taken in England and it is a view which is based on sound principle: see Duff Development Co. vs The Govt.
of Kelantan.(1) Any other view would create a chaos and we cannot be a party to it.
We may say that by a treaty.
as in the present case, India may acquire full jurisdiction over a foreign territory which under the same treaty may nonetheless remain a foreign territory.
It was contended that this would be absolute surrender to the executive Government; that such a view would enable the Government when it so liked, to disown a territory which was patently a part of India so that it might act therein as it liked in complete disregard of the laws and without any check from any court including this Court.
This contention, to use the words of Luch J. in Speyer 's case(2)is "argumentative and not real".
1017 We cannot imagine that in a democracy any Government would ever act in the way suggested and we are sure no Government of this country will ever do so.
Furthermore, the contention has no foundation whatever and is wholly imaginary.
It is the duty of a court to take judicial notice of the extent of the territory of its own State.
Section 57 of the Evidence Act requires that.
Therefore, if the fact is patent that a certain territory is within India, the courts will take judicial notice of it and there will be no occasion to refer to the Government for any information regarding it.
It may however be that in certain circumstances the fact is not patent but even then it appears that it will be the duty of a court to take judicial notice and it does so by requesting the Government to enlighten it on the point.
So Lawrence L. J. said in Fagernes (1), "It is the duty of the Court to take judicial cognisance of the extent of the King 's territory and, if the Court itself is unacquainted with the fact whether a particular place is or is not within the King 's territory, the Court is entitled to inform itself of that fact by making such enquiry as it considers necessary.
" It is only in cases where the Court is not aware of the facts that the question of referring to the Government will arise and therefore no occasion can possible arise where the Government might have the chance of distorting a patent fact.
This is all that we desire to say.
As the majority of the learned Judges of the Bench have taken a different view, the order to be made will follow their decision.
| The Supreme Court referred two questions to the Union Government viz (i) whether.
Pondicherry was comprised within the territory of India, and (ii) if not, what was the extent of the jurisdiction exercised by the Union Government and the French Government over the territory.
The answers given were that (i) Pondicherry was not comprised within the territory of India and (ii) the Union Government exercised full jurisdiction over Pondicherry and the French Government did not exercise any de facto jurisdiction over it.
There was a treaty of cession between France and India in respect of Pondicherry but it had not been ratified as required by the French and Indian laws.
The appellant contended that the answer of the Union Government to the second question established that Pondicherry was part of the territory of India and that the Court was not bound by the answer to the first question.
^ Held, that Pondicherry was not comprised within the territory of India as specified in article 1(3) of the Constitution.
The answer of the Union Government on this question was binding on the Court.
There was no conflict between the answers to the two questions.
Though complete administrative control over Pondicherry had been transferred to the Government of India it could not be equated to a transfer of territory.
Unless there was ratification of the Treaty there could legally be no transfer of territory.
Accordingly, no appeal could be entertained by the Court under article 136 of the Constitution against the decisions of the authorities in Pondicherry.
982 Duff Development Company vs Government of Kelantan , Government of the Republic of Spain vs Arantzazu Mendi.
(1939) A. C. 256 and Fagernes 1927 Probate 311, applied.
Jolley vs Mainka ; and Efrost vs Slevenson; , , distinguished.
Per Gajendragadkar, Wanchoo and Ayyangar, JJ.
Having regard to the nature of the relief sought no writ under article 32 of the Constitution could be issued to the authorities in Pondicherry.
Per Sarkar and Das Gupta, JJ The Supreme Court could issue a writ under article 32 to the quasi Judicial authorities in Pondicherry.
Article 32 was a fundamental right and the right to obtain a writ was equally a fundamental right.
If the Constitution gave to a party a fundamental right to a writ the Court could not refuse that right.
The consideration that the writ issued may not be enforced in Pondicherry could not be allowed to defeat the provisions of the Constitution.
Such a consideration is relevant only in the case of discretionary orders.
K. K. Kochunni vs The State of Madras, [1959] Supp. 2 S.C.R. 316, In re International Pulp and Paper Co. Ltd., , Reg vs Fox, ; , R. vs Cassel, (1916) I K B. 595 and In re Banwarilal Roy, , referred to.
|
ivil Appeal No. 2488 of 1989 etc.
From the Judgment and Order dated 24.1.
1989 of the Bombay High Court in Appeal No. 67 of 1989.
G. Ramaswamy, Additional Solicitor General, A.M. Khan wilkar and A.S. Bhasme for the Appellant.
T.R. Andhrujina, R.F. Nariman, Mrs. K.K. Pradhan, R. Karanjawala, Mrs. Manik Karanjawala, H.S. Anand, P.B. Agar wal, P.G. Gokhale, R.B. Hathikhanawala, K.R. Nagaraja, R.S. Hegde, section Menon, M.C. Shah, Madan Lokur, Adur Sanjay Vasant, and Mrs. Urmila Sirur for the Respondents.
Mrs. Kitty Kumaramangalam, Kailash Vasdev, Ms. Vijaylax mi and S.P. Pandey for the Intervener.
The Judgment of the Court was delivered by DUTT, J.
Special leave is granted in all these matters.
Heard learned Counsel for the parties.
These appeals preferred by the State of Maharashtra involve the question as to the admission in the MBBS Course in the Medical Colleges in the State of Maharashtra.
In the city of Bombay, there are three Medical Colleges run by the Municipal Corporation of Greater Bombay.
Besides the said three Municipal Colleges, there is another College in Bom bay, namely, Grant Medical College, which is a Government College run by the Government of Maharashtra.
712 Shorn of all details, it may be stated that after pro viding for 15 per cent of seats under the All India Quota and the seats which are to be reserved under Article 15 of the Constitution of India, the Government of Maharashtra laid down a policy of reservation of 70 per cent of the remaining seats for the local students in the city of Bombay and 30 per cent of seats for the students outside Bombay within the State of Maharashtra.
Certain students feeling aggrieved by the said method of filling up of the seats in the MBBS Course in the said Medical Colleges in the city of Bombay moved writ petitions before the Bombay High Court.
A learned Single Judge of the High Court took the view that it was not proper on the part of the State Government to first of all fill up the 70 per cent of the seats out of the local Bombay students and thereafter the remaining 30 per cent of seats from amongst the students residing outside Bombay.
The learned Single Judge, however, gave no specific direction as to the admis sion of the writ petitioners, but left it to the State Government for the purpose.
The State of Maharashtra pre ferred a Letters Patent Appeal to the Division Bench of the High Court.
The said appeal was summarily dismissed by the Bench holding that the two points urged by the Assistant Government Pleader appear to be quite frivolous.
The writ petitioners also preferred Letters Patent Appeals before the Division Bench.
From time to time, the Bench passed some orders.
The only order which is relevant for the purpose of these appeals is dated February 8, 1989.
By that order, the Division Bench of the High Court directed creation of 5 additional seats in each of the three Municipal Colleges and 4 additional seats in the Government Medical College, that is, in all, 19 additional seats.
Certain directions were also given by the said order for admission of students in those additional seats and also the seats under the All India Quota.
It has been strenuously urged by Mr. G. Ramaswamy, learned Additional Solicitor General appearing on behalf of the State of Maharashtra, that the High Court was not justi fied in directing that the 30 per cent of seats meant for the candidates outside Bombay to be filled in before the 70 per cent of seats are filled in by local candidates.
It may be stated at this stage that by virtue of the judgment in the case of Nidamarti Maheshkumar vs State of Maharashtra and others; , relating to admission in Medi cal Colleges in Maharashtra, the State of Maharashtra laid down the policy of regional reservation of 70 per cent of seats for the region of Bombay and the remaining 30 per cent of seats for the candidates outside Bombay but within the State of Maharashtra.
It has already been noticed that the High Court 713 iS Of the view that the 30 per cent of seats should have been filled up first and, thereafter, 70 per cent of region al seats should have been filled up.
We have not been able to understand the reason for this view of the High Court.
If 30 per cent of seats are filled up first, the candidates who are residing outside Bombay will have to compete with the local Bombay students who are also eligible for admission in the said seats.
It may so happen that most of the seats meant for candidates outside Bombay may be filled up by the local Bombay candidates.
If, however, 70 per cent of seats are filled up first, the more meritorious Bombay students would be admitted and those, who would not be admitted, would obviously be candidates obtaining lesser marks and it will not be difficult for the outside candidates to compete with them for the said 30 per cent of seats.
The question whether 70 per cent of seats or 30 per cent of seats should be filled up first is a question which should be left to the discretion of the Government.
In our opinion, this aspect is not within the purview or the jurisdiction of the Court.
We do not find any unreasonableness or impropriety in the State Government 's decision to fill up 70 per cent of seats first.
The High Court was not, therefore, justified in directing admission on the basis of filling up 30 per cent of the seats first and, thereafter 70 per cent of seats and such direction has created some complications in the matter.
There is considerable force in the contention of Mr. Ramaswamy that the High Court was also not justified in directing creation of additional seats.
The additional seats can be created only if the Indian Medical Council approves of such creation.
In the instant case, the Indian Medical Council has vehemently opposed before us the creation of the additional seats.
There is also the question of bearing the cost of creation of additional seats.
The High Court, in our opinion, should not have directed the creation of additional seats.
In exceptional circumstances and for ends of justice, the Court may direct the creation of one or two seats after giving the Indian Medical Council an opportunity of being heard, but surely the Court should not direct the creation of so many additional seats when neither the Government nor the Indian Medical Council consents to such creation.
In the circumstances, it is difficult to sustain the impugned judgment of the High Court.
We are told by the learned Additional Solicitor General that 4 seats in the Grant Medical College in Bombay and 34 seats in the other Medical Colleges outside Bombay under the All India Quota are available for admission.
We are also told that there are about 30 candidates who are to be admit ted in these seats.
Of these 30 candidates, we find 714 that one Sandeep Chaudhary and Miss Chaudhary Seena, the applicants in Civil Miscellaneous Petitions Nos.
9049 of 1989 and 9050 of 1989 respectively, were already admitted in the 2 out of the 4 seats in the Grant Medical College, Bombay.
They were initially admitted in the Gwalior Medical College, but on their representation they were transferred to the Grant Medical College, Bombay, by the Director Gener al of Health Services in compliance with the guidelines laid down by this Court in its judgment in the case of Amanjit Singh Gill vs Directorate General of Health Services, ; , but in view of the impugned judgment of the High Court they have been thrown out for no fault of theirs.
The admission of these two candidates in the Grant Medical College, Bombay, is restored and will not be disturbed.
So far as the remaining 36 seats are concerned (2 seats in the Grant Medical College.
Bombay, and 34 seats in the Medical Colleges Outside Bombay), the admission to these seats shall be made strictly in order of merit.
The appellants shall complete the admissions in the said 36 seats within a week from today.
The impugned judgments of the High Court are set aside and the appeals are allowed to the extent indicated above.
There will be no order as to costs.
The writ petitions and all other applications for inter vention are also disposed of as above without any order as to costs.
P.S.S. Appeals allowed.
| The respondent tenant fell into arrears of rent for two months consecutively.
The rent was payable in advance.
He was served with a notice of demand, within seven days of which he sent a bank draft purporting to be the rent for the first month, and within a month another bank draft for the like amount.
The landlady neither encashed nor returned them.
After the notice period she filed an application for his ejectment.
The Rent Controller held that the tenant was not in default.
The Tribunal, however, found that when the notice of demand was served the arrears of rent for the two months had arisen, that the bank draft sent thereafter related to the rent for the first month only, that as the rent for the second month had also become due but had not been tendered, the landlady was justified in not accepting the tender, and that when the respondent again sent a draft for the second month the rent for the third month had also fallen due but was not tendered.
It thus took the view that the respondent had not tendered the arrears of rent due up to date within two months of the notice of demand, and held that the ground of non payment of rent stood established.
Allowing the appeal, the High Court took the view that section 14(1)(a) of the Delhi Rent Control Act, 1958 made out a ground for eviction only where the tenant had neither paid nor tendered the whole of the arrears of rent legally recov erable from him within two months of the date on which a notice of demand was served on him by the landlord, the arrears being the rent due on the date of the notice.
As in the instant case, the notice called for payment of the arrears due for the two months and the bank drafts were tendered within the period indicated in the notice, the notice was satisfied.
Dismissing the appeal by special leave, the Court, 745 HELD: The arrears of rent envisaged by section 14(1)(a) of the Delhi Rent Control Act are the arrears demanded by the notice for payment.
The arrears of rent due cannot be ex tended to rent which has fallen due after service of the notice.
[747DE] In the instant case, the two bank drafts representing the arrears of rent covered by the notice of demand had been tendered within two months of the date of service of the notice.
The High Court was, therefore, right in the view taken by it.
[747DE] Jag Ram Nathu Ram vs Shri Surinder Kumar, S.A.O. No. 52 of 1975 and S.L. Kapur vs Dr. Mrs. P.D. Lal, All India Rent Control Journal, [1975] 322, overruled.
|
Civil Appeal No. 3429 of 1982 Appeal by Special leave from the Judgment and order dated the 29th July, 1982 of the Madhya Pradesh High Court in Misc.
Petition No. 1169 of 1981.
G.L. Sanghi and Ashok Srivastava for the Appellant.
D. Y.S. Chitale, Mrs. A K. Verma, D.N. Misra, A.M. Dittia and A K. Sanghi for the Respondents The Judgment of the Court was delivered by VENKATRAMIAH J.
The appellant is a judicial officer of the State of Madhya Pradesh, who would have ordinarily retired on January 31, 1984 on attaining 58 years of are, He was appointed 468 as a Munsiff Magistrate in the erstwhile State of Bhopal in 1953.
On reorganisation of States on November 1, 1956, he became a member of the Judicial Service of the State of Madhya Pradesh.
He was promoted as an Additional District Sessions Judge on January .
8, 1974 and was confirmed in that post with effect from November 25, 1971.
Consequent upon the decision of the State Government to reorganise the Higher Judicial Service of the State of Madhya Pradesh in accordance with the advice of the High Court of Madhya Pradesh 101 posts Of the cadre of Additional District & Sessions Judges came to be abolished and the incumbents of those posts were to be absorbed as District & Sessions Judges as per Government Memorandum dated February 24, 1981.
In the . issue of the said Memorandum the High Court of Madhya Pradesh decided to screen the officers in the cadre of Additional District & Sessions Judges for the purpose of making recommendation to the State Government about the promotion of selected officers to the cadre of District & Sessions Judges.
For this purpose, Full Court Meetings of the Madhya Pradesh High Court were held on February 27 and 28, 1981 and March 1, 1981.
The case of the appellant was also considered in that connection It is stated that at those meetings, the High Court first resolved to scrutinise the cases of all the judicial officers who were to attain the age of 55 years in the year, 1981.
In the course of such scrutiny the High Court decided on February 27, 1981 to retire the appellant compulsorily on his attaining the age of SS years under Rule 56(3) of the Fundamental Rules.
On March l, 1981 it decided not to recommend him for promotion to the cadre of District & Sessions Judges.
Accordingly, the State Government was addressed by the High Court to retire the appellant compulsorily.
The appellant thereafter continued as an Additional District & Sessions Judge until he was served with the order of compulsory retirement dated August 28, 1981.
Aggrieved by that order, the appellant filed a writ petition before the High Court.
The petition was dismissed by a Division Bench of the High Court on July 29, 1982.
This appeal is preferred by special leave against the judgment of the High Court, Clause (a) of the Fundamental Rule 56(3) as amended in 1976 which governs the case of the appellant reads thus: "F.R.56(3)(a) A Government servant may, in the public interest, be retired at any time after he attains the age of fifty five years without assigning any reason by giving him a notice in writing 469 It is contended that the order of compulsory retirement is unsustainable on various grounds and the principal ground urged is that the High Court had made the recommendation to retire the, appellant compulsorily without applying its mind to the case as required by law that it was a decision based on collateral considerations and that it was arbitrary.
It is now firmly settled that the power to retire a Government servant compulsorily in public interest in terms of a service rule is absolute provided the authority concerned forms an opinion bona fide 'that it is necessary to pass such an order in public interest.
It is equally well settled that if such decision is based on collateral grounds or if the decision, is arbitrary, it is liable to be interfered with by courts.
(See Union of India vs Col. J.N. Sinha & Anr).
We have also gone through the following decisions, namely, Union of India vs M.E. Reddy & Anr., Swami Saran Saksena vs State of U.P., Baldev Raj Chadha vs Union of India of, Brij Bihari Lal Agawral vs High Court of Madhya Pradesh & Ors., and D. Ramaswami vs State of Tamil Nadu which have a bearing on the question before us.
We shall now proceed to deal with the facts, of the case in the light of the principles enunciated in the above decisions.
In Para 10 of the counter affidavit of Shri A.K. Pandey, Additional Registrar of the High Court of Madhya Pradesh filed before this Court, it is stated as follows .
"It is not disputed that Full Court Meeting was held on 27th/28th February, as well as Ist March, 1981 to consider the cases of Additional District & Sessions Judges for promotion in the Higher Judicial Service.
It is also not disputed that the petitioner stood at serial No. 10 in the seniority list of Additional District Sessions Judges, It is also not disputed that he was confirmed as Additional District & Sessions judge in August, 1976.
The personal confidential record of the petitioner is placed before this Hon 'ble Court and (it) speaks for itself (Annexure R XI to XXXVIII).
470 It is wrong to say that any extraneous consideration operated in the Full Court Meeting against the petitioner and it is wrong to say that the resolutions in the Court Meeting were unjust, arbitrary or mala fide.
As already pointed out, the decision was taken in Full Court Meeting after consideration of the entire record of the petitioner, The decision to retire the petitioner under Fundamental Rule 56(3) was after due consideration of the entire record of the petitioner.
(Confidential entries are Annexures R XT to XXXVIII).
" On going through the said counter affidavit we are satisfied that apart from the confidential records, nothing else appears to have been relied on by the High Court to reach the decision that the appellant should be compulsorily retired.
We shall now proceed to Examine the confidential rolls maintained in respect or the appellant.
The Confidential Reports in respect of the appellant are placed before us.
lt is stated by the Registrar of the High Court in Para 13 of the counter affidavit that the appellants performance for 28 years was taken into consideration for screening under Fundamental Rule 56(3), The High Court has relied on some adverse remarks relating to 1959 60 or thereabouts, lt is true that in the early part of his career, the entries made do not appear to be quite satisfactory.
They are of varied kinds.
Some are good, some are not good and some are of a mixed kind.
But being reports relating to a remote period, they are not quite relevant for the purpose of determining whether he should be retired compulsorily or not in the year ]981, as it would be an act bordering on perversity to dig out old files to find out some material to make an order against an officer.
We therefore, confined our scrutiny to the reports made in respect of the appellant for about ten years prior to the date on which action was taken against him to retire him compulsorily.
We find that all of them except for 1972 73 and 1973 74 are good and quite satisfactory.
Even in 1972 73 and 1973 74 it is stated that there was nothing to doubt his integrity and that he was punctual in attending it to his work.
It may be noted, that the appellant was promoted as an Additional District & Sessions Judge on January 8, 1974 and was also confirmed with effect from November 25, 1974 by an order passed in 1976.
Any adverse report in respect of an earlier period unless it had some connection with any event which took place subsequently cannot, therefore, reasonably form a basis for forming an opinion about the work of the appellant.
471 We give below a few relevant extracts from the Confidential Reports for the period subsequent to March 31, ]974 .
Year : 1975 On confidential enquiries from the members of the Bar and from other sources nothing was found against him in respect of his integrity.
During surprise check he was found on the board in time.
Enquiries from other sources also disclosed that he usually comes in time and does not rise early and engages himself in judicial work.
This impression was gathered from judicial diary also.
After scrutiny of the cases, the following impression was gathered.
Knowledge about rules and orders, law and procedure is adequate but the number of the interlocutory application is sometimes not entered in the margin of the connected order sheet in red ink.
Judgments are good with proper discussion of evidence.
Interlocutory matters are not kept unduly pending for long time.
Rules regarding pleadings, and evidence etc.
are followed.
Punishments were adequate.
Examination of accused is proper.
Charges framed are proper.
Record is legible Control and supervision over the staff is satisfactory.
Judicial diary calls for no particular comments.
His relations with the Bar are cordial, with no complaints of any misbehavior with any litigants His average disposal during the period in question was of very good category.
There is nothing else to comment in particular.
Year : 1976 Knowledge of law and judicial Good capacity: Remarks about his promptness in Promptness satisfactory the disposal of cases: Remarks about reputation of integ Nothing was found against rity and impartiality: his integrity or impartiality.
General Remarks: He was mostly punctual and 472 did not rise early.
Judgments were proper and contained the required discussion of evidence Charges and examination of accused and issues were proper.
Promptness in framing of issues was marked in recent months.
Control and super vision over the staff was satisfactory.
Settling dates should not normally be of more than two weeks as was notice in certain cases.
Interlocutory matters were generally not kept unduly pending.
Net Result: Good Year 1976 77 Knowledge of Law and Judicial Satisfactory capacity: Remarks about his promptness in Generally prompt the disposal of cases: Percentage of average monthly 148.
1/2,% disposal Behaviour towards members of the Cordial Bar and Public: General Remarks: Satisfactorily managing heavy and exclusive civil file.
Mostly punctual.
Net Result: Good Year 1977 78 Knowledge of Law and Judicial Good capacity: Entry against almost all the 473 columns in the Report Good General Remark : Has good grasp of facts and law.
Judgments in proper form and well written.
Net Results Good Year 1979 80 (a) Shri Shrivastava begins his judicial work punctually at 11.00 A.M. and works throughout the Court hours.
So far, it appears that he has arranged his Cause List judiciously fixing civil work for the day.
This Judge understands that there can be no subsequent pleadings except by way of amendment of pleadings.
In other words, he understands the purport of order 8 rule 9 and order 6 rule 7 of the Civil Procedure Code.
He also understands what is pleading i e. Order 6 rule 1 of the Civil Procedure Code as compared with oral statement.
He so far appears to be equally conversant with order 17 rule I of the Civil Procedure Code i.e. adjournment is only granted for sufficient cause.
He does No. find any difficulty in applying law relating to pleadings and interlocutory matters.
So far, his procedure conforms to rules or pleadings, filing of documents, framing of issues and recording of evidence.
(b) So far, on the criminal side, he frames charges with care, records evidence with such care and prepares examination of accused with equal care.
(c) So far, he makes a neat and legible record.
He generally supervises the work of ministerial staff.
(d) His judgments, both on civil and criminal, so far, appear to be well written.
He is prompt in his disposals including doing work therein.
His work, as a whole, so far, has been found to be of high quality.
He also takes up civil work.
His relations with the Bar, so far, appear to be cordial.
(e) The above remarks are subject to the D.O. No. 462/C. Rs/1979 Jabalpur dated 6.3.80 of the High Court.
474 (Note: The Memo.
sent to the appellant in March, 1980 Only informed him of two remarks (1) that the did not dispose of Sessions trials quickly and (2) that he did not follow the amended provisions under order 39 rule 3 of the Civil Procedure Code.
The Memo.
also disclosed that the appellant did not write judgments in civil appeals according to the pattern prescribed; that Sessions trials were not conducted quickly and that (he) granted unduly long adjournments of about a month or so for examination of accused and defence witnesses.
The appellant sent a prompt reply to it oil March 28, 1980 refuting the correctness of the above remarks.
We have gone through the said reply.
On going through the facts mentioned therein, we feel that the remarks against him appear to be totally uncharitable.
It shows that the appellant has disposed of more number of cases than what ordinarily could be disposed of during the relevant period.
We are not informed of what action was taken on his prayer for expunging the said remarks).
Year: 1980 81 His out turn during the year was about 200 percent.
The quality of work may be classed as good. 'B ' category.
No specific complaints were received against him about his behaviour or integrity.
" The above reports no doubt speak for themselves as stated in the counter affidavit of the additional Registrar.
But they all speak in favour of the appellant and not against him.
A persual of these reports shows that there was nothing against the appellant which necessitated the action which was taken against him.
In the state of the above record it was impossible to take the view that the appellant was liable to be compulsorily retired, unless there was any other circumstance which was adverse to him.
We have found it necessary to incorporate in this judgment the relevant confidential remarks in great detail only to show that the action of the High Court was not called for.
We may state here that the learned counsel for the High Court very fairly stated that there was no other circumstance against the appellant during the period subsequent to 1971 which would support the order of compulsory retirement.
From what has been stated we find that the decision taken by the High Court in respect of the appellant is arbitrary as it was mainly based on the entries that were made about 20 years before the date on which the decision was 475 taken Dependence on such stale entries cannot be placed for retiring a person compulsorily, particularly when the officer concerned has been promoted subsequent to such entries, as held by this Court in D. Ramaswami 's case (supra).
In that case one of us (Chinnappa Reddy, J.) observed thus at pages 79 80: "In the face of the promotion of the appellant just a few months earlier and nothing even mildly suggestive of ineptitude or inefficiency thereafter, it is impossible to sustain the order of the Government retiring the appellant from service.
The learned Counsel for the State of Tamil Nadu argued that the Government was entitled to take into consideration the entire history of the appellant including that part of it which was prior to his promotion.
We do not say that the previous history of a Government servant should be completely ignored, once he is promoted.
Sometimes past events may help to assess present conduct.
But when there is nothing in the present conduct casting any doubt on the wisdom of the promotion, we see no justification for needless digging into the past." In the result the judgment of the High Court is reversed and the resolution of the High Court recommending to the Government that the appellant should be compulsorily retired and the impugned order passed thereon under Fundamental Rule 56(3) are quashed.
The resolution of the High Court that the appellant was not fit for promotion to the cadre of District & Sessions Judges is also quashed.
The High Court should now consider in the light of this decision whether the appellant was entitled to be promoted as a District & Sessions Judge as on the date on which his immediate junior was promoted and make appropriate recommendation to the State Government.
The appellant is entitled to all consequential financial and other benefits as if the order of compulsory retirement had not been passed.
The appeal is accordingly allowed with costs.
N.V.K. Appeal allowed.
| The State Government issued an advertisement inviting application for admission to the first year MBBS course in the two medical colleges in the State.
It was mentioned therein that the candidates would have to appear in a written test which would be followed by a Viva voce test and that 85 points were allowed for the written test and 15 points were Viva voce test.
The Selection Committee for the selection was constituted to consist of the Chairman of the State Public, Service Commission as Chairman, and two members, viz, the Principals of the two Medical Colleges.
The quorum for a meeting of the Committee was stipulated as the Chairman and one member.
When the Selection Committee held its first meeting one of the members, the Principal of the College informed the Committee that as his daughter was one of the candidates competing for admission, it would not be desirable for him to be associated, at any stage, with the written test, and that he would not like to be present when his daughter was interviewed.
The Committee took note of the information and agreed with the suggestion.
The petitioners in their writ petitions under Article 32, questioned the selection of candidates for admission : It was contended on their behalf that: (1) the entire selection was vitiated by the presence on the Committee of the father of a candidate, and this was a gross violation of one the principles of natural justice: (2) the entire procedure was bad as the marks obtained by the candidates at the qualifying examination (T.DC Part I Medical group) were not taken into account and not given any weightage; (3) the viva voce test provided for 7 points for general knowledge and general intelligence whereas it would have been more appropriate to test general knowledge and general intelligence of candidate by holding a written instead of a viva voce test; (4) general knowledge and general intelligence were not matters to be tested in a written examination; (5) there was delay in the announcement of the results and the delay made the selection suspect, and (6) the regulations made by the Indian Medical Council prescribed that the marks obtained in the qualifying examination should be taken in to consideration.
Dismissing the writ petition; ^ HELD: 1.
It is not unusual for candidates related to members of the Service Commission or other Selection Committee to seek employment.
Whenever such a 583 situation arises.
the practice generally is for the member concerned to excuse himself when the particular candidate is interviewed.
In the instant case, the Principal of the Medical College, whose daughter was a candidate for admission to the Medical College informed the Selection Committee at the very outset about this fact and told them that he would not have anything to do with the written test and would not be present when his daughter was interviewed.
The other members of the Selection Committee accepted the suggestion of the Principal and did not address the Government to appoint a substitute member of the Selection Committee, since the Government had fixed the quorum for a meeting of the Selection Committee, as the Chairman and one other member and it was possible to have a quorum without the Principal.
The procedure adopted by the Selection Committee and the member concerned was in accord with the quite well known and generally accepted procedure adopted by the Public Service Commissions everywhere.
Nagarajan vs State of Mysore, [1966]3 S.C.R. 682, referred to.
[596A C] 2.
It is not for the Court to sit in judgment over the nature of the questions to be put by the members of the Selection Committee.
It is for the members of the Selection Committee to decide what they should ask and so long as the questions are not such as to indicate that the interview was nothing but a make believe, the matter must be allowed to rest there.
It is not the function of the Court to weigh each question to find out the extent to which it is related to aptitude, general knowledge or general intelligence.
If the question is not flippant, it is not for the Court to say that the question was irrelevant and should not have been asked at any interview.
Perhaps irrelevant questions may also be asked to explore the candidate 's capacity to detect irrelevancies.
It is not for the Court to claim to itself the test of determining the nature of the questions to be put to candidates appearing at an interview.
The persons constituting the Selection Committee who may generally be assumed to be men of experience and knowledgeable in regard to men and matters may surely be expected to put the right questions.
In the absence of malafides, the matter is best left to them.
[589 E G] 3(i) The question as to the subjects in which an entrance test may be held is hardly a matter for the Court, unless, of course, the subjects are so arbitrarily chosen as to have not the slightest connection with the object of the examination.
Such a situation is not likely to arise as the authorities may be expected to act reasonably.
Again it is not for the Court to lay down whether an interview test should be held at all or how many marks should be allotted for the interview test.
Of course, the marks must be minimal so as to avoid charges of arbitrariness but not necessarily always.
There may be posts and appointments where the only proper method of selection may be by an interview test Even in the case of admission to higher degrees courses, it may sometimes be necessary to allot a fairly high percentage of marks for the Interview test.
That is why rigid rules cannot be laid down in these matters, and not by courts.
The experts are generally the best judges.
The Courts duty lies in preventing arbitrariness and denial of equal opportunity.
[592C E, 592B] 3(ii) There is interfere when the risk of arbitrariness is so high that arbitrariness is inevitable.
Again the Court is not the best judge of what questions may be asked at the inter view.
All that is necessary is that the questions should not be amere pretence.
[592F] 584 Ajay Hasia 's case; , ; Chitra Lekha and Ors.
vs State of Mysore and Ors.
, ; ; A. Peeriankaruppan vs State of Tamil Nadu & Ors., [1971] 2 S.C.R. 430; and Lila Dhar vs State of Rajasthan, [1982] 1 S.C.R. 320 referred to.
4(i) The Selection Committee apparently thought it would be better to have a common entrance test.
It appears to be a perfectly reasonable procedure.
Even otherwise it is always open to a Selection Committee to insist on taking into consideration marks obtained in the examination held by it and excluding from consideration marks obtained in examinations held by other bodies.
There is nothing wrong in this procedure.
[595C D] 4(ii) It was a matter for the Selection Committee to decide whether general knowledge and general intelligence could be more appropriately tested in the viva voce test or in the written test.
That is not a matter for the court to decide.
[595F] 5.
There was in fact no delay in the announcement of results and the suspicion, if any, was unfounded.
[595G] 6.
The regulation of the Indian Medical Council prescribing that the marks obtained at the qualifying examination should be taken into consideration has no application because there are two Medical colleges in the state.
Though only one Board conducted the qualifying examination, the examinations were conducted separately for Jammu and Srinagar areas and on two different occasions.
Moreover, the regulations of the Council have been held to be directory and not mandatory by this Court.
[597 D E] Madhya Pradesh vs Kr.
Nivedita Jain [1981] 4 S.C.C. 296, referred to.
|
Civil Appeal No. 947 of 1975.
Appeal by Special Leave from the Judgment and order dated the 2nd April, 1971 of the Punjab and Haryana High Court in Civil Writ No. 1039 of 1974.
Kapil Sibal and section K. Gambhir for the appellant.
section K. Nandy for the respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
What appears to have been a clear case of refusal of admission to the appellant or the cancellation of his candidature at the proper time has been completely bungled and destroyed by the inherent inconsistency and seemingly contradictory stand taken by the respondent and lack of proper vigilance on the part of the Head of the Department of Law.
The facts of the present case lie within a very narrow compass and only two short points of law have been raised before us by Mr. Kapil Sibbal learned counsel for the appellant.
The appellant was a teacher in the Government High School, Dumarkha in the District of Jind (Haryana).
The University of Kurukshetra was running law classes for three years Course and had extended the facility to persons who were in service to attend the evening classes and complete the three years course in that manner.
The appellant decided to take the benefit of the facility given by the Kurukshetra University and joined the LL.B. Part I classes some time in the year 1971.
According to the University statute a student of the Faculty of Law was given the option to clear certain subjects in which he may have failed at one of the examinations before completing the three years course.
The students were to appear in six papers each year.
In April 1972 the petitioner appeared in the annual examination of Part I but failed in three subjects, namely, Legal Theory, Comparative Law and Constitutional Law of India Subsequently he was promoted to Part II which he joined in the year 1972.
Under the University Statute the appellant was to appear in part II Examination in April 1973.
On April 26, 1973 the appellant applied for his Roll number to the University in order to reappear in the subjects in which he had failed and to clear them but he was refused permission and according to the appellant without any reasons.
The annual examination for Part II was to be held on May 19, 1973 and the appellant approached the University for granting him provisional permission to 724 appear subject to his getting the permission from his employer to attend the Law Faculty.
In between it appears that the appellant had been prosecuted for offence under sections 376, 366 and 363 I.P.C. and was suspended during the period when the case was going on against him.
The appellant was, however, acquitted and was reinstated by his employer on August 22, 1972.
It would thus appear that on May 18, 1973 as also on April 25, 1973 when he had applied for his Roll Number to clear the subjects, the stigma of criminal case had been completely removed.
To start the thread the appellant as mentioned already approached the University on May 18, 1973 and wrote a letter to the University authorities giving an undertaking that if he was not able to get the requisite permission from his employer to join the Law Classes, he would abide by any order that the University may pass.
It appears that on the basis of this undertaking he was allowed to appear at the Part II Examination on May 19, 1973.
On June 20, 1973 the appellant wrote to the University authorities that the condition on which he was to get the permission was not at all necessary and that his results may now be announced.
On June 26, 1973 the respondent informed the appellant that since his percentage was short in Part I his candidature stood cancelled.
Thereafter there were series of correspondence between the appellant and the University authorities but the appellant was refused admission to LL.B. Part III Class.
The appellant then filed an appeal to the Vice Chancellor of the University on September 26, 1973 which was also rejected on November 3, 1973.
Thereafter the appellant approached the High Court of Punjab and Haryana for a writ of certiorari to quash the order of the respondent canceling the candidature of the appellant but the High Court after issuing notice to the other side and persuing the application form rejected the petition in limine.
Hence this appeal by the appellant by special leave to this Court.
The sheet anchor of the case of the respondent was that the appellant had been involved in a criminal case` and therefore the Head of Institution could not give the certificate in the prescribed form that the appellant bore a good moral character.
Subsequently it was said that as the appellant was short of the requisite percentage in LL.B. Part I he could not insist on his being admitted to the Part II Examination; and lastly the stand taken by the respondent was that the Evening Law Classes were held to benefit the members of the Services and it was incumbent on the appellant to have obtained permission of his superior officers and as he did not do so, the University was well within its rights in refusing him permission to appear at the Part II Examination or in admitting him to Part III Law course.
A long counter affidavit has been filed by the respondent of which some paragraphs are extracted below : 4.
Para 4 of the writ petition is rebutted.
The petitioner was involved in a case under sections 363 and 366 of the Indian Penal Code.
As a result, he was suspended.
He remained under suspension till August 23, 1972, when he 725 was reinstated.
Consequently, he attended the lectures in Part I. So far as Part II is concerned, the petitioner didn 't attend the requisite number of lectures.
According to the notice displayed on the notice board of the Department of Laws on January 24, 1973, the petitioner was falling short of attendance by 48 lectures upto December, 1972.
There after, another notice was displayed on the notice board on r April 16, 1973, according to which the petitioner was falling short of attendance by 46 lectures.
As such, the averment in the writ petition that he attended his lectures according to the rules is absolutely false.
Vide letter dated November 17, 1972, the Headmaster, Government High School, Dumarkha (District Jind) made an inquiry from the University regarding the petitioner 's result in the LL.B. Part I Examination.
The intimation was sent by the University vide their letter dated November 17, 1972.
Thereafter, a letter dated January 1, 1973, was received in the University from the District Education officer stating inter alia that "it may also be pointed out that Shri Siri Krishan, Teacher was reinstated on 23 3 1972 and there after he is attending his duties in School.
I am amazed to learn that he is declared by your Law Department to be attending classes in LL.B. Part II simultaneously".
"A copy of this letter is appended as Annexure 'R.1 ' to this affidavit.
A perusal of this letter would show that the petitioner had not been granted permission by his employer to attend the law classes at the University.
Furthermore, the approximate distance between his station of posting and the University is more than ' fifty miles.
Keeping m view the fact that he was posted in the interior of District Jind, it is impossible that the petitioner could have attended the requisite number of lectures.
Evidently, the petitioner was himself aware of the fact that he had not attended the re quisite number of lectures.
It is also incorrect to suggest that the petitioner 's name could be sent for the examination only if he had completed and required minimum attendance of lectures.
The examination forms are always sent in December.
Rule 2(b) of Ordinance 10 of the Kurukshetra University Calendar, Volume I, provides as under inter alia: "B. that he has attended regular course of study for the prescribed number of academic years.
Certificate (b) will be provisional and can be withdrawn at any time before.
the examination if the applicant fails to attend the prescribed course of lectures before the end of his term.
" 5 L159SCI/76 726 The petitioner 's examination form was, as such, sent provisionally and could be withdrawn at any time in case of his failure to attend the requisite percentage of lectures." 23.
(i) In reply to sub para (i) of the writ petition, it is submitted that the cancellation of the candidature of the petitioner for LL.B. Part II was not based on any extraneous considerations.
Under the rules of the University every student is required to attend the prescribed course of lectures delivered to the class in each of the subjects offered.
, I Mr. Sri Krishan was short of attendance which was duly notified on the notice board of the Department of Law twice; once on January 24, 1973 and again on April 16, 1973.
The admission of the petitioner to Law course in the University was under dispute as a result of a complaint from the District Education officer, Jind.
The petitioner came to the Magistrate on May 18, 1973, with an application that pending final decision of his case, he may be allowed to sit `` in the examination provisionally at his own risk and responsibility.
In this application, the petitioner did not mention that he was also falling short in lectures as notified by the Head of the Department of Law.
Since the office was closed at that time and the examination was to start at 8.00 a.m.
On May 19, 1973, the candidate was allowed to appear in the examination provisionally at his own risk and responsibility.
(viii) In reply to sub para (viii) of the writ petition, it is submitted that in the admission notice printed at page 75 in the Hand Book of Information for the session 1971 72 to which the application for admission to the Department forms a part, mentions that LL.B. Classes in the evening were for employed persons only.
It was, therefore, implied that the applicant while seeking admission in this class would obtain the approval of his employers.
This approval became particularly necessary because of the constant complaints of ill serious nature from the employers (the Government) of the petitioner who insisted that he must obtain such permission.
It may be recalled that the petitioner in his undertaking to the Registrar on May 18, 1973 promised to produce the required permission.
" It will be seen from the above affidavit that the stand taken by the respondent is by no means consistent.
It may be mentioned that at one stage the University takes the stand that it was a case of shortage of , percentage and therefore the appellant was refused admission to appear at Part II Examination.
Later on this stand is given up and the respondent averred that as the appellant did not get the permission of his superior officers and since the University was moved by the District Education Officer to cancel the candidature of the appellant the impugned order was passed by the University.
It was also argued by Mr. section K. Nandy counsel for the respondent that the appellant knew fully well that his percentage was short and in spite of that be fraudulently suppressed this fact from the University authorities 727 when he was allowed to appear in the LL.B. Part I Examination in April 1972.
Mr. Sibbal learned counsel for the appellant submitted two points before us.
In the first place it was argued that once the appellant was allowed to appear at L.L.B. Part II Examination held on May 19, 1973 his candidature could not be withdrawn for any reason whatsoever, in view of the mandatory provisions of clause 2(b) of the Kurukshetra University Calendar Vol.
I, ordinance X under which the candidature could be withdrawn before the candidate took the examination.
Secondly it was argued that the order of the University was mala fide because the real reason for cancelling the candidature of the appellant was the insistence of the District Education officer that the appellant should not have been admitted to the Law Faculty unless he had obtained the permission of his superior officers.
In order to appreciate the first contention it may be necessary to extract the relevant portions of the statute contained in Kurukshetra University Calendar Volume I, ordinance X. Clause 2 of this ordinance runs as follows: "2.
The following certificates, signed by the Principal of the College/Head of the Department concerned, shall be required from each applicant: (a) that the candidate has satisfied him by the production of the certificate of a competent authority that he has passed the examinations which qualified him for admission to the examination; and (b) that he has attended a regular course of study for the prescribed number of academic years.
Certificate (b) will be provisional and can be withdrawn at any time before the examination if the applicant fails to attend the prescribed course of lectures before the end of his term." The last part of this statute clearly shows that the University could withdraw the certificate if the applicant had failed to attend the prescribed course of lectures.
But this could be done only before the examination.
It is, therefore, manifest that once the appellant was allowed to take the examination, rightly or wrongly, then the statute which empowers the University to withdraw the candidature of the applicant has worked itself out and the applicant cannot be refused admission subsequently for any infirmity which should have been looked into before giving the applicant permission to appear.
It was, however, submitted by Mr. Nandy learned counsel for the respondent that the names of the candidates who were short of percentage were displayed on the Notice Board of the College and the appellant was fully aware of the same and yet he did not draw the attention of the University authorities when he applied for admission to appear in LL.B. Part II Examination.
Thus the appellant was guilty of committing serious fraud and was not entitled to any indulgence from this Court.
It appears from the averments made in the counter affidavit that according to the procedure prevalent in the College the admission forms are forwarded by the Head of the Department in December preceding 728 the year when the Examination is held.
In the instant case the admission form of the appellant must have been forwarded in December 1971 whereas the examination was to take place in April/May 1972.
It is obvious that during this period of four to five months it was the duty of the University authorities to scrutinise the form in order to find out whether it was in order.
Equally it was the duty of the Head of the Department of Law before submitting the form to the University to see that the form complied with all the requirements of law.
If neither the Head of the Department nor the University authorities took care to scrutinise the admission form, then the question of the appellant committing a fraud did not arise.
It is well settled that where a person on whom fraud is committed is in a position to discover the truth by due diligence, fraud is not proved.
It was neither a case of suggestio falsi, or suppressio veri.
The appellant never wrote to the University authorities that he had attended the prescribed number of lectures.
There was ample time and opportunity for the University authorities to have found out the defect.
In these circumstances, therefore, if the University authorities acquiesced in the infirmities which the admission form contained and allowed the appellant to appear in Part I Examination in April 1972, then by force of the University Statute the University had no power to withdraw the candidature of the appellant.
A somewhat similar situation arose in Premji Bhai Ganesh Bhai Kshatriya vs Vice Chancellor, Ravishankar University, Raipur and others(ii) where a Division Bench of the High Court of Madhya Pradesh observed as follows: "From the provisions of ordinance Nos. 19 and 48 it is clear that the scrutiny as to the requisite attendance of the candidates is required to be made before the admission cards are issued.
Once the admission cards are issued permitting the candidates to take their examination, there is no provision in Ordinance No. 19 or ordinance No. 48 which would enable the Vice Chancellor to withdraw the permission.
The discretion having been clearly exercised in favour of the petitioner by permitting him to appear at the examination, it was not open to the Vice Chancellor to withdraw that permission subsequently and to withhold his result.
" We find ourselves in complete agreement with the reasons given by the Madhya Pradesh High Court and the view of law taken by the learned Judges.
In these circumstances, therefore, once the appellant was allowed to appear at the Examination in May 1973, the respondent had no jurisdiction to cancel his candidature for that examination.
This was not a case where on the undertaking given by a candidate for fulfilment of a specified condition a provisional admission was given by the University to appear at the examination which could be withdrawn at any moment on the non fulfilment of the aforesaid condition.
If this was the situation then the candidate himself would have contracted out of the statute which was for his benefit and the statute (1) A.T.R. 1967 M. P. 194,197.
729 therefore would not have stood in the way of the University authorities in cancelling the candidature of the appellant.
As regards the second point that the order was passed mala fide, it is difficult to find any evidence of mala fide in this case.
The order suffers from yet another infirmity.
The annexures filed by the appellant and the respondent as also the allegations made in the counter affidavit clearly show that there were series of parleys and correspondence between the District Education officer and the respondent in the course of which the respondent was being persuaded, to the extent of compulsion, to withdraw the candidature of the appellant because he had not obtained the permission of his superior officers.
Mr. Nandy appearing for the respondent has not been able to show any provision in the statutes of the University which required that the candidates attending the evening law classes who are in service should first get the prior permission of their superior officers.
We have also perused the University Statute placed before us by counsel for the appellant and we do not find any provision which could have afforded justification for the respondent to cancel the candidature of the appellant on the ground that he had not obtained the previous permission of his superior officers.
Mr. Nandy counsel for the respondent placed great reliance on the letter written by the appellant to the respondent wherein he undertook to file the requisite permission or to abide by any other order that may be passed by the University authorities.
This letter was obviously written because the appellant was very anxious to appeal in Part II Examination and the letter was written in terrorem and in complete ignorance of his legal rights.
The appellant did not know that there was any provision in the University Statute which required that he should obtain the permission of his superior officers.
But as the respondent was bent on prohibiting him from taking the examination he had no alternative but to write a letter per force.
It is well settled that any admission made in ignorance of legal rights or under duress cannot bind the maker of the admission.
In these circumstances we are clearly of the opinion that the letter written by the appellant does not put him out of court.
If only the University authorities would have exercised proper diligence and care by scrutinising the admission form when it was sent by the Head of the Department to the University as Ear back as December 1971 they could have detected the defects or infirmities from which the form suffered according to the University Statute.
The Head of the Department of Law was also guilty of dereliction of duty in not scrutinising the admission form of the appellant before he forwarded the same to the University.
Moreover, the stand taken by the respondent that as the appellant did not get the requisite permission from his superior officers, therefore he was not allowed to appear at the examination, does not merit consideration, because the impugned order does not mention this ground at all and it was not open to the respondent to have refused admission to the appellant to LL.B. Part III or for that matter to refuse permission to appear at the examination on a ground which was not mentioned in the impugned order.
730 Having gone into the circumstances mentioned above, we are of the view that the impugned order suffers from errors of law patent on the face of the record, and in any event this was not a case which should have been dismissed by the High Court in limine.
The appeal is accordingly allowed and the order of the University dated June 26, 1973, is hereby quashed by a writ of certiorari.
The respondent is directed to declare the result of LL.B. Part II Examination in which the appellant had appeared on May 19, 1973 and also to give him an opportunity to appear in the three subjects in which he had failed in LL.B. Part I Examination, at the next examination which may be held by the University.
In the peculiar circumstances of this case, however, we leave the parties to bear their own costs.
P.B.R. Appeal allowed.
| 'K ' was charged and tried for the offences under Ss. 465 r/w 471, for using a forged B.Sc.
Certificate and a Date of Birth Certificate Convicted under section 420 I.P.C. by the trial court and sentenced to Rigorous Imprisonment for one year and to pay a fine of Rs. 500/ .
On an appeal the conviction was maintained, but the sentence was altered to one of six months Rigorous Imprisonment.
On an appeal by the State and the Revision by 'K ', the revision petition was dismissed and the appeal allowed convicting him under Sections 465 & 471 Indian Penal Code and sentenced to one year Rigorous Imprisonment.
D On an appeal by special leave, on the question of competency of the state appeal under section 417(2) of the Criminal Procedure Code 1898, in a case investigated by the Delhi Special Police Establishment, while dismissing the appeal, the Court ^ HELD: (i) Under section 5 of the (Act XXV of 1946) the powers and the jurisdiction of the Government to other areas in a state, although not a Union Territory.
Once there is an extension of the powers and jurisdiction of the members of the Establishment, the members thereof while discharging such functions are deemed to be members of the Police force of the area and are vested with such powers functions and privileges and are subject to the liabilities of a police officer belonging to that force.
[756 BC] (ii) Investigation under the Delhi Act is a central investigation and the Central Government is concerned with the investigation of the cases by the Establishment and its ultimate result.
It is in that background that in 1955 section 417 Cr P.C. was amended adding sub section (2) in the section to provide for appeal against acquittal.
[756 CE] (iii) This, however, does not bar the jurisdiction of the State Government also to direct presentation of appeals when it is moved by the Establishment The Establishment can move either the Central Government or the State Government.
It will be purely a matter of procedure.
[756 E] (iv) The word "also" in sub section (2) of section 417 of the Criminal Procedure Code does not bar the jurisdiction of the State Government to direct the public prosecutor to present an appeal even in cases investigated by the Establishment.
Sub section (1) of section 417 is in general terms and would take in its purview all types of cases, since the expression used in that section is "in any case".
[756 G Hl (v) There is no limitation on the power of the State Government to direct institution of appeal with regard to any particular type of cases.
Sub section (1) of section 417 being in general terms is as such of wider amplitude Sub section (2) advisedly uses the word "also" when power is given to the Central Government is addition to direct the public prosecutor to appeal.
[756H, 757A] 754
|
vil Appeal Nos.
1467 69 of 1976.
295 Appeals by Certificate from the Judgment and Order dated 7.5.
1965 of the Calcutta High Court in Income Tax Reference No, 28 of 1954.
B. Sen, N.B. Singh, Sanjay J. Khaitan, Darshan Singh, B.N. Dhar and Ms. Suman Khaitan for the Appellant.
S.C. Manchanda, section Rajappa and Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by THOMMEN, J.
These appeals by the assessee arise from the judgment dated 7.5.1965 of the Calcutta High Court.
The question relates to the assessment for the years 1945 46, 1946 47 and 1947 48 under the Indian Income Tax Act, 1922 (hereinafter referred to as "the Act").
The assessee was a company resident in British India during the relevant years.
It had a cotton mill in British India.
The cloth manufac tured by the mill was sold in British India as well as in the native States.
In the assessment for 1944 45, it had been held that, for the sales effected in the native States, 1/3rd of the profit was, in terms of section 42(3) of the Act, deemed to have accrued to the assessee in British India.
This profit was considered as the profit attributed to the manufacturing part of the business carried out in British India, although the sales were effected in the native States.
On the same basis, assessment in terms of section 42(3) was made in respect of the assessment years 1945 46, 1946 47 and 1947 48.
In addition to the deemed income in British India, the assessee was assessed under section 14(2)(c) of the Act in respect of certain sums remitted to British India from the native States.
The assessee 's contention that 1/3rd of the income having been assessed under section 42(3) of the Act as income deemed to have accrued in British India, no further assessment should be made under section 14(2)(c) of the Act with respect to profits brought into British India, was rejected by the Income Tax Officer as well as the Appellate Assistant Commissioner.
On further appeal, the Income Tax Appellate Tribunal also held that there was no substance in that contention.
The Tribunal stated " . . the assessment of profits brought into British India from a Native State under Section 14(2)(c) is on a distinct and separate footing from the assessment of Native States 296 profits which are deemed to have accrued in British India under Section 42 . " The assessee raised an additional contention for the first time before the Tribunal.
That contention was that the remittances made to British India had to be taken as having first come out of profits "deemed to have accrued in British India" and brought to tax under section 42(3), and only the excess remittances, if any, could be taken as having come out of the remainder profits exempted from tax under section 42.
The assessee pointed out that I/3rd of the profits having been already charged under section 42(3), by reason of the legal fiction contained in that sub section, any amount brought into British India upto the extent of 1/3rd should be presumed to be that which was attributable to that 1/3rd which had already suffered tax, and the balance remit tance, if any, alone should be taxed under section 14(2)(c) of the Act.
In other words, according to the assessee, if the remittances made to British India in any accounting year exceeded the amount taxed under section 42(3) of the Act, then it was only so much of that excess which could be taxed under section 14(2) of the Act.
The Tribunal did not accept this contention.
However, it stated: " . . it appears to us that the common sense point of view would be that the remittances to British India include both the assessed as well as the exempt profits in the same proportion in which those existed in the Native State . .
It therefore appears to us that the correct view would be to apportion the remittances over the assessed and the exempt parts in the same proportion as these existed in the total profits made in the Native State.
As such proportion was one third and two thirds, the remittances would be similarly split up.
Thus 1/3rd of the remittances has come out of profits assessed under Section 42.
On this basis, these additions made by the Income Tax Officer and confirmed by the Appellate Assistant Commissioner will have to be reduced by one third of such remittances.
" On a reference under section 66(1) of the Act, the High Court by its judgment dated 22.7.1957, found that the facts stated were insufficient and that there was an error appar ent on the face of the question as framed.
The High Court accordingly called for a supplementary statement of the case.
In its supplementary statement, the Tribunal referred the following question: 297 "Whether on the facts and in the circumstances of the case, the sums of Rs.50,195 for 1945 46, Rs.76,155 for 1946 47 and Rs.6,00,909 for 1947 48 assessments have been rightly in cluded in the assessable income of the applicant under Section 14(2)(c) of the Indian Income tax Act as profits brought into British India from Indian States?" The High Court by its judgment dated 7.5,1965 rejected the assessee 's contention that, where there was a mixed fund composed of taxed and non taxed items and a neutral payment was made i.e. without specifying the exact source of the payment, the taxing authorities, in the absence of any evidence to the contrary, had to proceed on the basis that the payment was made out of that part of the mixed fund which had already borne tax.
The High Court, however, ob served: " . in this case the assessee did not have two funds but only one fund composed of taxed and non taxed amounts and as one third of the entire amount of profits made by the assessee in the Indian States had been subjected to tax the income tax authorities took a reasonable view in excluding one third of the remitence to British India from taxation in each year.
There were sufficient profits in each year out of which remittance could be made even after deduction of the portion which had been taxed . . ".
In the result, the question referred was answered by the High Court against the assessee.
Hence the present appeals.
If there were two funds at the disposal of the assessee one upon which tax had been already levied and another which was liable to be brought to tax a presump tion, in the absence of evidence to the contrary, might arise that the remittance made by the assessee in the course of its business was made out of the fund that was already taxed and not out of the fund that remained to be taxed.
See Meyyappa Chettiar vs The Commissioner of Income Tax, , 45.
That was apparently not the case here, for, on the facts found, the assessee did not have two funds, but only one fund composed of taxed and non taxed amounts.
As one third of this amount had already been taxed under sec tion 42(3) of the Act, 1/3rd of the remittances to British India in a particular year was held to be exempted from levy.
Relying on the principle referred to in Paton (As Pen ton 's Trustee) vs CommissiOners of Inland Revenue, 21 Tax Cases 626, Dr. 298 B. Sen, on behalf of the assessee, however, submits that where there was a mixed fund, as in the present case, con sisting partly of taxed and partly of untaxed monies, any remittance made should be deemed to have been paid out of that part of the money which had suffered tax.
It is a right of the tax payer to attribute the payment to the taxed money, so as to obtain the benefit allowed by the law.
Lord Wright, M.R. in Paton (As Penton 's Trustee) vs Commissioners of Inland Revenue, 21 Fax Cases 626 at 639), referring to the right of the tax payer to attribute payment to taxed monies, stated: " . . in the ordinary course, a person paying interest does not generally appropriate the payment to income or to any particular piece of income or any specific asset: he has the general body of available funds, say his banking ac count, if he has only one, and he pays by drawings on that account.
which may include income, borrowed money, capital and so forth.
This is what is meant by payment out of a mixed fund, or payments made out of the general till, or payments made neutrally.
The Revenue authorities have no right in such cases to appropriate those payments to non taxable rather than taxable moneys.
Hence the taxpayer is given the right of attribution in the way most favourable to himself It is presumed, in the absence of evidence to the contrary, that payments are made out of income".
This principle of attribution is no doubt applicable in certain circumstances, such as those narrated by Lord Wright in Paton (supra), although in that case, on the facts found, the principle was not applied.
Whether that principle is applicable in a particular case depends upon the facts of that case and the provisions of the statute.
The abstract principle of attribution, which is applicable in certain circumstances, can be adopted only to the extent that it is consistent with the law and facts.
It is well to recall: " . . there is no room for any intendment; there is no equity about a tax: there is no presumption as to a tax; you read nothing in; you imply nothing, but you look fairly at what is said and at what is said clearly and that is the tax".
[Per Rowlatt, J. The Cape Brandy Syndicate vs The Com 299 missioners of Inland Revenue, 12 Tax Cases 359,366].
The view taken by the Tribunal, with reference to the facts found and the provisions of the statute, was, in our opin ion, reasonable.
It was so found by the High Court.
In the circumstances, we hold that the Tribunal having excluded 1/3rd of the remittances to British India from taxation during a particular year, the High Court was justi fied in refusing to grant any further relief to the asses see.
Accordingly, we see no merit in these appeals and they are dismissed with costs throughout.
N.P.V. Appeals dis missed.
| A settlement was arrived at on 22.2.1972 between the Rajasthan State Electricity Board and the Union representing its employees.
In pursuance of this settlement, notification dated 22.3.1972 was issued revising the pay scales of var ious categories of posts, effective from 1st April, 1969.
As per the settlement, Meter Reader/Meter Checker was mentioned under scale No. 3.
On December 2, 1972 a Second Settlement was entered into between the parties with a view to removing certain ambigui ties in the earlier settlement.
In this second Settlement, notified on 6.12.1972, it was agreed to have two categories of Meter Readers, that is, Meter Reader I/Meter Checker I and Meter Reader II/Meter Checker II.
This settlement was made effective w.e.f. 1.4.1968.
Some employees appointed before 6.12.1972 challenged the notification dated 6.12.1972.
The learned Single Judge of the High Court allowed the writ petitions and quashed the notification mainly on the ground that the Second Settlement could not have been made as no conciliation proceedings were pending before the second settlement.
The Division Bench dismissed the appeal filed by the Board.
Accordingly, the Board implemented the Judgment of the High Court and issued orders to provide scale No. 3 to all the Meter Readers appointed upto 6.12.1972.
Brijlal vs Rajasthan State Electricity Board, [1979] WLN (UC) 221, referred to.
During this period, the State Electricity Board in exercise of the powers conferred by section 79, sub section (c) and (k) of the made regulations which are cared Rajasthan State 278 Electricity Board Employees (Emoluments) Regulations, 1978.
These Regulations were made applicable retrospectively from 1st April, 1974.
Under these regulations, post of Meter Reader II/Meter Checker II was mentioned in scale No. 2.
In 1979, an arbitration award was given between the Board and the union under which two categories of Meter Readers/Meter Checkers were again made.
Subsequently, 35 employees appointed between the period 197279 filed the present writ petitions in the High Court.
The stand taken by these employees was that the Notification dated 6.12.1972 had already been quashed by the High Court and as such they were to be governed by the First Settlement dated February 22, 1972 in which there was only one category of Meter Reader/Meter Checker to whom pay scale No. 3 had been given and as such they were also entitled to pay scale No. 3.
The High Court allowed the writ petitions and granted pay scale No. 3 to all the petitioners.
The Division Bench dismissed the special appeal of the Board.
The Board has now come before this Court against such employees who were appointed after 1.4.1974.
The contentions of the Board before this Court were that (i) even if for arguments ' sake the earlier decision given by the High Court may be considered as final, that was in respect of the employees who were appointed before 6th December, 1972; (ii) as regards the present employees no benefit could be granted in their case as the First Settle ment itself was to remain in force upto 31st March, 1974; (iii) in any case in the appointment orders of the respond ents it was clearly mentioned that they were appointed as Meter Reader/Meter Checkers Gr.
II in the pay scale No. 2; and (iv) under the Rajasthan State Electricity Employees (Emoluments) Regulations 1978, which were made applicable from 1st April, 1974 Meter Reader II/Meter Checker II have been placed in pay scale No. 2 and Meter Reader I/Meter Checker I have been placed in pay scale No. 3.
On behalf of the employees respondents it was connected that (i) though according to Clause IX of the First Settle ment dated 22.2.1972 the settlement was to remain in force till 31st March, 1974 yet the same would remain in operation until the expiry of two months from the date on which a notice in writing of an intention to terminate the settle ment was given by one of the parties to the other party or parties to the settlement as provided under sub section (2) of Section 19 of the ; (ii) that an arbitration award was given in 1979 279 between the Board and the employees federation under which two categories of Meter Readers/Meter Checkers were again made and hence all the Meter Readers appointed upto 1979 before the arbitration award were entitled to scale No. 3, and (iii) the contention with regard to the first settlement having come to an end on March 31, 1974 as well as the contention raised on the basis of Regulations were rightly negatived by the Division Bench of the High Court as these points were not taken in the writ petitions and were not argued before the learned Single Judge.
Allowing the appeals, this Court, HELD: (1) The respondents/employees in the present case want to take advantage of the First Settlement simply on the ground that it did not make any mention of Meter Reader/Meter Checker Gr.
I or II and it simply made mention of Meter Reader/Meter Checker to whom pay scale No. 3 was given.
The above ambiguity was clarified by an agreement between the Board and the Union representing the employees as early as on 2.12.1972 itself to the effect that Meter Reader/Meter Checker could be placed in two different grades.
After this there was no restriction on the Board to make appointment of the Meter Reader/ Meter Checker in Grade II after 1.4.1974.
[290B C] (2) There was clear mention in the appointment orders of the respondents that they were appointed as Meter Readers/Meter Checkers Gr.
II in pay scales No. 2.
Learned Counsel for the respondents/employees were unable to show that the Board had no power to make such appointments of the Meter Reader/Meter Checker in Gr.
[290D] (3) The Board had already taken the stand that the first settlement was clarified by the second settlement and as such even if the High Court had quashed the second settle ment, it was at least a sufficient notice within the meaning of section 19(2) of the that the Board had terminated the first settlement after 31.3.1974.
[290E] The Life Insurance Corporation of India vs D.J. Bahadur (4) The Rajasthan State Electricity Board (Emoluments) Regulation, 1978 made in exercise of the powers conferred by Sec.
79 Subsections (c) and (k) of the
|
o. 15 of 1972.
Appeal by Special Leave from the, _judgment and order dated December 16, 1971 of the Assam and Nagaland High Court in Civil Rule No. 431 of 1970.
C. K. Daphtary and D. N. Mukherjee, for the appellant.
section N. Chowdhury, for respondent Nos. 1 to 4.
M. C. Setalvad and K. P. Gupta, for respondent No. 5.
The Judgment of the Court was delivered by Hegde, J.
In this appeal by special leave the appellant challenges the decision of the High Court of Assam and Nagaland in refusing to set aside the order of the Assam Government dated June 16, 1970 granting a contract to Respondent No. 5 for wholesale supply of country spirit to Tinsukia and North Lakhimpur warehouses for three years from July 1, 1970 to June 30, 1973.
The appellant is a Public Limited Company.
Under a contract entered into between it and the Government of Assam, it had the exclusive privilege of supplying country spirit to the two warehouses in the District of Lakhimpur for the period from July 1, 1967 to March 3, 1970.
Sometime before that contract came to an end, the Commissioner of Excise, Assam invited tenders in sealed covers for the privilege of supplying the, country spirit to, retail vendors in the Upper Assam area comprising of the District of Lakhimpur and Sibsagar including Mikir Sub Division of the United Mikir and North Cachar Hills for the period of three years commencing from April 1, 1970.
In the notification issued by the Commissioner, it was stated that preference will be given to the manufacturers, of the spirit.
In pursuance of the tender notice, )the appellant, the 5th respondent and several others submitted tenders for the grant of the contract in question followed up by necessary licences.
The appellant offered to supply the spirit at 74 P. per London proof litre.
Respondent No. 5 quoted the 203 price at 95 P. per London proof litre.
Another tenderer namely Rampur Distillery and Chemicals Company Ltd. offered the lowest rate of 60 P. per London proof litre.
The tender of Rampur Distillery and Chemicals Co. Ltd., was found to be defective and therefore it was rejected.
The Government was not satisfied with any of the tenders.
Thereafter by a _letter dated February 28, 1970, it called upon all the tenderers to intimate to the Government whether they were willing to reduce their rate and if so, to what extent.
They were required to send their replies by March 10, 1970.
None of the tenderers excepting the 5th respondent was willing to reduce the rate quoted by them.
The Managing Director of Respondent No. 5, by his letter dated March 4, 1970 informed the Government that his concern was willing to reduce the rate and he left it to the Government to fix any rate which it considered reasonable.
He agreed to accept the rate fixed by the Government.
The Government reduced the rate fixed by Respondent No. 5 to 74 P. per London proof litre and accepted its tender.
Aggrieved by this decision, the appellant moved the High Court of Assam and Nagaland under article 226 of the Constitution to quash the Government Order granting the contract to the 5th respondent and for issuing a direction to the concerned respondents not to give effect to the impugned order.
The High Court rejected that application.
Hence this appeal.
At the very outset, it is necessary to mention that no allegation of mala fides is made against the Government.
The only question that we have to consider in this appeal is whether the impugned order was made in violation of any statutory provisions.
It was urged on behalf of the appellant that the impugned order violates Rule 93 of the Rules framed under the Eastern Bengal and Assam Act No. 1 of 1910 (Eastern Bengal and Assam Excise Act, 1910) (to be hereinafter referred to as the Act).
Before reading Rule 93, it is necessary first to refer to the relevant provisions in the Act i.e. section 19.
That section reads : "The Provincial Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege of manufacturing or of supplying to licensed vendors or of manufacturing and supply to licensed vendors any country liquor or intoxi cating drug within any specified local area.
No grantee of any exclusive privilege under this section shall exercise the same until he has received a license in that behalf from the Excise Commissioner.
" The validity of this provision was not challenged before us.
This provision undoubtedly confers on the Government very wide powers in the matter of granting exclusive privilege of manufacturing or of supplying to licensed vendors or of manufacturing 204 and supplying to licensed vendors any country liquor or intoxicating drug within any specified local area.
In the absence of any rule, the Government could have exercised that power in the manner most advantageous to the State so long as it did not infringe any of the constitutional guarantees.
In understanding the nature of the power under Rule 93, we have to bear in mind the fact that rules were framed by the Government itself in the exercise of the powers conferred on it under section 36 of the Act.
Having said that much we may now proceed to consider the rules relating to contract for supplying the country spirit to warehouses.
The rules relevant for our present purpose are Rules 91 to 93.
We may now read those rules.
Tenders for a contract for the exclusive privilege of supplying country spirit from a distillery to licensed vendors within a specified area for a specified period will be called for by the Excise Commissioner 1 8 months before the date from which the contract will take effect.
Provided that the Provincial Government may, if circumstances so require, direct that tenders be called for by the Excise Commissioner within a lesser period than 18 months specified above.
Any person tendering for a license specified in rule 91 shall apply in writing to the Excise Commissioner furnishing the following particulars: (1) The name or names of the person or persons applying, if a firm, the name of every partner of the firm, and, if a company, the registered name thereof (2) The applicant (if he is other than the existing contractor) shall also state in his tender that he is willing to take over under the provisions of rule 102 of these rules the existing vats and other permanent apparatuses in the warehouses within the area to be supplied and shall furnish a list of these in his application.
The Excise Commissioner shall forward the tenders with his recommendations to the Provincial Government which reserves to itself the right to accept any tender.
If none of the tenders are accepted by the Provincial Government on the ground that none of them, on due consideration, appear to be satisfactory, they reserve also the right to grant the licence to any person who has not tendered and is considered suitable in all respects; Provided that when a license is cancelled or suspended during the currency of the license the Provincial Government further reserves the right to grant the license to any one without calling for tenders.
" 205 It was urged on behalf of the appellant that the impugned order cannot be sustained firstly because the Government has nowhere stated that the tenders made were not acceptable to it "on the ground that none of them on due consideration, appear to be satisfactory".
Secondly under Rule 93, they could not have entered into negotiations with any of the tenderers.
Neither of these contentions are sound.
From the facts stated earlier, it is clear that the Government considered the tenders to be unsatisfactory and hence unacceptable.
That is clear from its letter to the tenderers asking them to reduce the price quoted.
It is true that ultimately it granted the contract to the 5th respondent at the very rate quoted by the appellant.
In the very notification calling for tenders, it had been mentioned that preference will be given to the manufacturers.
Prima facie there is nothing wrong in giving preference to the manufacturers.
It must be borne in mind that the Government is the purchaser.
On good grounds, it can prefer one seller to another.
It is true that being a Government, it cannot show any undue favour to any party; but for good reasons it may prefer one party to another.
There was justification in preferring a manufacturer to others.
Evidently the idea was that there should be reasonable guarantee in the matter of supply of country liquor.
It was not said that this preference was given for any collateral reason.
The Govern ment does not require any special power for preferring one class of sellers to others so long as the classification made by it is based on rational grounds.
It is true that no rule confers on the Government power to prefer one set of suppliers to others.
But what is important is that no rule prohibits it.
In the absence of any such rule, section 19 of the Act confers on the Government such a power.
It was next said that Rule 93 prohibits the Government to negotiate with any of the tenderers.
We are unable to read that rule in that way.
That rule does not prohibit any negotiations with the tenderers.
But on the other hand, it authorises the Government to negotiate with persons who have not tendered.
Here again in the absence of any rule prohibiting the Government to negotiate with the tenderers, the Government can fall back on its powers under section 19.
We are unable to find out any rational basis for prohibiting the Government from negotiating with the tenderers.
All that the Government is interested is to get country spirit at the cheapest possible rates and to have regular supplies.
For achieving those purposes, it can negotiate either with the tenderers or with others.
It was faintly argued that before concluding its contract with the 5th respondent, the Government should have given opportunity to the other tenderers to reduce the rates quoted by them.
This contention is clearly a misunderstanding of the principles of natural 206 justice.
No one has a fundamental right to get a Government contract.
The appellant was not deprived of any of its rights.
It was given an adequate opportunity to submit its tender.
Its offer was considered.
The same was not rejected on irrational grounds.
In matters like the one before us, no question of hearing the interested parties arises.
All that is required is fair play.
In the result we are unable to accept any of the contentions advanced on behalf of the appellant.
Hence this appeal fails and the same is dismissed.
But in the circumstances of the case we make no order as to costs.
V.P.S. Appeal dismissed.
| Held, (i) that the ordinary and primary jurisdiction of the Labour Appellate Tribunal constituted under the Industrial Disputes (Appellate Tribunal) Act, 1950 is appellate; (ii) that section 22 of the Act confers on the appellate tribunal a special jurisdiction which is in the nature of original jurisdiction; (iii) that section 23 also vests in the tribunal an additional jurisdiction to decide the complaint as if it were an appeal pending before it; and (iv) that section 23 confers on the 1242 workmen an additional remedy which they did not have under the .
The two now sections 33 and 33 A inserted in the Industrial Di putes Act 1947 (XIV of 1947) by Act XLVIII of 1950 confer distinct benefits on the workmen and give some additional jurisdiction and power to the authorities mentioned therein.
Section 33 A enjoins the Tribunal to decide the complaint "as if it were a dispute referred to or pending before it" and to submit its award to the appropriate Government and provides that the provisions of the Act shall apply to the award.
The provisions of these two new sections 33 and 33 A of the 1947 Act correspond to and are in pari materia with the provisions of sections 22 and 23 of the 1950 Act and are more or less in similar terms.
A ban has been put by section 22 of 1950 Act and section 33 of the 1947 Act upon the ordinary right, which the employer has under the ordinary law governing a contract of employment with a view to protect the workmen against victimisation by the employer and to ensure the termination.of the proceedings in connection with industrial disputes in a peaceful atmosphere and the only thing that the authority is called upon to do is to grant or withhold the permission i.e. to lift or maintain the ban.
These sections do not confer any power on the authorities to adjudicate upon any other dispute.
Under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950) the Labour Appellate Tribunal has no jurisdiction to impose conditions as a pre requisite for granting permission to the employer to retrench its workmen.
Under section 33 A of the and section 23 of the 1950 Act the jurisdiction of the authority is not only to decide whether there has been a failure on the part of the employer to obtain the permission of the authority before taking action but also to give a decision on the merits of an industrial dispute and grant appropriate relief which when published by the appropriate Government will become enforceable under the respective Acts.
Serampore Belting Mazdoor Union vs Serampore Belting Co., Ltd. ([1951] , Batuk K. Vyas vs Surat Borough Municipality ([1952] , Raj Narain vs Employer s ' Association of Northern India ([1952] 1 Lab.
L.J. 381), The Queen vs County Council of West Riding of Yorkshire ([1896] 1 Q.B. 386), Carlsbad Mineral Works Co., Ltd. vs Their Workmen ([1953] , Atherton West & Co., Ltd. vs Suti Mill Mazdoor Union ([1953] S.C.R. 780) and Bhattacharji vs Parry & Co., Ltd., Calcutta ([1954] , referred to.
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