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ition No. 5545 of 1980.
(Under Article 32 of the Constitution of India.) Pankaj Malik and Mr. R. P. Singh for the Petitioners.
section N. Kacker and Rathin Das for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
True to the spirit and letter of our Constitution and in fulfilment of the promises made by our national leaders to the people of India, the Government sought to introduce agrarian 851 reforms so as to reserve the lands to the tillers of the soil giving marginal relief or compensation to the erstwhile landlords or tenants in chief, through various statutes passed by almost all the States in the country.
I n order to hasten and safeguard the agrarian reforms the Constitution takes full care by virtue of the insertion of the directive principles of Stale policy contained in part IV, which are undoubtedly the heart and soul of our Constitution and have in fact been complied with in a variety of spheres.
Ceaseless attempts made by the landlords to challenge the constitutional validity of the aforesaid reforms met with little success.
Having failed in their attempts to undo the socialist reforms passed for the purpose of building an egalitarian society and bringing about marked improvement in the condition of the poor suffering tillers by the various Acts passed by the States, the landlords left no stone unturned and were always on the look out for an opportunity to ' seize the lands from the tenants on one pretext or the other through manpowers muscle power or money power.
Nevertheless, the constitutional validity of most of the Acts came up for decision in the High Courts and in this Court and by and large each one of them was held to be constitutionally valid, thus setting at naught the attempts of the landlords to take back possession of the lands which should have been given to the tillers of the soil long before.
The landlords were thus unable to get hold of any opportunity to pounce upon the land which went and should have gone to the actual tillers of the soil.
Thereafter, some of the bigger landlords tried through their dextrous methods aud legal ingenuity to defeat the laudable social endeavour of the Government by making a show of the so called complete destruction of their assess and properties reducing them to starvation.
This case is yet another glaring illustration of such an adroit attempt made by the tenants in chief to deprive the actual tillers of the rights conferred on them by the Land Reforms Acts of West Bengal passed from 1953 to 1977.
In view, however, of the modern trends of the decisions of this Court, which always made a practical and pragmatic approach to any progressive step taken by the Parliament, the attempts of the landlords ultimately proved to be a grotesque failure.
Coming now to the facts of the case, a brief history of the admirable object of the agrarian reforms introduced by the Government of West Bengal may be necessary as a prelude to our discussion of the subject, In fact, all the contentions raised before us stand 852 concluded by a recent decision of this Court as we shall show hereafter.
Not content with the addition of Art.31C of the Constitution which was introduced by the constitution (25th Amendment) Act, 1971, the petitioners chose to call into aid the decisions of this Court in Minerva Mills Ltd. vs Union of India & Ors and Waman Rao & Ors.
vs Union of Indian & Ors, which also proved to be an exercise futility because the ratio of, these cases is in no way of any assistance to the petitioners.
In the instant case, we are concerned with agrarian reforms achieved from time to time by the Government of West Bengal in order to improve the lot of the tillers of the land by giving them as many facilities as could be possible within the framework of the law and the Constitution.
Having realised that the West Bengal Estates Acquisition 'Act, 1953 (hereinafter referred to as the '1953 Act ') could not be challenged the landlords waited for future litigations swoop down on the validity of the West Bengal Land Reforms Act, 1955 (hereinafter referred to as the '1955 Act ') as amended by the West Bengal Land Reforms (Amendment) Act, 1972 and the West Bengal Land Reforms (Amendment) Act, 1977 (for facility, to be referred to as the 'Amendment Act of 1972 ' and 'Amendment Act of 1977 ' respectively).
In the first round which was the subject matter of a decision of this Court Sri Sri Kalimata Thakurani and Sri Sri Raghunath Jew & Ors. etc.
vs Union of India & Ors.
to which one of us Fazal Ali, J.) was a party, this Court negatived the constitutional objections and contentions raised by the landlords against the reforms introduced by the 1955 Act and the 1972 and 1977 Amendment Acts.
Unfortunately, however, there appears to be some small lacuna in the above judgment which was unhesitatingly exploited by the petitioners so as to attempt to destroy the progressive amendments of 1972 and 1977 particularly taking advantage of certain observations made in that case to which we shall come later.
To begin with, in the 1953 Act which was enforced with effect from 12th February, 1954, Section 4 introduced a more or less radical reform for the benefit of the actual tillers by abolishing the rights of 853 the intermediary (ex landlords).
By virtue of this section all estates and the rights of every intermediary was to vest in the State free from all encumbrances from a date mentioned in a notification issued by the Government.
In order, however, to be just and fair to the erstwhile landlords they were conferred the status of raiyats or tenants.
By virtue of section 6 they were entitled to retain certain categories of lands like lands comprised in home steads or ' appertaining to buildings and structures, etc., of non agricultural land in khas possession.
Section 6(d) expressly provided that so far as agricultural land in khas, possession was concerned it would not exceed twenty five acres in area to be chosen by the landlord.
No serious grievance was made before us regarding the provisions of sections 4 to 6 excepting that the ceiling of twenty five acres was not sufficient for the landlords to make both their ends meet and enable them to earn their livelihood Such a plea has to be stated only to be rejected because the landlords who had huge lands comprising home stead lands or those appertaining to buildings or structures and non agricultural lands in khas possession were not at all touched by the 1953 Act.
In these circumstance therefore, we do not take any serious notice of this grievance which in fact was not pressed before us.
Realising the current trends in the social, approach of the agrarian reforms made by the courts, the counsel for the petitioners confined his arguments to three infirmities from which the 1953 Act and the 1972 and 1977 Amendment Acts suffered.
However, during the course of arguments the challenge remained confined only to certain specific amendments made by the 1972 and 1977 Amendment Acts and the points raised before us may be summarised thus: (1) that the total ceiling area allowed to be retained by the 1953 Act in respect of agricultural land in khas possession of the raiyats was drastically reduced, (2) that although the status of raiyats was conferred on the erstwhile landlords which was heritable and transferable, the institution of bargardars was introduced in order to enable the raiyats to cultivate their lands on a 50:50 basis, and ' (3) that while the Amendment Act of 1972 had given a right to the raiyats to resume the lands given to the 854 bargardars for their personal cultivation, the subsequent amendments took away this right and made the right of the bargardar both heritable and transferable causing serious detriment and prejudice to the raiyats.
We now proceed to refer only to those provisions whose constitutional validity has been seriously challenged by the petitioners.
It appears that by the 1972 Amendment Act certain changes were made and a reference was made particularly to section 14M which may be extracted thus "14M. Ceiling area (1) The ceiling area shall be, (a) in the case of a raiyat, who is an adult unmarried person, 2.50 standard hectares; (b) in the case of a raiyat, who is the sole surviving member of a family, 2.50 standard hectares; (c) in the case of a raiyat having a family consisting of two or more but not more than five members, 5.00 standard hectares; (d) in the care of a raiyat having a family consisting of more than five members, 5.00 standard hectares, plus 0.50 standard hectare for each member in excess of five, so, however that the aggregate of the ceiling area for such raiyat shall not, in any case, exceed 7.00 standard hectares, (e) in the case of any other raiyat, 7.00 standard hectares; (2) Notwithstanding anything contained in sub section (1), where, in the family of a raiyat, there are more raiyats than one, the ceiling area for the raiyat, together with the ceiling area of all the other raiyats in the family shall not, in any case, exceed, (a) where the number of members of such family does not exceed five, 5.00 standard hectares; 855 (b) where such number exceeds five, 5.00 standard hectares, plus 0.50 standard hectare for each member in excess of five, so, however, that the aggregate of the ceiling area shall not, in any case, exceed 7.00 standard hectares.
(3) For the purpose of sub section (2), all the lands owned individually by the members of a family or jointly by some or all the members of such family shall be deemed to be owned by the raiyats in the family.
" It was submitted that the drastic reduction of the area of the raiyat has been reduced to 2.50 standard hectares being the minimum and 7.00 standard hectares being the maximum according to the nature of cases mentioned in cls.(a) to (e) of section 14M(I) and cls.(a) and (b) of section 14M(2), as extracted above, which worked serious injustice to the tenants.
A strong exception was taken to the amendment of s.17 of the 1955 Act particularly the substitution of s.17.(c) and the various provisos to that section.
The validity of s.17(6) was also challenged on the ground that the legislation was confiscatory.
The provisions of the proviso to cl.(8) of s.2 added by the 1977 Amendment Act to the 1955 Act was seriously assailed.
The said proviso runs thus: "Provided that such person or member of his family resides for the greater part of the year in the locality where the land is situated and the principal source of his income is produced from such land.
" A similar challenge was made to the addition of s.21B in the 1955 Act by the 1977 Amendment Act.
On similar grounds the aforesaid provisions were also challenged in the decision of this Court in Sri Sri Kalimata Thakurani 's case (supra) which did not meet with any success.
It was, however, pointed out by the counsel for the petitioners that this Court did not accept the arguments of the petitioners in that case because it was under an erroneous impression that the 1955 Act and the Amendment Acts of 1972 and 1977 were added to the Ninth Schedule in the Constitution of India and were 856 therefore, immune from challenge.
To some extent the counsel is right in his statement that such an inadvertent mistake has crept in due to oversight because the 1955 Act and the Amendment Acts of 1972 and 1977 were added to the ninth Schedule by the 4th Amendment of the Constitution of 1976 being entry numbers 181 to 185.
Hence, it could, be reasonably argued that the constitutional validity ' of the provisions, mentioned above, was justiciable and could be gone into.
Before dealing with these arguments it may be necessary to extract certain portions of the decision of this Court in Sri Sri Kalimata Thakurani 's case (supra) where this Court after dealing with the various provisions ' observed thus: "In the instant case, it is clear that the 1955 Act as also the Amendment Act of 1972 were added to the Ninth Schedule, being entry Nos. 80 and 81, prior to April 24, 1973.
In these circumstances, it is manifest that the aforesaid Acts are completely immune from challenge on the ground that they are violative of any of the rights enshrined in Part III of the Constitution.
The learned counsel for the petitioner, therefore, was fully justified in making the concession before us.
" The error is undoubtedly there but neither the counsel for the petitioners nor the counsel for the respondent drew our attention to this omission.
Even if the Acts were not included in the Ninth Schedule their constitutional validity could not be questioned because this Court has clearly held in Sri Sri Kalimata Thankurani 's case that the provisions are otherwise reasonable and give full effect to the pragmatic and socialistic approach, where the following observations were made: "It would be seen that s.17 permits the cultivator to terminate the Cultivation of the land by bargardar and resume possession under his own cultivation if the conditions mentioned in clauses (a), (b) and (d) of sub section (l) of section 17 are satisfied.
Clause (d) may be extracted thus: "That the person owning the land requires it bonafide for bringing it under personal cultivation." "Thus, the cultivator has a, right to get back the land for personal cultivation if he requires it for his bona fide 857 use and proves the some to the satisfaction of the authority appointed under s.17(1).
" Referring to some of the provisions of the 1972 Amendment Act this Court held that the provision by which the right of bargardar was protected and made heritable could not be challenged as being either unconstitutional, unreasonable or arbitrary. ' But this Court made some observations which were in favour of the petitioner and which may be extracted as follows . "But when the Bargardor on his, own volition surrenders or abandons the land, there is no reason why the tenant should not be allowed to resume ' cultivation and instead be compelled to get the land cultivated by some other person nominated by the authority concerned under s.49 of the 1955 Act.
This provision therefore appears to us to be extremely harsh and works serious injustice to the rights of the tenants particularly after the ceiling are of the tenant has been considerably reduced by the Amendment Act of 1972.
Thus, the tenant having a small area guaranteed to him for his unit, he should have at least fuller and more effective rights to get that area cultivated by him or even 'by a bargardar of his choice subject to resuming the same, if the bargardar surrenders or abandons the land. .
Unfortunately, however, though the provisions of sub sections (3), (4) and (5) of s.20B, which is only a penal section) perilously border on arbitrariness and amounts to serious curbs on the fundamental right of the cultivator to pursue his occupation, we cannot however strike down these provisions because they are contained in the Amendment Act of 1972 which has been placed in the Ninth Schedule prior to April 54, 1973, and therefore fall within the protective umbrella and are immune from challenge.
" A capital was therefore made out of the above observations in Sri .
Sri Kalimata Thakurani 's case.
Reliance was also placed on a decision of this Court in Sasanka Sekhar Maity & Ors, v Union of India & Ors where A.P. Sen, J., speaking for the Court, made the following observations: 858 In order, therefore, to reconcile the fundamental rights of the community as a whole with the individual rights of the more fortunate section of the community, it was fundamentally necessary to make the impugned legislation to secure to a certain extent the rights of that part of the community which is denied its legitimate share in the means of livelihood.
"The broad objectives or any, legislation relating to agrarian reforms are materially four, viz., (I) to maximise the agricultural output and productivity, (2) a fair and equitable distribution, of agricultural income, (3( increase in employment opportunities, and (4) a social or ethical order.
Though the abolition of the zamidari system in the State of West Bengal was an important step forward, the feudal structure remained so far as the peasants were concerned.
These objectives have been achieved through progressive legislation " These observations put the petitioners completely out of court demolish the contentions advanced before us.
The four objectives mentioned by Sen,J. in the passage extracted above are clearly brought out and implemented by virtue of the impugned amendments in the 1955 Act.
So far as the decision in the case of Sri Sri Kalimata Thakurani (supra) is concerned, in view of the crystallisation of the law in Minerva Mills, Waman Rao (supra) and Sanjeev Coke Manufacturing Co. vs M/S. Bharat Coking Coal Ltd. & Anr.
cases which have been followed and amplified is the recent decision of this Court in State of Tamil Nadu , etc vs L Abu Kavur Bai & Ors.
the matter is no longer res integra and even if there was an inadvertent error in the observations of this Court in Sri Sri Kalimata Thakurani 's case, the same has become redundant as the impugned provisions can be supported as squarely falling within the four corners of Art.39(b) of the Constitution as the intention of the Acts is to secure and promote the objectives contained in Art.39(b).
In this connection, we might extract a few observations from L. Abu Kavur Bai Ors (supra): 859 "In view of Art.31C, which gives protective umbrella against Art.31(2) also, the Court cannot strike down the Act merely because the compensation for taking over the transport services or its units is not provided for.
The reason for this is that Art.31C was not merely a pragmatic approach to socialism but imbibed a theoretical aspect by which all means of production, key industries, mines, minerals, public supplies, utilities and services may be taken gradually under public ownership.
management and control.
" It was further argued by the petitioners that there was no clear nexus between the Act and the objectives contained in Art.39(b).
We are, however, unable to agree with this argument because the question of nexus has been clearly expounded by this Court both in the Minerva Mills and Sanjeev Coke Manufacturing Co. 's cases as also in the case of L. Abu Kavaur Bai & Ors.
(supra) where a Constitution Bench of this Court, speaking through one of us (Fazal Ali,J.), made the following observations: D "Another important facet of Art.31C which has been emphasised by this Court is that there should be a close nexus between the statute passed by the legislature and the twin objects mentioned in clauses (b) and (c) of Art.39.
In approaching this problem and considering the question of nexus a narrow approach ought not to be made because it is well settled that the courts should interpret a constitutional provision in order to suppress the mischief and advance the object of the Act.
The doctrine of nexus cannot be extended to such an extreme limit that the very purpose of Art.39(b)&(c) is defeated If the nexus is present in the law then the protection of Art.31C becomes complete and irrevocable.
" It was also argued that by virtue of the various amendments made by the 1972 and 1977 Amendment Acts no process of distribution is involved.
This argument cannot be accepted in view of the observations of this Court by Krishna Iyer,J. in State of Karnataka vs Ranganatha Reddy & Anr.
where the learned Judge observed as follows: 860 "The next question is whether nationalisation can have nexus with distribution.
To 'distribute '; even in its simple dictionary meaning, is to allot to divide into classes or into groups and 'distribution ' embraces arrangement, classification, placement, disposition, apportionment, the way in which items, a quantity, or the like is divided or apportioned; the system of dispersing goods throughout a community. ' ' The above observations were followed and amplified in L. Abu Kavur Bai ' case (supra) thus: "It is obvious, therefore, in view of the vast range of transactions contemplated by the word 'distribution ' as mentioned in the dictionaries referred to above, it will not be correct to construe the word 'distribution ' in a purely literal sense so as to mean only division of a particular persons.
The words, apportionment, allotment, allocation, classification, clearly fall within the broad sweep of the word 'distribution '.
So construed, the word 'distribution ' as used in Art.39(b) will include various facets, aspects, method and terminology of a broad based concept of distribution In view of the aforesaid observations, the challenge to the impugned provisions of the Acts no longer survives.
Moreover, what could have been a better mode of distribution contemplated by Art.39(b) than to take away the surplus agricultural lands from the landlords and distribute it amongst the poor suffering landless tillers of the soil who had suffered for centuries as vassals slaves of the rich zamindars, The Acts have not touched the non agricultural homestead lands or buildings 'standing thereon but has taken over only a major portion of the agricultural lands, leaving with the landlords a portion prescribed within the ceiling limit, and distributed the excess to the tillers of the soil which along constitute their main source of sustenance and livelihood.
The claim of the raiyats (erstwhile landlords that the Acts amount to confiscation is absolutely untenable and, if we dare say, it amounts only to shedding of crocodile tears and an anathema or a taboo.
We are therefore convinced that the impugned amendments were manifestly and pointedly made for the purpose of giving effect to and securing the 861 Objects of Art.39(b) because these Acts clearly intended to distribute the material resources of toe community, viz., the agricultural lands to a large number of tillers of the soil.
in order to serve the common good of the aforesaid people.
The challenge to the impugned Acts and amendments must therefore fail as the amendments fall within the letter and spirit.
Of Art.39(b).
Finally, it was suggested that the provision of the amendment by which the raiyat is enjoined to reside In the village itself for a large part of the year seems to be harsh and arbitrary.
This argument does not hold any water for two reasons (1) that when once it is found that the Act is meant to promote and effectuate the objectives contained in Art.39(b), which is no doubt the case here, no other ground of challenge would survive because by virtue of Art.31C any Act which seems to secure the objects of Art.39(b) cannot be challenged being violative of article 14, 19 or 31.
(2) Secondly, the provision that the land owner should reside in the village is both salutary and beneficial, the object being that if a raiyat wants to cultivate his own land he must give his whole hearted attention to the said land instead of living the village and carrying on other avocations of life.
One of us, (Fazal Ali,J.) had clearly adverted to this aspect of the matter in Sri Sri Kalimata Thakurani 's case (supra) and observed h as follows: "The dominant object of the proviso is to abolish the age old institutions of absentee land holder by insisting that the cultivator to whom land is allotted must give full and complete attention to the soil and as a result of.
which there will be maximum utilisation of the agricultural resources which would increase production. .
It is obvious that the tenant has to remain in the village for the purpose of cultivating the lands.
sowing the seeds, growing it and harvesting it.
These processes would doubtless requires the presence of the tenant for a greater part of the year which is that the proviso predicates.
If 862 the tenant is permitted to leave the village for more than half the year then the very purpose of giving such a vast area for cultivation to a tenant will be foiled Moreover the proviso merely insists that the tenant should remain in the village or its periphery for 'greater part of the year ' which appears to be not only responsible but absolutely essential if the land has to be cultivated in a scientific manner in order to yield the maximum possible production, which would result in better and equitable distribution of agricultural products for the use of the people of the country.
" For the reasons given above all the contentions raised by the petitioners fail and the writ petition is dismissed but without any order as to costs.
S.R. Petitions dismissed.
| The petitioners, in this round of challenge assailed the validity of Section 14M, 17(c), 17(6) and 21 B of the West Bengal Land Reforms Act, calling to their aid certain observations made by this Court in Sri Sri Kalimata Thakurani and Sri Sri Raghunath Jain & Ors etc vs Union of India & Ors. ; and the decisions in Minerva Mills Ltd. vs Union of India & Ors.
[1981] 1 S.C.R. 206 and Waman Rao & Ors.
vs Union of India & Ors.
; The petitioners raised the following points: (i) that the total ceiling area allowed to be retained by the 1953 Act in respect of agricultural land in Khas possession of the Raiyats was drastically reduced; (ii) that although the status of Raiyats was conferred on the erstwhile landlords which was heritable and transferable, the institution of bargards was introduced in order to enable the raiyats to cultivate their lands on a 50:50 basis and, (iii) that while the Amendment Act of 1972 had given a right to the raiyats to resume the lands given to the bargardars for their personal cultivation; the subsequent amendments took away this right and made the right of the bargardar both heritable and transferable causing serious detriment and prejudice to the raiyats.
Dismissing the petitions, the Court.
^ HELD :1.1 The impugned amendments were manifestly and pointedly made for the purpose of giving effect to and securing the objects of Article 39(b) because these Acts clearly intended to distribute the material resources of the community viz, the agricultural lands to a large number of tillers of the soil in order to serve the common good on the aforesaid people.
The Amendments fall within the letter and spirit of Article 39(b) of the Constitution.
1 lie Acts have not touched the non agricultural home stead lands, or buildings of the Land owners standing thereon but has taken over only a major portion of the agricultural lands, leaving with the landlords a portion prescribed within the 850 ceiling limit and distributed the excess to the tillers of the soil which alone constitute their main source of sustenance and livelihood.
The claim of the raiyats (erstwhile landlords) that the Acts amount to confiscation is absolutely untenable and amounts only to shedding crocodile tears and an anathema or taboo.
[860 H; 861 A B; 860 G] 1.2 The error regarding the addition of Amending Acts as items of Entry in the Ninth Schedule was inadvertently crept in the decision of Sri Sri Kalimata Thakarani 's case.
Even if the Acts were not included in the Ninth Schedule their constitutional validity could not be questioned because the provisions are otherwise reasonable and give full effect to the pragmatic and socialistic approach as contained in Article 39(b) of the Constitution.
Sri Sri Kalimata Thakurani and Sri Sri Raghunath Jew and Ors vs Union of India & Ors.
[1981]2 S.C.R 950 Minerva Mills Ltd vs Union of India and Ors ; ; Waman Rao & Ors v Union of India & Ors ; Sanjeev Coke Manufacturing Co vs M/s Bharat Coking Coal Ltd and Anr , Sasanka Sekhar Maity & Ors, Union of India & Ors, ; , State of Tamil Nadu etc vs L. Abu Kavur Bai and Ors CA Nos 957 966 (N) of 1973 decided on 31 10 83 followed.
1.3 The Amendment Acts cannot be challenged as violative of the doctrine of nexus or involving no process of distributions; State of Karnataka v Rangnatha Reddy & Anr ; , Minerva Mills Ltd vs Union of India & Ors ; , Sanjeeva Coke Manufacturing Co. vs M/s Bharat Coking Coal Ltd and Anr , and State of Tamilnadu etc vs L. Abukavar Bai & Ors C.A. No. 957 966 (N) of 1973 decided on 31 10 1983 followed.
1.4 The provisions of the Amendment by which the raiyat is enjoined to reside in the village itself for a large part of the year cannot be said to be either harsh or arbitrary.
Sri Sri Kalimata Thakurani etc.
vs Union of India & Ors.
[1981]2 S.C.R. 950, applied.
|
vil Appeal Nos.
4890 91 of 1990.
From the Judgment and Order dated 17.10.1989 of the Madras High Court in C.R.P. Nos.
517 & 5 18 of 1989.
section Padmanabhan, P.N. Ramalingam and A.T.M. Sampath for the Appellants.
K. Parasaran, section Balakrishnan and Ms. Revati for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
Special Leave granted.
Counsel heard.
These two appeals are filed by Special leave against the judgment of the High Court of Madras in Revision Petitions Nos. 5 17 and 5 18 of 1989.
These appeals raise an interest ing question as to whether it is obligatory on the Court, before granting leave to institute a suit as required under section 92 of the Code of Civil Procedure, 1908, to give an opportunity to the respondents to show cause against the grant of such leave, and whether leave granted without such opportunity having been given is void.
The appellants instituted suit No. O.S. 55 of 1987 in the court of the learned subordinate Judge of Sivaganga in Tamil Nadu against the respondents as a representive suit inter alia praying for framing a scheme for a public char itable trust.
It is common ground that the reliefs prayed for in the suit were such that leave under section 92 of 269 the Civil Procedure Code was required for instituting the suit.
On the same day on which the suit was filed by lodging the plaint in court an application was made praying for leave to institute the suit under section 92 of the Code.
Without issuing any notice to the respondents, the said court granted leave by passing an order reading "permitted" and issued summons to the respondents.
In March, 1988 the respondents filed an interim application before the learned Subordinate Judge for revoking the leave granted inter alia on the ground that the respondents had not been given any opportunity to be heard before leave was granted.
The learned Subordinate Judge dismissed the said application on the ground that the grant of leave was an administrative act of the court and no notice to the respondents was required before such leave was granted.
The respondents then pre ferred a Civil Revision Petition in the Madras High Court which has been allowed by a judgment delivered by learned Single Judge.
He took the view that an analysis of the provisions of section 92 of the Code shows that in order to institute a representative suit as contemplated in the said section two or more persons must have an interest in the trust and they should have obtained the leave of the court before they institute the suit.
The learned Single Judge held that while the said section enables persons interested in a public trust to file a suit to secure the proper admin istration and management of the trust and its properties by its trustees, it also imposes a check on the institution of such suits by the imposition of certain conditions, one of which is the obtaining of leave from the court.
It was held that it is the grant of leave which confers on the person concerned a right to institute a suit under section 92 of the Code.
If there were any facts which might disentitle the applicants for leave from obtaining the leave of the court, these could be best brought to the notice of the court by the party arrayed on the opposite side.
The learned Judge also referred to the provisions of section 104(1) (ffa) of the Code whereby an order under section 91 or section 92 refusing leave to institute a suit of the nature referred to in section 91 is made appealable.
The learned Judge followed the decision of the High Court of Madras in T.M. Shanmugam and Others vs The Periyar Self Respect Propaganda Institu tion and Others, [1984] II MLJ 440; and held that as the leave had been granted without any notice to the respondents, it was void and liable to be set aside.
The learned Judge allowed the revision petitions, set aside the leave and held that the suit could not be entertained and was liable to be dismissed.
It is against this decision that these appeals have been peferred to.
Learned counsel for the appellants submitted that if the court 270 were required to give opportunity to the defendants to be heard before granting leave to under section 92, the grant of leave would entail a great deal of delay and might defeat the ends of justice where some urgent relief was required.
He pointed out that, if a defendant had a grievance against the grant of leave he could always made an application to revoke the leave and no serious prejudice would be caused to the defendant by the grant of leave.
Learned counsel for the respondents contended that leave under section 92 of the Code to institute a suit was a material requirement for maintenance of a suit.
Before granting leave the court was called upon to consider various aspects of the matter, namely, whether the suit was such as contemplated under section 92, whether the persons applying for such leave were fit persons to institute a representa tive suit and so on.
It was submitted by him that the court could not decide whether leave should be granted without giving an opportunity to the defendants to show cause against the grant of leave.
It was submitted by him that the grant of leave was a pre condition for instituting a 'suit under section 92.
Leave granted without giving any opportu nity to the defendant to show cause was void and a suit instituted on the basis of such void leave was not maintain able at all.
It was submitted by him that at the stage of grant of leave what the court is called upon to consider is the plaint and whether, prima facie, the suit proposed to be instituted was of the kind contemplated under section 92 of the Code, that is, whether the reliefs prayed for were such as were set out in section 92 and whether the suit was against a public trust.
It was also necessary for the court to consider whether, the proposed plaintiffs had an interest in the public trust and were fit persons for leave being granted to them.
The Court could also consider whether, prima facie, the allegations in the plaint were baseless or frivolous.
At that stage, it was necessary to give any notice to the defendant because he could point out the reasons why leave should not be granted.
Before considering the merits of the aforesaid conten tions, it would not be out of place to refer to the relevant provisions of the Code of Civil Procedure.
The relevant part of sub section (1) of section runs as follows: "92.
Public Charities (1) In the case of any alleged breach of any express or constructive trust created for public purposes of a charita ble or religious nature, or where the direction of the Court 271 is deemed necessary for the administration of any such trust, the Advocate General, or two or more persons having an interest in the trust and having obtained the leave of the Court, may institute a suit, whether contentious or not, in the principal Civil Court of original jurisdiction or in any other court empowered in that behalf by the State Gov ernment within the local limits of whose jurisdiction the whole or any part of the subject matter of the trust is situate to obtain a decree (a) removing any trustee; (b) appointing a new trustee; (c) vesting any property in a trustee; (cc) directing a trustee who has been removed or a person who has ceased to be a trustee, to deliver possession of any trust property in his possession to the person entitled to the possession of such property; (d) directing accounts and enquiries; (e) declaring what proportion of the trust property or of the interest therein shall be allocated to any particular object of the trust; (f) authorising the whole or any part of the trust property to be let, sold, mortgaged or exchanged; (g) settling a scheme; or (h) granting such further or other relief as the nature of the case may require.
Section 104 provides for appeals against certain orders unless otherwise provided in the body of the Code or by any other law in force.
Clause (ffa) of that section runs as follows: "(ffa) an order under section 91 or section 92 refusing leave to institute a suit of the nature referred to in section 91 or section 92, as the case may be.
" 272 We may mention that prior to its amendment in 1976, section 92 of the Code provided that leave of the Advocate General had to be obtained for the institution of a suit of the kind described in that section and not the leave of the court.
We may now discuss the main cases relied on by the learned Counsel for the respective parties.
Coming first to the cases relied upon by learned Counsel for the appellants, we find that the first decision cited by him was the deci sion of this Court in Swami Parmatmanand Saraswati & Anr.
vs Ramji Tripathi & Anr., ; at p. 796.
In that case it was held that to see whether the suit falls within the ambit of section 92, only the allegations in the plaint should be looked into in the first instance.
But, if, after the evidence is taken, it is found that the breach of trust alleged has not been made out and that the prayer for direc tion of 'the court is vague and is not based on any solid foundation of fact or reason but is made only with a view to bring the suit under the section then such a suit must be dismissed.
Learned Counsel next drew our attention to the decision of this Court in Charan Singh & Anr.
vs Darshan Singh & Ors., ; Section 92 of the Code before its amendment in 1976 was applicable to the case.
The court cited with approval the observations of Mukherjea, J., (as he then was), in Mahant Pragdasji Guru Bhagwandasji vs Patel Ishwarlalbhai Narsibhai and Others, reported in 13 which runs as follows: "A suit under section 92, Civil Procedure Code, is a suit of a special nature which presupposes the existence of a public trust of a religious or charitable character.
Such suit can proceed only on the allegation that there is a breach of such trust or that directions of the court are necessary.
It is only when these conditions are fulfilled that the suit has got to be brought in conformity with the provisions of section 92, Civil Procedure Code . " Neither of the aforesaid decisions of this Court deal with the question as to whether, before granting leave to insti tute a suit under section 92, Advocate General, or later the Court, was required to give an opportunity to the proposed defendants to show cause why leave should not be granted.
What learned counsel for the appellants urged, however, was that these decisions show that at the time when the Advo cate General or the Court is required to consider whether to grant leave to institute a suit as contemplated under sec tion 92, it is only the averments in the plaint which have to be examined and hence, 273 the presence of the defendant is not necessary.
We may now consider the High Court decisions relied on by the learned counsel for the appellants.
In Prithipal Singh vs Magh Singh and Others, AIR 1982 Punjab and Haryana 137 a learned Single Judge of the Punjab and Haryana High Court held that the grant of leave to file a suit is not a mere irregularity which can be cured but is a condition precedent.
The provisions of section 92 are mandatory in nature in that respect.
He further held that in granting leave under section 92 of the Code, the court does not have to write a reasoned order.
It does not even have to give a notice to the defendant of an application for leave to file a suit as the order granting leave is of an adminis trative nature.
The same view was taken by a Division Bench of the Punjab and Haryana High Court in Lachhman Dass Udasi (deceased by L.R. 's) and Others vs Ranjit Singh and Others, AIR 1987 Punjab and Haryana 108 wherein it was held that no notice is necessary to be issued to the defendants prior to the granting or refusing of leave under section 92 of the Code as at that stage it is only the subjective satisfaction of the court that is required and, thus, the order is an order of administrative nature.
A Division Bench of the Kerala High Court also took the same view in P.V. Mathew and Others vs K.V. Thomas and Oth ers, AIR 1983 Kerala 5.
In that case it was held that along with the petition for leave the plaintiffs petitioners should produce in court the plaint for the court 's perusal to enable it to pass a proper order under section 92(1).
This does not preclude the court from requiring the produc tion of any other record necessary for a proper decision.
The court, if it is so satisfied, may grant the leave with out issuing notice to the respondents defendants or hearing them.
In coming to this conclusion, the Division Bench relied upon the earlier decision of the Full Bench of the Kerala High Court in Mayer Simon, Perur vs Advocate General of Kerala and Others, which was rendered before the amendment of Section 92 of the Code in 1976.
Learned Counsel referred to the judgment of a learned Single Judge of Allahabad High Court in Ambrish Kumar Singh vs Raja Abhushan Bran Bramhshan and Others, AIR 1989 Allaha bad 194.
In that case the learned Judge held that while granting leave the court does not decide the rights of the parties.
No right is adjudicated at this stage.
The court has merely to see whether there is a prima facie case for granting leave to file a suit.
This order does not in any way affect the final decision which will be given on merits after the parties have 274 led evidence in the suit.
Section 92 of the Code does not contemplate giving of any notice to the proposed defendants before granting leave.
Learned counsel for the respondent.
on the other hand drew our attention to the afore mentioned decision of the Madras High Court in T.M. Shanmugham and Others vs The Periyar Self Respect Propaganda Institution and Others, which has been relied upon in the impugned judgment.
In that case a learned Judge of the said High Court held that leave granted to the plaintiffs to institute a suit under section 92 of the Code without notice to the defendants is void in law and the logical consequence will be that the institution and the numbering of the suit cannot be validly sustained in law and, therefore, the suit was liable to be dismissed on that technical ground.
However, this will not stand in the way of the plaintiffs, if so desired, to institute fresh proceedings in accordance with law under section 92 of the Code.
In the case of Gurdwara Prabandhak Committee.
Delhi Cantonment and Others vs Amarjit Singh Sabharwal and Others.
a learned Single Judge of the Delhi High Court has taken the view that an order of District Judge granting or refusing leave must be a reasoned order.
The public trust concerned has right to be heard before the grant or refusal of leave.
It was held by him that if the trust is not given an opportunity of being heard, it would be a material irregularity.
To pass a non speaking order in a judicial proceeding is also a material irregularity and revision would lie against such an irregularity.
The grant ing or refusing leave is a judicial order subject to revi sion or appeal and it must be supported by reasons.
Before such an order is passed both sides must have had an opportu nity of being heard.
As far as the decisions of this Court which have been pointed out to us are concerned, the question as to whether before granting leave to institute a suit under section 92 of the Code, the Court is required to give an opportunity of being heard to the proposed defendants did not arise for determination at all in those cases.
As far as the High Courts are concerned, they have taken different views on this question.
The legislative history of section 92 of the Code indicates that one of the objects which led to the enactment of the said section was to enable two or more persons interested in any trust created for a public purpose of a charitable or religious nature should be enabled to file a suit for the reliefs set out in the said section without having to join all the beneficiaries since it would be highly inconvenient and impractic 275 able for all the beneficiaries to join in the suit; hence any two or more of them were given the right to institute a suit for the reliefs mentioned in the said section 92 of the Code.
However, it was considered desirable to prevent a public trust from being harassed or put to legal expenses by reckless or frivolous suits being brought against the trus tees and hence, a provision was made for leave of the court having to be obtained before the suit is instituted.
A plain reading of section 92 of the Code indicates that leave of the court is a pre condition or a condition prece dent for the institution of a suit against a public trust for the reliefs set out in the said section: unless all the beneficiaries join in instituting the suit.
if such a suit is instituted without leave, it would not be maintainable at all.
Having in mind, the objectives underlying section 92 and the language thereof.
it appears to us that, as a rule caution, the court should normally.
unless it is impractica ble or inconvenient to do so, give a notice to the proposed defendants before granting leave under section 92 to insti tute a suit.
The defendants could bring to the notice of the court for instance that the allegations made in the plaint are frivolous or reckless.
Apart from this.
they could, in a given case, point out that the persons who are applying for leave under section 92 are doing so merely with a view to harass the trust or have such antecedents that it would be undesirable to grant leave to such persons.
The desirability of such notice being given to the defendants, however, cannot be regarded as a statutory requirement to be complied with before leave under section 92 can be granted as that would lead to unnecessary delay and, in a given case.
cause considerable loss to the public trust.
Such a construction of the provisions of section 92 of the Code would render it difficult for the beneficiaries of a public trust to obtain urgent interim orders from the court even though the circum stances might warrant such relief being granted.
Keeping in mind these considerations, in our opinion.
although, as a rule of caution, court should normally give notice to the defendants before granting leave under the said section to institute a suit.
the court ' is not bound to do so.
If a suit is instituted on the basis of such leave, granted without notice to the defendants, the suit would not thereby be rendered bad in law or non maintainable.
The grant of leave cannot be regarded as defeating or even seriously prejudicing any right of the proposed defendants because it is always open to them to file an application for revocation of the leave which can be considered on merits and according to law.
We may mention that although clause (ffa) of a section 104(1) of the Code provides that an appeal shall lie against the refusal of grant of 276 leave, that cannot lead to the conclusion that it is obliga tory on the part of the court to give notice to the proposed defendants before granting leave because an appeal lies only against the refusal of leave and not against the grant of leave.
Before refusing leave the proposed plaintiffs are bound to be heard and it is the plaintiffs and not the defendants who could be prejudiced by refusal to grant such leave.
In the result, the appeals are allowed as aforestated.
The impugned judgment of the High Court is set aside.
The Trial Court is directed to dispose of the application for revocation of leave on merits and in accordance with law.
On the facts and circumstances of the case, there will be no order as to cost incurred so far.
R.S. section Appeals allowed.
| The appellants instituted a representative suit in the court of the learned Subordinate Judge against the respond ents inter alia praying for framing a scheme for a public charitable trust.
On the same day, an application was made in the court praying for leave to institute the suit, as required under section 92 of the Civil Procedure Cede.
The Court granted leave without issuing any notice to the re spondents.
Thereupon, the respondents filed an interim application before the Court for revoking the leave granted inter alia on the ground that the respondents had not been given any opportunity to be heard before leave was granted.
The learned Subordinate Judge dismissed the said application on the ground that the grant of leave was an administrative act of the Court and no notice to the respondents was re quired before the grant of such leave.
The respondents preferred a Civil Revision Petition in the High Court which was allowed.
The learned Single Judge took the view that as the leave had been granted without any notice to the respondents, it was void and liable to be set aside.
Before this Court it was contended on behalf of the appellants that if tile court were required to give an opportunity to the defendants to be heard before granting leave under section 92, the grant of leave would entail a great deal of delay and might defeat the ends of justice where some urgent relief was required.
It was also urged that at the time when the court considered whether to grant leave, it was only the averments in the plaint which had to be examined and hence, the presence of the defendant was not necessary.
It was further submitted that if a defendant had a grievance against the grant of leave, he could always make an application to revoke the same and no prejudice would be caused to the defendant by the grant of leave.
267 On behalf of the respondents it was submitted that the court could not decide whether leave should be granted or not without giving an opportunity to the defendants who could point out the reasons why leave should not be granted.
Allowing the appeals and directing the Trial Court to dispose of the application for revocation of leave on merits and in accordance with law, this Court, HELD: (1) A plain reading of section 92 of the Civil Procedure Code indicates that leaves of the court is a pre condition or a condition precedent for the institution of a suit against a public trust for the reliefs set out in the said section, unless all the beneficiaries join in institut ing the suit; if such a suit is instituted without leave it would not be maintainable at all.
[275B C] (2) Having in mind the objectives underlying section 92 and the language thereof, it appears that, as a rule of caution, the court should normally, unless it is impractica ble or inconvenient to do so, give a notice to the proposed defendants before granting leave under section 92 to insti tute a suit.
The desirability of such notice being given to the defendants, however, cannot be regarded as a statutory requirement to be complied with before leave under section 92 can be granted as that would lead to unnecessary delay, and in a given case, could cause considerable loss to the public trust.
[275C E] (3) If a suit is instituted on the basis of such leave granted without notice to the defendants, the suit would not thereby be rendered bad in law or non maintainable.
The grant of leave cannot be regarded as defeating or even seriously prejudicing any right of the proposed defendants because it is always open to them to file an application for revocation of the leave which can be considered on merits and according to law.
[275G] T.N. Shanmugam and Others vs The Periyar Self Respect Propaganda Institution and Others, [1984] II MLJ 440; ; Swami Parmatmanand Saraswati & Anr.
vs Ramji Tripathi & Anr., ; , 795; Charan Singh & Anr.
vs Darshan Singh and Ors.
, ; ; Mahant Pragdasji Guru Bhagwandasji vs Patel Ishwarlal Bhai Narsibhai and Others, ; ; Prithipal Singh vs Magh Singh and Others, AIR 1982 Punjab & Haryana 137; Lachhman Dass Udasi (deceased by L. RS.) and Others vs Ranjit Singh and Others.
AIR 1987 Punjab and Haryana 108; I. V. Mathew vs K.V. 268 Thomas.
AIR 1983 Kerala 5; Mayer Simon Perur vs Advocate General of Kerala, ; Ambrish Kumar Singh vs Raja Abhushan Bran Bramhshan and Others, AIR 1989 All 194 and Gurdwara Prabandhak Committee, Delhi Cantonment and Others vs Amarjit Singh Sabharwal and Others, , referred to.
(4) Although clause (ffa) of section 104(1) of the Code of Civil Procedure provides that an appeal shall lie against the refusal of grant of leave, that cannot lead to the conclusion that it is obligatory on the part of the court to give notice to the proposed defendants before granting leave because an appeal lies only against the refusal and not the grant of leave.
[275H; 276A]
|
ivil Appeal No. 1295 of 1973 From the Judgment and Order dated 14.12.
1972 of the Allahabad High Court in Civil Revn.
Petition No. 1572 of 1969.
P.H. Parekh and Suhail Dutt for the Appellant.
Prithvi Raj, Mrs. Shobha Dikshit and Sudhir Kulshreshta for the Respondent.
The Judgment of the Court was delivered by THAKKAR, J.
The proposition canvassed by the appellant, namely, that from the point of time that an order for rate able distribution is passed by the executing court the monies in question cease to be 928 the property of the judgment debtor and 'become the property of the decree holder, regardless of whether or not actual payment pursuant to the said order is made, is supported by the decisions of three High Courts namely, Madras, Calcutta and Bombay.
As early as in 1922 the Madras High Court in Official Receiver of Tanjore vs M.R. Venkatararna lyer, AIR 1922 Madras p. 31 has taken the view canvassed by the appel lant as is evident from the passage quoted hereunder: "It seems to me that from the time of the order of rateable distribution the money must be treated as belong ing, not to the judgment debtor, Nataraja lyer, but to the decreeholder in whose favour the order was passed.
Mr. Devadoss for appellant contended that the effect of a rate able distribution order is merely to allocate the money to the different suits without affecting its ownership.
The latter, he says, still rests in the judgment debtor by the sate of whose property it was allocated.
I do not think this is so.
The section does not speak of distribution among the decree holders.
The latter are entitled to draw it out at will; and the judgment debtor most certainly is not.
I think the money in this case must be treated as the property of the decree holder, the present respondent and that the Official Receiver could no more recover it from the respond ent if it had actually been paid out to him by court.
Mr. Devadoss eventually admitted that he could not recover the money in the circumstances of the present case if it had passed into respondent 's possession.
I would dismiss the appeal with costs.
" A learned Single Judge of the Calcutta High Court has expressed the same view in Murli Tahilram vs T. Asoornal & Co., AIR 1955 Calcutta p. 423, wherein it is observed: "But where a private citizen has sued another to judgment and has in fact got by an order of Court a Receiver appoint ed of his goods and such goods have been sold by the Receiv er under orders of the Court and where there has been a prior direction in the Court 's order to pay the sale pro ceeds to the private judgment creditor, a subsequent claim by the State for arrears of sales tax cannot defeat the judgment creditor or deprive him of the fruits of his decree which is regarded as property.
" 929 And the same view has been reiterated by a Division Bench of the Calcutta High Court in Basanta Kumar Bhattacharjee vs Panchu Gopal Dutta & Ors., AIR 1956 Calcutta p. 23 where in the Court has made recourse to the following reasoning to support the proposition: "This contention, we think, should prevail.
The order allowing the application for rateable distribution that was passed on 2 12 1953 should, we think, be reasonably read as deciding that the decree holders had title to the money.
What remained to be done was the ascertainment of the exact amount which each decree holder was entitled to and payment of the same.
The decision as regards title had already been made and with the decision that 'the money was the decree holder 's money, the position, in our opinion, was that it could no longer be considered in law to be the judgment debtor 's money.
The question of priority of the State 's claim does not, therefore, fail to be decided.
On the date the letter of attachment of the Certificate Officer was received, there was no money belonging to the judgment debtors in the hands of the Court.
" The High Court of Allahabad which has differed from the aforesaid High Courts by the judgment under appeal has proceeded on the assumption that the High Court of Bombay has taken a contrary view in Income tax Officer, Ward C, Sangli & Ant.
vs Chandanbai Balaram Doshi & Ors., AIR 1957 Bombay p. 91.
We are afraid, by the High Court of Bombay in the said case the principle enunciated has been misunder stood.
No order for rateable distribution had been passed by the executing court in the said case.
Even, so, while dis cussing the law on the subject in the context of the scheme of the C.P.C., the High Court of Bombay has articulated the principle thus: "The scheme clearly indicates that, until the Court has directed appropriation of the amount to the claim made by the decree holder or of creditors entitled to rateable distribution, the amount received in Court continues to remain as of the judgment debtor.
" (Emphasis added) By necessary implication it means that as soon as an order for rateable distribution is made, the amount ordered to be distributed will cease to 930 be the property of the judgment debtor.
We are of the same opinion as that of the High Courts of Madras, Calcutta and Bombay.
As soon as the question of rateable distribution between the decree holders and the State having statutory priority is determined, and the Court passes an order as to how to appropriate the assets of the judgment debtor, the rights of the parties become crystalized.
What then remains is to give effect to the determination made by the court by officials in charge of concerned departments dealing with Accounts and Cash which is a ministerial act.
The rights of the respective decree holders or claimants are governed by the order for rateable distribution passed by the Court as a result of the adjudication and determination made by the Court.
Nothing further remains to be done by the Court in the judicial sphere thereafter.
The order partakes of the character of a judgment and decree passed by the Court.
What the officials of the Accounts and Cash department are re quired to do thereafter is to carry out the command of the Court by implementing or giving effect to the order.
The test which can be usefully applied is to pose the question whether the said officials can refuse to implement the order by refusing to make payment once the Court has passed the order.
Obviously and undoubtedly they cannot.
Therefore it is evident that nothing turns on whether or not actual payment pursuant to the order of the Court is made.
And when the Court officials make payment to 'the decree holder, they make payment because the property in the said monies has vested unto them by virtue of the order of distribution passed by the Court.
What is being paid by the officials of Accounts and Cash Sections will be the decree holder 's money, it having ceased to belong to the judgment debtor the moment the order for distribution was made, eventhough actual disbursement was made later.
If the State lays its claim after the order for distribution is made by the Court, it will be of no avail as the property Would have gone beyond the reach of the State, it having ceased to be the property of the debtor against whom the State had a claim.
No question of priority can arise in that situation the State having missed the bus.
In the present case, the amount had ceased to be the property of the judgment debtor from the point of time that the order forateable distribution was passed by the executing court.
There was no question there fore of the State being entitled to claim priority in re spect of the claims lodged by it subsequent to the order for rateable distribution.
The High Court was thus in error in reversing the order passed by the executing court.
We, therefore, allow the appeal, set aside the order of the High Court in so far as the appellant is concerned, and restore the order of 931 the executing court in so far as the appellant is concerned.
The appeal is disposed of accordingly.
There will be no order as to costs.
A.P.J. Appeal dis posed of.
| Section 481(1) of the Delhi Municipal Corporation Act, 1957 empowers the Corporation to make additional bye laws to the existing ones.
Under the power so conferred the Corpora tion introduced Byelaw No.3(i) in the Cycle Rickshaw Bye laws, 1960, under which only an owner of the cycle rickshaw can obtain a licence to keep a cycle rickshaw or to ply for hire and only one such licence would be issued to a person.
By necessary implication it excludes persons who own a number of cycle rickshaws from applying for licences and prohibits the hiring out of the cycle rickshaw by the owner in favour of a rickshaw puller against payment of considera tion.
The Writ Petitioners are owners of cycle rickshaws.
Some of them own two or more cycle rickshaws which are hired out by them to rickshaw pullen under a contract under which the rickshaw pullen have to pay some amount to the owners of the cycle rickshaws at the end of the day out of their earnings during the day.
Being aggrieved by the introduction of Bye law No.3(i), they have moved the Supreme Court under Article 32 of the Constitution that the said Bye law is opposed to Article 19(1)(g) of the Constitution and also outside the scope of section 481 (1)L(5) of the Delhi Municipal Corpora tion Act, 1957.
Dismissing the petitions, the Court, 906 HELD: 1.1 On a consideration of the language of clause (5) in section 481(1) L of the Delhi Municipal Corporation Act, 1957, it is clear that Bye law 3(1) falls within the scope of the power conferred on the Corporation to frame bye laws for the issue of licences in respect of cycle rickshaws which are kept or used for plying in the Delhi Municipal Corporation area.
While framing bye laws under the above statutory provision it is permissible for the Corpora tion to restrict the issue of licences only to the owners of the rickshaws who themselves act as rickshaw pullers.
This is apparently done to prevent exploitation of the rickshaw pullen by the owners of the cycle rickshaws.
A licensing authority may impose any condition while issuing a licence which is in the interest of the general public unless it is either expressly or by necessary implication prohibited from imposing such a condition by the law which confers the power of licensing.
The restriction imposed by the Corporation in the present case is in the interest of the general public.
[910C E] 1.2 The Bye law No.3(1) cannot therefore be said to be either outside the scope of section 481 of the Corporation Act or opposed to the provisions of the Constitution.
[911D] Azad Rickshaw Pullers Union (Regd) Ch.
Town Hall, Amrit sar & Ors.
vs State of Punjab & Ors., [1981] 1 SCR366 and Nanhu & Ors. etc.
vs Delhi Administration & Ors., ; , referred to.
Man Singh & Ors.
vs State of Punjab & Ors., , followed.
(The Court approved the two schemes of financial assist ance, put forward, at its instance, by the Bank of Baroda and the State Bank of India and the willingness of the Credit Guarantee Corporation of India (Small LOans) to guarantee the repayment of the loans advanced to the rick shaw pullers and directed, accordingly, the several branches of the Punjab National Bank, the Bank of Baroda and the State Bank of India operating in Delhi to give financial assistance to rickshaw pullers who wish to oWn cycle rick shaws and ply them under licences issued by the Corporation subject to their producing the necessary eligibility certif icate issued by the Corporation and satisfying the other terms of the Schemes, namely (i) the scheme for financial to cycle rickshaw pullers; and (ii) self employment programme for urban poor (SEPUP).
The court also directed the Delhi Administration to comply with the directions issued in Nanhu
|
iminal Appeal Nos. 211 & 212 of 1969 and Review Petition No. 37 of 1970.
Appeals by Special leave from the judgment of the Calcutta 7 High Court dated August 18, 1969 in Criminal Appeal No. 183 of 1961.
C. K. Daphtary and section K. Dholakia, for the petitioner.
V. A. Seyid Muhammad and section P. Nayar for the respondents.
The Judgment of the Court on August 18, 1970 was delivered by Sikri, J.
These appeals, by special leave, are directed against the judgment of the High Court at Calcutta whereby the High Court (A. K. Das and K. K. Mitra, JJ.) set aside the order of acuittal and convicted the appellants before us under section 23(1A) of the Foreign Exchange Regulation Act (VII of 1947) hereinafter refered to as the Act.
The appellant Girdharilal Gupta, and the appellant Puranmall Jain, were sentenced to rigorous imprisonment for six months each and to pay 750 a fine of Rs. 2,000/ each, in default, to rigorous imprisonment ' for a further period of three months each.
The appellant, Bhagwandeo Tewari was sentenced to rigorous imprisonment for three months and to pay a fine of Rs. 1,000/ , in default, to rigorous imprisonment for two months.
The firm was sentenced to pay a fine of Rs. 2,000/ .
It does not appear that any special leave was obtained on behalf of the firm.
In order to appreciate the contentions made before us it is ncessary to state the relevant facts.
On October 25, 1958, Customs Preventive Officer B. Roy examined a parcel (wooden case) which purported to contain Rasogolla, Achar, papar and dried vegetable, booked for Hongkong, to be taken by the Swiss Air of which the Indian Airlines Corporation was the ,cargo handling agent.
The articles had been declared to be worth Rs. 20/ but the freight which had been paid came to Rs. 127.73 nP.
This excited the suspicion of the Customs Preventive Officer, B. Roy, and on opening the parcel and breaking down the case, five hundred ten currency notes of the denomination of hundred rupees each, valuing Rs. 51,0001 , were found.
The name of the consignor was Ramghawan Singh at Karnani Mansion, Park Street, Calcutta, but on enquiry no trace could be found of this Ramghawan Singh at Karnani Mansion.
In the course of further investigation suspicion fell ,on M/s. Agarwala Trading Corporation of which the appellants Girdharilal Gupta and Fumanmall Jain were the partners and the appellant Bhagwandeo Tewri was an employee.
On January 22, 1959, the office of the firm at 191, Mahatma Gandhi Road and the alleged residence of the partners at 11 B Jatindra Mohan Avenue was searched.
The appellant, Bhagwandeo Tewari, on being identified by the Traffic Assistant of the Indian Airlines Corporation, Ambar Nath Sen, P.W. 4, and one loader of Thai Airways, section K. Battu, P.W. 26, was arrested.
Certain incriminating documents, including account slips and cash books of the firm were seized.
On June 3, 1959, a complaint was lodged at the instance of the Assistant Collector of Customs, Calcutta.
After stating the above facts it was alleged, in the complaint that sending out money in Indian currency was prohibited under section 8(2) of the Act and any attempt to do the same was punishable under section 23B of the, Act.
At the trial a number of witnesses were examined.
B. Roy, Customs Preventive Officer, gave evidence regarding the dis covery of Rs. 51,0001 in Indian currency notes, apart from Rasogollas, pickles, etc.
on October 25, 1958.
No cross examination was directed to show that this did not happen on October 25, 1958.
751 section A. D. Moira, Traffic Assistant of the Indian Airlines Corporation, P.W. 2, who checks freight and does other transshipment work in course of his duties at Dum Dum airport, deposed that he received the relevant documents on October 25, 1958, from Calcutta office.
H. , said that the documents were in the handwriting of N. Sen of the Freight Section of the Calcutta Office.
Armed with the letter of authority, he took the parcel to the Customs Officer and P.W. 1, B. Roy, asked him to open the parcel and currency notes of the value of Rs. 51,000/ , along, with other things were discovered.
R. R. Mukherjee, Traffic Officer of the Indian Airlines Corporation, P.W. 3, is another witness to the recovery of the currency notes.
P.W. 4, Ambare Nath Sen, was the Traffic Assistant in the Indian Airlines Corporation, who had typed out the consignment note in respect of this parcel after seeing the shipping bill (Ext. 1).
He identified the appellant, Bhagwandeo Tewari, as the, person who had handed over the shipping bill to him and the letter of authority, Ext. 11 He said that he .calculated the freight and received the freight, from this appellant.
He further said that this appellant signed the consignment notes in Hindi in his presence and he remembered having seen this appellant writing a postcard on the adjoining table while he was preparing the consignment notes.
He further stated that his immediate superior officer, P. K. Chatterjee, was also present at the time this consignment was being booked.
Apparently this is not the first time that hiss appellant had gone to the Indian Airlines Corporation because P.W. 4 says that seven days ahead of October 24, 1958, this appellant had called on him with another shipment although that consignment was booked by P. K. Chatterji.
Some days after October 25, 1958, this witness P.W. 4was taken by the Customs Officer to some place to find the man who is alleged to have booked the Parcel.
Two or three months thereafter he was again taken by the Customs Officers to another place in Burrabazar area, which was the place of Agarwal Trading Corporation, and he said that he Pointed out the appellant, Bhagwandeo Tiwari, as the one who had taken the Parcel to him on October 24, 1958.
He was cross examined in order to show that he could not remember customers.
He admitted that it was not always possible for him to remember all the men who came in contact with him in the course of his work, but 'he said that he had told C. R. Basu who wag investigating the case that the person who brought the parcel was an oldish man and lean one, and had also described his nose.
He further admitted that at the place he identified appellant Bhagwandeo Tiwari, he was the only oldish man there.
He 4 Ll 100SupCI/71 752 said that he did not think that he committed a mistake unless the man he identified had a double in the shape of a twin brother and the like.
He further admitted that he had been trying to recollect the appearance of the man to reconstruct in his mind the outline of his appearance as far as he could.
The evidence of P.W. 4 impresses us and there is no reason why we should not place reliance on his evidence.
P. K. Chatterjee, P.W. 5, speaks of the earlier visit of the appellant Bhagwandeo Tiwari as the person who called on him with the shipping bill on October 17, 1958.
C. R. Basu, P.W. 6, Officer of the Customs who investigated the case, said that after making enquiries he applied for the issue of search warrant to search the premises No. 191, Mahatama Gandhi Road.
He also applied for a search warrant to search the premises of the partners of the firm at 11 B, Jatindra Mohan Avenue.
He did not himself search 11 B, Jatindra Mohan Avenue, but went to execute the search warrant at 191, Mahatma Gandhi Road, where on the identification of P.W.4 he arrested the appellant Bhagwandeo Tiwari.
He then conducted the search of the premises in the presence of the witnesses and took into possession one Rokar, one khata bahi, one nakal bahi, the attendance register and three account slips which he marked 8, 9 and 10 (Ext.
9 and 9/1 and 9/2 respectively).
We may reproduce his evidence regarding the discovery of these account slips because a great deal of argument has been addressed to us on the recovery of these slips.
He stated "The three slips, about which I have spoken just now, are in the same condition to day as I found them on the day when they were seized.
The witnesses to the search I conducted are Radhesyam Gupta and Lalit Kumar Chandu Lal Parekh.
Here is the search list over my signature and the signature of the witnesses.
(Ext. 10).
" In his cross examined he stated "You are right that Exhibits 9, 9/1 and 9/2 are included in Serial No. 38 of the search list.
The search list does not mention the slips separately but only mentions loose sheets in 'a sealed parcel.
It has been urged that there is no evidence to show when the seal was opened.
It is suggested that these slips have been fabricated and planted.
No such question was put to the witnesses and we are 753 unable 'to presume that the investigating officer would go about fabricating account slips in order to rope in the appellants.
The prosecution produced two witnesses who had signed the recovery list.
The evidence of Radheshyam Gupta, P.W. 7, must be discarded because although he was examined before the Chief Presidency Magistrate he was not made available for cross examination.
The learned counsel, Mr. Bhattacharya, suggested that if this witness had been produced for cross examination he would have deposed against the prosecution.
We are unable to draw any such presumption.
The other witness was Lalit C. L. Parekh, P.W. 8.
He had signed the search list but on cross examination he stated that "Basu had taken slips of paper from the 'Agal Bagal ' of the guddy, by which I mean from underneath the Takia on the bed".
He further said that "bits of paper Basu found from a wooden case as well." He further stated as follows "You are right that Basu placed all these bits of papers at one and the same place.
How many pieces ? I cannot say.
I did not count.
By guess I can say that the number of bits of paper would run to 50 or 60. 1 signed all the pieces of paper which were found so.
" The learned counsel fastens on the last line and says that these slips do not bear the signature of Lalit C. L. Parekh, and therefore it is clear that these have been fabricated later.
We are unable to sustain this contention.
The witness had signed a number of documents including the search list and he pay well have thought that he had signed every piece of paper which was seized.
No such question was put to the investigating officer.
P.W. 11, N. R. Paul, who was the assistant attached to the Appraising Department of the Calcutta Customs deposed re garding the preparation of the shipping bill.
It appears that the shipping bill bore the words "Thai Airways Co." and these words were scored out and "Swiss Air" written in hand.
He could not say who corrected the entry but nothing turns on this because it may be that the original idea was to send the parcel by Thai Airways but later on for some reasons it was not possible to send that parcel through this airways.
The prosecution led evidence to show that as a matter of fact appellant Bhagwandeo Tiwari had approached some body in Thai Airways but we need not dwell on, this part of the case.
754 The prosecution also produced Shridhar Chatterjee, hand writing expert, who examined the signature reading as "Ram Chandra" writing in Hindi and in pencil in the two way bills, Ext. 3 and 4, and the specimen writing, He was of the opinion that the writer of the specimen writing was the writer of the signature "Ram Chandra" appearing in the airway bill.
We may mention that Bhagwandeo Tiwari is alleged to have signed as "Ram Chandra".
The expert also gave the opinion that.
the type written papers, Exts. 11 and IX had been typed on the same machine.
Exhibit 9/2, 'one of the seized account slips, is a very im portant document.
The official translation is printed in the records and reads: "Translation of EXT.9/2 dated 24 10 58. . . 2/8/ 4 cases Godown A/C 1 . . . /8/ 3 "opened below and goods brought.
In Cash (Paper Torn) cases bound (Pettis)(?). . . /4/ Case I ' (Illegible) /2/ Illegible (Paper tom) Cases (Pettis)(Illegi ble) 2 R.B. /151 for coming and going to I.A.C. Rs.223/8/. 4/51 127/73 HongkongShanghai (torn & illegible)" The High Court had to translate it again and the last line was translated into "Hongkong Lagaya" in, place of "Hongkong Shanghai".
In the account books of M/s. Agarwala Trading Corporation (Exts. 21 and 21/1) under the entries dated October 24, 1958, on which date the booking is alleged by the prosecution to have been done, on entry appears as follows: "Rs. 415/ Through Bhagwan Deo /8/ Colli (Janka) 115/ Rickshaw fare 2/ 14/ Cart Charge Rs. 1/8/ Through Ghanshyam & Pandey /4/ Bus fair 1/4/ Bus fair 1/4 Bus Tarm" It will be noticed that the same items appear in Ext.
The breakup in exhibit 9(2) is slightly different but in the account book 755 the four annas and two annas entries have been added to Rs. 2/8/to make Rs. 2/14/ as cart charge.
Again the entries in Ext.
9/1 are as follows "/1/ But hire for going home.
1/4/ Caine from home to Thai (?) Taxi /12/ Riksha hire from Thai /1/ Coolie /4/ Thai Office Colie ______________________ 2/6/ Rs. 147/10/ In Cash" The corresponding entry in the account books are as follows "Rs. 2/6/ (Bus fare /1/Taxi fare Rs. 1/4/ Rickshaw Rs. /12/ Cooli 151 " It is true that the entry of Rs. 127/73 which exists in Ext.
9/2 has not been carried over into the account books but perhaps that would have been even too much for an accountant to do.
He never dreamt that these entries, of Rs. 4/5/ and Rs. 2/6/ in the account books would be seized upon by the prosecution to complete the case against the appellants.
Be that as it may, the entries in the account books demolish the case of defence that these slips were fabricated and that they had nothing to do with the firm.
exhibit 9/2, on the other hand, clearly shows that somebody had gone to the I.A.C. office and paid /15/ for going and coming to the I.A.C. office and paid the incidental charges.
Mr. Bhattacharya, who followed Mr. Chagla for the appellants, contends that a serious question of law is involved, the question being that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated.
It is a novel proposition and he has not been able to cite any authority or principle in support of it.
It all depends on the facts in each, case.
At any rate here we have the corroborative evidence of P.W. 8, who signed the search document and also the entries themselves in the account books and their tallying with the slips.
It was urged on behalf of the defence counsel that these slips could not be taken into consideration at all because they are not evidence.
We are unable to appreciate why they are not evidence.
These are part of the things discovered during search and 756 if the entries therein are carried into the account books there is no reason why these things could not be looked at.
The learned counsel has taken us through the judgments of the Chief Presidency Magistrate and the High Court.
We are in agreement with the conclusions arrived at by the High Court.
We have ourselves gone into the evidence as the High Court had reversed the order of acquittal and in one or two places made minor mistakes.
Mr. Chagla, while arguing on behalf of the partners, said that there was evidence that one, partner was not in Calcutta on the 24th or 25th October, 1958,as he was in Japan.
But even if we take this fact into consideration, which fact was not brought to the notice of the Chief Presidency Magistrate or the High Court, it does not help him at all.
Entries were made in the account books and it was the firm 's money which was spent and he being an active partner is clearly liable under section 23C(1) of the Act which reads : "23C(1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and, was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly; Provided that nothing contained in this sub section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to pre vent such contravention.
" This sub section deems the appellant Girdhari Lal Gupta guilty.
The question is : Has he proved that the contravention took place without his knowledge and he exercised due diligence to prevent such contravention ? What he said in his statement under section 342, Cr P.C., was that he alone looks after the affairs of the firm.
There is also no evidence to show that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention.
The entries were there in his account books and the only thing that, he had to say about these entries in his account books is that they pertain to the routine work of the firm.
Under the circumstances we are unable to exonerate him of the charge.
As far as the other partner, Puramnall Jain, is concerned ' he stated that he does not look after the affairs of the firm and further 757 that he stays all along at Sriganganagar in Rajasthan and does not stay in Calcutta.
The prosecution has not led any reliable evidence to prove that he took any active part in the conduct of the business of the firm.
In these circumstances we are inclined to give him the benefit of doubt and acquit him.
In the result the appeal of Puranmall Jain is allowed and he is acquitted of the charge.
Ms bail bond shall stand cancelled.
The appeals of Girdhari Lal and Bhagwandeo Tewari are dismissed.
[After the above judgment was delivered Review Petition No. 37 of 1970 was filed.
The judgment of the Court thereon was delivered on February 18, 1971 by] Sikri, C.J. We disposed of Criminal Appeals Nos. 211 and 212 of 1959 by our judgment dated August 18, 1970, whereby the appeals of Girdharilal Gupta, and Bhagwandeo Tewari against.
their convictions were dismissed.
Girdharilal Gupta put in this review petition stating that the counsel had omitted to bring to our notice the provisions of section 23C(2) of the Foreign Exchange Regulation Act, 1947 hereinafter referred to as the Act which has a vital bearing on the case.
The judgment in Criminal Appeal No. 211 of 1959 has, therefore, been re opened.
We may mention that Bhagwandeo Tiwari has not filed a review petition against his conviction, upheld by this Court.
Mr. Daphtary contends that on the facts, as found by us, the appellant, Girdhari Lal Gupta, does not come within the purview of section 23C(1) or section 23C(2) of the Act.
Sections 23C(1) and 23C(2) read as follows "23C. (1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place, without his knowledge or that he exercised all due diligence to prevent such contravention.
23C. (2) Notwithstanding anything contained in sub section (1), where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the 758 part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.
For the purposes of this section, (a) " company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm.
Mr. Daphtary contends that there is no evidence to show that the appellant was in charge of the conduct of the business of the firm at the relevant time and therefore, section 23C(1) does not apply.
He further says that as the appellant was abroad, the contravention took place without his knowledge.
We may mention, however, that the defence that he was abroad at the relevant time was not taken in the courts below.
At the time of the last hearing learned counsel produced the passport of the appellant before us from which it appears that he was abroad at that time and came back a few days after the alleged contravention.
Mr. Daphtary further contends that section 23C(2.) also does not apply because there is no evidence that the contravention took place with the consent or connivance of, or was attributable to any neglect on the part of, the appellant.
He referred to us a number of authorities of the High Courts in India which have interpreted similar provisions and we shall refer to them later.
It seems to us quite clear that section 23C(1) is a highly penal section as it makes a person who was in charge and responsible to the company for the conduct of its business vicariously liable, for an offence committed by the company.
Therefore, in accordance with well settled principles this section should be construed strictly.
What then does the expression "a person in charge and responsible for the conduct of the affairs of a company mean ' ? It will be noticed that the word 'company" includes a firm or other association and the same test must apply to a director in charge and a partner of a firm in charge of a business.
It seems to us that in the context a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm.
This inference follows from the wording of section 23C(2).
It mentions director, who may be a party to the policy being followed by a company and yet not be in charge of the business of the company.
Further it mentions manager, who 75 9 usually is in charge of the business but not in over all charge.
Similarly the other officers may be in charge of only some part of business.
In State vs section P. Bhadani(1), Kanhaiya Singh, J., in construing a similar provision of the Employees Provident Fund Act (1952).
Section 14A held that the first sub section would be confined only to officers in the immediate charge of the management of the company.
Later he observed that "it is, therefore, manifest that all the officers of the company not in direct charge of the management of the business are immune from the liability for the offence, unless they have contributed to its commission by consent, connivance or neglect." In R. K. Khandelwal vs State (2 D. section Mathur, J., in construing section 27 of the Drugs Act, 1940, a provision similar to the one we are concerned with, observed : "There can in directors who merely lay down the policy and are not concerned with the day to day working of the Company.
Consequently, the mere fact that the accused person is a partner or director of the Company, shall not make him criminally liable for the offences committed by the Company unless the other ingredients are established which make him criminally liable.
" In The Public Prosecutor vs R. Karuppian(3), Somasundaram J., while dealing with a case arising under the (section 17(1)) observed that the Secretary of the Co operative Milk Society, on the facts of the case, could not be held to be a person in charge of the Society.
On the facts of that case the business of selling milk was done by the clerk of the Society and the Secretary was only an honorary Secretary and was not coming to.
the Society daily.
The only evidence led by the prosecution on this part of the case was of one Sohan Lal Gupta who is a broker.
He stated in examination in chief : "Who exactly the proprietors of the said firm are, I cannot say.
But I can say this much that whenever I had been there I was referred to Girdharilal Gupta (accused No. 2) and Puranmal Jain (accused No. 3) as the Maliks of the firm.
I see accused No. 2 Girdharilal Gupta in court (identified him).
I know that Bhagwandeo Tewari (accused No. 4) is the Cashier of that firm.
I see him here in court (identifies accused No. 4).
(1) A.I.R. [1959] Pat.9.
(2) (3) A.I.R. [1958] Mad.
760 .lm15
I know of another employee of the firm the manager, Jagdish Prasad.
I know another employee of the firm the accountant, Shyamlal.
" The appellant in 'his statement under section 342, Cr.
P.C. stated thus "You ask me, Sir, if I have to say anything about the evidence led in this case to the effect that I happen, to be a partner of accused No. 1 firm.
To that, Sir, my answer is that I am. " The evidence to that end is correct.
I shall only add that I alone look after the affairs of _this firm." Mr. Daphtary says that on this evidence it cannot be held that the appellant was in charge of the conduct of the business.
We are unable to agree with him on this point.
The appellant has himself stated that he alone, looked after the affairs of the firm.
This means that the is in charge of the business of the firm within the meaning of the section though there may be a Manager working under him.
The question then arises whether the appellant was in charge of the conduct of the business of the firm at the time the contravention was committed.
He was not physically present, in Calcutta at the time of the commission of the offence and the prosecution evidence shows that one Jagdish Prasad.
was the manager of the firm.
It is true that the onus of proving that the appellant was in charge of the conduct of the business of the company at the time the contravention took place lies on the Prosecution, but when a partner in charge of a business proceeds abroad it does not mean that he ceases to be charge, unless there is evidence that he gave up charge in favour of another person ' Therefore, we must hold that the appellant was in charge of the business of the firm within the meaning of sec.
23C(1).
But while imposing sentence a Court might take notice of the fact that a person is being vicariously punished for an offence and if he shows that it is possible that the contravention of the Act took place without his knowledge or neglect a sentence of imprisonment may not be imposed.
In this case he was abroad at the time of contravention and it is possible that the contravention took place without his knowledge or because of lack of diligence.
It seems to us that on the facts of this case a sentence of fine of Rs. 2,000/ will meet the ends of justice.
The learned counsel for the respondent State urges that this is not a case fit for review because it is only a case of mistaken judgment.
But we are unable to agree with this submission 761 because at the time of the arguments our attention was not drawn.
, specifically to sub section 23C(2) and the light it throws on the interpretation of sub section
In the result the review petition is partly allowed and the judgment of this Court in Criminal Appeal No. 211 of 1969 modified to the extent that the sentence of six months ' rigorous.
imprisonment imposed on Girdharilal is set aside.
The sentence , of fine of Rs. 2,000/ shall, however, stand.
G.C. Ordered accordingly.
| The appellant was a private limited company incorporated with the object of taking over the business carried on by another company.
By an agreement dated August 2, 1956, the appellant company agreed to purchase all the assets goodwill etc.
of the vendors.
By cl. 4 of the agreement it was provided that all assets of the vendors in respect of their business "shall be taken over at the book value standing in the books of accounts of the vendors" as on August 1, 1956.
The Income tax Officer in proceedings for the assessment year 1958 59 found that in the books of the vendors the 'value of stock ' as on August 1, 1956 was Rs. 1,77,285 but in the books of the appellant company the opening stock taken one was valued on the same day at Rs. 2,10,225.
The latter valuation also appeared in the Schedule annexed to the deed of transfer.
The Income tax Officer observed that the valuation by the appellant company of the opening stock was in "clear violation of the agreement between the vendors and the Company".
He accordingly added a sum of Rs. 33,000/ representing the difference between the value of the closing stock in the books of account of the vendors and the opening stock in the books of account of the Company.
The order was confirmed in appeal by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
In reference the High Court of Patna upheld the view taken by these authorities.
A Division Bench of the High Court certified the case under section 66A(2) of the Indian Income tax Act, 1922, observing that the case fulfilled all the requirements of the said section and was a fit case for appeal to the Supreme Court.
The Revenue contended in this Court that the certificate was incompetent as the question of law which had to be decided was not set out and no question of public or private importance had been disclosed.
HELD : (i) In granting the certificate the High Court merely observed that is was 'a fit case for appeal to the Supreme Court ' : they did not indicate the grounds which persuaded them to hold that it was a fit case for appeal to this Court.
It would be conducive to better administration of justice if in certifying a case under section 66A(2) of the Indian Income tax Act as a fit case for appeal, the High Court sets out the question of law which they regard as of public or private importance which falls to be decided by this Court.
[543 G] (ii) It is true that under section 66(1) and (2) of the Indian Income tax Act, 1922 only a question of law may be referred to the High Court for opinion, but the right to obtain a certificate under section 66A(2) arises only when in the proposed appeal a question of great public and private importance arises.
It cannot be held that because a question of law alone may be referred to the High Court under section 66 of the Indian Income tax Act.
in the proposed appeal a question of law of great public or private importance necessarily arises.
Any other view, would make every opinion of the High Court in a reference under section 66 appealable to this Court.
[544 B C] 540 The practice followed in some of the High court of issuing certificates under section 66A(2) without recording reasons or grounds for certifying the case would not justify a departure in the present case from the practice laid down, many years ago by decision of the Judicial Committee of the Privy Council according to which a certificate under section 66A(2) which does not set out precisely the grounds or raise a question of great public or private importance does not comply with the requirements of the Act.[544 E] Commissioner of Income tax, Central Provinces of Berar vs Sir section M. Chitnavis, L.R. 59 I.A. 290, followed.
Delhi Cloth and General Mills Company Ltd. vs Income tax Commissioner, Delhi, L.R. 54 I.A. 421, Banarsi Parshad vs Kashi Krishna Narain & Anr., L.R. 28 I.A. II, Radha Krishn Das vs Rai Krishn Chand, L.R. 48 I.A. 31 and Radhakrishna Ayyar vs Swaminatha Ayyar, L.R. 48 I.A. 31, applied.
(iii)The appellant made no attempt to explain the discrepancy in the valuation of the stock transferred.
The Income tax Officer was of the view that the company had inflated the opening stock so as to reduce the ultimate profits.
That view was confirmed by the Appellate Assistant Commissioner and by the Tribunal.
No question of law arose out of the order of the Tribunal.
The reference itself was incompetent.
[545 A B]
|
Appeal No. 731 of 1966.
779 Appeal by special leave from the judgment and order dated October 22, 1964 of the Madras High Court in Tax Case No. 197 of 1963 (Revision No. 126).
A.K. Sen and A.V. Rangam, for the appellant.
S.T. Desai and T.A. Ramachandran, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave in which the sole question for decision is whether the respondent company was liable to pay sales tax on an amount of Rs. 4,20,000 being the sale price of two arc furnaces which 'had been purchased in 1952 and sold in 1958.
The respondent company carried on business at 38, Mount ROad, Madras.
its main business 'being the.
manufacture and sale of machinery and parts of machinery. ,and accessories.
For manufacturing parts of the machinery, the company maintained a foundry and in 1952 it purchased two arc furnaces for a sum of Rs. 2,13,512.81 for the purpose of using the same in its foundry.
In the account books and the balance sheet of the company these furnaces were shown under the heading "workshop equipment".
According to the company.the furnaces were found to be unsuitable for the purpose for which they had been purchased and therefore they were disposed of in 1958 to a purchaser in Calcutta for a sum of Rs. 4,20,000.
For the assessment year 1958 59 the assessing authorities sought to include the amount of Rs. 4,20,000 in the turnover of the company although it was maintained by the company that the sale represented an isolated sale of its fixed capital assets.
The appeal before the Sales Tax Appellate Tribunal, Madras, also failed.
The view of the tribunal may be stated in its own words : ' "It is not denied that the appellant comes within the scope of the definition of "dealer".
It has to be seen whether the sale of the two arc ' furnaces had a reasonable connection with the normal course of business of the assessee.
The fact that the appellant could, not use them or that they are surplus machinery cannot take it out of the ambit of the appellant 's business of sales of machinery or part of machinery.
The necessity to dispose of unwanted machinery is ingrained in the very nature of business of sale of machinery which the assessee was carrying on and it had to effect sales of such surplus materials".
A revision petition was presented to the High Court of Madras under section 38 of the Madras General Sales Tax Act (Act 1 of 1959) read with section 9(3) of the Central Sale Tax Act, 1956 (Act LXXIV of 1956), hereinafter called the Madras Act and the Central Act 780 respectively. 'Before the High Court it was argued on behalf of the assessee that the furnaces were purchased for the purpose of being installed in the factory.
It was therefore to be used as capital asset and not as a part of the stock in trade.
At the time of purchase the assessee had no idea of selling the furnaces and there was no intention of making any profit.
The business which was carried on by the assessee was entirely different, namely, production of machinery and parts and the sale of the furnaces, when they were found to be unserviceable, was not made in the course of the normal business activity of the assessee.
The position taken up on behalf of the State was that when the assessee carried on the business of selling machinery of various kinds the sale of arc furnaces must be regarded as sale of machinery in the normal course of its business activity.
The learned Judges of the High Court referred to a large number of decided cases including the decision of this Court in State of Andhra Pradesh vs Abdul Bakshi & Bros.(1) Reliance was finally placed on the observations in Ambica Mills Ltd. vs State of Gujarat(2) in which it was observed inter alia that the machinery which had been disposed of had been obviously purchased and installed for use for production of textile goods.
The view taken in that decision was that a person could not be said to be carrying on business of selling assets of that business when sale of such assets had been made only because they had become useless and unserviceable by usual wear and tear or because of the necessity for substituting modern machinery.
In the present case the learned Madras Judges were of the opinion that it was impossible to hold that the sale of the arc furnaces was either ingrained in the business activity of the assessee or 'would constitute its normal business activity.
According to them the mere fact that the sale price exceeded the cost price of the arc furnace was not sufficient to establish that their sale was a business activity or that it was actuated by the profit motive.
It was consequently held that the turnover of the assessee was not liable to sales tax.
Mr. A.K. Sen for the appellant contends that the assessee being a dealer in heavy machinery and accessories thereof the sale of arc furnaces could not be said to be wholly different and unconnected with its usual business activity.
He has emphasised the fact that the assessee had admittedly made a profit of Rs. 2,07,000 from the aforesaid transaction and in addition collected sales tax from the Calcutta dealer.
He has called attention to the finding of the Appellate Assistant Commissioner of Commercial Taxes that the sale in the present ' case was not one of used asset and that whatever the intention at the time of the purchase might be, once the machinery was found not usable, the (1) 15 S.T.C. 644.
(2) 15 S.T.C. 367.
781 assessee "has got necessarily to get into a business venture of selling it and in point of fact sold it at good profit".
It is further urged that the arc furnaces became a part of stock or machinery for sale because the assessee was dealing in manufacture and sale of heavy machinery and it must be deemed to have put the furnaces into its stock in due course of business activity.
Mr. Sen has next pointed out that the respondent fell squarely within the definition of the word "dealer" as defined by section 2(b) of the Central Act.
In support of his submission Mr. Sen sought to rely on a decision of this Court in The State of Andhra Pradesh vs Abdul Bakshi & Bros.(1) In that case the respondents had purchased undressed hides and skins and tanning bark together with other material required in their tannery as they carried on the business of tanning hides and skins and of selling tanned skins in the town of Hyderabad.
For the assessment year 1954 55 the Sales Tax Officer sought to include in the total turnover a certain, amount representing the price paid for buying tanning bark required in their tannery.
The respondents submitted that the tanning bark had been bought for consumption in tannery and not for sate and they were accordingly not dealers in tanning bark.
Therefore the price paid for buying tanning bark was not liable to duty under the Hyderabad General Sales Tax Act.
The departmental authorifles as also the Sales Tax Appellate Tribunal rejected this contention but it was accepted by the High Court of Andhra Pradesh.
The High Court rejected the claim of the taxing authorities to tax the tanning bark on the ground that the purchaser was liable to pay tax only when he was carrying on business of buying and selling the commodity and not when he brought it for consumption in the process for manufacturing an article to be sold by him.
This view was reversed and it was observed as a follows: "A person to be a dealer must be engaged in the business of selling or buying or supplying goods.
The expression "business" though extensively used is a word of indefinite import.
In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit.
To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure".
Mr. Sen has laid stress on what has been said further at pages 647 and 648 : "The Legislature has not made sale of the very article bought by a person a condition for treating him as a (1) 15 S.T.C. 644.
782 dealer: the definition merely requires that the buying of the commodity mentioned in rule 5(2) must be in the course of business, i.e. must be for sale or use with a view to make profit out of the integrated activity of buying and disposal.
The commodity may itself be converted into another saleable commodity, or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such saleable commodity".
The facts in the decision of this Court under discussion were different and distinguishable from the present case.
The tanning bark: was actually consumed in the process of manufacturing another commodity and it was either used as an ingredient or for aiding the process of manufacture which cannot be said about the arc furnaces which were indisputably bought for being installed in the foundry as a part of the manufacturing plant.
The words "in aid of a manufacturing process" have to be read in the context in which they appear in the passage extracted above and cannot be taken to mean that even a part of manufacturing plant will become a salable commodity if it is found to be unusable or no longer required.
Such a view is untenable and cannot be regarded as sustainable in the light of the decision of this Court.
In State of Gujarat vs Raipur Manufacturing Co. Ltd.(1), the tribunal had held that where a cotton textile mill had managed to collect unserviceable article in the course of manufacture of cloth which were sold, sales of these articles must be regarded as a part of the business of the textile mill if the transactions of sale were large and frequent.
After referring to the definition and the expression "dealer" in section 2 (6) of the Bombay Sales Tax Act, 1953 and the other relevant provision of that Act as also the law laid down in the State of Andhra Pradesh vs Abdul Bakshi & Bros.(2) it was observed that by the use of the expression "profit motive" it was not intended that profit must, in fact, be earned nor did the expression cover a mere desire to make some monetary gain out of the transaction or even a series of transactions.
It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity.
Where a person came to own, in the course of his business of manufacturing or selling a commodity some other commodity which is not a byproduct or a subsidiary product of that business and he sold that commodity, cogent evidence that he had the intention to carry on the business of selling that commodity would be required.
It was further observed that where a person in the course of carrying on the business was required to dispose of what might be called his fixed assets or his discarded goods acquired in the course of business, an inference that he desired to carry on the (1) 19 S.T.C. 1.
(2) 15 S.T.C. 644.
783 business of selling his fixed assets or discarded goods would not ordinarily arise.
In the State of Gujarat vs Vivekananda Mills(1), the assessee was carrying on the business of manufacturing cotton fabrics.
It had agreed to purchase under user 's import licence 500 bales of Californian cotton in January 1953.
Believing that the shipment would arrive after six months the assessee made arrangement to purchase 300 bales of similar cotton to meet its immediate requirements.
The consignment of Californian cotton arrived unexpectedly in April 1953.
A large sum of money belonging to the assessee was blocked up and with the sanction of the authorities the assessee sold 411 bales of this cotton to other mills.
It was held that in selling the cotton with a view to avoid locking up of funds, it could not be inferred that.
the assessee had sold the goods with the intention to carry on the business of selling cotton and the sales were not liable to tax.
It was clear from the supplemental statement of the case which had been submitted that though the assessee had been selling cotton from the year 1946 onwards except for three intervening years the sales were in respect of goods purchased for the business of manufacturing cotton cloth and the sales had been effected either because the cotton was surplus or the assessee had to accommodate its sister concern or with the view that the finances were not blocked up by detaining cotton which the assessee did not need for its business.
The facts and circumstances which have been established in the present case are stronger than those in the previous decisions of this Court.
The furnaces were admittedly imported for the purpose of being installed as a part of the plant in the foundry of the assessee.
There is no material whatsoever to show that there was any intention at the time when the furnaces were purchased of selling them at a profit.
According to Mr. Sen himself the assessee decided to sell the furnaces because it was discovered that they were too big to be installed in the manufacturing plant.
The case of the assessee throughout was and no evidence or material to the contrary existed that the furnaces had been shown in the books of the assessee under the classification "workshop equipment".
The same entries existed in the balance sheet.
Although the assessee was dealing in the sale of heavy machinery and machinery part it was nowhere proved that furnaces were ever manufactured or sold by it or were part of its business or ingrained therein.
The arc furnaces were either fixed assets or discarded goods which had been found to be unserviceable or unsuitable.
The assessee could therefore hardly be said to be a dealer within the definition given in section 2(b) of the Central Act which is (1) 19 S.T.C. 103.
784 "dealer" means any.
person who carries on the business of selling goods, and includes a Government which carries on such business.
" This definition has to be read in the light of the principles which have been laid down by this Court in the cases referred to above.
It must therefore be held that the High Court rightly came to the 'conclusion that the sale proceeds of the furnaces could not be included in the turnover of the assessee for the purpose of determining the liability of the assessee to sales tax.
The appeal fails and is dismissed with costs.
Appeal dismissed.
| The appellant Bank, agreed to finance the contracts undertaken by M. and to advance monies against his bills for supplies under the contracts.
For the purpose of carrying out this arrangement M executed an irrevocable power of attorney in favour of the appellant authorising the latter to receive all monies due or to become due to M in respect of pending or future contracts.
M made a bill, endorsed it in favour of the appellant for collection, and handed it over to the appellant for collection.
Before the appellant received the payment, the amount under the bill was attached by the first respondent in execution of a money decree obtained by him against M.
The appellant filed a suit for a declaration that he was the assignee of the bill and the first respondent had no right to attach it.
The suit was decreed, but in appeal, the High Court dismissed the suit.
In appeal, on certificate, this Court: HELD: The appeal must be allowed.
The power of attorney coupled with the endorsement on the bill was a clear engagement by M to pay the appellant Bank out of the monies receivable under the bill and amounted to an equitable assignment of the fund by way of security.
The obvious intention of the parties was to provide protection for the lender and to secure repayment of the loans.
With that object in view the lender was authorised to receive payment of the loans.
As the lender had an interest in the funds the power of attorney was expressed to be irrevocable.
[597 D, H] There can be a valid equitable assignment of future.
debts.
A pay order is revocable mandate.
It gives the payee no interest in the fund.
An assignment creates an interest in the fund and is not revocable.
Read in the light of the power of attorney the endorsement on the bill created an interest in a specific fund and was irrevocable.
There was thus a sufficient equitable assignment of a specific fund in favour of the appellant Bank.
[598 H; 599 B] Loonkaran Sethiya vs State Bank of Jaipur, ; followed.
Palmer vs Carey ; at 706; Tailby vs Official Receiver, , applied, Jagabhai Lallubhai vs Rustamji Nauserwanji, Bom.
311, referred to.
|
ivil Appeal No. 2422 of 1989.
From the Judgment and Order dated 3.9.1988 of the Bombay High Court in Appeal from Order No. 707 of 1987.
Soli J. Sorabjee, R.F. Nariman, Raian Karanjawala, Ms. Meenakshi Arora, Ms. Nandini Gore and Ms. Manik Karanjawala for the Appellant.
Anil Diwan, Harish N. Salve, Ms. Indu Malhotra, Mrs. Ayesha Karim, I.R. Joshi, M. Gandhi and H.J. Javeri for the Respondents.
The Judgment of the Court was delivered by V. RAMASAMI, J.
This appeal arises out of notice of motion taken by the plaintiff in Civil Suit No. 2987 of 1987 on the file of the Bombay City Civil Court at Bombay for interim injunction pending the suit restraining defendants 1 to 3 from parting with possession and defendants 4 and 5 from entering into or taking possession and or remaining in possession or enjoyment of the suit property, namely, Dorab Villa, 29, Perry Cross Road, Bandra, Bombay, or any part or portion thereof.
The appellant is the plaintiff and defend ants 1 to 5 are respondents 1 to 5.
The appellant is the owner of an undivided half share in the suit property.
The suit property was purchased original ly under a deed dated 12th January, 1934 by Cawasji Dorabji Warden, Banubai Warden and the appellant as joint owners.
Cawasji Dorabji Warden and Banubai are respectively the father and mother of the appellant.
It appears that the super structure on the land was constructed subsequent to the purchase.
At the time when the property was purchased 337 the appellant was a minor.
By a registered deed of declara tion that the appellant made a declaration that the appel lant has an undivided share in the said piece of land and the building erected thereon as joint tenants with the declarants, and that in the event of the appellant 's surviv ing the declarants, he shall by virtue of the said joint tenancy and his survival becomes solely and beneficially entitled to the said piece of land and the building thereon.
However, this deed reserved a right to either or both the declarants and the appellant from severing the joint tenancy at any time.
On the death of Banubai on 9th June, 1946 the appellant and his father as surviving joint tenants came to own the entire property.
Under an agreement dated 23rd of August, 1951 the appellant and his father, who were then the joint tenants of the said property, agreed to hold the same as tenants in common, each having an equal undivided share therein so that each can dispose of his undivided share in the property and each share become a separate stock of descent.
On 16th April, 1952 the appellant 's father trans ferred his undivided haft share in the suit property in favour of his another son by name Sohrab Warden in cansider ation of the said Sohrab releasing in favour of his father his undivided share in some other property described in the second schedule to that document.
Thus the appellant and his brother Sohrab came to hold an equal undivided one half share each, as tenants in common in respect of the said property.
Sohrab died intestate on 12th October, 1976 leaving behind him his widow the first respondent and his two minor sons the second and third respondents in this appeal.
Re spondents 1 to 3 sold their undivided one half share in the said property to the fourth respondent and his wife under a sale deed dated 16th April, 1987.
On the 18th April, 1987 praying for a decree directing respondents 1, 2 and 3 from parting with possession of the said property or any part thereof and/or inducting any third party including respond ent 4 into the said property or any part or portion thereof, and for further directions against respondents 4 and 5 from entering into or taking possession and/or remaining in possession or enjoyment of the suit property from defendants 1, 2 and 3 or otherwise.
The fifth respondent was impleaded on the assumption that he and the fourth respondent jointly purchased the property but it is now accepted that he is not one of the purchasers and the property was purchased by the fourth respondent and his wife.
Pending the suit the appel lant prayed for an interim injunction restraining the re spondents 1 to 3 from parting with possession of the said property or any part thereof and/or inducting the fourth respondent into the suit property or any part or portion thereof and a similar injunction restraining the fourth respondent from entering into or taking possession and/or 338 remaining in possession or enjoyment of the suit property or part thereof.
The suit was filed on the ground that the suit property is a dwelling house belonging to an undivided family, that there had not been any division of the said property at any time, that the plaintiff and his deceased brother Sohrab during his fife time were for convenience occupying differ ent portions, the plaintiff occupying the first floor while the deceased Sohrab was occupying the ground floor.
After the death of Sohrab respondents 1 to 3 continue to be in occupation of that portion which was in the occupation of Sohrab.
In the circumstances the fourth defendant who is a stranger to the family has no right to have joint possession or common enjoyment of the property along with the plaintiff on the basis of the purchase of the undivided share.
On this ground the appellant plaintiff claimed that he is entitled to perpetual injunction as prayed for in the suit.
He fur ther claimed that pending the suit he is entitled to an interim relief as prayed for and that if the said relief is not granted irreparable loss and great prejudice will be caused to him which cannot be compensated in terms of money, and that the equity and balance of convenience is in his favour and no prejudice or loss would be caused to the respondents.
In the counter affidavit filed by the fourth respondent and the first respondent on behalf of herself and two minor sons it was contended that though the appellant and respond ents 1, 2 and 3 were owning the property in equal moity they were holding it in their individual capacity and not as members of joint family and that the suit property is not joint family property or property belonging to an undivided family.
The further case of the defendant was that since 1968 when Sohrab got married the appellant and 'his family had been in exclusive occupation of the upper floor of the Bungalow and a garage while the entire ground floor of the building of the said property and another garage was in the exclusive use and possession of Sohrab and his family and that the compound, staircase and the terrace were in joint possession.
They were also having separate mess, separate electricity and water meters and that they were paying proportionate taxes.
After the death of the said Sohrab, respondents 1 to 3 continued to stay and occupy exclusively the said ground floor as well as the garage till the said one half portion of the property was sold and conveyed absolutely to the fourth respondent and his wife.
1n the circumstances though the property was held as tenants in common, there had already been a partition as to the user of the property.
The fourth respondent had taken possession of that portion of the property which was in 339 occupation of respondents 1 to 3 in pursuance of the sale deed.
The further contention was that it is not the appel lant who would suffer irreparable loss and great prejudice if the injunction is granted but it is the respondents who would suffer the loss and prejudice and that the balance of convenience is not in favour of the appellant.
The trial court found that the suit property is dwelling house belonging to an undivided family, that there was no partition of the same by metes and bounds at any time, that the plaintiff and his father at the material time were undivided qua the entire suit property, that though the family of the appellant and the family of his brother Sohrab may be divided for food and worship they were not divided qua the suit property, that so far as the suit property is concerned the appellant and his family and the family of respondents 1, 2 and 3 were joint and undivided and that the case would fall within the scope of the second paragraph of section 44 of the Transfer of Property Act and that, there fore, respondent 4 and his wife as strangers were not enti tled to joint possession of the said family dwelling house.
Since the defendant had claimed that he already entered into possession interim mandatory injunction was granted to the effect that the fourth respondent, his servants and his agents are restrained "from remaining in possession or enjoyment of the suit property" or any part or portion thereof.
However, the learned Judge ordered that this in junction order would not prevent the fourth respondent to occasionally enter the suit property to enquire that on one else other than the plaintiff and his family members is entering into possession of the portion of the ground floor and one garage which he has purchased.
On appeal the High Court was of the view that prims facie the facts indicate that throughout the parties have lived separately, that there appear to have been severance in status and it is not possible to give a finding that there has been no partition between the parties, that the matter requires evidence on either side as to what extent the ground floor could have ever been considered as a family dwelling house that granting of interim mandatory injunction will have the effect of virtually deciding the suit without a trial and that the plaintiff has not made out a prima facie case that the plaintiff would suffer irreparable damage, if any injunction is not granted or that the balance of convenience is in his favour.
In that view the learned Single Judge allowed the appeal and set aside the order granting the injunction but directed that during the penden cy of the suit the fourth respondent and his wife shall not make any permanent alterations in the suit 340 premises nor shall they induct any third party, or create any third party interest over the suit property.
Sale deed in favour of the fourth respondent recites that the possession of that portion of the property which was the subject matter of the sale had been handed over to the purchaser and that purchaser can continue to be in possession without any let or hindrance by the vendees.
At the time of the Commissioner 's inspection immediately after filing of the suit except that there were some of the items belonging to respondents 1 to 3, it was found that the fourth respondent had taken possession.
That was the finding of the trial court and it was on that basis the injunction in a mandatory form was granted.
In fact, in this Court also the learned counsel appearing for the parties proceeded on the basis that the purchaser was inducted in the possession of the disputed portion of the house even by the time the Commissioner visited the place.
We, therefore, hold that the purchasers have occupied the disputed portion and the ques tion, therefore, for consideration is whether the appellant is entitled to the injunction in a mandatory form directing the fourth respondent purchaser to vacate the premises.
The trial court gave an interim mandatory injunction directing the fourth respondent not to continue in posses sion.
There could be no doubt that the courts can grant such interlocutory mandatory injunction in certain special cir cumstances.
It would be very useful to refer to some of the English cases which have given some guidelines in granting such injunctions.
In Shepherd Homes Ltd. vs Sandham, , Megarry J. observed: "(iii) On motion, as contrasted with the trial, the court was far more reluctant to grant a mandatory injunction; in a normal case the court must, inter alia, feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted; and this was a higher stand ard than was required for a prohibitory injunction.
" In Evans Marshall & Co. Ltd. vs Bertola SA, the Court of Appeal held that: "Although the failure of a plaintiff to show that he had a reasonable prospect of obtaining a permanent injunction at 341 the trial was a factor which would normally weigh heavily against the grant of an interlocutory injunction, it was not a factor which, as a matter of law, precluded its grant;".
The case law on the subject was fully considered in the latest judgment in Films Rover International Ltd. & Ors.
vs Cannon Film Sales Ltd., [1986] 3 AIIER 772 Hoffmann, J. observed in that case: "But I think it is important in this area to distinguish between fundamental principles and what are sometimes de scribed as 'guidelines ', i.e. useful generalisations about the way to deal with the normal run of cases falling within a particular category.
The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or manda tory, is that there is by definition a risk that the court may make the 'wrong ' decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alterna tively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial.
A fundamental princi ple is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong ' in the sense I have described.
The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle.
" Again at page 781 the learned Judge observed: "The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunc tion.
The second point is that in cases in which there can be no dispute about the use of the term 'mandatory ' to describe the injunction, the same question of substance will determine whether the case is 'normal ' and therefore within the guideline or 'exceptional ' and therefore requiring special treatment.
If it appears to the court that, excep tionally, the case is one in which withholding a mandatory interlocutory injunction would be in fact carry a greater risk of.
injustice than granting it even though the court does not feel a 'high degree of assurance ' about the plain tiff 's chances of establishing his right, there cannot be any rational basis for withholding the injunction.
" 342 and concluded that: "These considerations lead me to conclude that the Court of Appeal in Locabail International Finance Ltd. vs Agroexpon, at 906, at 664 was not intending to 'fetter the court 's discretion by laying down any rules which would have the effect of limiting the flexi bility of the remedy ', to quote Lord Diplock in the Cyanamid case ; at 510, (1975) AC 396 at 407.
Just as the Cyanamid guidelines for prohibitory injunctions which require a plaintiff to show no more than an arguable case recognise the existence of exceptions in which more is required (compare Cayne vs Global Natural Resources plc, , so the guideline approved for mandatory injunctions in Locabail recognises that there may be cases in which less is sufficient.
" On the test 1 to he applied in granting mandatory injunc tions on interlocutory applications in 24 Halsbury 's Laws of England (4th Edn.) para 948 it is stated: "A mandatory injunction can be granted on an interlocutory application as well as at the hearing, but, in the absence of special circumstances, it will not normally be granted.
However, if the case is clear and one which the court thinks ought to be decided at once, or if the act done is a simple and summary one which can be easily remedied, or if the defendant attempts to steel a march on the plaintiff, such as where, on receipt of notice that an injunction is about to be applied for, the defendant hurries on the work in respect of which complaint is made so that when he receives notice of an interim injunction it is completed, a mandatory injunction will be granted on an interlocutory applications.
" The law in United States is the same and it may be found in 42 American Jurisprudence 22 Edn.
page 745 etc.
As far the cases decided in India we may note the fol lowing cases.
In one of the earliest cases in Rasul Karim & Anr.
vs Pirubhai Amirbhai, ILR , Beaman, J. was of the view that the 343 court 's in India have no power to issue a temporary injunc tion in a mandatory form but Shah, J. who constituted a Bench in that case did not agree with Beaman, J. in this view.
However, in a later Division Bench judgment in Champ sey Bhimji & Co. vs The Jamna Flour Mills Co. Ltd., ILR 191416 Bom.
566, two learned Judges of the Bombay High Court took a different view from Beaman, J. and this view is now the prevailing view in the Bombay High Court.
In M. Kandas wami Chetty V.P. Subramania Chetty, ILR 191841 Mad. 208, a Division Bench of the Madras High Court held that court 's in India have the power by virtue of Order 39 Rule 2 of the Code of Civil Procedure to issue temporary injunction in a mandatory form and differed from Beaman 's view accepting the view in Champsey Bhimji & Co. vs Jamna Flour Mills Co. (supra).
In Israil vs Shamser Rahman, ILR 191441 Cal.
436, it was held that the High Court was competent to issue an interim injunction in a mandatory form.
It was further held in this case that in granting an interim injunction what the Court had to determine was whether there was a fair and substantial question to be decided as to what the rights of the parties were and whether the nature and difficulty of the questions was such that it was proper that the injunc tion should be granted until the time for deciding them should arrive.
It was further held that the Court should consider as to where the balance of convenience lie and whether it is desirable that the status quo should be main tained.
While accepting that it is not possible to say that in no circumstances will the Courts in India have any juris diction to issue an ad interim injunction of a mandatory character, in Nandan Pictures Ltd. vs Art Pictures Ltd. & Ors., AIR 1956 Cal.
428 a Division Bench was of the view that if the mandatory injunction is granted at all on an interlocutory application it is granted only to restore the status quo and not granted to establish a new state of things differing from the state which existed at the date when the suit was instituted.
The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the last non contested status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of those acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining.
But since the granting of such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injus tice or irreparable harm, courts have evolved certain guid lines.
Generally stated these guidelines are: 344 (1) The plaintiff has a strong case for trail.
That is, it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction.
(2) It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money.
(3) The balance of convenience is in favour of the one seeking such relief.
Being essentially an equitable relief the grant or refusal of an interlocutory mandatory injunction shall ultimately rest in the sound judicial discretion of the Court to be exercised in the light of the facts and circum stances in each case.
Though the above guidelines are nei ther exhaustive or complete or absolute rules, and there may be exceptional circumstances needing action, applying them as prerequisite for the grant or refusal of such injunctions would be a sound exercise of a judicial discretion.
The suit is one filed under section 44 of the Transfer of Property Act (hereinafter referred to as 'the Act ').
In considering the question of interim mandatory injunction in a suit filed under section 44 of the Act the Court has also to keep in mind the restriction on the rights of the trans feree to joint possession under that section.
The section reads as follows: "44.
Where one of two or more co owners of immoveable property legally competent in that behalf transfers his share of such property or any interest therein, the trans feree acquires, as to such share or interest, and so far as is necessary to give effect to the transfer, the transfer or 's right to joint possession or other common or part enjoyment of the property, and to enforce a partition of the same, but subject to the conditions and liability affecting, at the date of the transfer, the share or interest so trans ferred.
Where the transferee of a share of a dwelling house belong ing to an undivided family is not a member of the family, nothing in this section shall be deemed.
to entitle him to joint possession or other common or part enjoyment of the house.
" In order to attract the second paragraph of this section the 345 subject matter of the transfer has to be a dwelling house belonging to an undivided family and the transfer is a share in the same to a person who is not a member of the family.
Therefore, in order to satisfy the first ingredient of clear existence of the right and its infringement, the plaintiff will have to show a probable case that the suit property is a dwelling house and it belonged to an undivided family.
In other words, on the facts before the Court there is a strong probability of the plaintiff getting the relief prayed for by him in the suit.
On the second and third ingredients having regard to the restriction on the rights of a trans feree for joint possession and the dominant purpose of the second paragraph of section 44 of the Act, there is danger of an injury or violation of the corresponding rights of the other members of the family and an irreparable harm to the plaintiff and the Court 's interference is necessary to protect the interest of the plaintiff.
Since the relief of an interim injunction is all the same an equitable relief the Court shall also consider whether the comparative mis chief or inconvenience which is likely to issue from with holding the injunction will be greater than that which is likely to arise from granting it, which means that the balance of convenience is in favour of the plaintiff.
The first point that has to be considered, therefore, is whether one can have a reasonably certain view at this stage before the actual trial that the suit property is a 'dwell ing house belonging to an undivided family ' within the meaning of section 44 of the Act.
As to what is the meaning of these words in the section, the leading case is the one decided by the Full Bench of the Allahabad High Court in Sultan Begam and Ors.
vs Debi Prasad, All. 324.
That was concerned with the meaning of the phrase "dwelling house belonging to an undivided family" in section 4 of the Partnership Act, 1893.
That section provides that where a share of a dwelling house belonging to an undivided family has been transferred to a person who is not a member of such family and such transferee sues for partition, the Court shall, if any member of the family, being a share holder shall undertake to buy the share of such transferee make a valuation of such share in such manner as it thinks fit and direct the ' sale of such share to such shareholder.
The argument was that the words 'undivided family ' as used in the section mean a joint family and are confined to Hindus or to Muhammadans, who have adopted the Hindu rule as to joint family property.
The counter argument was that the expression is of general application and means a family whether Hindu, Muhammadan, Christian etc.
possessed of a dwelling house which has not been divided or partitioned among the members of the family.
The case itself related to a Muslim family to whom the house belonged.
The full Bench observed: 346 ". in it (section 4 of the Partition Act) we find nothing to indicate that it was intended to apply to any limited class of the community.
The words 'undivided family ' as used in this section appear to be borrowed from section 44 of the Transfer of Property Act.
The last clause of that section prescribes that where the transferee of a share of a dwell ing house belonging to an undivided family is not a member of the family, nothing in this section shall be deemed to entitle him to joint possession or other common or part enjoyment of the dwelling house.
This provision of the Statute is clearly of general application, and the effect of it is to compel the transferee of a dwelling house belonging to an undivided family, who is a stranger to the family, to enforce his rights in regard to such share by partition.
There appears to me to be no reason why the words 'undivided family ' as used in section 4 of the Partition Act, should have a narrator meaning than they have in section 44 of the Transfer of Property Act.
If the Legislature intended that section 4 should have limited operation, we should expect to find some indication of this in the language of the section.
For example, instead of the words 'undivided family ' the expression 'undivided Hindu family ' or 'joint family ' might have been used.
With reference to the object and purpose of such a provision the Full Bench further observed: "as was pointed out by Mr. Wells, Judicial Commissioner, in the case of Kalka Parshad vs Bankey Lall, [1906] 9 Oudh Cases, 158 is to prevent a transferee of a member of a family who is an outsider from forcing his way into a dwell ing house in which other members of his transferor 's family have a right to live, and that the words 'undivided family ' must be taken to mean 'undivided qua the dwelling house in question, and to be a family which owns the house but has not divided it '.
" Again in construing the word "family" and 'undivided family ' a Division bench of the Calcutta High Court in Khirode Chandra Ghoshal & Anr.
vs Saroda Prosad Mitra, observed: "The word 'family ', as used in the Partition Act, ought to be given a liberal and comprehensive meaning, and it does 347 include a group of persons related in blood, who live in one house or under one head or management.
There is nothing in the Partition Act to support the suggestion that the term 'family ' was intended to be used in a very narrow and re stricted sense, namely, a body of persons who can trace their descent from a common ancestor.
" The decision in Nil Kamal Bhattacharjya & Anr.
vs Kamak shya Charan Bhattacharjya & Anr., related to a case of a group of persons who were not the male de scendants of the common ancestor to whom the property in the suit originally belonged but were respectively the sons of the daughter of a grandson of the common ancestor and the sons of a daughter of a son of the said common ancestor.
The learned Judge applied the principle enunciated in Sultan Begam vs Debi Prasad, (supra) to this family and held that it was an undivided family since the house had not been divided by metes and bounds among themselves.
The Madras High Court also followed and applied the ratio of this judgment in the decision in Sivaramayya vs Venkata Subbamma & Ors., AIR 1930 Madras 561.
The next decision to be noted is the one reported in Bhim Singh vs Ratnkar., AIR 1971 Orissa 198.
In that case the undivided family consisted of the plaintiff and the defendants 1 and 2 therein.
The first defendant had alienated 1/3 of his half share in the house property in favour of defendants 7 and 10 who were the appellants before the High Court.
The suit was filed for a permanent injunction restraining defendants 7 and 10 from jointly possessing the disputed house alongwith the plain tiff and defendant 2.
The facts as found by the courts were that by an amicable arrangement among plaintiff and defend ants 1 and 2 they were living separately for a long time, had separated their residences and were living in different houses unconnected with each other but all situate in one homestead and that after the first defendant had alienated his separate interest as well as his separate house in favour of the alienees and in pursuance thereof the alienees were put in possession.
After referring to the judgments we have quoted above and following the principles therein, Ranganath Misra, J. as he then was held: "If in this state of things, a member of the family trans fers his share in the dwelling house to a stranger paragraph 2 of section 44 of the Transfer of Property Act comes into play and the transferee does not become entitled to joint possession or any joint enjoyment of the dwelling house although he would have the right to enforce a partition of his share.
The object of the provision in section 44 is to prevent the 348 intrusion of the strangers into the family residence which is allowed to be possessed and enjoyed by the members of the family alone in spite of the transfer of a share therein in favour of a stranger.
The factual position as has been determined is that the property is still an undivided dwell ing house, possession and enjoyment whereof are confined to the members of the family.
The stranger transferees being debarred by law from exercising right of joint possession which is one of the main incidences of co ownership of the property should be kept out.
" On the question whether the enjoyment of ascertained sepa rate portions of the common dwelling house and the alienee taking possession made any difference the learned Judge quoted the following passage from Udayanath Sahu vs Ratnakar Bej, AIR 1967 Orissa 139 with approval: "If the transferee (stranger) get into possession of a share in the dwelling house, the possession becomes a joint pOs session and is illegal.
Courts cannot countenance or foster illegal possession.
The possession of the defendant trans feree in such a case becomes illegal.
Plaintiff 's co owners are entitled to get a decree for eviction or even for in junction where the transferee threatens to get possession by force.
If there had been a finding that there was severance of joint status but no partition by metes and bounds, de fendant 1 was liable to be evicted from the residential houses and Bari under section 44 of the T.P. Act.
" The learned Judge further held: The last contention of Mr. Pal is that the plaintiff sued for injunction only.
The learned trial judge, however, has decreed ejectment of the transferee defendants and that decree has been upheld.
Once it is held that the plaintiff is entitled to protection under the second part of section 44 of the Transfer of Property Act and the stranger purchas ers are liable to be restrained, it would follow that even if the defendants have been put in possession or have come jointly to possess they can be kept out by injunction.
The effect of that injunction would necessarily mean ejectment.
In that sense and to the said extent, the decree of the trial court upheld by the lower appellate court must be taken to be sustainable.
The remedy of the stranger purchas er is actually one of partition.
Until then, he is obliged to keep 349 out from asserting joint possession.
" We may respectfully state that this is a correct state ment of the law.
There could be no doubt that the ratio of the decisions rendered under section 4 of the Partition Act equally apply to the interpretation of the second paragraph of section 44 as the provisions are complementary to each other and the terms "undivided family" and "dwelling house" have the same meaning in both the sections.
It is not disputed that prior to 1951 the suit dwelling house belonged to the undivided family of the appellant and his father and they were owning the same as joint tenants.
The High Court has relied on a letter dated 12th March, 1951 of the appellant to his father in which the appellant had expressed a desire to retain his share separately so as to enable him to dispose of the same in a manner he chooses and also enable his heirs to succeed.
In pursuance of this letter the appellant and his father executed an agreement dated 23rd of August, 1951 by which they declared that they have severed their status as joint tenants and that hence forth they were holding the said piece of land and building as tenants in common in equal undivided half share.
In the view of the High Court this conversion of joint tenancy of an undivided family into a tenancy in common of the members of that undivided family amounts to a division in the family itself with reference to the property and that, therefore, there shall be deemed to have been a partition between the appellant and his father.
In support of this conclusion the High Court also relied on the further fact that subsequent to the death of the father and marriage of Sohrab the appel lant 's family and Sohrab 's family were occupying different portions of the suit property and enjoying the same exclu sively.
We are afraid that some notions of co parcenary property of a Hindu joint family have been brought in which may not be quite accurate in considering section 44; but what is relevant for the purpose of these proceedings was whether the selling house belonged to an undivided family.
We have already pointed out that even if the family is divided in status in the sense that they were holding the property as tenants in common but undivided qua the property that is the property had not been divided by metes and bounds it would be within the provisions section 44 of the Act.
We had also noticed earlier that Cawasji, the father of the appellant transferred his undivided half share in the suit property in favour of his son Sohrab under a deed dated 16 4 1982.
Two questions may arise for consideration whether this transaction is covered by section 350 44 of the Act and whether after the transfer, the appel lant 's brother and the appellant can be said to be holding the property as undivided family.
The transfer by the father in favour of Sohrab was a transfer in favour of a member of a family as Sohrab was living with them.
Sohrab attained the age of 18 only on 25th December, 1951 and as seen from the other documents he was living with his father and brother till 1968 when he got married.
It is only after he was married the appellant and Sohrab were occupying different portions of the suit property and having different mess.
In the absence of a document evidencing partition of the suit house by metes and bounds and on the documentary evidence showing that the property is held by the appellant and his brother in equal undivided shares, we are of the view that the plaintiff appellant has shown a prima facie case that the dwelling house belonged to an undivided family consist ing of himself and his brother.
The two brothers, therefore, shall be deemed to be holding the property as members of an undivided family and in the absence of the partition by metes and bounds qua this property they shall be deemed to have been holding the dwelling house as an undivided family.
Prima facie, there fore, the transfer by defendants 1 to 3 would come within the mischief of second paragraph of section 44 of the Act.
The next question for consideration is whether irrepara ble injury would be caused to the appellant which could not be compensated in terms of money and whether the balance of convenience is in favour of the appellant.
While section 44 does not give a transferee of a dwelling house belonging to an undivided family a right to joint possession and confer a corresponding right on the other members of the family to deny the right to joint possession to a stranger transferee, section 4 of the Partition Act gives a right to a member of the family who has not transferred his share to purchase the transferee 's share on a value to be fixed in accordance with law when the transferee filed a suit for partition.
Both these are valuable rights to the members of the undivided family whatever may be the object or purpose for which they were conferred on such members.
As we have pointed out in some cases it is stated that the right to joint possession is denied to a transferee in order to prevent a transferee who is an outsider from forcing his way into a dwelling house in which the other members of his transferee 's family have a right to live.
In some other cases giving joint possession was considered to be illegal and the only right of the stranger purchaser is to sue for partition.
All these considerations in our opinion would go only to show that denying an injunction against a transferee in such cases would prima facie cause irreparable injury to the other members of the family.
351 Mr. Sorabjee the learned counsel for the appellant brought to our notice a number of circumstances which go to show that the fourth respondent was fully aware of the limited and restrictive title of respondents 1, 2 and 3 and the bar for joint possession provided in the second para graph of section 44 of the Transfer of Property Act and having purchased with such full knowledge tried to over reach the Court by keeping the whole transaction secret and taking possession of the property purchased before the appellant could get legal redress from the Court.
Apart from the fact that the various recitals in the agreement to sell dated 21.12.1986 and the sale deed 16.4.1987 executed by respondents 1 to 3 in favour of the fourth respondent clear ly show that the fourth respondent was fully aware of the provisions of section 44 of the Act and that he had pur chased the property with the full knowledge of the rights of the other members of the family taking, a complete risk.
Clause 6 of the agreement also specifically provided that: "In case pending the completion of this sale any suit be filed by the said co owner Dorab or other person against the Vendors, or any one or more of them, and an injunction (not being an ad interim injunction) is obtained restraining the Vendors from selling or disposing of the said property, then the Vendors shall have the option to keep this sale in abeyance or to cancel and rescind this agreement.
In the latter case, the earnest money will be returned and the Vendors shall transfer their right, title and interest in the said Bangalow property to the purchaser or his nominee . " This provision in the agreement clearly show that the fourth respondent knew that respondents 1 to 3 have only a limited right to transfer their undivided one half share to a stranger purchaser and they contemplated litigation in this regard.
The said sale was itself hurriedly executed in a hush hush manner keeping the entire transaction secret from the appellant.
The purchasers were also inducted in the premises in a manner which clearly suggests that the re spondents were attempting to forestall the situation and to gain an undue advantage in a hurried and clandestine manner defeating the appellant 's attempt to go to court for appro priate relief.
The suit itself was filed on 18th April, 1987 within two days of the sale without any delay.
On that very day the appellant obtained an interim exparte order in the injunction application but when it was sought to be executed it was reported that the 4th respondent had already taken possession and in view of that the interim order was granted by bracketing the words "remaining 352 in possession" without giving an effect to it pending fur ther consideration of the interim application.
By consent of parties a Commissioner was appointed on 22.4.1987 itself.
The report of the Commissioner showed that not all the articles of Vendors have been removed and the moveables of the purchasers were also only in the process of being brought into the house.
These facts showed the anxiety of the fourth respondent to complete the taking of possession before any order could be obtained by the appellant from the Court.
The learned counsel also referred to the affidavit filed by the first respondent wherein she has still claimed that she is residing in the suit property and the affidavit filed by the fourth respondent in the suit as if he is residing somewhere else and not in the suit property.
The learned counsel also referred to some telephone directories, telephone numbers and addresses given therein which also show that the fourth respondent is residing and having an office in some other places also other then the suit prem ises.
These evidences go to show that the purchaser has occupied the disputed property merely for the purpose of establishing his claim and he did not vacate his earlier permanent residence.
On the other hand the appellant had to leave from the portion of the house where he was living as it was not possible for him to reside there with stranger.
The respondents in such circumstances cannot be permitted to take advantage of their own acts and defeat the claim of the appellant in the suit by saying that old cause of action under section 44 of the Transfer of Property Act no longer survived in view of their taking possession.
In such circum stances it is but just and necessary that a direction should go to the respondents to undo what they have done with knowledge of the appellant 's rights to compel the purchaser or to deny joint possession.
These facts in our view clearly establish that not only a refusal to grant an interim mandatory injunction will do irreparable injury to the appellant but also balance of convenience is in favour of the appellant fox, the grant of such injunction.
In the result we allow the appeal, set aside the judgment of the High Court and restore that of the trial court with costs in this appeal.
We may add that our observations on facts are not to be taken as binding at the time of final disposal of the suit after trial.
We also make it clear that if the vendors desire to come and stay in the portion of the house which was in their possession earlier, they may indicate it to the Court and the trial court on such request will pass appro priate orders in that regard.
R.S.S. Appeal allowed.
| Rule 5 of the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules 1961 requires 50 per cent of the posts of Executive Engineers to be filled by promotion from m.tubers of Class II Service.
Rule .9(3) renders a member of service ineligible for promotion to the rank of Executive Engineer unless he renders five years ' service as an Assistant Executive Engineer, and has passed the depart mental examination.
The first proviso thereto grants pre fernce to an Assistant Executive Engineer over an eligible Class II Officer in the matter of promotion.
The second proviso empowers the Government to reduce the period of five years ' service as an Assistant Executive Engineer.
Rule II prescribes two years ' probation case of direct recruits to the Service.
Rule 15 requires officers appointed to the Service to pass departmental examination within such period as may be prescribed unless they have already done so.
Rule 22 empowers Government to relax the requirement of Rules In cases of undue hardship.
Respondent No. 3, a direct recruit to the post of As sistant Executive Engineer in the Public Health Branch, was promoted to the post of Executive Engineer, Class I Service, defeating the claim of the appellants, members of Class II Service of Engineers In the said Department.
They assailed his appointment by means of a writ petition under Article of the Constitution on the ground that the respondent was not eligible for promotion as he had not rendered five years ' service as an Assistant Executive Engineer and further he had not passed the departmental examination which was the minimum requisite qualification for promotion to the post of Executive Engineer.
Before the High Court the State Govern ment 's plea was that it had relaxed the requirement of Rule 9(3)(a) not only to respondent No. 3 but to other officers also.
The High Court dismissed the writ petition on the view that there was no infirmity in the Government 's order grant ing exemption to respondent 465 In appeal, in addition to the pleas raised before the High Court, it was further submitted that respondent No. 3 was not eligible for promotion as he had not completed two years ' probationary period as Assistant Executive Engineer on the date of his promotion.
Dismissing the appeal, the Court, HELD: 1.
There was no legal infirmity in the promotion of respondent No. 3.
The State Government had granted relax ation to him by reducing the period of service under clause (a) to Rule 9(3) in exercise of its power under the second proviso to the said Rule.
This relaxation was granted as he was the only officer in the department who was a direct recruit to Class I Service.
In addition to that, Rule 22 further confers power on the State Government to grant relaxation with regard to the operation of the Rules.
The Government 's order granting relaxation in favour of respond ent No. 3 was sustainable under Rule 22 also.
[468B D] J.C. Yadav & Ors.
vs State of Haryana & Ors.
, [1990] 1 SCR470, referred to. 2.
The respondent 's promotion to the post of Executive Engineer was not rendered illegal merely because he had not undergone departmental examination in the Public Health Branch.
He had been working as Sub Divisional Engineer in the Public Works Department (Buildings and Roads Branch) for a period of 6 1/2 years prior to his recruitment to the post of Assistant Executive Engineer in the Public Health Branch and during that period he had passed departmental examina tion.
The syllabus prescribed for the departmental examina tion in the Buildings and Roads Branch as well as in the Public Health Branch was almost the same.
The Government was satisfied that there was no necessity for him to pass the examination again.
[469B; 468E~G; 469A] 3.
Non completion of probationary period of two years on the post of Assistant Executive Engineer by respondent No. 3 did not affect the validity of his promotion to the post of Executive Engineer under the Rules.
There is no specific provision in the Rules requiring completion of probationary period for the purposes of promotion within the Service.
It was relevant only for the purpose of confirmation in Class I Service.
[469E; C D]
|
Appeal No. 613 of 1965.
Appeal from the judgment and decree dated March 25, 1960 of the Mysore High Court in Regular Appeal No. 155 of 1953.
V. Krishnamurthy and R. Gopdlakrishnan, for the appellant.
H. R. Gokhale, B. Subbiah and R. Thiagaraian, for, respondents Nos. 2 and 4.
The Judgment of the Court was delivered by Ramaswami, J.
The plaintiff G. Narayana Raju filed O.S. 34 of 1951 52 in the Court of District Judge, Mysore for partition and separate possession of suit properties mentioned in the various schedules of the plaint.
The first defendant is the brother 465 of the plaintiff.
The second defendant is the widow of Muniswami Raju, the eldest brother of the plaintiff.
The third defendant is the legal representative of the plaintiffs mother.
She is now the, appellant having been brought on record as the legal representative of the deceased plaintiff.
The case of the original plaintiff was that he, the first defendant and Muniswami Raju (husband of the second defendant) were the sons of one Gopala Raju and were all members of the joint family Gopalaraju died in May 1931 and after his death the plaintiff and his brothers continued to be members of the joint family.
The joint status of the, family was severed by the issue of a registered notice by the first defendant to the plaintiff in July 1951.
An ancestral house in Nazar bad belonging to the family was acquired by the City IuprovementTrust Board in or about the year 1909.
Out of the compensation paid for that house and supplemented by the earnings of the members of the joint family, the house item No. I of Schedule 'A ' to the plaint was purchased by Gopalaraju in or about the year 1910.
Subsequently item No. 2 of Schedule 'A ' was also purchased by Gopalaraju from the income of item No. I supple mented by the earnings of the members of the family.
All the other items of properties mentioned in Schedule 'A ' and other Schedules attached to the plaint were acquired out of the income from items 1 and 2 of Schedule 'A ', It was further alleged that the business known as "Ambika Stores" was also the joint family business and all the properties mentioned in the Schedules except items I and 2 of Schedule 'A ' were acquired out of the income of the members of the family including the income from the business of Ambika Stores.
The plaintiff accordingly claimed that he and the first defendant would each be entitled to get 5/14ths share and the second and third defendants would each be entitled to get 2/14ths.
share.
In the alternative the plaintiff pleaded that if for any reason the Court held that the properties stand in the name of Muniswami Raju and were not acquired with the aidof the joint familv nucleus, he and the second defendant were entitled to equal shares as co owners of the joint family business.
The suit was mainly contested by the second defendant who asserted that the properties mentioned in all the Schedules of the plaint were self acquisitions of Miiniswami Raju and constituted his separate properties.
It was alleged that Muniswami Raju was the only carniiig member of the family at the time of the acquisition of items 1 and 2 of Schedule operties and the plaintiff and the first defendant were emploved,in petty jobs in Wesley Press.
Muniswami Raju later on employed the plaintiff in his shop as a salaried servant and the latter had no proprietary right in the business of Ambika Stores.
After consideration of the oral and documentary evidence the District Judge held that the plaintiff, first defendant and Muniswami Raju were not divided and that the only property which was divisible was item No. I of Schedule 466 'A ' and there was not sufficient ancestral nucleus for acquisition of the other properties and that all properties except item No. 1 of Schedule 'A were the self acquisitions of Muniswami Raju, that Muniswami I Raju never blended his properties with that of the joint family that the plaintiff was only an employee under Muniswami Raju and therefore he was not entitled to the alternativ ' relief claimed by him.
Accordingly, the District Judge granted a preliminary decree holding that the plaintiff was entitled to 2/7ths share in item No. I of Schedule 'A '.
The plaintiff took the matter in appeal to the Mysore High Court.
By its judgment dated March 25, 1960 the High Court affirmed the decree of the trial court with the modification that besides item No. I of Schedule 'A ' item No. 2 also should be hold to be joint family property and the plaintiff was entitled to partition of his share in this item also.
The High Court cancelled the I direction of the District Judge that the plaintiff should account for the moneys and properties of Muniswami Raju in his hands before he is given possession of his share.
This appeal is brought by certificate on behalf of the plaintiff from the judgment of the Mysore High Court dated March 25, 1960 in R.A. No. 155 of 1953.
The first question to be considered in this appeal is whether the business of Ambika Stores was really the business of the joint family and whether the plaintiff was entitled.
to a partition of his share in the assets of that business.
: It was contended on behalf of the appellant that the business of Ambika Stores grew out of a nucleus of the joint family funds of at least by the efforts of the members of the joint family include the appellant.
The contention of the appellant has been negatived by both the lower courts and there is a concurrent finding that the Ambika Stores was the separate business of Muniswami Raju and it was neither the joint family business nor treated as joint family business, It is wellestablished that there is no presumption under Hindu law that a business standing in the name of any member of the joint family is a joint family business even if that member is the manager, of the joint family.
Unless, it could be shown that the business in the hands of the coparcener grew up with the assistance of the joint family property or joint family funds or that the earnings of the business were blended with the joint family estate, the business remains free and separate.
The question therefore whether the business was begun or carried on with the assistance of joint family property or joint family funds or as a family business is a question of fact. (See the decisions of the Judicial Committee in Bhwu Mal vs Jagannath (1) and in Pearey Lal vs Nanak Chand (1) and of this Court in Chattahatha Karayalar vs Ramachandra (1) A.T.R (2) A.T.R. 467 lyer) (1).
In the present, case there is a concurrent finding of both the lower courts that the business of Ambika Stores was a separate, business of Muniswami Raju and it, was neither a joint family business nor treated as joint family business.
The concurrent finding of the lower courts on this issue is upon a finding of fact and following the usual practice of this Court, it is not now open to further scrutiny by this Court under article 133 of the Constitution.
It was, however, contended on behalf of the appellant that the finding of the lower.
courts is vitiated in, law because of the circumstance that they have not taken into account three important documents, exhibit D, exhibit E and exhibit DDD.
We are unable to accept this argument as correct.
It is manifest on a perusal of the judgment of the High Court that all the documents have been examined, regarding the issue whether the business of Ambika Stores was a joint family business or whether it was p. separate, business of Muni swami Raju.
As regards exhibit D, the High ,Court has, after examining the evidence adduced, remarked that the, mere fact that item No. 2 of Schedule 'A was given as a security by Muniswami Raju did not result in any detriment to the joint family property and, it cannot therefore be held that the business of Ambika Stores grew out of the joint family funds or with the aid of the joint family funds.
On behalf of the appellant reliance was placed on the recitals in exhibit E, a deed of mortgage dated July 26, 1928 executed by Gopalaraju, Muniswamiraju and the appellant in favour of the Mysore Bank.
The property that had been mortgaged under this document is item No. 2 of Schedule 'A '.
The recital is that the borrowing from the Bank was for the business and trade of the executants and for the benefit and use of their family.
There is also a recital in an earlier portion of the document that the business, was being carried on for the benefit of the family, but it is not quite clear as to whether this related to the business carried on by Narayana Raju or whether it was intended to relate to some business carried on by all the three executants.
It is possible that the appellant had other business of his own carried on on his own.
account at that time and it cannot be, assumed that the borrowing under exhibit E must have been for the purpose of Ambika Stores.
It should be noticed that Muniswarni Raju has been described in the document as the proprietor of Ambika Stores which description is.
not consistent with the contention of the appellant that the business, was a joint family business.
The High Court has, in this connection, referred to exhibit I an application dated February 14, 1929, by the appellant to the City Co operative Bank, Mysore wherein, the appellant has said that he was getting a decent earning by doing; out of door commercial business with Ambika Stores.
There is also the, recital in exhibit I that Muniswami Raju was the proprietor of Ambika Stores.
Having regard to this recital in I it is not (1) ; 468 unlikely that the appellant had some business of his own at the material time and it cannot be assumed that borrowing under exhibit E, was for the purpose of Ambika Stores business only.
The High Court has also dealt with the effect of exhibit DDD, mortgage deed produced on behalf of the appellant.
It is true that in this document the appellant and Muniswami Raju have been described as proprietors of Ambika Stores.
The finding of the High Court is that this recital was made in the document for the purposes of borrowing from the Bank.
Reference was made in this context to a letter dated May 5, written by Muniswami Raju as proprietor of Ambika Stores to the Bank of Mysore.
In ' this letter, he has requested the Bank to take note of the fact that he has authorised the appellant to accept drafts, and sign letters etc.
on behalf of the firm ' There is another Letter, exhibit 76, dated April 14, 1934 written by Muniswami Raju to the Bank of Mysore wherein Muniswami Raju has been described as the proprietor of Ambika Stores and there is an intimation to the Bank, that the appellant Narayana Raju was authorised to sign for the firm.
In the context and background of these circumstances it is evident that though both the appellant and Muniswami Raju were described as proprietors of Ambika Stores the description was only for the purpose of borrowing money from the Bank, as contended for by the respondents.
In this connection the High Court has also taken into account exhibit 7 5 (b), a letter written by Muniswami Raju.
In this letter Muniswami Raju has described himself as the proprietor of Ambika Stores and has instructed the Bank that he has cancelled the authority given to the appellant to operate one his Current Account with the Bank.
It is therefore not possible for us to accept the contention of the appellant that the finding of the High Court that the business of Ambika Stores was the exclusive business of Muniswami Raju is vitiated in law.
On the other hand, it was contended on behalf of the respon dents that the finding of the High Court is supported by proper evidence.
The business of Ambika Stores was started by Muniswamiraju as the proprietor thereof at a time when Muniswamiraju himself was comparatively well off as a result of his partnership with Krishnaswamy Chetty & Co. In the year 1925 the partnership of Krishnaswamy Chetty & Co. was dissolved by a document exhibit D.
The entire business with 'all the assets ad liabilities was taken over by Muniswami Raju while the widow and son of Krishnaswamy Chetty were given a house estimated by the appellant himself at Rs. 3,000/ and furniture worth Rs. 400/ .
Muniswami Raju changed the name of the 'shop after taking it over into Ambika Stores and continued the business as is apparent from Exs.
XVIII, XXVI and XXVI(A).
There is also evidence that at the time when Ambika Stores was started other members of the family we 're not in a financial position to make any contribution to pur 469 such a business.
The appellant joined Wesley Press in 1912 on a salary of Rs. 8 or Rs. 9 p.m. and he was drawing Rs. 27 p.m. in 1927 when he resigned from the Press.
The first defendant joined Wesle Press in 1910 on a salary of Rs. 10 p.m. and he was continuing to work there till the institution of the present suit. 'Me income of the property item No. 2 of ' Schedule 'A ' was Rs. 15 p.m. and the income from pounding rice for which there is no satisfactory evidence was also negligible.
Therefore, the earnings of the members of the family other than Muniswami Raju were hardly sufficiently to maintain the family at the time when the business of Ambika Stores was started.
The High Court has found that the family did not have sufficient nucleus and that Muniswami Raju was not a partner of Krishnaswamy Chetty & Co. on behalf of the family but that he was a partner in his own right.
The High Court has observed that there is no evidence to show that the family supplied the money or that the family had enough means or that Muniswami Raju was representing the family when he started the business of Ambika Stores.
As we have already said, the finding of the High Court and of the District Judge is a concurrent finding on a question of fact and Counsel on behalf of the appellant has been unable to make good his argument that the finding is vitiated in law on any account.
We pass on to consider the alternative argument put forward on behalf of the appellant, namely, that even if the business of Ambika Stores was started as, a separate business of Muniswami Raju, it became converted at a subsequent stage into joint family business.
It was argued on behalf of the appellant that the business of Ambika Stores was thrown by Muniswami Raju into the common stock with the intention of abandoning all separate claims to it and therefore the business of Ambika Stores lost its character of a separate property and was impressed with the character of joint family property.
It is a well established doctrine of Hindu law that property which was originally self acquired may become joint property if it has been voluntarily thrown by the coparcener into the joint stock with the intention of abandoning all separate claims upon it.
The doctrine has been repeatedly recognized by the Judicial Committee [See Hurpurshad vs Shea Dayal(1) and Lal Bahadur vs 'Kanhaiya Lal( ).
But the question whether the 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 copareener to waive his separate rights and such an intention will not be inferred merely from acts which may have been done, from kindness or affection [See the decision in Lata Muddun Gopat vs Khikhinda Koer (3).
For instance, in Naina Piltal vs Daiyanai (1) 3 I.A. 259.
(2) 34 I. A. 65.
(3) 18 I. A. 9.
470 Ammal, (1) where in a series of documents, self acouired property was described and dealt with as ancestral joint family it was held by the Madras High Court that the mere dealing with self acquisitions as joint family property was not sufficient but an intention of the coparcener must be shown to waive his claims with full knowledge of his right to it as his separate property.
The important point to keep in mind, is that the separate property of a Hindu coparcener ceases to be his separate property and acquires the characteristics of his joint family or ancestral property, not by mere act of physical mixing with his joint family or ancestral property, but by his own volition and intention, by his waiving or surrendering his special right it as separate prop".
A man 's intention can be discovered only from his words or from his acts I and conduct.
When his inention with regard to his separate property is not expressed in words, we must seek for it in his acts and conduct.
But it is the intention that we must seek in every case, I the acts and conduct being no more than evidence of the intention.
In the present case, the High Court has examined the evidence adduced by the parties and has reached the conclusion that there was no intention on the part of Muniswami Raju to throw the separate business of Ambika Stores into the common stock, nor was it his intention to treat it as a joint family business.
Counsel on behalf of the appellant referred to the recital, in exhibit E describing the properties being those of the executants and that the borrowings was for trade and benefit of the family and it was argued that there was a clear intention on the part of.
Muniswaini Raju to treat the business as joint family business.
We have already referred to this document and indicated that the recitals were probably made for the purpose of securing a loan and cannot be construed as consent on the part of the members of the joint family to treat the business as the joint family business.
Further, there is ample evidence to show that in all succeeding years before his death Muniswami Raju had always described himself and conducted himself as the sole proprietor of Ambika Stores, Such an attitude on the part of Muniswami Raju was not consistent with any intention on his part either to abandon his exclusive right to the business or to allow the business ' to be treated as joint family business.
Exhibits XXXV to XLVI are all documents executed by third parties in favour of Muniswami Raju in which Muniswami Raju has been described as the proprietor of Ambika Stores.
Exhibits III, XXIII, XXIV, 51, 52, 56, 58, ZZ, AAA series and BBB are all communications addressed by institutions like Banks etc., in which Muniswwni Raju has been described as the proprietor of Ambika Stores.
It may be stated that the appellant himself has admitted in his evidence that he was not drawing any moneys from the business of Ambika Stores and that whenever he wanted any_money, he would ask Muniswami Raju and obtain (1) A.I.R. 1936 Mad .177. 471 from him.
If really the appellant had considered himself to be I co owner equally with Muniswami Raju, such conduct on his part is not explicable.
it was urged on behalf of the appellant that there was no documentary evidence to show that the appellant was being paid any salary 'Muniswami Raju, and that prior to Muniswami Raju 's death, it was the appellant who was in the entire management of Ambike stores when Muniswami Raju was ill and after the death of Muniswami Raju also it was the appellant who had been in management.
Al, the books of account and other documents pertaining to the business of Ambika Stores had been admittedly entrusted to the appellant.
But it is not explained on behalf of the appellant as to why the documents were not produced on his behalf to disprove the Case of the respondents that he was a salaried servant.
It is therefore not unreasonable to draw an inference from the conduct of the appellant that the Account Books, if produced in court, would not have supported his case.
We accordingly reject the argument of the appellant that the business of Ambika Stores became converted into joint family business at any subsequent stage by the conduct of Muniswami Raju in throwing the business into the common stock or in blending the earnings of the business with the joint family income.
it was finally contended on behalf of the appellant that, in any event, the appellant became a co owner of the business along with Muniswami Raju by reason of contribution of his own labour towards the development of the business.
In our opinion, there is no substance in this argument.
It is evident that the appellant gave up his job in Wesley Press and joined Ambika Stores about 9 or 10 months after it was started by Muniswami Raju.
The appellant does not state in his evidence that he was a co owner when he joined Ambika Stores.
On the other hand, in exhibit 68 which is an application dated March 20, 1928 by the appellant to the City Co operative Bank, the appellant has described himself as a clerk in Ambika Stores and Muniswami Raju has been described as his proprietor.
There is no satisfactory evidence on behalf of the appellant to show as to when and under which circumstances his status of a clerk changed to that of a co owner.
In another application, exhibit I which is of the year 1929 the appellant has described Muniswami Raju as the Proprietor of Ambika Stores and he has described himself as doing out door commercial business with Ambika Stores.
Again, in exhibit C which is a loan application made in 1932 by both the brothers, Muniswami Raju has been described as the proprietor of Ambika Stores while the appellant has been described as a General Merchant of Mysore.
Reference was made on behalf of the appellant to recitals in exhibit DDD, a mortgage deed dated June 20, 1934 in which Muniswami Raju and the appellant have been described as proprietors of Ambika Stores.
We have already dealt with this, document and for the reasons already mentioned we hold that the description of the 472 executants was only given for the purpose of borrowing from the Bank and it had not the legal effect of making the appellant .
co owner of the partnership business.
There is no evidence of any assertion by the appellant during Muniswami Raju 's life time of his being a co owner of the partnership business, nor is there any evidence of recognition by Muniswami Raju of any such right of the appellant.
On the other hand, there is sufficient evidence to show that whatever the appellant did in connection with the business was only done with the Authority conferd by Muniswami Raju.
In our opinion the High Court has rightly rejected the claim of the appellant that he was a co owner of the partnership business.
For the reason expressed we hold that this appeal has no merit and it must be dismissed with costs.
R.K.P.S. Appeal dismissed.
| Under section 73 of the Bombay Municipal Boroughs Act, 1925 read with rr.
4(1) and 5 made thereunder a rate on nonresidential buildings belonging to factories and mills was leviable on a capital basis, and the capital value for this purpose was to be worked out, if 'reliable data ' were furnished by the assessee, on the basis of such data.
The respondent company owned certain buildings on which rat was leviable under r. 4(1) on the basis of capital value.
The respondent company claimed that the actual cost of construction of the buildings in 1920 ought to be taken as the capital value.
The Municipality of Godhra however made its own estimate of the capital value.
Thereafter the Judicial Magistrate and the Sessions Judge made valuations taking into account the rise in the cost of building materials since 1920.
The High Court in revision upheld the view that the actual cost minus depreciation thereon should be the capital value; it observed that the English law and practice as to levy of rates was not relevant in the Indian context.
The Municipality appealed.
HELD: (i) When legislatures in this country enact statutes which closely resemble statutes in England and have the same purpose and object in view, then unless the expressions used in the Indian Statutes are defined courts of law cannot go wrong in interpreting them in the way English judges have done.
Further, the words which have acquired a particular shade of meaning in England may be given the same meaning unless there is anything in the statute its, If which would be contraindicative.
[486 F G] (ii) Section 73 empowered the municipality to impose a rate on buildings or lands.
The word 'rate ' had not been defined in the Act but it has a well known meaning.
In Patel Gordhandas,s, case this Court examined various statutes bearing on the English rating law and held that the word 'rate ' was used with respect to a tax which was levied on the net annual value or rateable value of lands and buildings and not on their capital value, but capital value could be adopted as the basis for working out the annual value.
[485G 486E] (iii) Rule 4 of the Godhra Municipal Rules shows what properties are to be valued on capital basis.
What the capital basis is not defined.
The capital value however can be determined in the way laid down in Patel Gordhandasg case by adopting the contractor 's method.
[487B].
(iv) The figures given in the balance sheet of the company could not be regarded as 'reliable data ' for the purpose of r. 5.
The figures given in the balance sheet are merely statements in terms of the form given in 482 Schedule VI.
They have no relevance in determining the capital value of property for the purpose of assessment to a rate.
[488 B C] [Case remanded to District Judge for determining capital value by adopting contractors method in the light of the observations made by this Court.] Patel Gordhandas Hargovindas vs Municipal Commissioner, Ahmedabad, ; , relied on.
R. vs School Board for London, (1885) 55 L.J.M.C. 33, referred to.
|
minal Appeal No. 213 of 1967.
Appeal by special leave from the, judgment and order, dated May 19, 1967 of the Allahabad High Court (Lucknow Bench) at Lucknow in Criminal Appeal No. 118 of 1967 and capital sen tence No. 11 of 1967.
R. K. Garg, section C. Agarwala, D. P. Singh and A. K. Gupta, for the appellants.
O. P. Rana, for the respondent.
The Judgment of the Court was delivered by Shelat, J.
This appeal, by special leave is directed against the judgment of the High Court of Allahabad which confirmed the convictions and sentences passed by the Sessions Judge, Hardoi, in respect of the murders of Lal Singh and his father Harihar.
The ten appellants on being convicted under sections 302 and 201 read with section 149 of the Penal Code were awarded various sentences.
Four of them, namely, Karnesh Kumar, Krishna Kumar, Kaushal Kumar and Chhetrapal were awarded death sentence and the rest imprisonment for life.
At the material time, the two deceased, along with the mem bers of their family, and the appellants lived in village Nir in District Hardoi, and, except for appellants Jugal Kishore and his brother Kailash Narain, they are close relations, their common ancestor being one Jhabha Singh.
The evidence, however, shows a long standing enmity between the members of the branch of Sobaran Singh, one of the sons of Jhabha Singh, on the one hand and the rest of the descendants of Jhabha Singh on the other.
It also shows that since 1950, there has been intermittently civil and criminal litigation between the parties, the last of such litigation before the incident in question being in respect of an incident which took place on April 3, 1966 when appellant Ram Kumar charged the deceased Harihar and Lal Singh, and witnesses Jitendra and Virendra and two others with rioting and witness Virendra, in turn, filed a cross complaint against the appellants and some others.
According to the prosecution, at about 1 p.m. on June 5, 1966, Lal Singh was irrigating his field with canal water when appellants L8 Sup.
C.1.168 10 776 Karnesh and Avdesh diverted the water into their field.
There was an exchange of abuses between them in the course of which appellant Karnesh was said to have threatened that he would not rest until Lal Singh was done to death.
At about 5.30 that evening, Jitendra, Virendra and Girendra, P. Ws. 1, 6 and 8 were in the main room of the Chaupal where Lal Singh lived and Lal Singh was in a room nearby.
Fifty paces away from this house is the house where the deceased Harihar lived, Suddenly, a shout was heard to the effect that Lal Singh should be dragged out.
On hearing the shout, these witnesses and Lal Singh came out.
The witnesses saw appellants Krishna and Chhetrapal armed with guns, appellant Karnesh with a pistol, Rain Kumar and Jugal Kishore with spears, appellants Kaushal and Mahendra with banks and the rest with lathis.
As soon as Lal Singh came out, appellants Krishna, Chhetrapal and Karnesh simultaneously fired at him whereupon Lal Singh fell on the ground.
On being threatened that the witnesses would also be shot, they ran away and stood at some distance.
Five of these appellants, namely, Chhetrapal, Kaushal, Mahendra, Kailash and Jugal Kishore then ran to Harihar 's house where appellant Jugal Kishore struck Harihar with a spear in his face and then appellants Kaushal and Jugal Kishore dragged him to where Lal Singh had fallen.
Chhetrapal then fired at Harihar with his gun; Jugal Kishore gave another blow with his spear in the chest and the rest beat him with bankas and lathis.
Harihar also died on the spot.
Appellants Kailash, Jugal Kishore, Kaushal and Mahendra followed by Chhetrapal with his gun, lifted Harihar 's body to the field of one Sita Ram where they set fire to it.
The other five appellants took Lal Singh 's body to the Bathis of P.W. 4, Abdul Bari, and burnt it there on a heal) of cowdung cakes.
Having thus tried to do away with the dead bodies, appellants Kaushal and Mahendra scraped the blood.stained earth where Lal Singh had fallen as also the drops of blood which had fallen on the way.
P. W. 1, Jitendra, started on cycle to the Kotwali six miles away and lodged the F.I.R. at about 6 45 P.M. Inspector Jaswant Singh, P. W. 17, started for the scene of offence reaching there at about 7 45 P.M. The fires were put out but Lal Singh 's body had practically been burnt out with the result that the Inspector could collect only his bones and ashes.
But he was able to recover the half burnt body.
of Harihar.
That night he recorded the statements of P. Ws. 1, 6, 7, 8, 14 and of certain other persons.
On the 7th and 8th he recorded further statements.
On June 20, he recorded the statements of Raghubar, P. W. 9 and Gopali, P. W. 12.
It appears that statements of these witnesses were recorded late as these and other residents, presumably on account of fear of reprisals or to avoid having to figure as witnesses, had fled from the village.
777 The evidence on which the prosecution mainly relied was that of the four eye witnesses.
of these, Jitendra, P. W. 1, the son and brother of Harihar and Lal Singh respectively, Virendra, P. W. 6, his cousin, and Girendra, P. W. 8, a boy of 14 years of age and the younger brother of Lal Singh deposed to the assault by the appellants on both the deceased.
Santosh Kumari, P. W. 7, the daughter of Harihar, deposed only to the assault on Harihar in the house.
Besides this evidence, the prosecution examined Raghubar, Jeet, Gopali and Surat Singh, P. Ws. 9, 11, 12 and 14, the neighbours of the deceased, who in one part or the other corroborated the eye witnesses.
Gopali 's evidence was, however, the only direct evidence as to the scrapping of the blood stained earth by two of the appellants but that evidence was not relied upon by the High Court on the ground that his name was not mentioned in the F.I.R. and his statement was recorded late.
There was, however, the evidence of the eye witnesses that blood had dropped where Lal Singh had fallen and of the Investigating Officer that when he inspected the site that night, though he found no blood marks, he noticed that the earth at that place had been scrapped.
It is clear that, no one except the assailants, who had burnt of the dead bodies of Harihar and Lal Singh to do, away with evidence as to the two murders, would be interested also in doing away with an equally important evidence as to the place where Lal Singh had been killed by scrapping off the blood where he had fallen.
Scrapping of blood from that place was thus in line with and part of the stratagem of burning the bodies of the victims so as not to leave any evidence of the killing of the two men.
This part of the evidence lends support to Jitendra 's case that Lal Singh was fired at and fell at or near the intersection of the roads just outside his house.
It is true that only these four members of the family figured as eye witnesses.
But that fact alone cannot mean that P. W. 1 or the investigating agency excluded other available independent witnesses.
This is clear from the fact that the F.I.R. mentions a number of persons whom P. W. 1. thought to be eye witnesses.
There is evidence that the incident had created panic in the village and a number of residents had fled and had stayed away possibly with a view to avoid having to figure as witnesses.
It is, therefore hardly surprising that only the members of the family came forward as eye witnesses.
But as they were interested witnesses both by reason of their being members of the family and their sharing the hostility of the two victims towards the appellants, their evidence had to be examined with care and caution.
But there was circumstantial evidence to lend support to their account of the incident.
That evidence established the following facts (1) the Ion standing enmity between the parties, (2) the incident having taken place at about 5 30 P.m., (3) the burning of the two bodies by the appel 778 lants, (4) the scrapping of the earth to wipe out the blood stains (5) P. Ws. 6 and 8 having run to the house of Surat Singh, P. W. 14, the village Pradhan and having informed him of the incident, (6) P.W. 1 lodging the F.I.R. without any delay and giving therein the details of the incident, the names of the appellants and of witnesses whom he thought to be eye witnesses and (7) the injuries on Harihar 's body which could still be seen by Dr. Srivastava though it had been burnt, indicating three types of weapons having been deployed against him, namely, a fire arm, a spear and a sharp cutting instrument.
The trial court and the High Court found from this evidence that the account of the incident given by the witnesses was acceptable despite certain discrepancies therein, that it occurred at about 5 30 P.m., that Lal Singh was shot at and killed just outside his house, that Harihar was first attacked inside his house and then dragged to where Lal Singhs body lay and was there killed, that the appellants were responsible for the assault and the consequent deaths of the two victims, that in order to leave no trace of the, two assaults they burnt the bodies of the victims and scrapped the earth where blood had fallen, that they formed an unlawful assembly of which the common object was to murder the father and the, son and that they attacked and killed both in furtherance of that common object and then tried to do away with the evidence of their acts and burnt the two bodies.
These being concurrent findings ,of fact, we would not normally proceed to review the evidence unless it is shown that the trial is vitiated by some illegality or irregularity of procedure or that it was held in a manner contrary to rules of natural justice or the judgment under appeal has resulted in gross miscarriage of justice : (cf.
Kirpal Singh vs State of U.P.) Counsel for the appellants, however, contended that such a miscarriage, of justice has resulted in the present case.
He argued that the trial court and the High Court failed to appreciate from the evidence on record that the prosecution had deliberately tried to shift the time of the incident at 5 30 that evening though the incident must have taken place subsequently, in order to enable the four witnesses to pose as eye witnesses.
The evidence of Jitendra and the Investigating Officer was that the F.I.R. was lodged at 6 45 P.m. and that Jitendra had started from the village at 6 P.m. on cycle for the police station.
The evidence of the Investigating.
Officer also is that he reached the spot soon thereafter, that the body of Harihar was not fully burnt out, and that he could manage to extract the half burnt body from the fire.
The evidence of Dr. Srivastava supports this evidence in a large measure.
It is manifest that if the incident took place at night and P. W. 1 bad (1) ; , 996.
779 not seen it, he could not have reported it to the police officer in time to enable the police officer to arrive at the scene and extract the half burnt body of Harihar from the fire.
This fact clearly supports the prosecution that the incident took place that evening and not at night.
But reliance was placed on the fact that postmortem examination on Harihar 's body was made by Dr. Srivastava at 5 P.m. on June 6, 1966.
The argument was that if the body had been dispatched to the mortuary soon after it was recovered by the police officer, it would have reached the mortuary earlier and the postmortem examination would have been carried out earlier.
But the evidence of Maqbool Khan, P. W. 15, shows that the body was given to him, at 10 that night, that, he carried it in a bullock cart, that he started at about 1 A.m.
but on the way he feared that the body might be taken away from him and, therefore, he stopped at an intervening village till sunrise and reached the mortuaryat 6 30A.M.
It is true that the doctor said that he performed the post mortem examination at 5 P.m. and not at 1 p.m. as the constable deposed.
Obviously, the constable appears to have delayed in his mission and there was a gap of time between the body reaching the mortuary and the time when the postmortem examination was performed.
But the delay in the postmortem examination does not mean that the Investigating Officer had not handed over the body to the constable that night or that the incident did not take place in the evening of the 5th of June or that the F.I.R. was not lodged at 6 45 P.m. as testified by P. W. 1.
Reliance was next placed on the evidence of the Magistrate at Hardoi that he received the special report about the incident on June 6, 1966.
The contention was that if the Investigating Officer had sent the special report before he started for the scene of the offence, as stated by him, the Magistrate was bound to receive it on the night of the 5th and not on the 6th of June.
But the Magistrate admitted that he had not noted the time when he received it on the 6th.
He also admitted that he could not say whether he was in Hardoi on the 5th of June, it being a, Sunday, and that it was possible that his peon might have received it in the evening of the 5th and placed it before him on the 6th of June when he noted the date of its receipt.
There is also evidence of the Reader to the Superintendent of Police, Hardoi that his office had received the General Diary of the 5th on the 6th and of the 6th on the 7th June.
This controversy is set at rest by the evidence of the Head Constable, P.W. 13, that he had sent constable Abdul Hafir at 7 30 P.m. on the 5th June to the Magistrate with the special report and that Abdul Hafiz had returned to the police station at 9 3O that night after delivering it and that this fact was noted by him in Ext.
This evidence establishes that the Investigating Officer had sent the special report on the 5th of June and that report was carried to Hardoi that very night.
Consequently, it must be held that the incident took 780 place in the evening of the 5th of June, and that P. W. 1. was right when he claimed that he had given the F.I.R. at 6 45 P.M.
The next contention was that the place of attack on Lal Singh was not on the road but in Harihar 's house.
We find no basis for this contention.
The evidence of witnesses on the other hand, is clear and there is no reason to disbelieve it.
That evidence is supported by the evidence of the Police Officer that he found signs of scrapping of the earth at the place where, according to the prosecution, Lal Singh had fallen.
The next contention was that witnesses Jitendra and Santosh Kumari had tried to make improvements in their evidence, the former by stating that the three accused who were armed with firearms had shot simultaneously at Lal Singh though in the F.I.R. he had only said that three shots were fired without stating who had fired them, and the latter by stating that Jugal Kishore had struck his spew in the eye of Harihar, which allegation was not borne out by the medical testimony.
These infirmities, no doubt, are in their evidence.
But they were considered by the High Court and yet on an examination of the entire evidence, it accepted their evidence as reliable.
That three shots were fired was stated by witness Jitendra both in the F.I.R. and in evidence.
It may be that from that fact coupled with the fact that the three appellants were armed with fire arms, he might have inferred that all the three had fired.
For a witness like him, it was possible not to be able to distinguish between a fact seen by him and an inference drawn by him.
Failure to appreciate such a distinction cannot mean that he was deliberately improving upon his original version.
As regards Santosh Kumari, a spear injury was inflicted on Harihar 's face and that injury must have covered his face with blood.
It is possible that she mistook that injury to be one in the eye, especially as it in her evidence that appellant Jugal Kishore had at that time said that Harihar should be struck in his eyes.
These infirmities, even if they can rightly be so termed, cannot discredit their testimony so as to render it unacceptable.
Counsel then argued that though P. Ws. 9 and 11 were referred to in the F.I.R. as eye witnesses, they did not come out in their evidence as eye witnesses and that fact showed that P. W. 1 had tried to introduce them falsely as eye witnesses.
He forgets, however, that there are two distinct alternatives, (1) that he saw them at the scene of the offence after the incident and believed they had seen it and (2) that though the witnesses had seen it, like the other neighbours, they preferred not to figure as eye witnesses and circumscribed the scope of their evidence to what they had seen after the assault.
In either event, P. W. 1 cannot be said to have falsely tried to usher them in the F.I.R. as eyewitnesses.
781 The argument which counsel strenuously urged was that though independent eye witnesses were available, they were pur posely excluded and only the family members were examined as eye witnesses.
In this connection he relied on the F.I.R. where P. Ws. 9 and 11, one Chhuta Bhurji, Alha Singh, Lakhan Singh, Paragu, Parsadi, Sishupal, Girdhari Kachhi and "some other men" were said to be witnesses.
In his evidence also P. W. 1 has mentioned that these persons and a few others were present at the time of the incident.
And yet these persons were not examined.
The prosecution, however, did explain that these persons were not examined either because they had been won over by the opposite side or because some of them had failed to identify the appellants from the identification parades held for them, which, according to the prosecution, indicated that they had been won over.
The explanation, however, does not apply to two persons, viz., Parsadi and Paragu, for whose non examination the only explanation given was that they were not necessary witnesses.
The High Court does not appear to have been satisfied with this explanation and, therefore, has observed that it would have been better if these two persons had been examined.
At the same time it refused to draw from their non examination an adverse inference under section 114(g) of the Evidence Act.
Counsel argued that the High Court erred in declining to do so and relied on Habeeb Mohammed V. State of Hyderabad(1), where it has been observed that it is the bounded duty of the prosecution to examine a material witness particularly when no allegation has been made that, if produced, he would not speak the truth.
The decision further observes that not only does an adverse inference arise against the prosecution case from his nonproduction as a witness in view of illustration (g) to section 114, but that the circumstance of his being withheld from the court would cast a serious reflection on the fairness of the trial.
In Darya Singh vs State of Punjab(1) also this Court has observed that a prosecutor should never adopt the device of keeping back eye witnesses only because their evidence is likely to go against the prosecution and that the duty of the prosecutor is to assist the Court in reaching a proper conclusion.
It is open, however, to the prosecutor not to examine witnesses who in his opinion have not witnessed the incident, but normally, he ought to examine all 'the eye witnesses in support of his case.
But in a case where a ,large number of persons have witnessed the incident, it is open to him to make a selection.
The selection must, however, be fair and honest and not with a view to suppress inconvenient witnesses.
Therefore, if it is shown that persons who had witnessed the incident have been deliberately kept back, the court may draw an (1) A. I. R. (2) , 408, 782 adverse inference and in a proper case record such failure as constituting a serious infirmity in the proof of the prosecution case.
As stated earlier, it appears that the persons mentioned by P. W. 1 were not examined either because the prosecution believed that they had been won over by the opposite side or because in the parades held for them they had not identified the appellants or committed errors.
If that was so, it is manifest that no useful purpose would have been served by examining the persons who had failed to identify the appellants.
But then neither Parsad nor Paragu falls in this category of persons for the explanation given in regard to them was that they were not necessary.
For one reason or the other the defence seems to have remained content with that explanation, for they asked no question either to P.W. 1 or to the Investigating Officer to elicit why these two persons were considered unnecessary witnesses.
, It may be that if a clarification had been demanded, they would have given some explanation.
Besides, there is nothing in the evidence to suggest that they were not produced because they would have turned out to be inconvenient witnesses.
The High Court on an examination of the evidence held that it was not possible to say that the prosecution had delibe rately withheld these two persons for any oblique motive.
In these circumstances it is difficult to persuade ourselves to take the view pressed upon us by counsel that the High Court ought to have drawn an adverse inference.
For the reasons aforesaid, the contentions of Mr. Garg cannot be sustained.
Consequently, we do not find any reason to interfere with the concurrent findings of the trial court and the High Court that the appellants were responsible for the deaths of Lal Singh and Harihar and were guilty of the offences charged against them.
As regards the sentence of death imposed on appellants Karnesh, Krishna, Kaushal and Chhetrapal, it is difficult for us to agree with that order passed by the trial court and confirmed by the High Court.
In imposing the sentence of death on these four appellants, the trial court made a distinction between them on the one hand and the rest of the appellants on the other.
The distinction was made on the ground that three of them were armed with fire arms and that they all fired at Lal Singh simultaneously, that appellant Chhetrapal had shot at Harihar also and finally, that appellant Kaushal had given a hatchet blow to Harihar.
In our view, the evidence on which this distinction was made cannot be said to be fully satisfactory.
It is true that P. W. 1 while giving evidence stated that the three appellants had fired simultaneously at Lal Singh, that Chhetrapal had also fired at Harihar and that Kaushal had given a hatchet blow to him.
But the F.I.R. merely states that three shots were fired at Lal Singh but does not state that they were fired by the three appellants simultaneously, nor does it state that Chhetrapal had fired at Harihar after he had been 783 dragged out on the road.
It is hardly conceivable that if P. W. 1 had seen these appellants firing either at Lal Singh or at Harihar, he would have forgotten to make a positive statement about it in the F.I.R.
In view of this omission, it is difficult to build the conclusion with any certainty on his subsequent statement that the three appellants had simultaneously fired at Lal Singh and that Chhetrapal had shot at Harihar after he had been brought out of the house.
The possibility of any one or two of them having fired the three shots in quick succession cannot, therefore, be ruled out.
In that case the distinction made on the basis that all the three of them had fired at Lal Singh cannot be sustained.
Therefore, the reason given by the trial judge for imposing the extreme penalty on these four appellants as against the rest becomes difficult to sustain.
It is true that these four appellants were armed with firearms and a hatchet.
But the others also were armed with equally dangerous weapons, such as spears and bankas.
The said distinction being not sustainable, the proper punishment that should have been awarded to the four appellants in the absence of clear evidence, as to who inflicted the fatal blows, should have been the same punishment as imposed on the rest.
, We have,; therefore, to set aside the sentence of death imposed on the aforesaid four appellants and impose on them the sentence of rigorous imprisonment for life.
Except for this modification the appeal fails and is dismissed,.
R.K.P.S. Appeal dismissed.
| The appellant was a Mukhtear practising in Bihar.
He along with ,some others attested the identity of certain persons on applications for loans under the Agriculturists Loan Act, 1884.
It was found that the applications had been made under false names and the appellant along with other accused was tried for an offence under section 467 read with section 109 I.P.C.
The appellant 's plea was that he had made the endorsements on the assurance of a co accused and in view of the fact that another Mukhtear, D had also attested the loan applications.
D 's plea as an accused was that he had made the attestation on the assurance of one R.
The Sessions Judge acquitted all the accused.
The State of Bihar appealed to the High Court.
During the pendency of the appeal D died.
The High Court set aside the acquittal of the appellant and convicted him on two grounds namely, (i) that though he had raised a defence that he had attested the applications on the assurance of S, no evidence had been produced to support this defence,, (ii) that D with whose case the appellant 's case was closely connected had not examined himself under section 342A of the Criminal Procedure Code in support of his plea, and the same consideration applied to the appellant also.
On appeal to this Court by special leave.
HELD : The order of the High Court could not be sustained.
(i) In requiring evidence in support of the plea raised by the appellant the High Court really threw the burden of proof on him instead of finding out whether the prosecution had proved its case and whether the order of acquittal was erroneous.
[174 F] (ii) In commenting on the failure of the accused to examine them,selves on oath under section 342A Cr.
P.C. the High Court committed a breach of the proviso to that section which specifically states that the failure of an accused to give evidence shall not be made the subject of comment by any of the parties, or the court, or give rise to any presumption against himself or any other person charged together with him at the same time.
[175 B]
|
Civil Appeals No.1472 77 of 1987.
From the Judgment and Order dated 4.12.1986 of the Delhi High Court in Civil Writ Petition Nos.
2148 of 1986, 2417, 2173, 2174, 2175 and 2166 of 1986.
1017 S.C. Mohanta, Ravinder Bana and Mahabir Singh for the Appellant.
A.K. Sen, P.P. Rao, Rajinder Sachhar, K.B. Rohatgi, S.K. Dhingra, Praveen Jain, Shashank Shekhar, C.M. Nayar, P.N. Duda and Randhir Jain for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
The present appeals by the State of Haryana and the Haryana Minerals Limited are directed against the common judgment of the Delhi High Court disposing of 6 writ applications filed by different petitioners impleaded as respondent No. 1 herein.
Separate mining leases were executed on behalf of the State of Haryana with respect to Silica sand and ordinary sand in favour of the writ petitioners for a period of 10 years, in accordance with the provisions of the Mines & Minerals (Regulation & Development) Act, 1957, hereinafter referred to as the Act.
The State of Haryana, in purported exercise of powers under Section 4A of the Act prematurely terminated the leases by its order dated 1st October, 1986 which is quoted in the judgment of the High Court, stating that it was proper to do so as the Haryana Minerals Limited, respondent No. 4 (appellant No. 2 herein) a public sector undertaking had informed that it had fully equipped itself to undertake the mining operation and that necessary permission in terms of the Section had been obtained from the Central Government to prematurely terminate the leases.
Admittedly no prior notice to the writ petitioners or any opportunity to them to place their case was given.
The lessees contended before the High Court that essential conditions for exercises of the powers under Section 4A are not satisfied in the present cases and further, the impugned decision is violative of the principles of natural justice.
It was also urged that so far as the lease in respect of ordinary sand which is a minor mineral under the Act, is concerned, Section 4A being excluded by the provisions of Section 14 is not applicable.
It was also averred that forcible possession of the mining areas was taken even before communicating the impugned order.
The High Court agreed with these contentions and allowed the writ petitions.
The State of Haryana and the Haryana Minerals Limited, respondents No. 2 and 4, respectively, in the writ cases were allowed special leave to appeal under Article 136.
Hence these appeals.
1018 4.
Section 4A as it stood at the relevant time read as follows: "4A.(1) Where the Central Government, after consultation with the State Government, is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, it may request the State Government to make a premature termination of a mining lease in respect of any mineral, other than minor mineral, and, on receipt of such request, the State Government shall make an order making a premature termination of such mining lease and granting a fresh mining lease in favour of such Government company or corporation owned or controlled by Government as it may think fit.
(2) Where the State Government, after consultation with the Central Government, is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, it may, by an order, make premature termination of a mining lease in respect of any minor mineral and grant a fresh lease in respect of such mineral in favour of such Government company or corporation owned or controlled by Government as it may think fit.
Silica sand being a major mineral is governed by Sub section (1) of Section 4A and ordinary sand by Sub section (2).
According to the appellant, full and necessary consultation between the two Governments i.e. the Central Government and the State Government was held and it was considered expedient in the interest of regulation of mines and mineral development to take the impugned decision.
Reference in this regard was made by the learned counsel to the report of the Indian Bureau of Mines referred to in the letters of the Director, Department of Mines, Central Government to the Chief Secretary, Government of Haryana, dated 20th April, 1985, 8th July, 1985 and 10th July, 1985 and the State 's letters dated 14th July, 1986, 17th September, 1986 and 29th September, 1986.
It has been contended that since a decision was jointly taken by the two Governments to grant mining lease of the entire area to the Haryana Minerals Limited, this by itself fulfilled the necessary conditions under Section 4A and as the writ petitioners lessees had no locus standi to place their point of view with respect to this aspect, it was not necessary to give them a notice.
The argument is that in the circumstances there is no question of violation of principles of natural justice.
It was also claimed that the State was the final authority to take a decision under Section 4A with respect to both major and minor minerals.
1019 6.
Mr. B. Datta, Additional Solicitor General, stated on behalf of the Union of India, respondent No. 2 that the respondent is ready to reconsider the matter after hearing the parties concerned.
He refuted the claim of the appellant that the State is the ultimate authority to take a decision under Section 4A with respect to major minerals and he appears to be right.
Sub section (1) which deals with major minerals empowers the Central Government to consider the matter and, after having consultation with the State Government, to take a decision in this regard and once it does so and makes a request to the State Government for prematurely terminating a lease, the State Government shall be under an obligation to act.
The use of "shall" in this context indicates the binding nature of the request.
The language of Section 4A clearly indicates that the Section by itself does not prematurely terminate any mining lease.
A decision in this regard has to be taken by the Central Government after considering the circumstances of each case separately.
For exercise of power it is necessary that the essential condition mentioned therein is fulfilled, namely, that the proposed action would be in the interest of regulation of mines and mineral development.
The question of the State Government granting a fresh mining lease in favour of a Government Company or a Corporation arises only after a decision to terminate the existing mining lease is arrived at and given effect to.
The Section does not direct termination of all mining leases, merely for the reason that a Government Company or Corporation has equipped itself for the purpose.
The Section was enacted with a view to improve the efficiency in this regard and with this view directs consulation between the Central Government and the State Government to be held.
The two Governments have to consider whether premature termination of a particulare mining lease shall advance the object or not, and must, therefore, take into account all considerations relevant to the issue, with reference to the lease in question.
It is not correct to say that an existing mining lease can be terminated merely for the reason that a Government Company or Corporation is ready to undertake the work.
Considered in this light, the Section must be interpreted to imply that the person who may be affected by such a decision should be afforded an opportunity to prove that the proposed step would not advance the interest of mines and mineral development.
Not to do so will be violative of the principles of natural justice.
Since there is no suggestion in the Section to deny the right of the affected persons to be heard, the provisions have to be interpreted as implying to preserve such a right.
Reference may be made to the observations of this Court 1020 in Baldev Singh and others vs State of Himachal Pradesh and others, , that where exercise of a power results in civil consequences to citizens, unless the statute specifically out the application of natural justice, such rules would apply.
The cases, Union of India and another vs Cynamide India Ltd. and another, AIR 1987 SC 1802; D.C. Saxena vs State of Haryana, AIR 1987 1463 and State of Tamil Nadu vs Hind Stone etc.
; , , relied upon by Mr. Mohanta do not help the appellant.
The learned counsel placed reliance on the observations in paragraphs 5 to 7 of the judgment in Union of India vs Cynamide Ltd. which were made in connection with legislative activity which is not subject to the rule of audi alteram partem.
The principles of natural justice have no application to legislative activities, but that is not the position here.
It has already been pointed out earlier that the existing mining leases were not brought to their and directly by Section 4A itself.
They had to be terminated by the exercise of the executive authority of the State Government.
Somewhat similar was the situation with regard to Section 4A of Haryana Board of School Education Act, 1969 which was under Consideration in D. C. Saxena vs State of Haryana, AIR 1987 SC 1463.
A matter of policy was adopted and included by the legislature in the impugned section.
Besides, the validity of the Section was not under challenge there, as was expressly stated in paragraph 6 of the judgment.
So far as the case, State of Tamil Nadu vs Hind Stone is concerned, the learned counsel for the appellant cited it only with a view to emphasise the importance of the mineral wealth of the nation which nobody denies.
We, therefore, held that a final decision to prematurely terminate a lease can be taken only after notice to the leassee.
Coming to the facts of the present case it will be observed that the question of terminating the mining leases in question before us was introduced for the first time under the letter dated 14.7.1986 (page 80) of the State of Haryana.
The earlier letter dated 20.4.1985 and 8.7.1985, of the Department of Mines, Union of India sent to the State Government discussed the general question about the desired improvement in the mining field and referred to the report of the Indian Bureau of Mines on silica sand mining in Haryana.
The report had highlighted various aspects of silica sand mining in the State and made several positive suggestions.
It was stated in the letter dated 20th April, 1985 that if the lessees did not comply with the requirements mentioned therein, their leases "deserve to be terminated in accordance with the procedure established under law.
" In the letter dated 8th July, 1985, further emphasis was laid on ensuring scientific mining of optimum utilisation of natural resources, ensuring safety in operation 1021 and ensuring payment of fair wages to the mine workers.
In this letter the desirability of entrusting mining operations to the public sector was mentioned but it was also stated that the representatives of the Government of Haryana had in the earlier meetings expressed their inability to entrust the Haryana Minerals Ltd. (appellant No. 2 before us) with the mining operations in the entire State immediately.
Additional terms and conditions were also suggested to be imposed in the future mining leases to be granted in favour of private parties.
Later on, it appears that the Haryana Minerals Ltd. became ready to take over the mining operations and intimated its preparedness by letter dated 10.7.1986 and thereupon the State of Haryana wrote on 14.7.1986 to the Union of India that it was appropriate to prematurely terminate the 6 leases mentioned in the letter of the date.
It will be significant to note that the State Government did not take a decision to terminate all the mining leases; on the countrary, fresh mining leases in favour of private individuals were in contemplation of the State authorities, as indicated by the aforementioned letters and by Annexure P 5 (page 273) to the Writ Petition of Ram Kishan in the High Court.
The State 's letter dated the 14th July, 1986 was followed by another letter dated 5.9.1986 and in reply to it, the Central Government asked for a report on several specific points mentioned in their letter which is at page 85 of the paper book.
In place of sending the required information, the State Government, in its letter dated 17.9.1986, took the erroneous stand that the information sought for was not relevant.
Instead of pointing out that the information demanded was very pertinent in the context of the proposed termination of the mining lease, the Central Government by its letter dated 26th November, 1986 agreed to the proposal, but took care to advice that while taking any action for premature termination of the leases the authority should "ensure that the provisions of Section 4A of the Act are complied with".
As has been mentioned earlier, the Union of India does not deny the right of hearing to the affected lessees and is ready, even now, to give an opportunity to them.
Admittedly, the writ petitioners who are respondents before us were never given any such opportunity and according to their assertion if such an opportunity had been afforded, they would have shown that the standard of their mining operation was very high and favourably measured against the expected standard suggested in the report of the Indian Bureau of Mines and mentioned in the letter of the Mines Department of the Central Government and that it was definitely superior to that of Haryana Minerals Limited.
On a consideration of the facts and circumstances of the 1022 present case, we are of the opinion that there was no effective consultation between the Union of India and the State Government, and the Central Government did not form any opinion as required under Section 4A of the Act.
We are further of the view that the lessees, the respondents before us, were entitled to be heard before a decision to prematurely terminate their leases was taken but they were not given any opportunity to place their case.
Mr. Sen, the learned counsel for the respondents, very fairly stated that he could not support the plea that leases in respect of minor minerals are saved from the application of Section 4A altogether by reason of Section 14.
This Court in State of Tamil Nadu vs Hind Stone, ; (at pages 746H and 747A) pointed out that perhaps since Section 4A(1) is inapplicable to minor minerals because of the provisions of Section 14, Section 4A(2) has been specially enacted making somewhat similar provision.
It must, therefore, be held that leases in respect of minor minerals also can be prematurely terminated in appropriate cases.
However, in view of our earlier finding the respondents must succeed.
We accordingly dismiss these appeals with costs.
S.L. Appeals dismissed.
| These appeals were directed against the common judgment of the High Court in Writ applications filed by different petitioners, challenging the termination of the mining leases granted to them.
The State of Haryana which had executed the mining leases in favour of the writ petitioners for ten years under the provisions of the Mines & Minerals (Regulation & Development) Act (the Act), terminated the said leases prematurely in the purported exercise of powers under Section 4A of the Act without prior notice to the writ petitioners or any opportunity to them to defend their cases.
The leases were so terminated on the ground that the Haryana Minerals limited a public sector undertaking had fully equipped itself to undertake the mining operations.
The High Court allowed the writ petitions.
The State of Haryana and Haryana Minerals Limited appealed to this Court by Special leave against the decision of the High Court.
According to the appellant, the necessary consultation between the Central Government and the State Government was held, fulfilling the conditions under Section 4A of the Act and the decision impugned was taken.
The appellant contended that the writ petitioners lessees had no locus standi to place their view point and it was not necessary to give them notice, and that there was no violation of the principles of natural justice.
Dismissing the appeals, the Court, ^ HELD: The language of Section 4A indicates that the Section by itself does not permaturely terminate any mining lease.
A decision in this regard has to be taken by the Central Government.
The question of the State Government granting a fresh mining lease in favour of a 1016 Government Company or a Corporation arises only after the existing mining lease is terminated, the section does not direct termination of all mining leases merely for the reason that a Government Company or a Corporation has equipped itself for the purpose.
It is not correct to say that an existing mining lease can be terminated for the reason that a Government Company or a Corporation is ready to undertake the work.
Viewed thus, the section must be interpreted to imply that a person who may be affected by such a decision should be afforded an opportunity to prove that the proposed step would not advance the interest of mines and mineral development.
Not to do so will be violative of the principles of natural justice.
Since there is no suggestion in the section to deny the right of the affected persons to be heard, the provisions have to be interpreted as implying to preserve such a right.
A final decision to prematurely terminate a lease can be taken only after notice to the lessee.[1019C H;1020E] The Writ Petitioners respondents before the Court were never given an opportunity to be heard.
If such an opportunity had been afforded, they would have shown that their standard of mining operations was very high and favourably measured against the expected standard and was superior to that of the Haryana Minerals Limited.
[1021G] There was no effective consultation between the Union of India and the State Government, and the Central Government did not form any opinion as required under Section 4A of the Act.
The respondents before the Court were entitled to be heard before a decision to prematurely terminate their leases was taken but they were not given any opportunity to place their cases.
The respondents must succeed.
[1022A B] Baldev Singh and others vs State of Himachal Pradesh and others, ; Union of India and another vs Cynamide India Ltd. and another, AIR 1987 SC 1802; D. C. Saxena vs State of Haryana, AIR 1987 SC 1463 and State of Tamil Nadu vs Hind Stone, etc.
; , , referred to.
|
N: Criminal Appeal No. 277 of 1974.
Appeal by Special Leave from the Judgment and order dated the 22nd February, 1974 of the Allahabad High Court Lucknow Bench in Criminal Appeal No. 498 of 1973 and Capital Sentence No. 13 of 1973.
A. N. Mulla and N. section Das Behal for the appellant.
O. P. Rana for the respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal, by special leave, is limited only to the question of sentence.
The appellant has been sentenced to death for an offence under section 302 of the Penal Code.
The question is: Should the extreme penalty of death be commuted to one of life imprisonment? To answer the question it is necessary to state a few facts.
The appellant and a few others were tried in the Court of the Sessions Judge, Unnao for offences under section 148 and section 302 read with section 149 of the Indian Penal Code.
The learned Sessions Judge, on an appreciation of the evidence, found that the appellant, Sheo Dayal, Mihi Lal, Dularey and Mewa Lal had formed an unlawful assembly and in pursuance of its common object, the appellant had intentionally caused the death of one Ram Kumar by by inflicting on him a severe injury with a bank severing his head from the body and then carried away the head in an angaucha in a most brutal and inhuman fashion.
On this finding, the learned Sessions Judge convicted the appellant, Sheo Dayal, Mihi Lal, Dularey and Mewa Lal of offences under section 148 and section 302 read with section 149 and sentenced each of them to rigorous imprisonment for one fear for the former offence and to death for the latter.
The appellant, Sheo Dayal, Mihi Lal, Dularey and Mewa Lal preferred an appeal to the High Court against the order of conviction and sentence recorded against them and their case was also referred to the High Court for confirmation of the death sentence.
The High Court agreed with the findings reached by the learned Sessions Judge and confirmed the conviction of Sheo Dayal, Mini Lal, Dularey and Mewa Lal under section 148 and section 302 read with section 149, but reduced their sentence to one of life imprisonment for the offence under section 302 read with section 149 and so far as the appellant was concerned, the conviction was converted to one under section 302 and the sentence of death was maintained.
The appellant thereupon preferred an application for special leave and on that application, special leave was granted by this Court limited only to the question of sentence.
Now, there can be no doubt that the crime committed by the appellant was a most reprehensible and heinous crime which dis 276 closed brutality and callousness to human life and no extenuating circumstances could be pointed out on behalf of the appellant which would assuage the conscience of the Court and persuade it not to inflict the extreme penalty of death on the appellant.
The only circumstance on which reliance could be placed on behalf of the appellant for mitigating the rigour of the punishment to be inflicted on him was his tender age at the time of the commission of the offence.
The record of the case shows that the appellant was about sixteen years of age at the time when he committed this brutal crime.
The question is : whether this could be regarded as a valid circumstance for invoking the clemency of penal justice? The legislative history in regard to the subject of capital punishment shows that there has been significant change in thinking and approach since India became free.
Prior to the amendment of section 367(5) of the Code of Criminal Procedure by Act 26 of 1955, the normal rule was to impose sentence of death on a person convicted for murder and, if a lesser sentence was to be imposed, the Court was required to record reasons in writing.
But by Act 26 of 1955 this provision in section 367(5) was omitted, with the result that the Court became free to award either death sentence or life imprisonment and no longer was death sentence the rule and life imprisonment the exception.
Then again a further progress was made in the same direction by section 354(3) of the Criminal Procedure Code, 1973.
That section provides that when the conviction is for an offence punishable with death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded, and, in the case of sentence or death, the special reasons for such sentence.
It will be seen that the unmistakable shift in the legislative emphasis is that for murder, life imprisonment should be the rule and capital punishment the exception to be resorted to only for special reasons.
It is only where, in view of the peculiar facts and circumstances, there are special reasons that death sentence may be awarded : otherwise life sentence should be the ordinary rule.
This legislative provision in the new Code of Criminal Procedure clearly shows, as pointed out by Krishna Iyer, J., in E. Anamma vs State of Andhra Pradesh(1), "that the disturbed conscience of the State on the vexed question of legal threat to life by way of death sentence has sought to express itself legislatively, the stream of tendency being towards cautious, partial abolition and a retreat from total retention.
" The seminal trends in current sociological thinking and penal strategy, tampered as they are by humanistic attitude and deep concern for the worth of the human person frown upon death penalty and regard it as cruel and savage punishment to be inflicted only in exceptional cases.
It is against this background of legislative thinking which reflects the social mood and realities and the direction of the penal and processual laws that we have to consider whether the tender age of an accused is a factor contraindicative of death penalty.
277 The Law Commission, in the 35th Report made by it on capital punishment fully considered whether the Indian Penal Code should specify the minimum age of the offender who can be sentenced to death, and after examining the position under the Children 's Acts of various States it expressed the following opinion : "We feel that, having regard to the need for uniformity, to the views expressed on the subject, and to the consideration that a person under 18 can be regarded as intellectually immature, there is a fairly strong case for adopting the age of 18 as the minimum for death sentence.
we are aware that cases will occasionally arise where a person under 18 is found guilty of a reprehensible killing, or, conversely, a person above 18 is found to be immature and not deserving of the highest punishment.
A line has, however, to be drawn somewhere and we think that 18 can be adopted without undue risk.
We, therefore recommend that a person who is under the age of 18 years at the time of the commission of the offence should not be sentenced to death.
A provision to that effect can be conveniently inserted in the Indian Penal Code as section 558.
" The Law Commission in its 42nd Report on the Indian Penal Code agreed with this recommendation of the previous Law Commission vide paragraph 3.34 of the 42nd Report of the Law Commission.
The Central Government appears to have accepted this recommendation and a provision to that effect is to be found in the Indian Penal Code (Amendment) Bill, 1972.
This being the current sociological and juristic thinking on the subject, it would be legitimate for the Court to refuse to impose death sentence on an accused convicted of murder if it finds that at the time of commission of the offence he was under 18 years of age.
Krishna Iyer, J., also pointed out in E. Anamma vs State of Andhra Pradesh (supra) that "where the murderer is too young the elemency of penal justice helps him", and a murderer who is below 18 years age at the time of the commission of the offence would certainly be "too young".
The appellant in the present case was, as pointed out above, just around 16 years of age at the time when he committed the offence and, therefore, in the light of the above discussion he would be entitled to the elemency of penal justice and it would not be appropriate to impose the extreme penalty of death on him.
We accordingly commute the sentence of death imposed on the appellant and convert it to one of life imprisonment.
P.B.R. Appeal allowed and sentence reduced.
| The legislative history in regard to the subject of capital punishment shows that there has been a significant change in thinking and approach Since India became free.
Prior to the amendment of section 367(5) of the Code of Criminal Procedure by Act 26 of 1955, the normal rule was to impose sentence of death on a person convicted for murder and if a lesser sentence was to be imposed, the Court was required to record reasons in writing.
But by Act 26 of 1955, this provision in section 367(5) was omitted with the result that the Court became free to award either death sentence or life imprisonment, and no longer was death sentence the rule and life imprisonment the exception.
Then again a further progress was made in the same direction by section 354(3) of the Criminal Procedure Code, 1973.
That section provides that when the conviction is for an offence punishable with death or in the alternative with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded and, in the case of sentence of death, the special reasons for such sentence.
The unmistakable shift in the legislative emphasis is that for murder, life imprisonment should be the rule and capital punishment the exception to be resorted to only for special reasons.
It is only where, in view of the peculiar facts and circumstances, there are special reasons that the death sentence may be awarded: otherwise life sentence offence would certinly be "too young." [277G; E, F] The seminal trends in current sociological thinking and penal strategy tempered as they are by humanistic attitude and deep concern for the worth of the human person, frown upon death penalty and regard it as cruel and savage punishment to be inflicted only in exceptional cases.
[276G] In the instant case the appellant was charged with an offence of murder by severing the head of the deceased from the body and then carrying it away in a most brutal and inhuman manner.
The trial court convicted and sentenced him to death.
Both the conviction and sentence were upheld by the High Court.
On the question of sentence, Allowing the appeal to this Court, ^ HELD: The appellant was just around 16 years of age at the time when he committed the offence and, therefore, he would be entitled to the clemency of penal justice.
It would not be appropriate to impose the extreme penalty of death.
Taking into account the current sociological and juristic thinking as could be seen from the recommendation of the Law Commission which appears to have been incorporated in the Indian Penal Code (Amendment) Bill 1972, it would be legitimate for the Court to refuse to impose death sentence on an accused convicted of murder, if it finds that at the time of the commission of the offence the appellant was under 18 years of age.
A murderer who is below 18 years of age at the time of commission of the offence would certainly be "too young." [277G; E, F] E. Anamma vs State of Andhra Pradesh, A.I.R. 1974 S.C. 799, followed.
|
Appeal No. 312 of 1959.
Appeal from the judgment and order dated August 23, 1956, of the Bombay High Court in Income tax Reference No. 21 of 1956.
Hardyal Hardy and D. Gupta, for the appellant.
A.V. Viswanatha Sastri and I. N. Shroff, for the respondent.
December 6.
The Judgment of the Court was delivered by KAPUR, J.
This is an appeal by special leave brought by the Commissioner of Income tax against the judgment and order of the High Court of Bombay answering the question in favour of the assessee.
The question referred by the Tribunal was: "Whether on the facts and in the circumstances of the case the amount of Rs. 3,20,162 is an allowable deduction under Section 10(2)(xi) or 10(2)(xv) of the Income tax Act?" which was amended by the High Court as follows: "Whether on the facts and in the circumstances of the case the amount Rs. 3,20,162 is an allowable deduction" and was answered in the affirmative and against the appellant.
The facts of the case shortly stated are these: The respondent is a registered firm carrying on business as commission agents.
It was treated as the agent of a non resident principal Haji Mohamed Syed Ali Barbari of Port Sudan (hereinafter 'referred to as the nonresident principal.
It was carrying on the business of export of cloth and kariana (i.e., miscellaneous goods) to Aden, Saudi Arabia and sudan.
It used to supply goods from India to the nonresident principal, who on his part, was sending cotton to the respondent and other merchants for sale in India.
For the years 1942 43, 1943 44, 1944 45 and 1945 46, the respondent firm was treated as the agent of the nonresident principal under section 43 of the Income tax Act 951 (which will hereinafter be termed 'the Act ') for the purpose of income tax and Excess Profits Tax.
The respondent firm had to pay in all Rs. 3,78,491 under section 42(1) of the Act and after allowing for the amounts which were in its hands the account of the principal non resident showed a debit balance of Rs. 3,20,162.
For the year of assessment, 1953 54, the respondent firm treated this amount as a bad debt and claimed it as a deductible loss to be set off against profits.
The Income tax Officer treating this claim as one under section 10(2)(xv) of the Act, disallowed it.
The Appellate Assistant Commissioner treated it as one under section 10 (2)(xi) of the Act and he also disallowed it.
On appeal to the Income tax Appellate Tribunal it was held to be a bad debt and an allowable deduction as it was incurred as a result of the business activities which the respondent firm was carrying on with the nonresident principal.
At the instance of the Commissioner of Income tax, the case was stated to the High Court and the High Court modified the question and answered the same in the affirmative, i.e., against the appellant.
The High Court held that as the law imposed an obligation upon the respondent firm to discharge the liability and it was incidental to the business of the respondent the amount was a deductible loss; and even if it was not a debt, then also the amount could be claimed by the assessee as a business or trading loss, because in arriving at the true profit of the respondent 's business that loss had to be deducted.
The High Court thus applied section 10(1) of the Act to the amount claimed by the respondent.
The allowability of the amount in dispute depends upon the nature of the liability imposed upon the respondent firm.
The contention of the respondent 's counsel was that it was carrying on foreign trade and had dealings with a foreign merchant and in the course of the business there were imports and exports and therefore the interconnection between the respondent firm and the non ' resident principal was so intimate as to invite the application of section 42(1), i.e., the establishment of agency as 'contemplated in that section.
The liability to pay arises under a. 42(2) which provides 952 "Where a person not resident or not ordinarily resident in the taxable territories carries on business with a person resident in the taxable territories, and it appears to the Income tax Officer that owing to the close connection between such persons the course of business is so arranged that the business done by the resident person with the person not resident or not ordinarily resident produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom or which may reasonably be deemed to have been derived therefrom, shall be chargeable to income tax in the name of the resident person who shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income tax." Relying on this provision it was argued that the nature of the respondent 's business was foreign trade which was inter connected with the business of the non resident principal.
Its nature was such as to attract the imposition of liability on the respondent firm under section 42(2) of the Act and therefore the loss so incurred must be taken to be incidental to and arising out of the business of the respondent.
"The thing to be taxed", said Lord Halsbury, L. C., "is the amount of profits and gains.
The word 'profits ' I think is to be understood in its natural and proper sense in a sense which no commercial man would.
misunderstand": Gresham Life Assurance Society V. Styles (1).
Hence even if a deduction is not specifically enumerated in sub section (2) of B. 10 it would still be a debatable item to reflect the taxable profits.
The Privy Council in Commissioner of Income tax vs Sir section M. Chitnavis (1) held that the Act nowhere authorises the deduction of bad debts of a business, such a deduction is necessarily allowable because what is chargeable to income tax in respect of a business are the profits and gains of a year and in assessing the amount of profits and gains of that, year account must necessarily be taken of all losses incurred, otherwise true profits and gains cannot be ascertained.
In order (1)(1892) , 188 (H.L.).
(2)(1932) L.R. 59 I.A. 290, 296. 953 that a loss may be deductible it must be a loss in the business of the assessee and not payment relating to the business of somebody else which under the provisions of the Act is deemed to be and becomes the liability of the assessee.
The loss becomes allowable if it "springs directly from and is incidental" to the business of the assessee.
The decision therefore mainly depends upon whether the loss claimed is a business loss of that nature.
In our opinion the amount which became payable by the respondent firm cannot be called its business loss.
In order to be deductible the loss must be in the nature of a commercial loss and, as has been said above, must spring directly out of it and must really be incidental to the business itself.
It is not sufficient that it falls on the trader in some 'other capacity or is merely connected with his business.
Counsel for the respondent relied upon a judgment of this Court in Badridas Daga vs The Commissioner of Income tax (1).
In that case an agent of the assessee engaged for the purpose of carrying on of the assessee 's business had authority to operate a bank account.
Acting under such authority the agent withdrew from the bank monies and put them to his personal use.
The assessee was able to recover from the agent only a part of the amount misappropriated and the balance was written off as irrecoverable debt and it was held that it was not allowable under section 10(2)(xi) or 10(2)(xv) of the Act but it was a loss deductible in computing the profits under section 10(1) of the Act as a loss incidental to the carrying on of his business.
Counsel relied on the following observation of Venkatarama Ayyar, J., at p. 695: "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.
,, That passage has to be read in the circumstances of (1)[1959] S.C.R. 690.
954 that case where the employment of agents was incidental to the carrying on of the business and it was observed that it logically followed that the losses which were incidental to such employment were also incidental to the carrying on of the business.
At page 696, it was observed: "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." Reference may also be made to an English decision in Curtis vs J. & G. Oldfield Ltd. (1).
In that case the managing director of a company of wine and spirit merchants embezzled monies of the ' company and that.
was claimed as a loss as a bad debt and it was held that it was not a trading loss and was therefore not an admissible deduction.
In that case the contention of the Crown *as that the sum was not an ordinary trading debt and therefore could not be a bad debt and that the loss was not connected with, and did not arise out of the trade.
Rowlatt, J., said at p. 330: "When the Rule speaks of a bad debt it means a debt which is a debt that would have come into the balance sheet as a trading debt in the trade that is in question and that it is bad.
It does not really mean any bad debt which, when it was a good debt, would not have come in to swell the profit.
" In the present case the liability was imposed upon the respondent firm because it was treated as an agent within the meaning of section 42(1) of the Act and the liability was imposed because of the deeming provision in sub section
(2) of section 42 of the Act.
can it be said, in the present case, that the liability imposed upon the respondent firm was a business debt arising out of the business of the respondent or to use the words of Venkatarama Ayyar, J., "springs directly from the carrying on of the business and is incidental to it or is a trading debt in the business of the respondent firm.
" As we have said above, that condition has not (1)(1925) 955 been fulfilled and the loss which the respondent has incurred is not in its own business but the liability arose because of the business of another person and that is not a permissible deduction within section 10(1) of the Act.
It is not a loss which has to be deducted in respect of the business of the respondent from the profits and gains of the respondent 's business.
Counsel for the respondent also relied on Lord 's Dairy Farm Ltd. vs Commissioner of Income tax, Bombay(1).
That 'was a case of embezzlement by an employee and it was held that the loss directly arose from the necessity of employing cashiers and therefore the loss by embezzlement was a trading loss but in that very case it was held that before a claim could be made for deduction of a debt as bad debt it must be a debt in law.
That case is not applicable to the facts of the present case and is of little assistance in the decision of the question before us.
Counsel for the respondent next relied on Calcutta Co., Ltd. vs The Commissioner of Income tax (2).
It was held in that case that the expression "profits and gains" has to be understood in its commercial sense and that there could be no computation of profits and gains until the expenditure necessary for earning those profits and gains is deducted therefrom and that when there is no specific provision in section 10(2) in regard to claim made, its allowability will depend on accepted commercial practice and trading principles and it will be allowed if it can be said to arise out of the carrying on of the business and is incidental to it.
As a principle it is unexceptionable but it does not carry the matter any further.
It was next contended that the matter falls within section 10(2)(xi) of the Act, i.e., it is in respect of the busi ness.
This contention has even less substance than the claim of deduction under section 10(1).
Under cl.
(xi) also a debt is only allowable when it is a debt and arises out of and as an incident to the trade.
Except in money lending trade debts can only be so described (1) (2) [1959] 37 I.T.R. 956 if they are due from customers for goods supplied or loans toconstituents or transactions of a similar kind.
In every case the test is, was the debt due as an incident to the business; if it is not of that character it will be a capital loss.
Thus a loan advanced by a firm of Solicitors to a company in the formation of which it acted as legal adviser is not deductible on its becoming irrecoverable because that is not a part of the profession of a Solicitor: C. I. R. vs Hagart & Burn Murdoch (1).
In our opinion the High Court 'was in error in answering the question in favour of the respondent.
We therefore allow this appeal, set aside the judgment and order of the High Court and answer the question against the respondent.
The appellant will have his costs in this Court and in the High Court.
Appeal allowed.
| The appellant had been incorporated in 1944 as a private company limited by shares in the former State of Bhor with its registered office in Bhor.
The shareholders of the company were at all material times resident in British India.
By virtue of the States Merger (Governors ' Provinces) Order, 1949, the State was merged with the Province of Bombay with effect from August 1, 1949.
The provisions of the Indian Income tax Act, 1922, were extended to the merged State with effect from April 1, 1949.
Under the power given by section 60A of the Act which enabled the Central Government to remove any difficulty in the application of the Act to merged States by making a general or special order granting exemption or other modification, the Central Government notified the Merged States (Taxation Concessions) Order, 1949.
Paragraph 12 of that Order stated that " the provisions of section 23A of tile Indian Income tax Act shall not be applied in respect of the profits and gains of any previous year ending before 1st day of August, 1949, unless the State law contains a provision corresponding thereto.
" The total world income of the company for 1946 and 1947 was Rs. 6,57,084 and 7,8o, 125 respectively and for those years the company declared dividends of Rs. 2,580 and Rs. 1140.
For the assessment years 1947 48 and 52 410 1948 49, corresponding to the account years 1946 and 1947, the Income tax Officers assessed the company as nonresident ; for the assessment year 1947 48, the Officer held that ' the assessable income of the company in British India for 1946 less the taxes must be deemed to be distributed among the shareholders in the proportion of their shareholdings, under section 23A of the Act, while for the account year 1947, the total world income less the taxes was deemed to be is tributed, the part proportionate to the income in Bhor State being excluded, except for purposes of rate.
In computing the " deemed dividends " the Income tax Officer did not deduct the interest charged to the company under section 18A (8) from the assessable income along with the income tax and super tax under section 23A(1).
The company and the shareholders claimed (1) that para.
12 of the Merged States (Taxation Concessions) Order, 1949, precluded the Income tax Officer from making an order under section 23A of the Act in respect of the profits and gains of the account years ending December 31, 1946, and December 31, 1947, which were previous years ending before August 1, 1949, and (2) that, in any case, interest under section 18A(8) ought to have been deducted along with the income tax before the fictional dividends were computed.
A further contention was raised that since the dividends in question would be deemed to have been declared in Bhor State and received there, unless another fiction was engrafted upon the fiction created in section 23A that the dividends must be deemed to have been received in the taxable territories, they could not be taxed in the hands of the shareholders.
The shareholders also claimed the benefit of s 14(2)(C) in respect of the entire amount of the balance deemed to be distributed.
Held: (1) that the expression "any previous year" in para.
12 of the Merged States (Taxation Concessions) Order, 1949, did not refer to all the previous years prior to and ending before August 1, 1949, but meant only one previous year, which would be a previous year for the purposes of the assessment year 194950, but which, to get the exemption, must end before the first day of August, 1949; (2) that the force of the fiction under section 23A of the Indian Income tax Act, 1922, which makes the dividends which ought to have been distributed to be so distributed, transcends all questions of accrual and receipt, and what is deemed to be distributed must also be deemed to have accrued and received by the person to whom it is deemed to be distributed; (3) that section 14(2)(c) of the Act saves only that portion of the income which is not assessable in the taxable territories by reason of its accrual in the State and does not affect the operation of section 23A on the assessable income of the company which, by reason of the application of the Indian Income tax Act even prior to the extension of the Act to the State after merger, was assessable under the Act 411 (4) that the wording of section 18A(8) of the Act under which interest is recoverable along with the tax, does not show that it is to be treated as tax but retains its character as interest, and since section 23A speaks of deduction only of income tax and supertax, no deduction could be made in respect of the interest under that section.
|
Appeal No. 265, of 1966.
Appeal by special leave from the judgment and order dated January 10, 1966 of the Assam and Nagaland High Court in Civil Rule No. 266 of 1965.
Naunit Lal, for the appellants.
R. Gopalakrishnan, for respondent No. 1.
The Judgment of the Court was delivered by Shah, J.
Daksha Prasad Deka hereinafter called 'the res pondent ' was appointed Assistant Sub Inspector of Police with 688 effect from January 17, 1929.
On a representation made by the respondent the date of his birth was entered in the service record as July 1, 1910.
Under F.R. 56(a) the respondent was liable to be compulsorily retired on July 1, 1965.
In 1956 the respondent applied that the date of birth entered in his service record 'be showing as August 1 191 1.
That application was rejected.
The respondent again applied in 1963 for correction of his date of birth.
The application was, rejected and by order dated June 26, 1965, the respondent was informed that he win stand superannuated on June 30, 1965.
His representation made to the Government of Assam against that order was unsuccessful.
The respondent then applied to the High Court of Assam praying for a writ in the nature of mandamus requiring the State ,of Assam to forbear from giving effect to the order dated June 26, 1965.
The High Court quashed the order dated June 26, 1965 and directed the State of Assam to give an opportunity to the respondent to show cause against the order directing compulsory retirement and an opportunity to prove his true date of birth.
Against that order, this appeal is preferred with special leave.
In the opinion of the High Court if the true date of birth of the respondent was August 1, 1 9 1 1, the order compulsorily retiring the respondent on June 30, 1965, without giving him an opportunity to prove his true age, infringed the guarantee of article 311(2) of the Constitution.
In our judgment, the High Court was wrong in holding that there was any infringement of article, 311(2) of the Constitution.
In the service record of the respondent his date of birth was recorded as July 1, 1910 and under F.R. 56(a) the respondent was liable to be compulsorily retired on the date on which he attained the age of 55 years.
The date of compulsory retirement under F.R. 56(a) must in our judgment, be determined on the basis of the service record, and not on what the respondent claimed to be his date of birth, unless the service record is first corrected consistently with the appropriate procedure.
A public servant may dispute,.the date of birth as entered, in the service record, and may apply for correction of the record.
But until the record is corrected, he cannot, claim that he has been deprived of the guarantee under article 311(2) of the Constitution by being compulsorily retired on attaining the age of ' superannuation on the footing of the date of birth entered in the service record.
is true that the State authorities did not give to the respondent an opportunity to support his case that he was born on 689 August 1, 1911, and that the service record was erroneous.
But in view of S.R. 8 Note, which governed the employment of the respondent an application for correction of the service record could not be entertained if it was made within three years before the date of "actual supernuation".
S,R. 8 Note provides "No alteration in the date of birth of a Government servant should be allowed except in very rare cases where a manifest mistake has been made.
Such mistakes should be rectified at the earliest opportunity in the course of (1) periodical re attestation of the entries in the first page of service book, and (2) preparation of the annual detailed statement of a permanent establishment (Financial Rule Form No. 11) in which is noted the date of, incumbent 's birth.
In no case the request for change in the date of birth of a Government servant made on a date with three years of the date of ' his actual.
superannuation ' should be entertain ed.
" Validity of the Rule is not challenged by the respondent.
are unable to agree with the view of the High Court that the date of "actual superannuation" within, the meaning.
of S.R. 8 Note is the date of superannuation computed with reference to the claim made by the public servant, and not with reference to the date as entered in the service record.
If such an interpretation be accepted, S.R. 8 Note would prove in a majority of cases of no practical utility.
It is intended by S.R. 8 Note that any error 'in the service record shall be rectified at the, earliest opportunity and in no case should an application for rectification be entertained within three years of the "date of actual super annuation".
i.e. the date of superannuation according to the service record.
Again, if the contention of the respondent were correct, on the date on which he entered service he was a minor.
If on a representation that he had attained the age of majority on the date on which he entered service, it would not be open for him, after being admitted to the service, to contend that under the appropriate service rules he could not have been admitted to the service, but for the misrepresentation made by him.
Counsel for the respondent relied upon the judgment of this Court in State of Orissa vs Dr. (Miss) Binapani Dei & Ors.
(1) in support of the contention that a public servant must be given an opportunity to prove his true date of birth before he is superannuated, and any order passed without such opportunity is illegal.
In our judgment Dr. (Miss) Binapani 's case(1) enunciates no such proposition.
In that case in the service record of a pub (1) 1967 2 section C. R. 625 2 L 694 Sup.
C.I/171 690 lic servant, April 10, 1910 was entered as the date of 'her An enquiry was, held and the public servant was required to show cause why her date of birth should not be accepted as April 1907.
Thereafter the Government of Orissa determined her of birth as April 16, 1907, and declared that she should deemed to have been superannuated on April 16, 1962.
order was challenged by the public servant in a petition to High Court of Orissa.
The High Court held that the order the State Government amounted to compulsory retirement before she attained the age of superannuation and was contrary to the rules governing her service conditions and amounted to removal within the meaning of article 311 of the Constitution, and since :she was not given a reasonable opportunity of showing cause against the action proposed to ';be taken in regard to her, the order was invalid.
This Court confirmed the order passed by the High Court of Orissa.
It was observed by this Court that ,even an administrative order which involved civil consequences must be made consistently with the rules of natural justice 'The person concerned must be informed of the case of the State and the evidence in support thereof and must be given a fair opportunity to meet the case before an adverse decision is taken The public servant, according to the service record, could not be superannuated before April 10, 1965.
But by an enquiry which was not held in a manner consistent with the rules of natural justice an order was made altering the date of birth as entered in the service record, and declaring that she was born in 1907 That was plainly an order passed to the prejudice of the public servant without giving an opportunity to meet the case of the State.
In the present case, however, the State did not seek to modify the service record: it was the respondent who sought modification of the service record and claimed that he declared only on the basis of the rectification prayed for by him.
It is true that ordinarily when an application is made for rectification of age by a public servant, the State should give the applicant proper opportunity to prove his case and should give due consideration to the evidence brought before it.
But in the present case, since the application for rectification was made within three years of the date of actual superannuation, according to S.R. 8 Note the application could not be, entertained.
The principle of Dr. (Miss) Binapani 's case(1) has no application to this case.
The appeal is allowed and the order passed by the High Court is set aside.
The petition filed by the respondent shall stand dismissed.
There will be no order as to costs throughout.
| The respondent was appointed Assistant Sub Inspector of Police with effect from January 17, 1929, and on his own representation his date of birth was entered in the service record as July 1, 1910.
Under F.R. 56(a) he was liable to be compulsorily retired on July 1, 1965. 'In 1963 he applied that the date of birth in the service record may be corrected as.
August 1, 1911.
The application was rejected without giving him an opportunity to support his case and he was informed on June 26, 1965.
that he would stand superannuated on June 30, 1965.
He filed a writ petition in the High Court and the High Court quashed the order dated June 26, 1965.
In appeal to this Court HELD : Until the service record of a public servant is corrected he cannot claim that he has been deprived of the guarantee under article 311(2) of the Constitution by being compulsorily retired on attaining the age of superannuation on the basis of the service record.
A public servant may dispute the correctness of the date of birth as entered in the service record and may apply for its correction, but in view of S.R. 8 Note, which governed the employment of the respondent, an application for such a correction could not be entertained if it was made within three years before the date of 'actual superannuation '.
The words 'actual superannuation ' mean the date of superannuation according to the service record, and not according to the date of birth claimed by the public servant.
The respondent represented that he had attained the age of majority on the date on which he entered service.
It was not open to him to contend that under the appropriate service rule he could not have been admitted to the service.
[688 G H, 689 A B, F G] State of Orissa vs Dr. (Miss) Bimapani Dei, [1967] 2 S.C.R. 625 explained.
|
etition (Criminal) No. 9516 of 1981.
(Under article 32 of the Constitution) Bhim Singh, P.D. Sharma & Subash Sharma for the Petitioner.
M.N. Phadke and Altaf Ahmed for the Respondents, 524 The Judgment of the Court was delivered by DESAI, J.
On February 9, 1982 we made an order quashing the detention order dated July 11, 1981 made by the District Magistrate, Jammu in exercise of the power conferred by Section 8 of The Jammu and Kashmir Public Safety Act, 1978 ( 'Act ' for short) and we announced that the reasons would follow.
Here are the reasons.
The detenu Vijay Kumar was arrested on June 26, 1981.
A petition was moved on his behalf before the Chief Judicial Magistrate Jammu praying for releasing the detenu, on bail.
This petition for bail appears to have come up before the learned Magistrate on July 4, 1981 when the following order was made: "I have heard the advocate for the applicant and perused the C.D. File.
Put up for orders on 6.7.81.
" When the matter again came up on July 6, 1981, the learned Magistrate made the following order: "Although there was nothing in the C.D. File about his (Petitioner) involvement in E.A.O. (Enemy Agents ordinance) on 4.7.81, but today a detailed report has been presented in which one of the offences of which he is charged is u/s 3, E.A.O. which this Court is not competent to try.
Hence this application is returned to the applicant for presentation to the proper court alongwith report " The detenu thereupon moved an application for releasing him on bail before the learned Additional Sessions Judge, Jammu, who, we are informed, was competent to try the accused charged with an offence under Enemy Agents ordinance.
His petition for bail came up before the learned Additional Sessions Judge on July 11, 1981 when the following order was made: "This application pertains to Vijay Kumar accused who is involved for an offence under the Enemy Agents ordinance which is being investigated by the Counter Intelligence Police, Jammu.
The learned Chief Prosecuting officer and the learned counsel for the accused have been heard.
525 During the course of arguments an order has been A shown to me by the police that said Vijay Kumar accused has now been ordered to be detained under the Public Safety Act.
In view of this order, this bail application has become infructuous which is disposed of accordingly.
" The detenu was served with the detention order dated July 11, 1981 on the same day in jail because he was already in jail from June 25, 1981.
The grounds for detention were served on him on July 15, 1981.
The detenu submitted his representation dated July 29, 1981 addressed to the Secretary the Government Home Department to the Superintendent, Central Jail, Jammu where the detenu was detained.
One Shri K.D. Sharma, Incharge Superintendent, Central Jail Jammu has stated in his affidavit dated February 6, 1982 that the representation of the detenu dated July 29, 1981 was forwarded to the Government at Srinagar vide office letter No. 2595 dated July 29, 1981 and simultaneously a wireless message No. 2596 on the same day was also sent to the Government intimating that the representation of the detenu had been forwarded to the Government for appropriate action.
Mr. K section Salathia, Deputy Secretary to the Government of Jammu and Kashmir, Home Department, Jammu, in his affidavit dated February 9, 1982 has stated that the 1 representation of the detenu was received from the Superintendent, Central Jail, Jammu in the office of the Home Department at Srinagar on August 12, 1981.
The department also received the comments of S.P., C.I.D. Counter Intelligence, Jammu and thereafter the case was processed on August 24, 1981 in the office of the Home Department at Srinagar and the file was placed before the Home Secretary on August 25, 1981, who recommended the same for approval on August 28,1981 to the Chief Minister (Home) From the same affidavit, it further transpires that the Chief Minister rejected the representation on August 31, 1981 and the same was communicated to the detenu on September 1, 1981.
In the meantime, the case of the detenu was referred to the Advisory Board on August 3, 1981.
The Advisory Board submitted its report to the Government on September 4, 1981.
one Rattanlal, the brother of the detenu moved Petition No. 31 of 1981 for writ of Habeas Corpus in the High Court of Jammu and Kashmir at Jammu.
The petition came up for hearing before 526 the learned Single Judge, who by his judgment dated December 7, 1981 rejected the same.
Thereafter the detenu by the present writ petition, moved this Court under Article 32 of the Constitution for a writ of Habeas Corpus.
Section 8 of the Act prescribes grounds for detention, one such ground being to prevent any person from 'acting in any manner prejudicial to the security of the State.
The impugned order of detention recites that the detenu is detained with a view to preventing him from 'acting in any manner prejudicial to the security of the State. ' The expression 'acting in any manner prejudicial to the security of the State ' has been defined in Section 8 (3) of the Act to mean making preparations for using, or attempting to use, or using or instigating, inciting, provoking or otherwise abetting the use offence, to overthrew or overawe the Government established by the law in the State.
The detenu contended before the High Court that accepting all the activities attributed to the detenu in the grounds of detention at their face value.
the alleged prejudicial activity would not fall within the ambit of the expression 'acting in any manner prejudicial to the security of the State. ' The definition of the expression as here in before extracted indicates that the person accused of 'acting in any manner prejudicial to the security of the State ' must be shown to be making preparations for using, or attempting to use, or using or instigating, inciting or provoking or otherwise abetting the use of force, and the intention or motive for the activity must be to overthrow or overawe the Government established by law in the State.
The learned judge of the High Court following an earlier Division Bench judgment of the same High Court in Kharotilal vs State,(1) negatived this contention of serving that where the Government accusation against the detenu is that he had been indulging in supplying information for Pakistan Army Intelligence and was passing on vital information pertaining to the Army department etc.
to that Agency, such activities were likely to assist Pakistan in any armed aggression against the State and were a threat to the security of the State.
This view needs examination but as the argument was not pressed before us, we refrain from examining the same.
Number of contentions were advanced at the hearing of this petition but we propose to deal with only two of them which in our 527 Opinion go to the root of the matter and which, when accepted, in our opinion, would result in invalidation of the order.
The first contention is that the order of the District Magistrate suffers from non application of mind inasmuch as the date on which he passed the impugned order of detention dated July li, 1981, the detenu was long before arrested and locked up in Jail on the allegation that he was suspected to have committed some offence under the Enemy Agents ordinance 8 of Samvat Year 2005, and, therefore there was no present apprehension that the detenu, if not detained, was likely to act in any manner prejudicial to the security of the State.
The District Magistrate passed the impugned order of detention on being satisfied that with a view lo preventing the detenu from acting in a manner prejudicial to the security of the State it was necessary to detain him.
The order ex facie does not show that the detaining authority was aware that the detenu was already arrested and kept in jail.
If the detaining authority was conscious of the fact that the detenu was already arrested and confined in jail, the order ex facie would have shown that even though the detenu was in jail, with a view to preventing him from acting in a manner prejudicial to the security of the State it was necessary to detain him.
There is a foot note in the order that the order was forwarded to the S P., C.I D. Counter Intelligence, Jammu for execution of the order under section 3 of the Act.
The further direction was that notice of the order shall be given to Vijay Kumar s/o Anant Ram, r/o H. No. 609, Peer Mitha, Jammu, by reading over and explaining the same to him in language he understands.
The detention order does not give the slightest indication that the detaining authority was aware that the detenu was already in jail yet on the material placed before him he was satisfied that a detention order ought to be made.
There is nothing in the order to show that to the knowledge of the detaining authority the detenu was already in jail for a period of more than lo days before the date on which he passed the order and that such detention in the opinion of the detaining authority was not sufficient to prevent the detenu from acting in a manner prejudicial to the security of the State, and therefore power under section 8 of the Act is required to be .
exercised.
The detenu in para 3 of his petition before this Court has specifically averred that he was arrested on June 26 1981, the correct 528 date being June 25, 1981, under a false and fabricated charge.
Shri K.S. Salathia, Deputy Secretary to Government of Jammu & Kashmir, Home Department, who has filed the counter affidavit has with reference to the averments made in para 3 of the petition made a very very ambiguous statement that for the purpose of J and K Public Safety Act the petitioner was arrested on July 11, 1981, pursuant to the detention order.
It is no where suggested that the detaining authority was aware of the fact that the detenu was already in jail and that keeping in view the fact the detenu was already locked up in jail yet it was considered necessary for preventing him from acting in a manner prejudicial to the security of the State to pass the detention order.
lt may further be pointed out that Shri A. Sahasranaman, the District Magistrate of Jammu who has made the impugned detention order, filed an affidavit on February 7, 1982.
Of course, in fairness to him it must be stated that this affidavit was for the limited purpose of pointing out as to how he dealt with the case of Hans Raj, another detenu whose detention was quashed by this Court subsequent to the order of this Court.
It may be noticed in passing that Hans Raj and the detenu were involved jointly in the activity, which led to the detention of the detenu.
Even though this affidavit was filed for the limited purpose, it came on record after the case was taken up for hearing by this Court and the affidavit at least does not throw any light on the vexed question whether the detaining authority was aware of the fact that the detenu on being suspected of having committed a serious offence, was already in jail for a period of more than a fortnight before the date of the impugned detention order.
Preventive detention is resorted to, to thwart future action.
If the detenu is already in jail charged with a serious offence, he is thereby prevented from acting in a manner prejudicial to the security of the State.
May be, in a given case there yet may be the need to order preventive detention of a person already in jail.
But in such a situation the detaining authority must disclose awareness of the fact that the person against whom an or der of preventive detention is being made is to the knowledge of the authority already in jail and yet for compelling reasons a preventive detention order needs to be made.
There is nothing to indicate the awareness of the detaining authority that detenu was already in jail and yet the impugned order is required to be made.
This, in our opinion, clearly exhibits non application of mind and would result in invalidation of the order.
We, however, do not base our order on this ground.
529 The second contention which in our opinion goes to the root A of the matter is that there has been a violation of section 13 of the Act.
Section 13 provides as under: "13.
Grounds of order of detention to be disclosed to persons affected by the order: (I) When a person is detained in pursuance of a detention order, the authority making the order shall, as soon as may be, but not later than five days from the date of detention, communicate to him the grounds on which the order has been made, and shall afford him the earliest opportunity of making a representation against the order to the Government.
" x x x The provision contained in section 13 (1) is on par with the constitutional protection conferred by Article 22 (5) of the Constitution of India.
The contention is that the obligation on the detaining authority to afford to the detenu the earliest opportunity of making representation against the order of detention, in order not to render it illusory simultaneously obliges the authority to whom the representation is made to consider the same expeditiously.
Submission is that a statutory right conferred on the detenu enabling him to make a representation which of necessity must be giving an opportunity to point out to the Government as to why the detention order was not justified and that it must be revoked and the personal liberty deprived under the detention order must be restored, is to convince the Government to take into consideration the facts and contentions set out in the representation, which must imply that the Government must consider the same.
The earliest opportunity to be afforded for making representation inheres the corresponding duty of the Government to consider the representation so received expeditiously.
The reason behind enacting this provision is manifest.
When power to detain without trial is exercised, the authority exercising the power must afford an opportunity to the detenu to convince the Government/detaining authority that the power was not justifiably exercised or no occasion arose for exercise of the power.
In a punitive detention which is the end product of a trial in which the convict participates and has full opportunity to present his side of the case while preventive detention ordinarily described as jurisdiction based on suspicion does not afford any opportunity to the detenu to explain his side of the matter before 530 he is deprived of the liberty and; therefore, so soon after the detenu is deprived of his personal liberty the statute makes it obligatory on the authorities concerned to afford him an earliest opportunity to represent his side of the case and which inheres the corresponding obligation on the authority to consider the same.
The word 'earliest ' which qualifies the opportunity must equally qualify the corresponding obligation of the State to deal with the representation if and when made, as expeditiously as possible.
The opportunity contemplated by the section is the opportunity to make a representation against the detention order to the Government and therefore ex hypothese soon after the person is deprived of his personal liberty he must be afforded the earliest opportunity to make a representation.
The representation is to be made tc.
the Government.
Therefore the detenu who has already been served with the detention order and thus deprived of his liberty would ordinarily be in a position to send his representation through the jail authorities.
The jail authority is merely a communicating channel because the representation has to reach the Government which enjoys the power of revoking the detention order.
The intermediary authorities who are communicating authorities have also to move with an amount of promptitude so that the statutory guarantee of affording earliest opportunity of making the representation and the same reaching the Government is translated into action.
The corresponding obligation of the State to consider the representation cannot be whittled down by merely saying that much time was lost in the transit.
If the Government enacts a law like the present Act empowering certain authorities to make the detention order and also simultaneously makes a statutory provision of affording the earliest opportunity to the detenu to make his representation against his detention, to the Government and not the detaining authority, of necessity the State Government must gear up its own machinery to see that in these cases the representation reaches the Government as quickly as possible and it is considered by the authorities with equal promptitude.
Any slackness in this behalf not properly explained would be denial of the protection conferred by the statute and would result in invalidation of the order.
Reverting to the facts of this case, the detenu who in jail from June 25, 1981, was served with a detention order on July 11, 1981, the very day on which the detention order was made.
The grounds of detention were served upon him on July 15, 1981.
Admittedly the detenu submitted his representation to the Superintendent of Jail on July 29, 1981.
One K.D. Sharma, Medical officer, Central Jail, 531 Jammu, Incharge Central Jail, Jammu who has filed his affidavit dated February 6, 1982, has admitted that the detenu submitted his representation addressed to the Secretary to the Government, Home Department, on July 29, 1981.
He proceeds to assert that the said representation in original was forwarded by post to the Government in Srinagar vide his office No. 2595 dated July 29, 1981.
He further adds that a wireless message No. 2596 dated July 29, 1981, was also sent to the Government to intimate that the representation of the detenu had been forwarded to the Government for appropriate action.
Postal communication from Jammu to Srinagar hardly takes two days unless it is pointed out that there was some break down of communication.
Nothing to that effect was brought to our notice.
Now, Shri Salathia has stated in his counter affidavit that as no representation was received a wireless message was sent on August 6, 1981, making reference to the wireless communication from the Superintendent of Jail that the representation referred to in the wireless message of the Jail Superintendent has still not been received at Srinagar.
He requested the Superintendent to send a duplicate copy of the same by air consignment, and gave a further direction that in future all such communications should be sent through air consignment.
Be that as it may, he says that the representation was received in the office on August 12, 1981.
The comments from S.P., C.I.D., Counter Intelligence were called for on August 14, 1981.
He does not state the date on which they were received but he says that the case was examined and processed on August 24, 1981 in the office and the file was placed before the Home Secretary on August 25, 1981, who recommended the same for approval on August 28, 1981, and the Chief Minister (Home) rejected the representation on August 31, 1981, and the fact of rejection of the representation was communicated to the detenu on September 1, 1981.
There are two time lags which may be noticed.
Representation admittedly handed in the Superintendent of Jail on July 29, 1981 to at Jammu reached Srinagar, the summer capital of the State on August 12, 1981, which shows a time lag of 14 days.
The second lime lag is, from our point of view, more glaring.
Even though the concerned office was made aware of the fact by the wireless message of the Superintendent of Jail, Jammu, dated July 29, 1981, that a representation of the detenu has been sent by post, the .
first query about its non receipt came as per the wireless message dated August 6, 1981.
That can be overlooked, but it has one important message.
The concerned office was aware of the fact that a representation has 532 already been made and a duplicate was sent for.
With the background of this knowledge trace the movement of the representation from the date of its admitted receipt being August 12, 1981.
If the representation was received on August 12, 1981, and the same office disposed it of on August 31, 1981, there has been a time lag of 19 days and the explanation in that behalf in the affidavit of Shri Salathia is far from convincing.
In our opinion, in the facts of this case this delay, apart from being inordinate, is not explained on any convincing grounds.
In Khudi Ram Das vs State of West Bengal,(l) this Court held that one of the basic requirements of clause (5) of Article 22 is that the authority making the order of detention must afford the detenu the earliest opportunity of making a representation against the order of detention and this requirement would become illusory unless there is a corresponding obligation on the detaining authority to consider the representation of the detenu as early as possible.
Thus, in the facts of this case we are not satisfied that the representation was dealt with as early as possible or as expeditiously as possible, and, therefore, there would be contravention of section 13 of the Act which would result in the invalidation of the order.
These are the reasons which had prompted us to quash and set aside the detention order.
P.B.R. Petition allowed.
| The petitioner has arrested on June 26, 1981 under the Enemy Agent ordinance.
The Chief Judicial Magistrate rejected his application for bail on the ground that he had no jurisdiction to try him.
The Addl.
Sessions Judge rejected his bail application on the ground that as ha was by then ordered to be detained under the J & K Public Safety Act the bail application has become infructuous.
The detention order dated July 11, 1981 was served on the detenue in jail on July 15, 1981.
His representation dated July 29, 1 981 was forwarded to the State Government on July 29, 1981 and simultaneously a wireless message was sent on the same day.
The representation was received by the Government on August 12, 1981.
After investigations the file was put up to the Chief Minister on August 28, 1981 for approval.
The Chief Minister rejected the representation on August 31, 1981 which was communicated to the petitioner in jail on September 1, ]981.
The detenu 's case was referred to the Advisory Board on August 3, 1981.
Its report was submitted on September 4, 1981.
In this petition under article 32 of the Constitution it was contended before this Court on behalf of the petitioner that as section 13 (1) of the Jammu & Kashmir Public Safety Act 1978 imposes an obligation on the detaining authority to give the detenu the earliest opportunity of making a representation against the detention order the long unexplained delay in this case had invalidated the order of detention.
Allowing the petition, ^ HELD: The petitioner 's representation had not been dealt with as expeditiously as possible.
There was therefore contravention of section 13 of the Act which invalidated the detention.
[532 D] Preventive detention, unlike punitive detention, does not afford an opportunity to the detenu to explain his side of the matter before he is deprived 523 Of his liberty and therefore the statute makes it obligatory on the authorities to A afford him the earliest opportunity to represent his case and a corresponding obligation on the authority to consider the representation.
The word "earliest" which qualifies the term "opportunity" must equally qualify the corresponding obligation of the State to deal with the representation if and when made as expeditiously as possible.
[529 H; 530 A B] The jail authorities who are merely a communicating channel have to move with promptitude so that sufficient guarantee of affording earliest opportunity of making the representation and the same reaching the Government is translated into action.
The corresponding obligation of the State to consider the representation cannot be whittled down by merely saying that time was lost in transit.
The State Government must gear up its own machinery to see that in these cases the representation reaches the Government as early as possible and is considered by the authorities with equal promptitude.
Any unexplained delay would be denial of the statutory protection given to the detenu.
[530 D G] In the instant case there were two time lags: the representation handed in to the Jail Superintendent on July 29, 1981 reached the Government on August 12, 1981 after a time lag of fourteen days and the representation was disposed of on August 31, 1981 after a time lag of nineteen days and the delay has not been explained on any convincing ground.
B] Khudi Ram Das vs State of West Bengal, ; , referred to.
Preventive detention is resorted to, to thwart future action.
If the detenu is already in jail charged with a serious offence, he is thereby prevented from acting in a manner prejudicial to the security of the State.
Where there is need to order preventive detention of a person already in jail the detaining authority must disclose awareness of the fact that the person against whom an order of preventive detention is being made is to the knowledge of the authority already in jail and yet for compelling reasons a preventive detention order needs to be made.
[528 F G] In the instant case there is nothing to indicate awareness of the detaining authority that the detenu was already in jail for more than 16 days and Yet the impugned order was made.
This clearly exhibits non application of mind and would result in invalidation of the order.
But the Court did not base its order on this ground.
[528 G H]
|
the applicability is underfined but the statute is clearly enforceable as long as it is in the statute book side by side with the normal excise duties.
The clear intention is that the same provisions shall govern both the levies except that the duty under the later Act is confined to certain goods only und its distributability among the States may perhaps follow a different pattern from the principal duty.
[825B C] 3(v) The Finance Acts which levied special or regular or additional excise duties contained in themselves all the elements of charge or duty.
T he goods were mentioned and the duty has to be levied either at a percentage of the normal excise duty payable under the 1944 Act or at a percentage of the value of the assessable goods as determined under the 1944 Act.
All that was further needed was the applicability of the procedural provisions of the 1944 Act.
However, the 1957 Act is incomplete as to the basis of the charge and its provisions would become totally unworkable unless the concepts of 'manufacture ' and 'assessable value ' as determined under the 1944 Act are carried into it.
[825D F] & ORIGINAL JURISDICTION: Writ Petition No. 12183 of 1985 etc.
etc (Under Article 32 of the Constitution of India) K. Parasaran.
Attorney General, Soli i Sorabjee A.J. Rana A.K Sen, S.K. Dholakia, Hari Swarup V.C.Mahajan, A. K. Ganguli, Mrs. Shashi Rana, Mrs. J Wad, Ms. Aruna Mathur, Subhash Parekh, Dushyant Dave, P.H Parekh E. K. Jose Ms. Rashmi Chandrachud, Sanjay Bharthri, Sarve Mitter, C.L. Beri, S.K. Beri R.C. Bhatia.
Ravi P. Wadhwani.
P C Kapur Sukumaran, D.N. Mishra, B.V. Desai, M.B Lal.
Mukul Mudgal, B Kanta Rao, Mrs. H Wahi, Mrs. V D Khanna, Aruneshwar Gupta, Mrs. Anil Katiyar R.K.Kapur, B.R. Kapur.
Anis Ahmed Khan.
Ms. Abha Jain, R. Karanjawala, Mrs. Karanjawala, Ms. Meenakshi.
Vishnu Mathur, Kailash Vasudev P.D.Shah, Shri Narain, Sandeep Narain, M.N. Shroff.
Mrs P section Shroff, R. Sasprahbu, S.A.Shroff, S.S Shroff, Praveen Kumar, M.N Chowdhary M.D. Chowdhary, N. Das Gupta, Rajesh Chibber, K.K Bhaduri, Rajiv Dutta.
E.C. Agarwala, Harjinder Singh, R.K. Nambiar P Paremeswaran, Ms. Bina Gupta, K.Swami and V.N. Ganpule for the appearing parties.
The following Judgments of the Court were delivered PG NO.
783 VENKATACHALIAH J.
These appeals, by Special Leave, preferred against the Judgments of the High Court of Gujarat and the High Court of Bombay and the batch of writ petitions under Article 32 of the Constitution of India are heard together and disposed of by this common judgment as they all involve questions common to them concerning the validity of the levy of duties of excise under tariff items 19 and 22 of the Schedule to the ("Central Excise Act") as amended by the Central Excise and Salt Additional Duties Excise (Amendment) 1980 Act ( '"Amending Act") treating as "Manufacture" the process of Bleaching.
Dyeing, Printing, Sizing, Mercerising, water proofing, rubberising, Shrink Proofing Organdie, Processing, etc done by the processor who carry out these operations in their factories on Job work basis in respect of Cotton fabric ' and 'Man made fabric belonging to their customers The Amending Act which became effective from 24.12.1979 sought to render the processes of Bleaching, Dyeing, Printing Sizing, Mercerising etc "Manufacture within the meaning of the Section 2(f) of the Central Excise Act The amendment was necessitated by the Judgment of the High Court of Gujarat which has declared the levy on such 'processing as illegal as, according to the High Court the processing did not bring into being a new and commercially different article with a distinctive character and use and did not therefore constitute 'manufacture ' for purposes, and within the meaning, of the charging section.
The processors who carry out these operations on cotton fabrics or "man made fabrics which are popularly go by the name 'Grey fabric in the particular trade also challenged the levy of the additional duties of excise under the provisions of the additional Duties of Excise goods (of special importance) Act 1957 (Additional Duties Act) on the ground, first.
that if the processes carried on by them do not amount to "manufacture" under Section 2(f) as it originally stood, then, consistent with the impermissibility of main impost.
the levy of additional duties also fails and, that at all cvents, even after the amendment the concept of manufacture under the said Additionl Duties Act had not been correspondingly widened by an appropriate amendment.
The present hatch of appeals and writ petitions comprise of a large number of cases It is not, having regard to the questions requiring to be decided in these matters, necessary to go into, in any particular detail, the fact situation of each individual case.
The processors in these PG NO 784 cases, who may conveniently be referred to as the processors" or "jobbers ', mainly carry out these operations of Bleaching, Dyeing, Printing, Sizing, Finishing etc.
of 'Grey fabric ' on 'job work ' against payment of processing charges to them by the customers who are the owners of the Grey fabric.
The ownership of the cloth rests with the customers who get these processes done to their specifications from these processing houses on payment of processing charges.
The Grey fabric, after processing, is returned by the processing house to the customers.
The facts of W P. No. 12 183 of 1985 'M/s. Ujagar Prints vs Union of India and Ors.), in which the petitioner has challenged the levy by a petition under Article 32 of the Constitution are typical and representative of all other similar cases The petitioner is a firm of partners with its Head Office at 51, Sheikh Memon Street, Bombay.
It has a factory at Sunder Baug, Deonar, Bombay, which is equipped with machinery and plants for processing of man made grey fabric The machinery and equipment installed in the petitioners factory? it is averred and that is not disputed either are suited for and appropriate to the processing of Grey fabric and are not capable of manufacturing Grey fabric The man made grey fabric such as Art Silk Grey fabric, it is stated, is manufactured in mills and on power looms and that letter is exempt from excise duty on its manufacture Petitioners further over that the Art Silk (Grey fabrics which are processed in the petitioner ' factory are those manufactured on power looms and not by the mills and that the Art Silk (Grey fabric received do not come from the manufacturers of the grey fabric through the manufacturing stream but from the various traders through the sales stream.
The point that the petitioners seek to made is that the processing of the grey fabric is not a part, a continuation, of the process of manufacture in the manufacturing stream, but is an independent and distinct operation carried out in respect of the Grey fabric, after it has left manufacturing stage and has become part of the common stock of goods in the market.
It is also averred that the firm M/s. Ujagar Prints does not purchase the Grey fabric but is only engaged in processing it for charges and that in many cases the Grey fabric would have passed on from trader to trader with the attendant increase in the prices with each successive change of hands and is entrusted to the petitioner by the last purchaser for processing against stipulated processing charges on job work basis.
It is contended that these job work processing operations do not amount to "manufacture" as the petitioners do not carry out any spinning or weaving operations; that what they receive from their customers for processing is PG NO 785 therwise fully manufactured man made fabric and that what is returned to the customers after processing continues to remain man made fabric.
The imposition of excise duty on the processor on the basis of the full value of the processed material, which reflects the value of grey fabrics, the processing charges, as well as the selling profits of the customers is, at once unfair and anamolous, for, in conceivable cases the duty itself might far exceed the processing charges that the processors stipulate and get.
The batch of cases also includes cases where the grey fabric is also purchased by these processing houses and are sold by them, after processing In some cases the manufacturers of the grey fabric subject it to captive consumption and process them in their own compositeestablishments .
The essential question is whether these situational differences have a bearing on the principles of determination of the assessable value of processed grey fabric and whether the assessable value could be different in the different fact situations which would be the logical corollary if the contention of the processing houses which do not processing work for charges on the goods not their own, is accepted and the assessable value determined on the basis of mere processing charges.
But the main questions that arise are whether "processing" of the kind concerned in these cases amounts to manufacture", whether the provisions of section 2 of the Amending Act which impart an artificial dimension to the concept of "manufacture" is ultra vires Entry 84 List l; whether at all events, the imposition of a tax on such 1processing is referable to Entry 97 List l; and if the import on the processors is justified under tariff items 19 and 22, according as whether the Grey fabric is cotton or 'man made, what should be the assessable value for purposes of levy of duty so far as processors are concerned.
Prior to the Amending Act of 1980, the levy on the processors was challenged before the Gujarat High Court The Gujarat High Court by its judgment dated 24.1.1979 in the cases of Vijaya Textiles Mills vs Union of India and Real Honest Textiles vs Union of India held that the processes that the processing houses imparted to the Grey fabric did not amount to 'manufacture ' and did not attract ad valorem duty under tariff items 19 and 22, and that processors were liable to pay duty under tariff entry 68 only on the value added by the processing.
PG NO.
786 Following this judgment a large number of similar claims of processing houses were allowed by the High Court by its judgment dated 13.3.1979.
Civil Appeals 1685 to 1766 of 1979 are preferred by the Union of India challenging this view of the High Court.
The Bombay High Court on the contrary by its judgment,dated 16th June, 1983 in writ petition 1623 of 1979 New Shakti Dye Works Pvt. Ltd. vs Union of India and Anr.
took a view different from the one that commended itself to the Gujarat High Court.
Bombay High Court held that even under the concept of "manufacture ' envisaged in Section 2(f) even prior to its amendment, the operations carried on by the processors amounted to "manufacture" and that, at all events, the matter was placed beyond any controversy by the mending Act i.e. Act of 1980.
The aggrieved processors have come up in appeal by Special Leave in Civil Appeal No 6396 of 1983.
Some of the processors have, as stated earlier, filed writ petitions under Article 32 directly in this court challenging the impost on grounds that commended themselves for acceptance to the Gujarat High Court.
Before its amendment by the Amending Act Central Act VI of 1980) Section 2(f) of the Central Excise ACt, defined 'manufacture ' in its well accepted legal sense nomen juris and not with reference to an artificial and statutorily expanded import "2(f) 'manufacture ' includes any process, incidental or ancillary to the completion of a manufactured product; and (i) ] (ii) ] Omitted as unnecessary" The reasoning of the Gujarat High Court was on these lines "In the instant case, the excise duty claimed on the basis of the market value of the processed cotton fabrics or manmade fabrics cannot be levied because, assuming that process amounts to manufacture, all that they have done is to manufacture processed cloth, processed fabric, either cotton or man made and that not being a taxable event in the light of Section 3 read with section 2(d) of the Act and PG NO 787 Items 19 and 22 levy of excise duty on this basis was ultra vires and contrary to law . " This view, according to the Revenue, was incorrect and caused serious prejudice to the legitimate financial interests of the State.
Accordingly the President of India promulgated an Ordinance called the 'Central Excise and Salt and Additional Duties of Excise (Amendment) Ordinance ', 1979 (Central Ordinance No. 12 of 1979) sub sequently replaced by Central Act VI of 1980 of the same name with retrospective effect from 24.2.1979 amending Section 2(f) of the Central Excise Act and tariff items 19(1) and 22(1).
The relevant entries in the Schedule to the 'Additional Duties Act ' were also amended.
So far as amendment to Section 2(f) was concerned, Section of the Amending Act introduced three sub items in the definition of 'manufacture '.
Two of them are material for the present purpose: "(v) in relation to goods comprised in Item No. 19(1) of the First schedule, includes bleaching, mercerising, dyeing, printing, water proofing, rubberising.
shrink prcofing, organdie processing or any other process or any one or more of these processes. ' "(vii) in relation to goods comprised in Item No 22(1) of the First Schedule, includes bleaching.
dyeing, printing, shrink proofing, tentering, heat setting, crease resistant processing or any other process or any one or more of these processes.
" Similarly, amendments were affected by Section 3 of the Amendment Act which amended the original tariff items 19 and 22 by sub stituting the following provisions in their respective places: " 1 Cotton fabrics other than (i) embroidery in the piece.
strips or in motifs, and (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials (a) cotton fabrics.
not subjected to any process Twenty per cent ad valorem (b) cotton fabrics, subjected to the process of bleaching, mercerising, dyeing, printing, water proofing, rubberising, shrink proofing, organdie processing or any other process or any two or more of these processes.
Twenty per cent ad valorem PG NO 788 XXX XXX XXX" "22(1) Man made fabrics other than (i) embroidery in the piece, in strips or in motifs, (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials (a) man made fabrics, not subjected to any process: Twenty per cent ad valorem plus rupees five per square metre.
(b) man made fabrics, subjected to the process of bleaching, dyeing, printing, shrink proofing, tentering, heat setting, crease resistant processing or any other process or any two or more of these processes Twenty per cent ad valorem plus rupees five per square metre.
" Section 4 of the Amending Act amended the relevant entries in the Schedule to the Additional Duties Act.
Section 5(2) of the Amending Act provided: "5 Special provisions as to duties of excise on cotton fabrics, woollen fabrics, man made fabrics, etc during a certain past period and validation: (1). . . . (2) Any rule or notification or any action or thing made issued, taken or done or purporting to have been made.
issued, taken or done under a Central Act referred to in sub section (I) before the date of commencement of this Act, with respect to or in relation to the levy of duties of excise on (a) 'cloth", "cotton cloth" or, as the case may be.
cotton fabrics," (b) woollen fabrics", (c) "rayon or artificial silk fabrics" or, as the case may be, "man made fabrics", shall for all purposes be PG NO 789 deemed to be and to have always been, as validly and effectively made, issued taken or done as if the provisions of this section had been in force at all material times and, accordingly, notwithstanding any judgment, decree or order of any court, tribunal or other authority (a) all duties of excise levied, assessed or collected or purported to have been levied assessed or collected before the date of commencement of this Act, on (i) "cloth", "cotton cloth" and "cotton fabrics" subjected to any process, (ii) "woollen fabrics" subjected to any process, (iii) "rayon or artificial silk fabrics" and "man made fabrics" subjected to any process, under any such Central Act shall be deemed to be, and shall be deemed always to have been, as validly levied, assessed or collected as if the provisions of this section had been in force on and from the appointed day; (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been collected and which would have been validly collected if the provisions of this section had been in force on and from the appointed day; (c) . . . . (d) . . . . " 8.
Indeed, the correctness of the judgment of the Gujarat High Court in the cases of Vijaya Textiles and Real Honest Textiles were considered by a Bench consisting of three judges of this court in Empire Industries vs Union of India, [1985]SUPP.
I SCR 292 by the judgment dated 6.5.1985, one of us (Sabyasachi Mukharji J ) speaking for the Court upheld the validity of the impost Vijaya Textiles Mills vs Union of India, (1979] 4 ELTJ 181, was held not to have been PG NO 790 decided correctly.
The view taken by the Bombay High Court in New Shakti Dye Works Pvt.
vs Union of India & Anr. was approved.
The pronouncement of this court in Empire Industries case otherwise covers, and is a full answer to, the contentions raised in this batch of cases.
However, the correctness of the view taken in the Empire Industries ' case on certain aspects was doubted by another Bench of this court and the matter was, accordingly, referred to a Bench of five judges.
It is, perhaps, necessary to refer to the order dated 9.12.1986 made by the Division Bench referring the cases to a larger bench.
What came before the Division Bench were WP 12183/1985 (M/s. Ujagar Prints vs Union of India & Ors.) and CA Nos.
1685 1766/1979 (Union of India & Ors.
vs Narendra Processing Industries & Ors.).
Two questions arose before and were examined by the Referring Bench.
The first was whether the processing of Grey fabric amounted to 'manufacture ' within the meaning of Section 2(f) as it stood prior to its amendment.
The second question was whether, even if such processing did amount to 'manufacture ' what should he the proper basis for determining the assessable value of the processed fabrics.
Both these questions had earlier been examined and answered in the Empire Industries case.
It is necessary to ascertain as to the precise points on which the Empire Industries ' decision was required to be reconsidered.
The Referring Bench did not disagree with the decision in Empire Industries ' case on the question whether processing ' did amount to 'manufacture '.
Indeed, the Referring Bench appears to have proceeded on the premise that the view taken in Empire Industries case on the point was the correct one.
Referring Bench said this on the point: ".
So far as the first question is concerned it was agitated before this Court in Empire Industries Ltd. v Union of India and this Court held that the processes of bleaching, mercerising, dyeing, printing.
water proofing.
carried out by the processors on job work basis amount to manufacture both under the Act as it stood prior to the amendment as also under the Act subsequent to the amendment and the processed fabrics are liable to be assessed to excise duty in the hands of what may be called jobbers '.
Since this was a decision given by a Bench of three Judges, the petitioners and appellants who are carrying on business of processing on job work basis could not contend that these PG NO 791 processes do not amount to manufacture and that the processed fabrics are not liable to be assessed to excise duty in the hands of the jobbers.
But, it was the second question which provoked serious controversy before us .
It is only on the second question touching valuation that it expressed some doubts.
Nevertheless, in par.
6 of the order, the Referring Bench made a further observation to this effect: ".
Of course, when.
,n se writ petitions and appeals are referred to the larger Bench it will be open to the larger Bench to consider not only the question of determination of the assessable value but also the other question, namely, whether processing of grey fabric by a processor on job work basis constitutes manufacture, because the judgment in Empire Industries case which has decided this question in favor of the revenue and against the processor is a judgment of a Bench of only three Judges and now the present writ petitions and appeals will be heard by a Bench of five Judges .
This is how the first question which is, otherwise concluded by the pronouncement in Empire Industries case is sought to be reagitated before us Out of deference to the learned counsel who vigorously argued this aspect at great length and we though we should examine the submission on this point also, though, the matter could by no means be considered to have been referred to a larger bench.
On the second question also the matter is within a short compass.
The Referring Bench clearly excluded any possibility of the assessable value being limited to the mere processing charges.
It contemplated the alternative possibilities of valuation thus: "It was common ground between the parties that the procedure followed by the Excise authorities was that the trader, who entrusted cotton or man made fabrics to the processor for processing on job work basis would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market and that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis.
This may be illustrated by giving the following example: PG NO 792 (i) Value of grey cloth in the hands of the processor: Rs. 20.00 (2) Value of job work done: Rs.5.00 Value of finished cloth returned to the trader ( 1+2): Rs.25.00 (3) Trader 's selling price inclusive of his selling profits, etc.: Rs.30.00 The assessable value in the case given in this example would be taken by the Excise authorities at Rs.30 which was the sale price of the trader . ' ' The view of the Referring Bench on the point was this: "We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric since the grey cloth is one of the raw materials which goes into the manufacture of the processed fabric and the value of the processed fabric cannot be computed without including the value of the raw material That goes into its manufacture.
The assessable value of the processes fabric cannot therefore be limited merely to the value of the job work done but it must be determined by reference to the wholesale cash price of the processed fabric gate of the factory of the processor .
The Referring Bench was of the view that the correct assessable value should be: ". .
Thus in the example given above the assessable value of the processed fabric must be taken to be Rs. 20 + 5 that is Rs. 25 and the profit of Rs.5 which the trader may make by selling the processed fabric cannot be included in the assessable value.
The element of selling profit of the trader would be entirely an extraneous element and it cannot be taken into account for the purpose of determining the assessable value of the processee fabric which would comprise the value of the grey cloth and the PG NO 793 job work charges but exclude the profit at which the trader may sub sequently sell the processed fabric.
We have heard Sri A.K Sen, Sri Soli J. Sorabjee, Dr. Chitale and Sri Dholakia, learned Senior Advocates in the appeals and writ petitions preferred by the processors; and Sri K. Parasaran, learned Attorney General and Sri A.K. Ganguli, learned Senior Advocate for the Union of India and its authorities.
On the contentions urged, the points that fall for determination are: (a) (i) Whether the processes of Bleaching, Dyeing, Printing, Sizing, Shrink proofing etc.
carried on in respect of cotton or man made 'Grey fabric ' amount to 'manufacture ' for purposes, and within the meaning of Section 2(f) of the prior to the amendment of the said Section 2(f) by Section 2 of the Amending Act VI of 1980.
(a) (ii) Whether the decision in Empire Industries Limited & Ors.
vs Union of India, [1985] Suppl.
1 SCR 282 holding that these operations amount to a manufacture is wrongly decided and requires reconsideration.
(b) Whether the amendment brought about by the Amending Act of 1980 of Section 2(f) and to tariff items 19 and 22 of the Central Excise Act is ultra vires Entry 84 List I and, therefore, beyond the competence of the Union Parliament.
Whether, at all events, even if the expanded concept of manufacture introduced by the Amendment is beyond the scope of Entry 84 List l, whether the impost is, at all events, referable to and supportable by the residual Entry 97 of List I. (c) Whether, at all events, even if the amendments to Central Excise Act are valid, the levy under the Additional Duties Act is unsupportable and without the authority of law as there is no corresponding enlargement of the definition of 'manufacture ' under the Additional Duties Act.
(d) Whether the retrospective operation of the Amending Act is an unreasonable restriction on the fundamental right of the 'processors ' under Article 19(1)(g) of the Constitution.
PG NO 794 (e) Whether, even if the levy is justified, at all events, the computation of the assessable value of the processed Grey fabric on the basis of the whole sale cash selling price declared under classification list under Rule 173(b) is unjustified and illegal in respect of the assessable value of the processed Grey fabric done on job work basis.
Re: Contention (a) The essential condition to be satisfied to justify the levies, contend counsel, is that there should be 'manufacture ' of goods and in order that the concept of 'manufacture ' in Entry 84 List I is satisfied there should come into existence a new article with a distinctive character and use, as a result of the processing.
It is contended that nothing of the kind happens when 'Grey fabric ' is processed; it remains 'grey fabric '; no new article with any distinctive character emerges.
A number of authorities of this Court and of the High Courts were cited.
Particular reference was made to Union of India vs Delhi Cloth & General Mills, [1963] Supp.
( I) SCR 586 at 597; Tungabhadra Industries Ltd. vs Commercial Officer Kurnool, L 1961] ? SCR 14; Deputy Commissioner of Sales Tax vs Pio Food Packers, ; at 1275; Sterling Foods vs State of Karnataka, ; at 475 & 476; Kailash Nath vs State of U.P., 8 STC 358; Deputy Commissioner Sales Tax vs Sadasivan, 42 STC 201 (Kerala); Swastic Products Baroda vs Superintendent of Central Excise, Swan Bangle Stores v Assistant Sales Tax Officer, 25 STC 122 '(Allahabad); Stale of Andhra Pradesh vs Sri Durga Hardware Stores, 32 STC 322 (Andhra Pradesh) and Extrusion Process Pvt. Ltd. vs N.R. Jadhav, Superintendent of Central Excise, [19791 ELT 380 (Gujarat ). 13.
The following observations of this Court in Union of India vs Delhi Cloth and General Mills, AIR 1963 SC p. 791 at 794 were emphasised: "According to the learned counsel "manufacture is complete as soon as by the application of one or more processes.
the raw material undergoes some change.
To say this is to equate "processing to manufacture and for this we can find no warrant in law.
The word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance ' and does not mean merely to produce some change in a substance.
however minor in consequence the change may be. ' PG NO 795 These observations in Health & Milligan Manufacturing Company, the Sherwin Williams Company, etc.
vs J.H. Worst, Director of the North Dakofa Government Agricultural Experiment Station which were referred to with approval by this Court in the case of Pio Food Packers ' supra, was relied upon: "At some point processing and manufacturing will merge.
But where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been "manufactured".
(Emphasis Supplied) The following observations of Bhagwati J. in Pio Food Packers case were cited: " . . manufacture is the end result of one or more processes through which the original commodity is made to pass .
Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that in one commodity has been consumed in the manufacture of another.
Although it has undergone a degree of processing, it MUSt be regarded as still retaining its original identity." (Emphasis Supplied) The observations of this ( 'court in Kailash Nath vs State of U. P., 3 STC 358 made while repelling the contention of the revenue urged in that case that when cloth is printed and coloured it gets transformed to sorne other material and that therefore when such printed and coloured cloth is exported what was exported was not the same cloth and that by such printing and dyeing the original cloth got transformed into different material were relied on: The cloth exported is the same as the cloth sold with this variation or difference that the colour has change by printing and processing.
In view which we take the cloth exported is the same as the cloth sold by the petitioners, there can be no question above the exemption clause not applying to it .
(Emphasis Supplied) The following passage in the permanent Edition of 'Words and Phrases ' referred to with approval in Delhi Cloth and General Mills ' AIR 1963 SCp.
791 at 795 case was referred to: PG NO 796 "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation.
But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use.
" Further, learned counsel placed reliance upon Tungabhadra Industries ' case where it was held that ground nut oil after the process of hydrogenation which improved its keeping qualities and shelf life yet remained basically ground nut oil and that the quality of the oil had been improved by the processes it was subjected to, did not detract from its continuing identity as ground nut oil.
The change brought about in the oil, it was observed by this Court, rendered it more acceptable to the customers by improving its quality, but did not render the oil a commodity other than ground oil which still continued to be "groundnut oil" notwithstanding the processing which was merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume ground nut oil.
Likewise the processing such as bleaching, dyeing.
printing, finishing etc.
, it was urged, merely improved the quality of Grey fabric and rendered it more acceptable to the customers while not shedding its basic character as 'cotton fabric ' or 'man made fabric '.
It was also urged that the affidavits filed by person engaged in and familiar with the textile trade indicated that the finished fabric was not a commercially different commodity.
We have carefully considered these submissions.
In the Empire Industries case, this court considered similar submissions in an almost identical context and situation.
Learned judges referred to the observations of this Court in Commissioner of Sales Tax UP (Lucknow) vs Harbilas Rai, 21 STC 17 in which the view expressed by the Division Bench of the Madhya Pradesh High Court in Hiralal Jitmal vs Commissioner of Income tax, 8 STC 325 at 326 was held supportable on the reasoning that: " .
The decsion of the Madhya Pradesh High Court might perhaps be justified on the ground that a printed or dyed cloth is commercially different article from the cloth which is purchased and printed or dyed." PG NO 797 The Division Bench also referred to, with approval, the decision of the Bombay High Court in Kores (India) Limited vs Union of India and Ors., The Division Bench noticed the question arising for decision: "Fabric itself means woven materials.
It was contended that processing the manufactured fabric does not bring into existence any new woven material but the question is: does new and different goods emerge having distinctive name, use and character?" Answering, the Bench said: "It appears in the light of the several decisions and on the construction of the expression that the process of bleaching, dyeing and printing etymologically also means manufacturing processes . ' 15.
It is strenuously urged for the processors that the view taken by the Division Bench in the Empire Industries case suffers from fallacies both of reasoning and conclusion and requires to be reconsidered.
The prevalent and generally accepted test to ascertain that there is 'manufacture ' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes.
The principles are clear.
But difficulties arise in their application in individual cases.
There might be border line case where either conclusion with equal justification be reached.
Insistence on any sharp or intrinsic distinction between processing ' and 'manufacture, we are afraid, results in an over simplification of both and tends to blur their interdependence in cases such as the present one.
The correctness of the view in the Empire Industries case cannot be tested in the light of material in the form of affidavit expressing the opinion of persons said to be engaged in or connected with the textile trade as to the commercial identity of the commodities before and after the processing placed before the court in a sub sequent case.
These opinions are, of course, relevant and would be amongst the various factors to be taken into account in deciding the question.
PG NO.798 16.
On a consideration of the matter, we are persuaded to think that the view taken in the Empire Industries case that 'Grey fabric ' after they undergo the various processes of bleaching, dyeing, sizing printing, finishing etc.
emerges as a commercially different commodity with its own price structure, custom and other commercial incidents and that there was in that sense a 'manufacture ' within the meaning of Section 2(f), even as unamended, is an eminently plausible view and is not shown to suffer from any fallacy.
Indeed, on this point the Referring bench did not disagree or have any reservations either.
It is to be noticed that if the amending law is valid, this aspect becomes academic.
We think, we should reject Contention (a).
Re: Contention (b) The concept of manufacture ' embodied in Entry 84 of List I, it is urged, should be construed not in an artificial sense, but in its recognised legal sense and so construed artificial dimensions sought to be imparted to it by the amendment would be impermissible.
Learned counsel drew attention to the following observations of this Court in Diamond Sugar Mills vs State of UP, ; at 248. ". . we have, on the one hand, to bear in mind the salutary rule that words conferring the right of legislation should be interpreted liberally and the powers conferred should be given the widest amplitude; on the other hand we have to guard ourselves against extending the meaning of the words beyond their reasonable connotation, in an anxiety to preserve the power of the legislature.
(Emphasis supplied) Though entries in the legislative lists are to be construed liberally and the widest possible amplitude given to them, however, no artificial or arbitrary extensions of the meaning of the words in the entry.
it is urged, are permissible.
It is submitted the concept manufacture in Entry 84 List I has a well accepted legal connotation and in construing the entry the precise connotation which it possesses and conveys in law must be kept in mind.
There is in law no 'manufacture ' unless as a result of the process a new and commercially distinct product with distinct use emerges.
The idea of manufacture might imply change, but every change is not necessarily manufacture.
It is.
accordingly, contended that the amendment which seeks to equate "processing "with "manufacture" is beyond the scope of Entry 84 List I. PG NO.
799 18.
In the Empire Industries ' case a similar argument was urged but without success.
Learned Judges were persuaded to the view that such processes which were referred to by the amendment were not so alien or foreign to the concept of 'manufacture ' that they could not come within that concept.
Entries to the legislative lists, it must be recalled, are not sources of the legislative power but are merely topics or fields of legislation and must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense.
The expression "with respect to" in Article 246 brings in the doctrine of "Pith and Substance" in the understanding of the exertion of the legislative power and wherever the question of legislative competence is raised the test is whether the legislation, looked at as a whole, is substantially 'with respect to ' the particular topic of legislation.
If the legislation has a substantial and not merely a remote connection with the entry, the matter may well be taken to be legislation on the topic.
In Empire Industries case, it was held: "As has been noted processes of the type which have been incorporated by the impugned Act were not so alien or foreign to the concept of "manufacture ' that these could not come within that concept.
At all events, even il the impost on process is not one under Entry 84, list l, but is an impost on 'processing ' distinct from "manufacture" the levy could yet be supported by Entry '97.
List l, even without the aid of the wider principle recognised and adopted in Dhillon 's case AIR 1972 SC l061.
It was, however, contended that the levy of tax on an activity which cannot reasonably be regarded as an activity of 'manufacture ' cannot be described as a levy of duties of excise under Entry 84, List I.
If it is a non descript tax under Entry 97, the Parliament, it is urged, has not chosen1 to enact any such law in this case.
The charging section does not, it is urged.
bring such a taxable event to charge.
This argument was noticed in Empire Industries case thus: " .
It was then argued that if the legislation was sought to be defended on the ground that it is a tax on activity like processing and would be covered by the powers enumerated under Entry 97 of List I of the Seventh Schedule PG NO 800 then it was submitted that there was no charging section for such an activity and as such the charge must fail, and there cannot be any levy . " The contention was rejected holding: ".
This argument proceeds on an entire misconception.
The charging section is the charging section 3 of the .
It stipulates the levy and charge of duty of excise on all excisable goods produced or manufactured.
"Manufactured" under the Act after the amendment would be the 'manufacture ' as amended in section 2(f) and Tariff item 19 I and 22 and the charge would be on that basis.
Therefore it is difficult to appreciate the argument that the levy would fail as there will be no appropriate charging section or machinery for effectuating the levy on the activity like the method of processing even if such an activity can be justified under Entry 97 of List l of Seventh Schedule.
We are, therefore, of the opinion that there is no substance in this contention We respectfully agree.
If a legislation purporting to be under a particular legislative entry is assailed for lack of legislative competence, the State can seek to support it on the basis of any other entry within the legislative competence of the legislature.
It is not necessary for the State to show that the legislature, in enacting the law, consciously applied its mind to the source of its own competence.
Competence to legislate flows from Article 245, 246, and the other Articles following, in Part XI of the Constitution.
In defending the validity of a law questioned on ground of legislative incompetence, the State can always show that the law was supportable under any othe entry within the competence of the legislature.
Indeed in supporting a legislation sustenance could be drawn and had from a number of entries.
The legislation could be a composite legislation drawing upon several entries.
Such a "rag bag" legislation is particularly familiar in taxation.
Bennion in his "Statutory Interpretation" (at page 644) refers such a composite legislation, though the observations must be under stood in the context of the supremacy of the British Parliament and one of unlimited powers and which is, under no inhibitions unlike a federal polity, of PG NO 801 distribution of legislative powers.
Learned author refers to: " 'Ragbag ' Acts: Some Acts are 'rag bag ' Acts, covering many areas.
The annual Finance Act is an extreme example.
It is divided into Parts, dealing respectively with customs and excise duty, value added tax, income tax, capital gains tax, stamp duty, capital transfer tax and so on.
Even within a Part of a Finance Act the various provisions havnuite different aims. " In Hari Krishna Bhargav vs Union of India and Anr., ; , this Court said: ". .
There is no prohibition against the Parliament enacting in a single statute, matters which call for the exercise of power under two or more entries in List I of the Seventh Schedule.
Illustrations of such legislation are not wanting in our statute book, and the fact that one of such entries is the residuary entry does not also attract any disability . " 21.
So far as, the exclusive competence of the Union Parliament to legislate is concerned all that is necessary is to find out whether the particular topic of legislation is in List II or List III.
If it is not, it is not necessary to go any further or search for the field in List I. Union Parliament has exclusive power to legislate upon that topic or field.
Of course, it has concurrent power also in respect of the subjects in List III.
Contention (b) is, therefore, insubstantial.
Re: Contention (c) This pertains to the validity of levy of additional duties.
The contention proceeds on the pre supposition that processing does not amount to 'manufacture ' under Section 3(1) of the Additional Duties Act.
If it does, as has been held on point (a), this argument does not survive at all.
The point, however, sought to be put across is that, even if the concept of 'manufacture ' for purposes of levy of excise duty under the 'Central Excise Act ' is validly expanded or that a tax on processing is, otherwise, PG NO 802 supportable under Entry 97(1), the position under the 'Additional Duties Act ' ;s quite different.
The 'Additional Duties Act ' does not expressly invoke or attract the definition of 'Manufacture ' in Section 2(f) of the 'Central Excise Act '; nor does the 'Additional Duties Act ' itself contain a definition of 'manufacture ' in the broad terms in which Section 2(f), as amended, contains.
The result is, it is urged, that the ordinary legal connotation of 'manufacture ', contained in the charging Section 3(1) of the 'Additional Duties Act ' can alone support the levy.
It is not, it is urged, permissible to import the artificial and expanded definition of 'manufacture ' containing in Section 2(f), as amended, into Section 3(1) of the Additional Duties Act.
The following observations of this court in Pandit Ram Narain vs The State of Uttar Pradesh and Ors.
, l1956] SCR 664 at 673 are pressed into service: ". .It was rightly pointed out that it is no sound principle of construction to interpret expressions used in one Act with reference to their use in another Act . " Again, the observations in Macbeth & Co. vs Chisten, at 224 referred to with approval by this court in Commissioner of Sales Tax, Madhya Pradesh vs Jaswant Singh Charan Singh, ; at 725 26 were relied upon: ". .It would be a new terror in the construction Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone '. ." It is further contended that a mere amendment of the schedules to the 'Additional Duties Act ' purported by Section 4 of the Amending Act VI of 1980 would be inadequate to serve the purpose of a valid levy on the activity of processing.
It was also urged that Section 3(3) of the 'Additional Duties Act ' which provides that the provisions of 'Central Excise Act ' and the rules made thereunder shall, so far as may be, apply in relation to the 'levy and collection" of the Additional Duties would not also enable the wider definition of 'manufacture ' in Section 2(f) to be imported into Section 3(1) of the Additional Duties Act to justify levy of Additional Duties on 'processing '.
The contention was neatly and attractively presented and appeared, at first blush, to merit a serious PG NO 803 consideration of the validity of the levy of additional duties.
But on a closer examination of the concept of, and the scheme for, levy and collection of the additional duties and the specific statutory provisions, the tensile strength of the argument breaks down.
There are at least two circumstances which render the definition of 'manufacture ' under Section 2(f) attracted to the additional levies.
Section 3(3) of the Additional Duties Act provides: ". .Ievy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub section (l) .
" It is plain that the statute expressly makes the provision in the "Central Excise Act" apply in relation to 'levy and collection ' of the additional duties.
The question is whether this provision is sufficient to attract Section 2(f) of the main Act as amended.
This, in turn, depends upon what the expression "levy" connotes and carries with it.
The term 'levy ' it is held, is an expression of wide import.
It includes both imposition of a tax as well as its quantification and assessment.
In Assistant Collector of Central Excise, Calcutta Division vs National Tobacco Co. of India Ltd., [ 1973] I SCR 822 this Court held: "The term "levy" appears to us to be wider in its import than the term "assessment".
It may include both of a tax as well as assessment.
The term imposition" is generally used for the levy of a tax or duty by legislative provision indicating the subject matter of the tax and the rates at which it has to he taxed . . 24.
That apart, Section 4 of Amending Act VI of 1980 has amended the relevant items in the schedule to the Additional Duties Act.
The expressions 'produce ' or 'manufacture ' in Section 3(1) of the Additional Duties Act must be read along with the entries in the schedules.
In Att.
Gen vs Lamplough, , 229 it is observed: 'A schedule in an Act is a mere question of drafting, a mere question of words.
The schedule is as much a part of the statute, and is as much an enactment, as any other part.
804 Maxwell says (in Interpretation of Statutes 11th ed.
p. 156): " . if an enactment in a schedule contradicts an earlier clause it pevails against it.
" Bennion (in Bennion 's Statutory Interpretation, p. 568 569) referring to the place of schedules in statutes observes: "The Schedule is an extension of the section which induces it.
Material is put into a Schedule because it is too lengthy or detailed to be conveniently accommodation in a section, . ." "A Schedule must be attached to the body of the Act by words in one of the sections (known as inducing words].
It was formerly the practice for the inducing words to say that the Schedule was to be construed and have effect as part of the Act.
(See, e.g. Ballot Act 1872 section 28.) This is no longer done, being regarded as unnecessary.
If by mischance the inducing words were omitted, the Schedule would still form part of the Act if that was the apparent intention. " " .
The schedule is as much a part of the statute, and is as much an enactment, as any other par.
(See also.
to the like effect, Flower Freight C o. Ltd. vs Hammond [19633] 1 QB 275; R vs Legal Aid Committee No. I [London] Legal Aid Area.
ex p. Rondel, and metropolitan Police Commr.
vs Curran.
, What appears.
therefore, clear is that what applies to the main levy, applies to the additional duties as well, we find no substance in Contention [c] either.
Re: Contention [d] There is really no substance in the grievance that the retroactivity imparted to the amendments is violative of Article 19 [l] (g).
A Competent legislature can always validate a law which has been declared by courts to be invalid, provided the infirmities and vitiating infactors noticed in the declaratory judgment are removed or cured.
Such a validating law can also be made retrospective.
If in the light of such validating and curative exercise made by the Legislature granting legislative competence the earlier judgment becomes irrelevant and unenforceable, that cannot PG NO 805 be called an impermissible legislative overruling of the judicial decision.
All that the legislature does is to usher in a valid law with retrospective effect in the light of which earlier judgment becomes irrelevant.
(See Sri Prithvi Cotton Mills Ltd. & Anr.
vs Broach Borough Municipality & Ors., Such legislative expedience of validation of laws is of particular significance and utility and is quite often applied, in taxing statutes.
It is necessary that the legislature should be able to cure defects in statutes.
No individual can acquire a vested right from a defect in a statute and seek a windfall from the legislature 's mistakes.
Validity of legislations retroactively curing defects in taxing statutes is well recognised and courts, except under extraordinary circumstances, would be reluctant to override the legislative judgment as to the need for and wisdom of the retrospective legislation.
In Empire Industries Limited & Ors.
vs Union of India & Ors.
Etc., [ 19851 l Supp. 292 at 327 this court observed: ". . not only because of the paramount governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government amongst those who benefit from it".
In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under Article l9(1)(g), the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of validation of taxing statute struck down by courts for certain defects; the period of such retroactivity, and the degree and extent of any unforeseen or unforseable financial burden imposed for the past period etc.
Having regard to all the circumstances of the present case, this court in Empire Industries ' case held that the retroactivity of the Amending provisions was not such as to incur any infirmity under Article 19( l)(g).
We arc in respectful agreement with that view.
There is no merit in contention (d) either.
Re: Contention (e) This concerns the question of the correctness of the determination of the assessable value.
The processors say that they have filed classification lists under rule 173 B PG NO 806 of the Central Excises and Salt Rules 1944 as they had no other choice and that if the proper principles of determination of the assessable value do not legally justify the consequences flowing from the classification, it is open to them to contend against the validity of the determination and they are not estopped from doing so.
Duties of excise are imposed on the production or manufacture of goods and are levied upon the manufacturer or the producer in respect of the commodity taxed.
The question whether the producer or the manufacturer is or is not the owner of the goods is not determinative of the liability.
The essential and conceptual nature of the tax is to be kept clearly distinguished from both the extent of the power to impose and the stage at which the tax is imposed.
Though the levy is on the production or manufacture of the goods, the imposition of the duty could be at the stage which the law considers most covenient to impose as long as a rational relationship with the nature of the tax is maintained.
The processors contend that, the assessable value could only be the job work charges received by them for the processing of 'Grey fabric ' and cannot be the selling price at which the customer who entrusts the Grey fabric for processing ultimately sells it in the market.
Such a sale price, it is said, would, quite painly.
include the value of the Grey fabric, the processing charges and also the selling profit of the customer.
Even in regard to the price of the Grey fabric itself which comes to the processing houses in fully manufactured condition would again depend upon how many hands it has changed before reaching the particular customer who brings them for processing.
The determination of assessable value at the actual or hypothetical selling price of goods of like nature and quality in the wholesale market would include the post manufacturing profits of the trader which cannot legitimately be regarded as part of the assessable value.
This contention was considered in detail in Empire Industries case [ 1985] 1 Supp.
SCR 293 at 327 wherein it was held: "When the textile fabrics are subjected to the processes like bleaching, dyeing and printing etc.
by independent processes, whether on their own account or on job charges basis, the value of the purposes of assessment under section 4 of the Central Excise Act will not be the processing charges alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold PG NO 807 for the first time in the wholesale market.
That is the effect of section 4 of the Act.
The value would naturally include the value of grey fabrics supplied to the independent processors for the processing.
However, excise duty, if any, paid on the grey fabrics will be given pro forma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the Rules 56A or 96D of the Central Excise Rules, as the case may be." Even the Referring Bench did not doubt the correctness of the inclusion in the assessable value the cost of the Grey fabric and the processing charges.
The Referring Bench held: "We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric . " 29.
In the argument, as presented, that the assessable value would include what is referred to as the "post manufacture profits", there is an obvious fallacy.
In Atic Industries Ltd. vs H.H. Dave, Asstt.
Collector of Central Excise and Ors., [ 1975] 3 SCR p. 563 Bhagwati J. speaking for the Court said: "The value of the goods for the purpose of excise must take into account only the manufacturing cost and the manufacturing profit and it must not be loaded with post manufacturing cost or profit arising from post manufacturing operation . . " " .
It may be noted that wholesale market in a particular type of goods may be in several tiers and the goods may reach the consumer after a series of wholesale transactions.
In fact the more common and less expensive the goods, there would be greater possibility of more than one tier of wholesale transactions. ." " .
If excise were levied on the basis of second or subsequent wholesale price, it would load the price with a post manufacturing element, namely, selling cost and selling profit of the wholesale dealer.
That would be plainly contrary to the true nature of excise as explained in the PG NO 808 Voltas ' case (supra).
Secondly, this would also violate the concept of the factory gate sale which is the basis of determination of value of the goods for the purpose of excise. " "There can, therefore, be no doubt that where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at arms length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise . " Explaining what really is the idea of "post manufacturing profit" referred to in Atic 's case this court in Union of India & Ors.
v Bombay Tyre International Ltd. etc.
, [ 1984] l SCR, p. 347 at 375 aid: ". .When it refers to post manufacturing expenses and post manufacturing profit arising from post manufacturing operations, it clearly intends to refer not to the expenses and profits pertaining to the sale transactions effected by the manufacturer but to those pertaining to the subsequent sale transactions effected by the wholesale buyers in favour of other dealers." (Emphasis Supplied) The principles for the determination of assessable value are laid down under section 4 of the Act.
Section 4 of the Central Excise Act ' envisages that the value of an article for the purposes of duty shall be deemed to be; (a) The wholesale cash price for which an article of the like kind and quality was sold or was capable of being sold at the time of removal of the article from the factory or premises of manufacture for delivery at the place of manufacture or; (b) Where such price was not ascertainable, the price at which an article of the like kind and quality was sold or capable of being sold at the time of removal of the article chargeable with duty.
The nature of the excise duty is not to he confused with, or tested with reference to, the measure by which the tax is assessed.
The standard adopted as the measure of assessment may throw light on the nature of the levy but is not determinative of it.
When a statutory measure for assessment of the tax is contemplated, it "need not contour PG NO 809 along the lines which spell out the levy itself.", and "a broader based standard of reference may be adopted for the purposes of determining the measure of the levy.
" Any statutory standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the tax.
In the case of processing houses, they become liable to pay excise duty not because they are the owners of the goods but because they cause the 'manufacture ' of the goods.
The dimensions of the Section 4(1)(a) and (b) are fully explored in number of decisions of this Court.
Reference may be made to the case of Bombay Tyres International.
Consistent with the provisions of Section 4 and the Central Excise (Valuation) Rules, 1975, framed under Section 37 of the Act it cannot be said that the assessable value of the processed fabric should comprise only of the processing charges.
This extreme contention if accepted, would lead to and create more problems than it is supposed to solve; and produce situations which could only be characterised as anomalous.
The incidence of the levy should be uniform, uninfluenced by fortuitous considerations.
The method of determination of the assessable value suggested by the processors would lead to the untenable position that while in one class of Grey fabric processed by the same processor on bailment, the assessable value would have to be determined differently dependent upon the consideration that the processing house had carried out the processing operations on job work basis, in the other class of cases, as it not unoften happens, the goods would have to be valued differently only for the reason the same processing house has itself purchased the Grey fabric and carried out the processing operations on its own.
It is to solve the problem arising out of the circumstances that goods owned by one person are "manufacture ' by another that at a certain stage under rule 174A, a notification was issued by the Central Government exempting from the operation of the rule 174A: ". every manufacturer who gets his goods manufactured on his account from any other person, subject to the conditions that the said manufacturer authorises the person, who actually manufactures or fabricates the said goods to comply with all procedural formalities under ( l of 1944) and the rules made thereunder, in respect of the goods manufactured on behalf PG NO 810 of the said manufacturer and, in order to enable the determination of value of the said goods under section 4 of the said Act, to furnish information relating to the price at which the said manufacturer is selling the said goods and the person so authorised agrees to discharge all liabilities under the said Act and the rules made thereunder.
On a consideration of the matter, the view taken in the matter in the Empire Industries case does not call for reconsideration.
Contention (e) is also held and answered against the petitioner.
In the result the appeals preferred by the Union of India are allowed and the Judgment of the Gujarat High Court under appeal is set aside.
The appeals preferred by the processors against the judgment of the Bombay High Court and the writ petitions filed by the processors directly in this court are dismissed.
There will, however, be no orders as to costs in the appeals and the writ petitions.
The Union of India and its authorities shall be entitled to recover the amounts due by way of arrears of excise duty and shall be entitled to take necessary steps to seek the enforcement of the bank guarantees, if any, for the recovery of the arrears.
SABYASACHI MUKHARJI, J.
I have had the advantage of reading in draft the judgment proposed to be delivered by my learned brother Venkatachaliah, J. I respectfully agree with him.
There is, however, one aspect of the matter in respect of which I would like to say a few words.
Contention (e) as noted by my learned brother in his judgment deals with the determination of the assessable value.
The processors in the cases before us say that they have filed classification lists under rule 173B of the Central Excises and Salt Rules, 1944 as they had no other choice and that if the proper principles of determination of the assessable value do not legally justify the consequences flowing from the classification it is open to them to contend against the validity of the determination and they are nOt estopped from doing so.
The processors are right in contending that the true principle should be followed in determining the assessable value.
Then what is the true principle? Section 4 of the Act deals with the valuation of excisable goods for purposes of charging of duty of excise.
Section 4 [l] (a) of the Act stipulates that the value should be subject to other provisions of the Section the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer PG NO 811 is not a related person and the price is the sole consideration for the sale.
For the present purpose, we are not concerned with the provisos nor the situation where the normal price of goods is not ascertainable for any reason.
In Empire Industries Limited & Others etc.
vs Union of India and Others etc.
, L , it was held that where for the purpose of calculating assessable value, a notional sum is laid down by the legislature to be arrived at one a certain basis, it is not permissible for the courts to engraft into it any other deduction or allowance or addition or read it down on the score that unless the said deduction or allowance or addition is authorised elsewhere in the Act or in the Rules.
A statutory charge should be measured by the method of its own computation as laid down in the statute and not by any other method of computation.
The circumstances that thereby the benefit of any exemption granted by the legislation may be lost and that in some cases hardship might result are not matters which would influence courts on the construction of the statute.
A tax payer is entitled only to such benefit as is granted by the legislature.
It was emphasised that the taxation under the Act is the rule and the benefit and exemption, the exception.
And it was held that there was no hardship in these cases.
It was further reiterated that when the textile fabrics are subjected to the processes like bleaching, dyeing and printing etc.
by independent processes, whether on their own account or on job charges basis, the value for the purposes of assessment under section 4 of the Central Excise Act will not be the processing charge alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold for the first time in the wholesale market.
That is the effect of section 4 of the Act.
The value would naturally include the value of grey fabrics supplied to the independent processors for the processing.
However excise duty, if any, paid on the grey fabrics will be given proforma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the relevant rules.
In M/s. Ujagar Prints vs Union of India, [1986] Suppl.
S.C.C. 652 Bhagwati C.J. held that the processes of bleaching, dyeing, printing, mercerising etc.
carried on by a processor on job work basis in respect of grey cotton fabrics and manmade fabrics belonging to the customer and entrusted by him for processing amount to manufacture with the meaning of the Act prior to its amendment so as to attract levy of excise duty on the processed fabrics and in any event, after the Amendment Act, these processes amount to manufacture and excise duty is leviable on the processed fabrics.
The learned Chief Justice also dealt with the other PG NO 812 question, namely, what is the value of the processed fabrics liable to be assessed.
Referring to the aforesaid decision of the Empire Industries, (supra), he illustrated the problem by reference to the example set out in the judgment (Page 654 of the report at para 2).
In that example illustrated by him the value of the grey cloth in the hands of the processor was Rs.20.
The value of the job work was Rs.5.
B Trader 's selling price inclusive of his selling profits etc.
was put at Rs.30.
Bhagwati C.J. at page 655 of the report observed that the assessable value of the processed fabric must obviously be taken to he the wholesale cash price of the processed fabric at the factory gate that is when the processed fabric leaves the factory of the processor and it cannot possibly include the selling profit of the trader who subsequently sells the processed fabrics.
The learned Chief Justice reiterated that it is at the point when the processed fabric leaves the factory of the processor that its assessable value has to be determined and that assessable value cannot include the selling profit of the trader.
Empire Industries, (supra) did not say that the post manufacturing profits or post manufacturing costs could be included in the assessable value of the processed fabric.
If the trader who entrusted cotton or man made fabrics to the processor for processing on job work basis, would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis.
Where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at the arms length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise But the price received by the wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other dealer, would be irrelevant for determination of the value of the goods and the goods would not be charged on that basis.
This has been explained in Atic Industries Ltd. vs H.H. Dave.
Asstt.
Collector of Central Excise and Ors., [ 1975] 3 S.C.R .
This has also been explained in Union of India & Ors.
vs Bombay Tyre International Ltd. etc.
[1984] l S.C.R. 347 at 375.
It has to he reiterated that the valuation must be on the basis of wholesale cash price at the time when the manufactured goods enter into the open market.
See in this connection the ratio of this Court in Union of India and Ors.
vs Cibatul Ltd., [ 1985] Suppl 3 SCR 95 and the Joint Secy.
to the Govt of India & Ors.
vs Food Specialities Ltd., 11985] Suppl 3 SCR 165.
It was emphasised in Union of India & Ors.
vs Cibatul, (supra) that the value of the trade marks was not be taken into account PG NO 813 in computing the assessable value as the affixation of the trade marks of a particular brand was extraneous to manufacture.
The values of such extraneous or additional factors do not enter into the computation of assessable value and as such the wholesale cash price at which the goods enter into the wholesale market would be independent of the value of the trade marks.
So that cannot be taken into the computation of the assessable value.
Similarly, in the case of Joint Secretary to the Govt.
of India and others vs Food Specialities Ltd., (supra), it was held that the value of Nestle 's trade marks could not be to the wholesale price charged by the dealer to Nestle 's for the purpose of computing the value of the goods manufactured.
The goods in both these cases were manufactured independently of the addition of the trade marks.
The price thereof at the factory gate was not after taking into account the value of the trade marks.
If that was the position the value of the trade marks cannot be added to the wholesale cash price charged by the dealer.
Affixation of trade marks for enhancement of the value thereof is extraneous to and independent of the process of manufacture.
The charges for the same are not part of the assessable value and cannot enter into computation of the whole sail cash price on the basis of which excise duties ale to be levied.
In the aforesaid view of the law and tor the reasons mentioned by my learned brother, l agree with his answer to this contention.
The assessable value would.
therefore.
include the value of the grey cloth in the hands of the processors plus the value of the job work done plus manufacturing expenses whatever would be included in the price at the factory gate.
The correct assessable value must be the value of the fabric at the factory gate, that is to say, the value at which manufactured goods leave the factory and enter the main stream.
One more aspect will have to be reiterated.
Computation of the assessable value is one question and as to who would be liable for the same is another.
Duties of excise are imposed on production or the manufacture of goods and are levied upon the manufacturer or the producer in accordance with the relevant rules.
This is quite independent of the ownership of goods.
It is, therefore.
necessary to reiterate that the value for the assessment under section of the Act will not be the processing charge alone but the intrinsic value of the processed fabrics which is the price at which the fabrics are sold for the first time in the wholesale market.
The rules are clear on the computation of that value.
If the valuation is made according to the rules as adumbrated in Empire Industries (supra) and as clarified by my learned brother in this judgment no difficulty should arise.
PG NO 814 RANGANATHAN, J. I agree but I should like to add a few words on two of the points argued before us.
First, I should like to clarify the nature of the decision in Hindustan Milkfood Manufacturers Ltd. vs Union, (the HMM case) (to which I was a party), since learned counsel for the petitioners sought to rely on my judgment in that case as supporting his contention that the Union cannot seek to uphold the amendment presently in question by reference to Entry 97 of List I in the Seventh Schedule to the Constitution.
In that case, the Delhi High Court was concerned with the interpretation of the amendment to section 4 of the by Act 22 of 1975.
The pre amendment section postulated the determination of excise duty on the basis of the wholesale cash price of the excisable goods at "the factory gate"; and, an explanation provided that, in determining this price, no abatement or deduction shall be allowed in respect of trade discount and the amount of duty payable at the time of the removal of the goods from the factory.
The post amendment section made certain changes in the concept of sale at the factory gate by excluding therefrom sales effected in favour of a category of persons defined as "related persons" with which we are not concerned here.
The amendment also defined the assessable "value" so as to include packing charges but to exclude the amount of excise duty, sales tax and other taxes as well as trade discount.
The question was whether this amendment precluded the deduction, from the wholesale factory gate price, of post manufacturing expenses and profits.
The question had been answered by several High Courts in the negative principally on the ground that the duty sought to be levied under the Act was an excise duty, the very nature of which required a proximate connection with production or manufacture and that what had passed beyond this region and entered the domain of sale could not pass as excise duty.
Counsel for the Union of lndia.
with a view to overcome these decisions, had contended that since Entry 97 of List I in the Seventh Schedule to the Constitution enabled Parliament to enact a legislation even beyond the purview of an excise duty covered by Entry 84 of that list, the Court should not read into the amended section the limitations that had been considered inherent in the section before its amendment.
It was in repelling this contention that certain observations were made by me in paras 30 to 32 of the judgment to which Sri Soli Sorabjee drew our attention.
It will, however, be clear from the discussion in the paragraphs referred to that the contention was repelled not on the ground that the legislature could not make a wider levy by reference to Entry 97 but only on the ground that the history, context and language of the amendment did not warrant the wider interpretation.
This will be clear from the following two sentences in para 31 where I said: PG NO 815 "Mr. Chandrasekharan 's contention . that the language of the new section should be given an enlarged scope and interpretation by relating it to Entry 97 of List I of Seventh Schedule cannot, in our opinion, be accepted.
We do not think, in considering this amendment, that it is necessary for us to discuss whether, if Parliament were to enact a law imposing on goods manufactured or produced a duty based not only on the manufacturing cost/profits, but also including in the dutiable value the whole or some part, post manufacturing cost/profits, such a law would be intra vires or not: because it appears to us that no such law has been enacted in this case.
We shall assume with Mr. Chandrasekharan, that in view of Entry 97 in the Union List under the Constitution, it is open to and competent for the legislature to expand or even modify the nature of the levy.
The question, however, will be whether it has done so.
" It was concluded, after referring to the previous position as well as the statement of objects and reasons for the amendment, that there was nothing to show that the legislature had intended to make ally change and that the rule against a presumption of implicit alteration of the law should be invoked in the context.
In other words, the HMM decision was based not on the scope of legislative Entry 97 in List 1 but on the language and scope of the amendment actually effected.
It was considered not necessary or possible to stretch the language of the definition in section 4 beyond the ambit of the provision as delineated in the earlier decisions.
The question decided was not that the legislature could not, but that it did not, make any radical change in the nature of the levy.
The position considered in the HMM case may be illustrated by an analogy.
Entry 82 in List I of the Seventh Schedule to the Constitution permits the enactment, by the Union Legislature, of a law relating to taxation of 'income.
The entry does not restrict such laws only to the income of a 'previous year ', though this was the pattern of the prevelent Income Tax Acts activated by annual Finance Acts.
Between 1948 and 1955, however, the Finance Acts purported to impost a tax on "excess dividends" which, in brief, was a tax on dividends declared out of profits of past years.
The effect of these enactments was considered by the Bombay High Court as well as this Court.
In C.I.T. vs Elphinstone Spinning & Weaving Mills Co. Ltd., , this Court held that the language of the relevant provision in the Finance Acts was so framed that it could not be read as an independent charging section.
It will be appreciated that the Finance Acts were also enactments of the Union Legislature and a taxation of profits, even of past years, by an independent and specific enactment could certainly have been brought within the scope of Entry 97, if not Entry 82 itself.
Nevertheless, the enactments were held ineffective not because they could not but because they did not contain the words necessary to effectuate the result.
The position in the HMM case was somewhat similar.
The legislature retained the levy on the basis of the wholesale cash price at the factory gate as before and only introduced a definition of the expression 'value ' in terms a little more elaborate but basically not very different from what had been contained in the earlier section.
The Court saw no reason to read into the language of the amended provision a meaning much wider that had been attributed to the provision before its amendment.
The amendment gave no indication that, contrary to what had been decided earlier, it was the intention of the legislature to bring into the assessable value even an element of post manufacturing cost/profit.
PG NO 816 But here the position is entirely different.
The amendment has specifically enlarged the meaning and concept of the word "manufacture".
If such extended concept is within the range of duties of excise as envisaged under Entry 84 and I agree that with my learned brothers that is , there is no difficulty.
But, if, as contended for by Sri Sri Soli Sorabjee, that legislative entry permits a duty levied with on the process of 'manufacture", stricto sensu, and the processing in this case cannot be brought within that definition then this expended definition cannot be fitted into that entry.
Nevertheless the specific statutory definition cannot be ignored and it it cannot be held valid by reference to Entry 84, its validity has to be considered with reference to the residuary Entry 97.
The definition of manufacture in a limited sense.
It explictly enlarges the scope of the levy of excise duty and, if it is not permissible to bring it within the scope of Entry 84, a resort to Entry 97 cannot be ruled out.
In my view, therefore, there is nothing in the decision in the HMM case that supports the contention of the petitioners have that the amendment of the definition of "manufacture" cannot be PG NO 817 sustained by reference to Entry 97 of List I in the Seventh Schedule to the Constitution of India, if it cannot be upheld as falling under the purview of Entry 84.
The second point, on which I feel inclined to add a few words is in regard to the contention on behalf of the petitioners that the definition of the term "manufacture" enacted in the Central Excises & Salt Act, 1944 as enlarged by Amendment Act 6/80, cannot be read into the provisions of the Additional Duties of Excise Act (No. 58), 1957.
The argument is in three phases and runs thus: (i) section 3 of the 1957 Act, which is the charging section, fastens the charge of duty at the state of 'manufacture out this e expression is deliberately left undefined, though the statute takes special care in section 2 to adopt, for its purposes, the definition of the specified goods as contained in the 1944 Act.
This excludes the definition of 'manufacture ' enacted in section 2(f) of the 1944 and enlarged from time to time .
(ii) section 3(3) cannot help the Revenue in this regard, as its only purpose and effect is to avoid a repetition.
in this Act of the procedural provisions of the 1944 Act.
The charge or imposition of the tax having been said under section 3 [1], the purpose of .S. 3(3) is only to say that this charge shall be qualified, demanded of the 1944 Act.
This sub section cannot be read as having the effect of incorporating the substantive definition of "manufacture" in the 1944 Act particularly when section 2 chose to incorporate only the definition of the specified goods as contained in the 1944 Act.
[iii] Even if the language of section 3( 3 ) is construed more liberaly, it will be effective with only to incorporate the definitions contained in the 1944 Act as on the date of commencement of the 1957 Act but not its subsequent legislative expansions.
In my opinion.
there is no warrant or justification for giving such a narrow interpretation to the wide language of section 3[3] of the 1957 Act.
Learned counsel for the petitioner, in advancing this argument, apparently has in mind the famous dictum of Lord Dunedin in Whitney vs Inland Revenue Commissioners, [1927] A.C. 7 echoed in several decisions of this Court and of the various High Courts in India: PG NO 818 "Now, there are three stages in the imposition of a tax: there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable.
Next, there is the assessment.
Liability does not depend on assessment.
That, ex hypothesi, has already been fixed.
But assessment particularizes the exact sum which a person liable has to pay.
Lastly come the methods of recovery, if the person taxed does not voluntarily pay." The argument, founded on the above figurative analysis, seeks to equate the expressions "levy and collection" used in section 3(3) with the stages of assessment and collection concerned with the procedure for quantification and recovery of a duty that has already been imposed.
The first stage of "charge", according to counsel, has already been dealt with in the first sub section of section 3, which has fastened a charge on the production of manufacture of specified goods.
The third sub section, it is said, only relates to the quantification or recovery of the charge imposed under section 3(1) .
I do not see any force in this argument.
In the first place, even section 3(1) which, according to the counsel, is the charging section, uses the same words "levied and collected.
These are the same as the words used in Article 265 of the Constitution, which have been interpreted as comprehending the entire process of taxation commencing from the imposition of the tax by enacting a statute to the actual taking away of money from the pocket of a citizen.
They take in every stage in the entire process of taxation.
The words "levied" is a wide and generic expression.
One can say with as much appropriateness that the Income tax Act levies a tax on income as that the the Income Tax Officer levies the tax in accordance with the provisions of the Act.
It is an expression of wide import and takes in all the stages of charge, quantification and recovery of duty, though in certain contexts it may have a restricted meaning.
In the context of sub section (1) the word "levied" admittedly means "charged " as well as "assessed.
The words "levy and collection ' in sub section (3) cannot be construed differently from the words levied and collected used in sub section (1).
section 3(3), therefore, also covers the entire gomut of section 3 (1) and cannot be construed as becoming operative at a somewhat later stage.
Its operation cannot be excluded in determining the scope of the charge.
PG NO 819 In this context, reference has to be made to a decision of this Court which had to consider a provision, almost identical with section 3(3) of the 1957 Act, appearing in the Finance Act 1965, in a somewhat indirect manner, as the decision contains some observations, which, at first sight, appear to support the line of argument of the petitioner herein.
Such a provision has been annually repeated in all Finance Acts vide, the Finance Act from 1963 to 1983 and imposes what has been described as "special", "regular" or "auxiliary" duties of excise and customs.
The decision I am referring to is that of this Court in Associated Cement Co. Ltd. vs Director of Inspection, 19.
This decision was really concerned with section 280 ZD of the Income Tax Act, 1961, which in turn called for a reference to section 80 of the Finance Act, 1965 which is in the following terms: "(I) When goods of the description mentioned in this section chargeable with a duty of excise under the Central Excises Act . are assessed to duty, there shall be levied and collected (a) as respects (certain) goods . . , a special duty of excise equal to 10 per cent of the total amount so chargeable on such goods; (b) as respects (certain other) goods . . , a special duty of excise equal to 20 per cent .
: and (c) as respects (certain other) goods . . , a special duty of excise equal to 33 1/3 per cent .
(2) xxx xxx (3) The duties of excise referred to in sub section ( l) chargeable on such goods under the Central Excise Act or any other law for the time being in force . (4) The provisions of the Central Excises Act and the rules thereunder.
including those relating to refunds and exemptions from duty, shall.
so far as may be.
apply in relation to the levy and collection of the duty of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or rules.
" PG NO 820 Section 280 ZD of the Income Tax Act, 1961 enabled an assessee, in certain circumstances, to obtain a "tax credit" certificate in respect of a percentage of the amount of "duty of excise payable by him." "Duty of excise" was defined by the section to mean "the duty of excise leviable under the Central Excises & Salt Act".
The question was whether the tax credit could also be given in respect of the amount of the special duty of excise levied and collected under the Finance Act.
This Court held that, obviously, the special duty levied under section 80 could not be regarded as having been levied under the Central Excise Act.
It said: "It is true that the expression 'leviable ' is an expression of wide import and includes stages of quantification and recovery of the duty but in the context in which that expression has been used in clause (b) of sub section (6) of section 280 ZD, it is clear that it has been used in the sense of chargeability to duty.
In other words, the duty of excise in respect whereof tax credit is available would be in respect of such duty of excise as is chargeable under the Excise Act and clearly the Special excise duty in respect whereof additional tax credit is sought by the appellant company is not chargeable under the Excise Act but chargeable under the Excise Act.
" Having said this, the Court added: " 'Sub clauses [3] and (4) of section 8() of the Finance Act on which reliance has been placed by counsel for the appellant company in terms refers to the procedural aspect such as the qualification and collection of the special duty and simply because the qualification and collection of the special duty under the Finance Act is to he done in accordance with the provisions of the Excise Act such duty does not become leviable that is to say chargeable, under the Excise Act.
" The above observations no doubt lend some support to the contention of the petitioner, as the wording of section 80(4) of the 1965 Finance Act is identical with that of section 3(3) and has been interpreted as attracting only the procedural aspect of the Central Excise Act.
But in my opinion, while that may have been true of section 80(4) of the Finance Act, 1965, it will not be correct to draw the same conclusion about the 1957 Act.
For, section 80(1) of the Finance Act, 1965 fully exhausted the aspect of charge of the special duty.
It PG NO 821 specified the goods to be taxed and also laid down that the special duty was to be a percentage of the normal excise duty chargeable on those goods.
Nothing else remained except the quantification and the collection.
But here the position is different.
There are three ingredients of the charging provision viz. section 3(1).
The additional duties are charged (a) on manufacture, storage of production (b) of certain named goods (c) at the rates specified in the first schedule.
Of these, only aspect (b) finds mention in the t957 Act but in relation to the definitions contained in the 1944 Act.
Aspect (c), clearly is not complete without a reference to the main Act.
For, turning to the First Schedule of the Act, originally it specified rates on the basis of length, weight or number on all items except "cigarettes" where the duty was to be ad valorem.
The Amendment Act, No. 6 of 1980, substituted the rate per metre specified under the original schedule in respect of the items with which we are concerned to ad valorem rates.
Now the assessable value is to be determined on the basis of which the special duty will have to be worked out cannot be found out from the 1957 Act which contains no definition or indication in this regard.
The statute cannot be worked atleast in respect of goods where an ad valorem rate is prescribed unless section 3(l) is read with section 3(3 ) and the definition of "assessable value" in section 14 of the 1944 Act is read with the Finance Act.
In like manner, I think.
the content of aspect (a) cannot be understood differently from, or independently of, the definition in the main enanctment.
Having regard to the nature and content of the levy indicated in s 3(1), it is obvious that section 3(3) has to have the effect of attracting not only the purely procedural and machinery provisions of the 1944 Act but also some of its charging provisions.
It is, therefore difficult to consider section 3(1) of the 1(1957 Act in contrast to the Finance Act of 1965 As covering the entire ambit of the charge imposed.
In short, the language of section (3) has to he given a wider meaning than under the Finance Act, 1985.
I have referred to the fact that a provision similar to that in section 80 of the Finance Act, 1965 is also found in other Finance Acts.
On perusal of these provisions, it will be found that a like position exists there also.
These provisions are all self contained and completely specify the scope of the charge either as a percentage of the excise duty normally chargeable under the Central Excises & Salt Act, 1944 or as a percentage of the 'assessable value determined under section 4 of the 1944 Act. ' This, in my view, is a very important reason why the observations in the Associated Cement Co. 's case (supra) cannot be of application in the context of the 1957 Act.
A question has been raised as to why, if it were the intention of the Legislature to take in all the provisions PG NO 822 including definitions from the 1944 Act, it was considered necessary to make a specific reference to the definitions of the various goods on which additional duty was being imposed as contained in the schedule to the 1944 Act.
Counsel says that this enactment of specific definitions drawn from the 1944 Act should lead to an inference that no other definitions from that Act were intended to be incorporated in the 1957 Act.
A careful examination will, however.
show that this is not the effect.
Actually, section 2 is not much of a 'definition ' section.
(a) is not strictly necessary and cl.
(b) is only intended to clarify that the proceeds of the duties are not be distributed to Union Territories.
So far as clause (c) is concerned, it is necessary to make a reference to section 7 of the Act, which reads thus: "7.
It is hereby declared that the following goods, namely, subject, tobacco, cotton fabrics, rayon or artificial fabrics and woolen fabrics, are of special importance in inter state trade of commerce and every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of the declared goods, he subject, as from the 1st day of April, 1958, to the restrictions and conditions specified in section 15 of the .
" The effect of this provision, as held in M/s Mahendra Pratap Rama Chandra vs Commercial Tax Officer & Others, is that "the contents of section 15 became a part of section 7 from the moment when section ', was enacted. ' ' section 15 of the Central Sales Act applies to "declared" goods as defined in section 2(c) and enumerated in section 14 of that Act as being of special importance in inter state trade and commerce.
section 14 of the .
enumerates various items of goods among which arc the six items specified in section 3(1) of the 1957 Act and this list further specifies that they shall have the same meaning as is attached to the respective items in the First Schedule to the Central Excises & Salt Act, 1944 vide items (ii a), (vii), (viii), (ix).
(x) and (xi).
Thus, it was always clear that the specified goods have to be understood in the way they were defined in the Central Excises & Salt Act, 1944.
The idea in 1956 was to restrict the powers of the States to levy sales tax in respect of such goods and other goods.
In 1958, the idea was conceived of the Centre levying an additional excise duty on these goods and distributing the same to the States subject to the condition specified in Schedule II that such States did not impose any sale or purchase tax on these commodities.
Subsequently, perhaps.
it was realised that section 7 served no specific purpose under the Act except that of the definitions which was an aspect PG NO 823 already covered by section 2(c).
In these circumstances, not much significance need be attached to section 2(c) much less can it be construed as negativing the import of other definitions from the 1944 Act.
The next question that arises for considerion is, whether, even assuming that the terms of section 3(3) are applicable, its terms are wide enough to take in not merely the provisions of the Central Excises and & Salt Act, 1944 and, in particular its definition clauses, as they stood in 1957 on the date when the 1957 Act came into force but also the amendments effected therein from time to time.
The answer to this question depends upon the general principles applicable to what is described as 'referential legislation ' of which this is an instance.
Legislatures sometimes take a short cut and try to reduce the length of statutes by omitting elaborate provisions where such provisions have already been enacted earlier and can be adopted for the purpose on hand.
While, on the one hand, the prolixity of modern statutes and the necessity to have more legislation then one on the same or allied topics render such a course useful and desirable, the attempt to legislate by reference is sometimes everdone and previty is achieved at the expense of lucidity.
However, this legislative device is quite well known and the principles applicable to it fairly well settled.
Referential legislation is of two types.
One is where an earlier Act or some of its provisions are incorporated by reference into a later Act.
In this event, the provisions of the earlier Act or those so incorporated, as they stand in the earlier Act at the time of incorporation, will be read into the later Act.
Subsequent changes in thc earlier Act or the incorporated provisions will have to be ignored because, for all practical purposes, the existing provisions of the earlier Act have been re enacted by such reference into the later one, rendering irrelevant what happens to the earlier statute thereafter.
Examples of this can be seen in Secretary of State vs Hindustan Cooperative Insurance Society, AIR 1931 P.C. 149; Solani Ores Ltd. vs State, ; and Mahindra and Mahindra Ltd. vs Union, AIR 1979 S.C.798.
On the other hand, the later statute may not incorporate the earlier provisions.
It may only make a reference of a broad nature as to thc law on a subject generally, as in Bhajiyu vs Gopikabai. ; ; or contain a general reference to the terms of an earlier statute which are to be made applicable.
In this case any modification, repeal or re enactment of the earlier statute will also be carried into in the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the latter Act also.
Examples of PG NO 824 this type of legislation are to be seen in Collector of Customs vs Nathella Sampathu Chetty, ; ; New Central Jute Mills Co. Ltd. vs Assistant Collector, ; and Special Land Acquisition Officer vs City Improvement Trust, Whether a particular statute falls into the first or second category is always a question of construction.
In the present case, in my view, the legislation falls into the second category.
section 3(3) of the l957 Act does not incorporate into the 1957 Act any specific provisions of the 1944 Act.
It only declares generally that the provisions of the 1944 Act shall apply "so far as may be", that is, to the extent necessary and practical, for the purposes of the 1957 Act as well.
That apart, it has been held, even when a specific provision is incorporated and the case apparently falls in the first of the above categories, that the rule that repeals, modifications or amendments of the earlier Act will have to be ignored is not adhered to incertain situations.
These have been set out in State of Madhya Pradesh vs Narasimhan.
[ ; In that case.
the Supreme Court was considering the question whether the amendment of section 21 of the Penal Code by the Criminal Law Amendment Act.
195X, was also applicable for purposes of the Prevention of Corruption Act, 1947, which by section 2 incorporates, for the purposes of that Act, the definition of `public servant ' in s 2l of the Penal Code.
Answering thc (question in the affirmative, the Court outlined the following proposition: "Where a subsequent Act incorporates provisions of a previous Act.
then the borrowed provisions become an integral and independent part of the subsequent Act and are totally uneffected by any repeal or amendment in the previous Act This principle.
however will not apply in the following, cases: (a) where the subsequent Act and the previous Act are supplemental to each other; (b) where the two Acts are in pari materia: (c) where the amendment in the previous Act, if not imported into the subsequent Act also, would render the subsequent Act wholly unworkable and uneffectual; and (d) where the amendment of the previous Act, either PG NO 825 expressly or by necessary intendment, applies the said provisions to the subsequent Act.
" The present case falls within the scope of these exceptions, even if section 3(3) is construed as incorporating certain specific provisions of the 1944 into itself.
The legislation presently in question is clearly in pari materia with the 1944 Act.
It is also merely supplemental.
While the 1944 Act imposes a general levy of excise duty on all goods manufactured and produced, and aim of the present Act is to supplement the levy by an additional duty of the same nature on certain goods.
The duration of the applicability is undefined but the statute is clearly enforceable as long as it is in the statute book side by side with the normal excise duties.
The clear intention is that the same provisions shall govern both the levies except that the duty under the later Act is confined to certain goods only and its distributability among the States may perhaps follow a different pattern from the principal duty.
There is no reason or logic why all the incidents attaching under the earlier legislation, in so &r as they are not clearly inconsistent with the later one should not be extended to the later legislation as well.
As has been pointed out earlier, the Finance Acts which levied special or regular or additional excise duties contained in themselves all the elements of charge of duty.
The goods were mentioned and the duty as to be levied either at a percentage of the normal excise duty payable under the 1944 Act or at a percentage of the value of the assessable goods as determined under the 1944 Act.
All that was further needed was the applicability of the procedural provisions of the 1944 Act Here, however, the 1957 Act is incomplete as to the basis of the charge and its provisions would become totally unworkable unless the concepts of "manufacture" and "assessable value? ' as determined under the 1944 Act are carried into it.
In the circumstances, I agree that we should give full and literal effect to the language of section 3(3) and hold that it has the effect not only of attracting the procedural provisions of the 1944 Act but also all its other provisions, including those Containing the definition.
| Section 3(1) of the Andhra Pradesh Scheduled Areas Land Transfer Regulation 1959 (Regulation I of 1959) prohibited transfer of immovable properties situated in the scheduled areas from a member of scheduled tribe to non tribals without previous sanction of the State Government.
In order to facilitate effective enforcement of the said 1959 regulations, the Andhra Pradesh Scheduled Areas Land Transfer (Amendment) Regulation, 1970 was introduced.
Regulation 1970 inter alia brought the following changes namely (i) transfers of land in scheduled areas in favour of 'non tribals ' were wholly prohibited in future and (ii) non tribals holding lands in the scheduled areas were prohibited from transferring their lands in favour of persons other than tribals.
The appellants who owned lands in the scheduled areas having acquired them from tribals and 'non tribals ' were affected by this amending Regulation of 1970.
They filed writ petitions in the High Court challenging this regulation being unconstitutional.
The High Court dismissed the writ petitions.
Hence these appeals by Certificate under Article 133(1)(a) of the Constitution.
The main contention of the appellants was that the impugned provisions were unconstitutional as being violative of Article 19(1)(f) of the Constitution as it obtained at the 444 material time till it was repealed by the Constitution (Forty fourth) Amendment in 1979 because they imposed unreasonable restrictions on the non tribal holders of properties in the scheduled areas.
Dismissing the appeals and while tracing a short history of the legislation, this Court, ^ HELD: originally all the lands in these tracts were owned by the 'tribals '.
With the advent of the 'non tribals ' in the late 19th Century and early 20th Century, the lands changed hands from 'tribals ' to 'non tribals '.
This change of ownership was a result of exploitation raising: (1) In the context of money lending operations and (2) in the context of dubious and unconscionable dealings in the course of trade.
The 'non tribals ' had so often circumvented the legislation enacted in order to protect the 'tribals ' by recourse to benami transactions and by recourse to dubious devices.
The poor ignorant, illiterate, and unsophisticated tribals had succumbed to the wiles of the economically stronger and unscrupulous 'non tribals '.
A legislation which in essence and substance aims at restoration to the 'tribals ' of the lands which originally belonged to the 'tribals ' but which passed into the hands of 'non tribals ' in the aforesaid background certainly cannot be characterised as unreasonable.
[455G H; 456A C] No unreasonableness is involved in making the prohibition against transfer to 'non tribals ' applicable to both the 'tribal ' as also to the 'non tribal ' owner in the scheduled area.
As a matter of fact it would have been unreasonable to do otherwise.
In the absence of protection, the economically stronger 'non tribals ' would in course of time devour all the available Lands and wipe out the very identity of the tribals who cannot survive in the absence of the only source of livelihood they presently have.
[457C D] The submission that the prohibition against transferring the properties to 'non tribals ' being in absolute terms, a non tribal ' cannot even raise a loan on his properties even in the event of the 'non tribal ' being under economic compulsion to do so cannot be acceded to as it overlooks the amendment introduced by Sec.
3A(1) inserted by Regulation 1 of 1971.
[458A B] Tribes of India The Struggle for Survival (1982 83 edition) by Christoph von Furer Haimendorf; The Continent of Circe, [1965] by Nirad C. Chaudhari; Manchegowda and Ors.
vs State of Karnataka, [1984] 3 SCC p. 301 and Lingappa Rochanna Appelwar vs State of Maharashtra. , referred to.
445 The argument that the expression 'Iand ' has been used in its restricted sense in paragraph 5(2)(a) of Schedule V to the Constitution of India and therefore the impugned provisions prohibiting the transfer of lands along with structures thereon by employing the expression 'immovable property ' is not in accordance with law is devoid of merit for two reasons: firstly, there is no reason to believe that `land ' has not been employed in its legal sense.
The expression 'land ' in its legal sense is a comprehensive expression which is wide enough to include structures, if any, raised thereon and secondly to interpret the expression 'land ' in its narrow sense is to render the benevolent provisions impotent and ineffective.
In that event the prohibition can be easily circumvented by just raising a farm house or a structure on the land.
The impugned provisions were inserted by the Amending Regulation precisely to plug such loopholes and make the law really effective.
[.158C D; 459D E] The Dictionary of English Law, [19591 Edition Vol.
2 p. 1053 by Earl Jowitt; Words and Phrases Judicially Defined, By Roland Burrows Vol.
IlI 1944 Edition p. 206 and The Law Lexicon, By p. Ramanatha Aiyar Reprint Edition 1987 p. 700, referred to.
|
Civil Appeal Nos.
2815 2819(NT) of 1977 From the Judgment and Order dated 18.10.1976 of the Punjab & Haryana High Court in Civil Writ Nos.
1183, 1184, 1795, 1796 and 1797 of 1970.
O.P. Sharma, L.K. Gupta and Miss A. Subhashini for the Appellant.
S.T. Desai, J.D. Jain and Ms. Kawaljit Kochar for the Respondents.
The Judgment of the Court was delivered by PATHAK, J.
These appeals by special leave are directed against the judgment and order of the High Court of Punjab and Haryana dismissing the writ petitions filed by the appellant against proceedings for the assessment of sales tax.
The appellant, the Government Medical Store Depot, Karnal, is a Depot functioning under the Assistant Director General (Stores) who is in charge of the Medical Stores Organisation in the country under the Directorate General of Health Services, Ministry of Health, Government of India, New Delhi.
It is a department of the Central Government and supplies medicines and hospital equipment manufactured in India or imported from abroad to Government hospitals, 453 Government institutions, Health Centres, Dispensaries and Primary Health Units located in northern India, some of which are run by local bodies such as Panchayats, Panchayat Samitis, Zila Parishads and Municipalities.
It does not deal with private hospitals and individuals.
The organisation works as a public utility service on a 'no profit, no loss ' basis.
The medical stores and hospital equipment are purchased by the appellant and supplied to the hospitals and medical institutions, after adding a service charge of 10 per cent on the cost of the indented stores.
During the year 1956 57, a question arose whether the activities of the appellant brought it within the definition of the expression 'dealer ' as defined in section 2(d) of the Punjab General Sales Tax Act, 1948.
The Excise and Taxation authorities took the view that the appellant was not a dealer because the transactions conducted by it did not include an element of profit.
By a letter dated July 15, 1957, the appellant was informed by the Excise and Taxation Commissioner, Punjab, that it need not be registered under the Punjab General Sales Tax Act.
On August 21, 1968, the Excise and Taxation Officer, Karnal took note of a decision of this Court in Deputy Commercial Tax Officer, Saidapet, Madras vs Enfield India Ltd. Co operative Canteen, [1968] 21 S.T.C. 317 and called upon the appellant to produce its account books for the years 1965 66, 1966 67 and 1967 68 for the purpose of assessment to sales tax on the Medical Stores and equipment supplied by it.
The appellant was also directed to get itself registered as a dealer under the Act.
The appellant replied on August 24, 1968 that it did not fall within the scope of the definition of 'dealer ', and it seems that the Government of India in the Ministry of Health also intervened in the matter.
The Excise and Taxation Officer, however, continued to maintain that the appellant was a dealer within the meaning of the Act.
The Excise and Taxation Officer then issued formal notices to the appellant for the production of its account books for the years 1964 65 to 1968 69, and after giving an opportunity to the appellant to be heard, he proceeded to make assessment orders dated March 25, 1970 for the years 1964 65 and 1965 66, and also passed penalty orders for each year under the Punjab General Sales Tax Act as well as under the Central Sales Tax Act.
He also initiated assessment proceedings for the years 1966 67, 1967 68 and 1968 69.
454 The appellant filed five writ petitions in the High Court of Punjab and Haryana, challenging the assessment proceedings pertaining to the assessment years 1964 65 to 1968 69 respectively taken under the Punjab General Sales Tax Act and the Central Sales Tax Act.
The writ petitions were dismissed by the High Court by a common judgment and order dated October 18, 1976.
The High Court held that the appellant was a dealer notwithstanding that it was not carrying on a business for earning profit.
Learned counsel for the appellant contends that the appellant is not a dealer because the activity carried on by it is pursued without any motive of earning profit and, therefore, it cannot be described as a business.
It is pointed out that the definition of the word 'dealer ' in section 2(d) of the Punjab General Sales Tax Act is different from the definition of that word in section 2(c) of the Haryana General Sales Tax Act.
While the Haryana Act states that a person is a dealer whether or not he is inspired by a profit motive in carrying on his business, no such statement is contained in the definition under the Punjab Act.
It is urged that these appeals are governed by the Punjab General Sales Tax Act and not by the Haryana General Sales Tax Act.
When the Punjab General Sales Tax Act, 1948, was enacted it applied to the territories of the State of Punjab as that State was constituted on the partition of India on August 15, 1947.
The State of Punjab so constituted continued in existence until it was again partitioned under the with effect from the appointed day, November 1, 1966.
The Punjab General Sales Tax Act, which had operated in the territories constituting the original State of Punjab up to October 31, 1966 continued as the law in force on and from November 1, 1966 even in those territories which now comprised the State of Haryana.
This was pursuant to section 88, of the .
Its continuance was subject to any change in the law effected by the Haryana Legislature.
The Haryana Legislature could permit the Punjab General Sales Tax Act to continue in force subject to legislative modifications made by it in that law.
Alternatively, it could supersede and repeal the Punjab Act by enacting an independent Haryana Act to replace it.
The Haryana Legislature amended the Punjab Act from time to time.
It did so, for instance, by the Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1969.
Later, the entire Punjab Act was repealed by the enactment of the Haryana General Sales Tax Act, 1973, which came into effect from May 5, 1973.
Some provisions of the Haryana Act came into 455 force from an earlier date, among being them the definition of 'dealer ' set forth in section 2(c) of that Act which operated retrospectively with effect from September 7, 1955.
The present appeals are concerned with the assessment years 1964 65 to 1968 69, and the question is whether they are governed by the definition of the word 'dealer ' in section 2(d) of the Punjab Act or by section 2(c) of the Haryana Act.
During that period section 2(d) of the Punjab Act, in its application to the State of Haryana, defined the word 'dealer ' as follows: S.2(d).
"Dealer" means any person including a Department of Government who in the normal course of trade sells or purchases goods that are actually delivered for the purpose of consumption in the State of Haryana irrespective of the fact that the main place of business of such person is out side the said State, and where the main place of business of any such person is not in the said State, 'dealer ' includes the local manager or agent of such person in Haryana in respect of such business." Section 2(c) of the Haryana General Sales Tax Act, however, defines the word 'dealer ' in the following terms: section 2(c).
"dealer" means any person including a department of Government who carries on, whether regularly or otherwise, trade whether with or without a profit motive, directly or otherwise, whether for cash, deferred payment, commission, remuneration or other valuable consideration, of purchasing, selling, supplying or distributing any goods in the State, or importing into, or exporting out of the State any goods, irrespective of the fact that the main place of business of such person is outside the State and where the main place of business of such person is not in the State, includes the local manager or agent of such person in the State in respect of such business.
" It is apparent that the existence or absence of a profit motive is irrelevant when identifying a 'dealer ' under the Haryana Act.
No such statement of immateriality is contained in the definition of the word 'dealer ' under the Punjab Act as applied to the State of Haryana.
456 What is important to note is that the definition of the word 'dealer ' in the Haryana Act has been framed only for the purpose of the provisions of that Act.
The opening words of the definition section, section 2, make it clear that the expressions defined by that section are the expressions as used in the Haryana Act.
Wherever, the word 'dealer ' is used in the Haryana Act, one must turn to the definition contained in section 2(c) of that Act.
Now, except for a few specified provisions, the Haryana General Sales Tax Act came into force on May 5, 1973.
Section 6, its charging provision, commenced to operate from that date.
Section 6(1) of the Haryana Act declares that the first year of which the turnover is liable to tax under that Act is the year "immediately preceding the commencement of this Act.
" It is obvious that section 6 does not govern the assessment years which are the subject of these appeals.
Therefore, it is immaterial for our purposes that the definition of the word 'dealer ' under the Haryana Act has to be read retrospectively with effect from September 7, 1955.
Because, as we have pointed out, section 2(c) relates to the word 'dealer ' contained in the provisions of the Haryana Act and the charging provision of the Haryana Act did not operate during the assessment years with which these appeals are concerned.
These appeals will be governed by the Punjab General Sales Tax Act, and it is section 2(d) of that Act which must be looked to for ascertaining the definition of the word 'dealer ' in that Act.
It may be mentioned that section 65 of the Haryana General Sales Tax Act repealed the Punjab General Sales Tax Act.
Section 65 contains a proviso that such repeal will not affect the previous operation of the repealed Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder.
The liability incurred by a dealer in respect of the years under consideration in these appeals is a liability incurred under the charging provision, section 4, of the Punjab General Sales Tax.
To ascertain who such dealer is one must read the definition of the word 'dealer ' in the Punjab General Sales Tax Act.
No reference is permissible for that purpose to the definition in the Haryana General Sales Tax Act.
No doubt the further language in the proviso to section 65 of the Haryana General Sales Tax Act provides that anything done or any action taken in respect of the liability incurred under the Punjab General Sales Tax Act will be deemed to have been done or taken in the exercise of the powers conferred by or under the provisions of the Haryana Act as if that Act was in force on the date on which such thing was done or action taken.
This merely refers to the provisions enacted for the purpose of enforcing the liability and realising the tax and does not affect the position that the charge is under section 4 of the Punjab General Sales Tax Act, and to appreciate who the 457 'dealer ' mentioned therein is, one must turn to section 2(d) of the Punjab Act.
It will be noticed that the definition of the word 'dealer ' in section 2(d) of the Punjab Act does not treat the existence of a profit motive in the business as an immaterial factor.
In Govt.
Medical Store Depot, Gauhati vs The Supdt.
of Taxes, Gauhati & Ors, ; , the question was whether a Government Medical Store Depot set up at Gauhati by the Central Government in the Ministry of Health, Family Planning and Urban Development, for the purpose of procuring and supplying medical stores to Central and State Government institutions could be made liable to sales tax under the Assan Finance (Sales Tax) Act, 1956 and under the .
The appellant, the Government Medical Store Depot, took the stand that the supply of medical stores to the Government institutions were without any profit motive, on the basis of "no loss, no profit", and unless it was found that the transactions had been carried on with a view to making a profit the appellant could not be held to be a 'dealer ' liable to tax.
This Court observed that in the definition of 'business ' the profit motive had not been omitted, and therefore without anything more it could not be said that the person carrying on those transactions was a dealer.
The Court rested the burden on the Revenue to show that the transactions carried on by the appellant were carried on with a profit motive.
In the end, inasmuch as the appeals before it were concerned with the years 1965 66 to 1967 68 having regard to the lapse of time the Court, while allowing the appeals and quashing the assessments, did not think it fit to remand the cases for fresh assessment proceedings.
We think we should do likewise.
Accordingly, the appeals are allowed, the judgment and order of the High Court are set aside and the assessment proceedings which are the subject of these appeals are quashed.
In the circumstances of the case, there is no order as to costs.
M.L.A. Appeals allowed.
| The appellants three children belong to a sect called Jehovah 's Witnesses who worship only Jehovah the Creator and none other.
They refused to sing the National Anthem: 'Jana Gana Mana ' because, according to them, it is against the tenets of their religious faith not the words or the thoughts of the National Anthem but the singing of it.
They desisted from actual singing only because of their aforesaid honest belief and conviction but they used to stand up in respectful silence daily, during the morning assembly when the National Anthem was sung.
A Commission was appointed to enquire and report, and it reported that the children were "law abiding" and that they showed no disrespect to the National Anthem.
However, under the instructions of Deputy Inspector of Schools, the Head Mistress expelled the appellants from school from July 26, 1985.
A representation by the father of the children to the Education Authorities requesting that the children may be permitted to attend the 519 school pending orders from the Government having failed, the appellants filed a Writ Petition in the High Court seeking an order restraining the authorities from preventing them from attending the school.
A single Judge and then a Division Bench rejected the prayer of the appellants.
Allowing the appeal by Special Leave, to this Court, ^ HELD: 1.1.
The Fundamental Rights of the appellants under article 19(1)(a) and 25(1) have been infringed and they are entitled to be protected.
The expulsion of the three children from the school for the reason that because of their conscientiously held religious faith, they do not join the singing of the National Anthem in the morning assembly though they do stand respectfully when the National Anthem is sung, is a violation of the fundamental right to freedom of conscience and freely to profess, practice and propagate religion.
Therefore, the judgment of the High Court is set aside and the respondent authorities are directed to re admit the children into the school, to permit them to pursue their studies without hindrance and to facilitate the pursuit of their studies by giving them the necessary facilities.
[538D E; 539 C D] 1.2 There is no provision of law which obliges anyone to sing the National Anthem nor is it disrespectful to the National Anthem if a person who stands up respectfully when the National Anthem is sung does not join the singing.
Proper respect is shown to the National Anthem by standing up when the National Anthem is sung.
It will not be right to say that disrespect is shown by not joining in the singing.
Standing up respectfully when the National Anthem is sung but not singing oneself clearly does not either prevent the singing of the National Anthem or cause disturbance to an assembly engaged in such singing so as to constitute the offence mentioned in section 3 of the Prevention of Insults to National Honour Act.
[527B G] 2.1 Article 19(1)(a) of the Constitution guarantees to all citizens freedom of speech and expression, but Article 19(2) provides that nothing in Article 19(1)(a) shall prevent a State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the said right. article 25(1) guarantees to all persons freedom of conscience and the right freely to profess, practise and propagate religion, subject to order, morality and health and to the other provisions of Part III of the Constitution.
article 51 A(a) of the Constitution enjoins a dub on every citizen of India "to abide by the Constitution and respect its ideals and institutions, the National Flag and the National Anthem".
[526G H; 527C] 520 2.2 While on the one hand, article 25(1) itself expressly subjects the right guaranteed by it to public order, morality and health and to the other provisions of Part III, on the other hand, the State is also given the liberty to make a law to regulate or restrict any economic, financial, political or other secular activity which may be associated with religious practice and to provide for social welfare and reform, even if such regulation, restriction or provision affects the right guaranteed by article 25(1).
Therefore, whenever the Fundamental Right to freedom of conscience and to profess, practise and propagate religion is invoked, the act complained of as offending the Fundamental Right must be examined to discover whether such act is to protect public order, morality and health, whether it is to give effect to the other provisions of Part III of the Constitution or whether it is authorised by a law made to regulate or restrict any economic, financial political or secular activity which may be associated with religious practise or to provide for social welfare and reform.
[531G H; 532A B] 2.3 Any law which may be made under clauses 2 to 6 of article 19 to regulate the exercise of the right to the freedoms guaranteed by article 19(1)(a) to (e) and (g) must be 'a law ' having statutory force and not a mere executive or departmental instructions.
[529E F] The two circulars on which the Department, in the instant case, has placed reliance have no statutory basis and are mere departmental instructions.
They cannot, therefore, form the foundation of any action aimed at denying to citizens Fundamental Right under article 19(1)(a).
Further it is not possible to hold that the two circulars were issued 'in the interest of the sovereignty and integrity of India, the security of the State, friendly relation with foreign states, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence ' and if not so issued, they cannot again be invoked to deny a citizen 's Fundamental Right under article 19(1)(a).
If the two circulars are to be so interpreted as to compel each and every pupil to join in the singing of the National Anthem despite his genuine, conscientious religious objection, then such compulsion would clearly contravene the rights guaranteed by article 19(1)(a) and article 25(1).
[530C E; 529C] Kharak Singh vs State of U.P., ; and Kameshwar Prasad vs The State of Bihar, [1962] Supp.
SCR 369 relied upon.
The Kerala Education Act contains no provision of relevance and the appellants in the present case have never been found guilty of 521 misconduct such as that described in Chapter IX, Rule 6 of the Kerala Education Rules.
On the other hand, the report of the Commission, is to the effect that the children have always been well behaved, law abiding and respectful.
[528 B C] 4.
The question is not whether a particular religious belief or practice appeals to our reason or sentiment but whether the belief is genuinely and conscientiously held as part of the profession or practice of religion.
Personal views and reactions are irrelevant.
If the belief is genuinely and conscientiously held it attracts the protection of article 25 but subject, of course, to the inhibitions contained therein.
[533F G] In the instant case, what the petitioners truly and conscientiously believe is not in doubt.
They do not hold their beliefs idly and their conduct is not the outcome of any perversity.
The petitioners have not asserted those beliefs for the first time or out of any unpatriotic sentiment Jehovah 's Witnesses, as they call themselves, appear to have always expressed and stood up for such beliefs all the world over.
[523C D] Adelaide Company of Jehovah 's Witnesses vs The Commonwealth, ; ; Minersville School District vs Gebitis, 84 Law Ed.
US 1376; West Virginia State Board of Education vs Barnette, ; ; Donald vs The Board of Education for the City Hamilton, 1945 Ontario Reports 518, Sheldon vs Fannin, 221 Federal Suppl.
766; The Commissioner Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, ; ; Rati Lal Panachand Gandhi vs The State of Bombay & Ors., [1954] SCR 1055; SP Mittal etc.
vs Union of India Commissioner, Calcutta, AIR 1984 SC 51 referred to.
|
ION: Special Leave Petition (Civil) No. 6605 of 1983.
From the Judgment and Order dated the 6.4.1983 of the Rajasthan High Court in D.B. Special Appeal No. 74 of 1983.
WITH Special Leave Petition Nos.
9678 9680 of 1982.
From the Judgment and Order dated the 4th October, 1982 of the Madras High Court in C.R.P. No. 2880 82/1978.
AND Write Petition Nos.
9600 9601 & 9759 9760 of 1983.
Under Article 32 of the Constitution of India.
468 K.K.Venugopal and Mukul Mudgal for the Petitioner in SLP.
6605/83.
Shanti Bhushan, S.K. Jain and B.M. Mathur for the Respondents in SLP.
6605/83.
C.S. Vaidyanathan for the Petitioner in SLP (Civil) Nos.
9678 9680 of 1982.
Dr. Y.S. Chitale and A.V. Rangam for the Respondents in SLP (Civil) Nos.
9678 9680 of 1982.
S.N. Kacker and A.K. Panda for the Petitioners in Writ Petitions.
Shanti Bhushan and B.N. Mathur, S.K.Jain & S.D. Sharma for the Respondents in Writ Petitions.
The Judgment of the Court was delivered by DESAI, J.
In this group of special leave petitions and writ petitions, constitutional validity of Sec.
47 (I H) of the (`Act ' for short) directly or indirectly figures.
With a view to focussing attention on the context in which the question is raised, it may be advantageous to refer to the factual matrix in S.L.P. 6605/83, in which the learned Single Judge and the Division Bench of the High Court repelled the challenge.
We would first deal with the principal challenge common to all petitions and then dispose of specific contention raised in other petitions clubbed together here.
For representative facts we would refer to S.L.P. 6605/83.
Re: S.L.P. No. 6605/83: Petitioner Sher Singh is the holder of a stage carriage permit on Behror Rewari via Barrod, Shahjahanpur inter State route.
A portion of the route from Bahror to National Highway No. 8 via Barrod and Shahjahanpur 28 k.ms.
in length passes through Rajasthan State and the rest of the portion of the route 22 K.ms.
in length lies in Haryana State.
It is thus an inter State route.
Petitioner holds 12 permits, for operating on the aforementioned route.
Of the 12 permits, the period prescribed under 8 permits expired and the petitioner applied for the renewal of the permits under Sec.
58 of the .
Regional Transport Authority granted renewal of the permits upto and inclusive of January 20, 469 1981.
The petitioner again applied for renewal of the permits on December 29, 1980.
The Rajasthan State Road Transport Corporation, fifth respondent (`Corporation ' for short) made an application to the Regional Transport Authority on April 20, 1981 for stage carriage permit on the aforementioned route.
This application was as usual advertised.
The application of the petitioner for the renewal of his permits accordingly was taken up for consideration on April 30, 1981.
Pending the consideration of the application for renewal of permits, petitioner was granted temporary permits under Sec.
62 for a period of four months commencing from the date of the expiry of the earlier permit.
The temporary permits were thus to expire on May 20, 1981.
And these temporary permits were further renewed for a period of 4 months Thereafter the application of the petitioner for renewal of his permits and the application for stage carriage permit made by the Corporation were taken up for consideration.
An objection was raised by the Corporation that as the route in question is an inter State route, it is entitled to permit in preference to the petitioner in view of the provision contained in Sec.
47 (I H) of the .
On the other hand, it was contended on behalf of the petitioner that in view of the provision contained in Sec.
58, the petitioner is entitled to renewal of his permits in preference to the Corporation, which has made an application for a fresh permit.
This contention found favour with the Regional Transport Authority and the renewal of permits was refused to the petitioner and the permits were granted to the Corporation.
This decision was questioned in a writ petition filed by the present petitioner in which the only contention raised was that the preference was accorded to the Corporation for grant of a permit under Sec.
47 (I H) of the which is constitutionally invalid, and once no such preference could be granted, the preference in favour of a renewal of permit under Sec.
58 should have a precedence and the renewal ought to have been granted.
It was contended before the learned Single Judge of the High Court that Sec. 47 (1 H) is violative both of article 14 and article 19 (1) (g) and is thus constitutionally invalid.
That was the only contention canvassed before the learned Single Judge which did not find favour with him as well as the Division Bench of the Rajasthan High Court.
Hence the petitioner filed this petition for special leave.
A notice was ordered to be issued to the respondent and it was directed that the petition be finally disposed of at this stage as the only question raised is one of law and no investigation of facts is necessary.
470 A brief reference to the relevant provisions of the may help us in demarcating the contours of controversy with precision.
Chapter IV of the contains provisions for control of transport vehicles.
For regulating the transport business, a scheme for granting different types of permits has been statutorily prescribed.
There are various kinds of permits contemplated by the such as stage carriage permit, contract carriage permit, all India tourist permit, special permit, permits for transport of goods etc.
Various authorities have been constituted under the for the purpose of implementing the .
Power has been conferred upon specific authorities for granting different kinds of permits.
47 prescribes procedure which the Regional Transport Authority has to follow while examining and deciding an application for stage carriage permit.
47 was specifically amended by 47 of 1978 which came into force on January 16,1979 By the Amending , sub secs (1 A) to (1 H) were added to Sec.
The focus of controversy is on subsec.
(1 H).
Sub sec.
(1 H) reads as under: "(1 H): Notwithstanding anything contained in this section, an application for stage carriage permit from a State Transport undertaking for operating in any inter State route shall be given preference over all other applications: Provided that the authority shall not grant a permit under this sub section unless it is satisfied that the State transport undertaking would be able to operate in the inter State route without detriment to its responsibility for providing efficient and adequate road transport service in any notified area or notified route as is referred to in sub section (3) of Section 68 D where the undertaking operates the service.
Explanation: For the purposes of this sub section, 'inter State route ' means any route lying contiguously in two or more States. '.
A bare reading of the provision contained in sub sec.
(1 H) shows that where a Corporation set up under the is one of the applicants for a stage carriage permit on an inter State route, then as between other applicants and a State Transport Undertaking ( 'Undertaking ' for short), the latter 471 will have preference over others.
Routine statutory procedure prescribed in Sec.
47 for grant of a stage carriage permit requires the Regional Transport Authority which has the power to grant permit before selecting who amongst the numerous applicants should be granted the permit must take into consideration various things that are enumerated in Sec.
Fair approach would be that after examining the credentials of every applicant, the Regional Transport Authority shall grant permit to the person who in its opinion would best serve the travelling public.
The Regional Transport Authority upon a judicious consideration of merits and demerits of every applicant must in a fair and reasonable manner decide who amongst the applicants would perform the duty and carry out the obligations under the permit.
However, sub sec.
(1 H) carves out an exception to this generally well recognised principle that an administrative authority has to adopt while exercising the power conferred upon it by the statute, that where an application for a stage carriage permit on an inter State route is made by all intending applicants which includes a State Transport undertaking, its application must be accorded preference.
But while granting preference, the Regional Transport Authority must satisfy itself that the Corporation would be able to operate on the inter State route without detriment to its responsibility for providing efficient and adequate road transport service in any notified area or notified route as is referred to in sub sec.
(3) of Sec.
68 D where the undertaking operates the service.
At this stage, a reference to Sec. 58 would be useful.
It provides for duration and renewal of stage carriage and contract carriage permits other than temporary permit granted under Sec.
An existing holder of permit may apply for renewal of permit.
Sub sec.
(2) of Sec.
58 requires that a permit may be renewed on an application made and disposed of as if it were an application for a permit.
There is a proviso to sub sec.
(2) which prescribes the time limit within which an application for renewal of different kinds of permits may be made.
There is a second proviso which is material and which may be extracted: "Provided further that other conditions being equal, an application for renewal shall be given preference over new applications for permits." Chapter IV A was introduced in the by Amending 100 of 1956 which came into force on February 2, 1957.
Chapter IV A makes special provisions relating to State Transport Undertaking.
472 The broad scheme of Chapter IV A is that a State Transport Under taking may prepare and publish a scheme on road transport service.
On the publication of the scheme, objections can be filed as provided in Sec.
68 D. Sec.
68 E confers powers for modification and cancellation of the Scheme.
Then comes Sec. 68 F which provides that where, in pursuance of an approved scheme, any State transport undertaking applies, in such a manner as may be prescribed by the State Government in this behalf, for a stage carriage permit or a contract carriage permit in respect of a notified area or notified route, the State Transport Authority in any case where the said area or route lies in more than one region and the Regional Transport Authority in any other case shall issue permit to the State Transport undertaking, notwithstanding anything to the contrary contained in Chapter IV.
In short in respect of a notified area or a notified route, an application for permit by State Transport undertaking shall be granted to the exclusion of any other operator.
Apart from this specific provision in Sec.
68 F, this outcome to some extent also emerges from the provision contained in Sec.
68 B which provides that the provisions of Chapter IV A and the rules and orders made thereunder shall have effect notwithstanding anything inconsistent there with contained in Chapter IV of the or any other law for the time being in force or in any instrument having effect by virtue of any such law.
The first contention raised on behalf of the petitioner was that the State Transport Undertaking must either take recourse to provision in Chapter IV A or otherwise if it wants to compete without recourse to Chapter IV A, it must stand in competition with other applicants for stage carriage permit and any preference that it may enjoy in respect of inter State route under sub sec.
(1 H) of Sec.
47 is violative of article 14 and is denial of fundamental freedom to carry on trade guaranteed to petitioners by article 19 (1) (g).
At the outset it is necessary to bear in mind the legal position of a State Transport Undertaking when dealt with under Chapter IV A and Chapter IV of the .
If an approved scheme in respect of a notified area or a notified route is in force, State Transport Undertaking alone is entitled to operate vehicles and therefore is entitled to obtain stage carriage permits both regular and temporary depending upon whether the scheme provides for total or partial exclusion of private operators.
However, when an application for a permit is made under Chapter IV, the Undertaking has to compete 473 with private operators who may as well make an application for permit.
When the Undertaking applies for permit under Chapter IV, it must satisfy the Regional Transport Authority that it is better suited than the private operator to render transport facility to the travelling public.
47 (1 H) however, provides that in the case of inter State route, the Undertaking will have preference in the matter of stage carriage permit.
Does preference of this nature deny equality guaranteed by article 14 ? The expression 'preference ' amongst others means prior right, advantage, precedence etc.
But how would it be possible to give precedence one over the other.
It signifies that other things being equal, one will have preference over the others.
When an application for a stage carriage permit is being processed as required by Sec. 47, the application of the Undertaking for an inter State route shall be examined as application of any other private operator.
Their merits and demerits must be ascertained keeping in view the requirements of (a) to (f) of Sec.
47 (1) and after comparing the merits and demerits of both, not with the yardstick of mathematical accuracy, but other things being equal, the application of the Undertaking will have preference over others.
Qualitative and quantitative comparison on broad features of passenger transport facility such as fleet, facilities to travelling public and other relevant consideration may be undertaken and after balancing these factors other things being equal, the application of the Undertaking shall be given preference over other applicants.
There is no question of eliminating private operators merely because the Undertaking applies for a stage carriage permit under Chapter IV.
That situation is catered to under Chapter IV A.
In an application under Chapter IV, Corporation has to enter the arena like any other applicant, face the competition and come up to the level of other private operators intending to obtain stage carriage permits and then in respect of the route in question claim preference.
Would this statutory provision violate equality guaranteed by article 14 ? The answer is obviously in the negative.
Competition is the essence of improved commercial service.
After ensuing competition in matter of rendering more efficient transport service a public sector undertaking is assured statutory preference, remember no monopoly, there is no denial of equality guaranteed by article 14 ? A similar argument when the vires of the provisions contained in Chapter IV A were questioned in Dosa Satyanarayanamurty etc.
vs The Andhra Pradesh State Road Transport Corporation (1) did not commend to the Constitution Bench when it repelled the challenge observing as under: 474 "Ordinarily a State Transport Undertaking should be in a better position than others to carry on the said services for the benefit of the public; administratively, financially and technically it can be expected to be in a far better position than others.
It can provide more well equipped buses, give better amenities to the travelling public, keep regular timings repair or replace the buses in emergencies.
It may also employ efficient supervisory staff to keep things going at an appreciably high standard.
" This would apply mutatis mutandis to the present situation.
But let it be made clear that while considering the application for stage carriage permit under Sec.
47, the private operator has an equal chance to get a permit even on inter State route if it shows that the Undertaking is either unable to provide efficient and economical service or that the private operator is better equipped to render the same.
Preference in this context would mean that other things generally appearing to be qualitatively and quantitatively equal though not with mathematical accuracy, statutory provision will tilt the balance in favour of the Undertaking.
Viewed from this perspective the provision contained in Sec.
47 (1 H) would not deny equality before law and hence would not effend article 14.
The next contention was that Sec.
47 (1 H) is violative of article 19 (1) (g) in that it denies to the petitioner the fundamental freedom to carry on trade.
There is no substance in this contention because the petitioner has not been denied his freedom to carry on trade.
The petitioner is entitled to make an application under Chapter IV for a stage carriage permit and must compete with other private operators as also the Undertaking.
It is too late in the day to contend that a preference in favour of the Undertaking would be violative of article 19 (1) (g) for the obvious reason that Undertaking like all other applicants for permit has to compete for a permit.
It may be recalled that when it came to the provisions of Chapter IV A, this Court has more often than once upheld the validity of the provisions contained in Chapter IV A and repelled the challenge of its being violative of article 19 (1) (g), even though the private operator may be wholly excluded from even applying for a permit in respect of a notified area or a notified route being part of an approved scheme.
From a slightly different angle, the challenge may be repelled in that other things 475 being equal, even apart from the statutory preference, the Undertaking whose net profits are required to be spent for the provision of amenities to the passengers using road transport services, welfare of labour employed by the Undertaking, for financing the expansion programmes of the Undertaking, and the balance to be made over to the State Government for the purpose of road development must receive in larger public interest preference for a permit compared to a private operator whose profits would go to augment his private income.
30 of the Road Transport Corporation Act, 1950 makes statutory provision for disposal of net profits of a State Transport Undertaking.
In a slightly different context, this Court in Lachman Das vs State of Punjab & Ors.
while repelling the challenge to the validity of Patiala Recovery of State Dues Act, IV of 2002 BD approved the ratio in Mannalal & Anr.
vs Collector Of Jhalawar and Ors.(2) in which it was held that the dues of the Government of a State are the dues of the entire people of the State.
This being the position, a law giving special facility for the recovery of such dues cannot, in any event, be said to offend article 14 of the Constitution. ' This very approach requires to be adopted while examining the challenge under article 19 (1) (g).
It was next contended that petitioner was an existing permit holder and therefore, under Sec.
58 it was entitled to renewal of its permits in preference to the applications for new permits made by the Undertaking.
The second proviso to Sec.
58 (2) does provide that 'other conditions being equal, an application for renewal shall be given preference over new applications for permits. ' What has surprised us the most is that while the petitioners have a serious grievance against the preference accorded to the Undertaking for a permit on the inter State route under Sec. 47 (1 H), the same petitioner is keen to protect preference in favour of the renewal of a permit against a new applicant statutorily provided in Sec. 58.
But Sec. 58 also manifests the legislative intention when it uses the expression preference with an adjectival clause 'that other conditions being equal ', an application for renewal will have a preference over the new applications.
The first submission in this behalf is that when an application is made for a renewal of a permit, it has to be considered only under and the preference therein provided excludes any consideration of an application for a permit under Sec.
Approaching the matter from this angle, it was contended that as the present petitioner has made an application for the renewal of the permit, he should have been accorded preference as mandated by the second proviso to Sec.
58(2) over the fresh application of the Undertaking and consideration of the application of the renewal of the permit under Sec.
58 excludes importing of the provisions of Sec.
This approach overlooks a specific provision enacted in sub sec.
(2) of Sec. 58 which provides as under: "58 (2) A permit may be renewed on an application made and disposed of as if it were an application for a permit . " When a statute prescribes that an application for renewal of a permit shall be made and disposed of as if it were an application for a permit, the legislature incorporated by pen and ink all those provisions which are applicable for grant of a permit upon a fresh application made in this behalf.
If an application for renewal of a permit was to be treated differently than the application for a permit made under Sec. 45 and processed under Sec.
47 and other connected provisions, it was absolutely unnecessary for the legislature to provide that an application for renewal of a permit shall be made and disposed of as if it were an application for a fresh permit.
The expression 'as if ' is used to make one applicable in respect of other.
Therefore, the expression 'as if ' used in Sec. 58 (2) would mean and imply that the application for renewal must be made in the same manner and to same extent an application for a fresh permit and must be processed as such.
This would mean that even where an existing permit holder applies for a renewal of his permit, it has to be advertised and fresh applicants can as well apply for a permit to ply vehicles on the same route for which the previous holder of permit has applied for renewal of his permit.
After considering all such applications, other conditions being equal, an existing operator who has applied for renewal will have preference.
Therefore, by necessary interpretation, Sec. 47 (1 H) would also come into play when an application is for renewal of a permit on an inter State route.
There is no conflict between Sec.
47 (1 H) and Sec.
58 (2).
It is therefore, not possible to accept the submission that while considering the application for renewal of a permit, Sec. 47 (1 H) is not attracted.
477 It appears that the State of Rajasthan had amended Sec.
58 (2) in its application to that State by engrafting a third proviso to sub sec.
(2) of Sec.
58 by Rajasthan Act 8 of 1973, which reads as under: "Provided also that other conditions being equal, an application for stage carriage permit by a State Transport Undertakings, as defined in Section 68 A, whether an application for renewal or a new application shall be given preference over all other applications for renewal.
" Addition of this proviso merely makes explicit what was implicit in sub sec.
(2) of Sec. 58.
Nothing was pointed out to us to hold that the Rajasthan State Legislature lacked competence to add the aforementioned proviso to sub sec.
(2) of Sec. 58.
Re: S.L.Ps.
9678 to 9680/82: In this group of petitions for special leave, it was contended before the High Court that as Pallavan Transport Corporation Ltd., the first respondent, did not make provision for night halt cleaners, the application for permits made by them were liable to be screened.
The High Court declined to examine this contention on the short ground that this contention was not raised before the State Transport Appellate Tribunal.
For the same reason, we could as well have declined to examine this contention.
However, it may as well be pointed out that even if the contention is to be examined on merits, there is no substance in it.
The State of Tamil Nadu has framed what are styled as Tamil Nadu Motor Vehicles Rules.
Rule 155 A provides for a marking system under different heads to rival claimants for permit to objectively assess who amongst them is the best to whom permit should be granted.
Before proceeding to assign marks under different heads, the Transport Authority has to screen applications so as to weed out those unsuitable on one or the other ground mentioned in the rule.
One such disqualification is the failure to provide for night halt cleaners.
It was urged that after the Transport Authority made the enquiry from the first respondent Corporation whether it has provision for night halt cleaners, without waiting for the clarification, the Transport Authority proceeded to dispose of the application.
It was next pointed out that Rule 155 A (3) (d) provides that 5 marks shall be awarded to the applicant falling within the proviso to cl.
(c) of Sec.
62 of the Act which means and implies a State Transport Undertaking.
The 478 grievance is that such adhoc assignment of marks and failure to weed out the application on the ground of disqualification for not providing night halt cleaners has vitiated the decision of the Transport Authority.
The validity of Rule 155 A and its various sub clauses came up for consideration of this Court in D.R. Venkachalam & Ors.
vs Dy.
Transport Commissioner & Ors.(1) This Court repelled the challenge especially to the provision for assigning 5 marks to a State Transport Undertaking observing as under: "A State enterprise, in a truly Welfare State, is charged with a social consciousness and responsibility for its citizens, an attention to serve them and a willingness to embark on public utility undertakings better to fulfil people 's demands.
The public sector enterprises are expected to be model employers and model servants planning their budgets, subjecting themselves to public audit and criticism and inquest by legislative committees and the Houses of the legislature.
Profits are their concern but, more importantly, public weal is their commitment.
Such is the philosophy of the State sector in our socialistic pattern of society.
" On the question of assignment of 5 marks to State Transport Undertaking this Court held that 'this is not an arbitrary stroke of favouritism because there are many promotional factors bearing on the interest of the travelling public which a State enterprise qua State enterprise will, but a private enterprise qua private enterprise will not, take care of.
After all, private enterprise has its primary motivation in profit '.
The Court further observed that 'the superiority in many respects of State Transport Undertakings, in the legislative judgment, has led to r. 155 A '.
The Court ultimately held that the assignment of marks under r. 155 A is geared to public interest, which is the desideratum of section 47 (1) of the Act.
Once the assignment of 5 marks to State Transport Authority Undertaking is held to be valid, the Transport Authority was perfectly justified in refusing renewal of permits to the petitioners in comparison to the State Transport Undertaking.
As for failure to explain absence of night halt cleaners, in the absence of concerte evidence, no inference can be drawn.
This was the only additional contention in this group of petitions and we find no substance in it.
479 These are all the contentions in this group of petitions and as we find no substance in any of them, all the petitions are dismissed with no order as to costs.
N. V. K. Petitions dismissed.
| In 1865, the Government of Bombay called upon the prede cessor in title of the Corporation of Bombay to remove some markets from a certain site and vacate it, and on the appli cation of the then Municipal Commissioner the Government passed a resolution approving and authorising the grant of another site to the Municipality.
The resolution stated further that "the Government do not consider that any rent should be charged to the Municipality as the markets will be, like other public buildings, for the benefit of the whole community.
" The Corporation gave up the sites on which the old markets were situated and spent a sum of over 17 lacs in erecting and maintaining markets on the new site.
In 1940 the Collector of Bombay, overruling the objection of the Corporation, assessed the new site under section 8 of the Bombay City Land Revenue Act to land revenue rising from Rs. 7,500 to Rs. 30,000 in 50 years.
The Corporation sued for a declaration that the order of assessment was ultra vires and that it was entitled to hold the land for ever without payment of any assessment.
The High Court of Bombay held applying the principle of Ramsden vs Dyson(1) that the Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case in favour of the Corporation and there was thus a limitation on the right of the Government to assess under section 8 of the said Act: Held per KANIA C.J., DAS, CHANDRASEKHARA AIYAR and BOsE JJ.
(PATANJALI SASTRI J. dissenting) that the Govern ment was not, under the circumstances of the case, entitled to assess land revenue on the land in question.
Per KANIA C.J., DAS and Bose JJ.
Though there was no effectual grant by the Government passing title in the land to the Corporation by reason of non compliance with the statutory formalities, yet, inasmuch as the Corporation had never the less taken possession of the land in terms of the Government resolution and continued in such possession openly, uninterruptedly and as of right for over 70 years, the Corporation had acquired the (1) (1866)L.R. 44 limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent, but only for the purposes of a market and for no other purposes.
The right acquired included as part of it an immunity from payment of rent which constituted a right in limitation of the Government 's right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of section 8 of the Bombay City Land Revenue Act (II of 1876) there being for the purposes of this case no distinction between rent and revenue.
Per CHANDRASEKHARA AIYAR J.
If the Resolution of 1865 can be read as meaning that the grant was of rent free land the case would come strictly within the doctrine of estoppel enunciated in section 115 of the Indian Evidence Act.
Even otherwise, if there was merely the holding out of a promise that no rent will be charged in the future the Government must be deemed to have bound themselves to fulfil it.
The right to levy assessment is a prerogative right of the Government and it is hard to conceive of a ease where it could be said to be lost by adverse possession.
A court of equity must prevent the perpetration of a legal fraud.
PATANJALI SASTRI J. (contra) The principle of Ramsden vs Dyson cannot prevail against statutory requirements regarding disposition of property or making of contracts by Government.
No question of estoppel by representation arises, as the Government made no representation of fact which it now seeks to deny.
Nor can any case of estoppel by acquiescence be rounded on the facts of the case as there was no lying by and letting another run into a trap.
No right of exemption has been established either on the basis of express or implied contract or on the basis of equitable principles of part performance or estoppel by acquiescence.
The right to levy land revenue is no part of the Govern ment 's right to property but a prerogative of the Crown and adverse possession of the land could not destroy the Crown 's prerogative to impose assessment on the land.
|
Appeal.
1644 of 1966.
Appeal by special leave from the judgment and order dated January 18, 1966 of the Allahabad High Court in Civil Revision Application 24 of 1966.
V. A. Sevid Muhammad and section P. Nayar, for the appellant.
section C. Agarwal, R. K. Garg, D. P. Singh and section Chakravarty.
for respondents Nos. 1 to 28 and 30 to 57.
727 The Judgment of the Court was delivered by Dua, J.
This appeal by special leave is directed against the order of a learned Single Judge of the Allahabad High Court affirming on revision under section 115 Civil P.C. the order of the learned Additional District Judge, Jhansi, who had allowed the respondent 's appeal from the order of the learned City Magistrate, Jhansi, made on an application presented by the respondents under section 15 of the IV of 1936.
The City Magistrate was the " 'authority" appointed under section 15 and the district court was the court of appeal under section 17 of the said Act.
The respondents through the Assistant Secretary of the National Railway Mazdoor Union Work shop Branch, Jhansi had asserted in their application under section 15 that they were workers within the meaning of section 2(1) of the (63 of 1948) and complained that they were denied wages for overtime work done by them on the erroneous ground that they were not workers within the aforesaid provision.
The learned Magistrate held that the respondents had been entrusted with purely clerical duties and they were not connected in any manner with the manufacturing process.
On this conclusion their application was dismissed.
On appeal the learned Additional District Judge disagreed with this view and came to the conclusion that the work done by the respondents was incidental to or connected with the manufacturing process.
It was observed in the order that some of the respondents were entrusted with the duty of checking the time work of each worker in the workshop, a few others were timekeepers and the remaining respondents prepared account sheets on the basis of the time sheets and did other work incidental to the running of the work shop including payment of wages to the staff of the workshop and the office.
The High Court on revision as already observed, affirmed the order of the learned Additional District Judge.
On appeal in this Court the short question we are called upon to decide is whether the respondents, who are time keepers fall within the purview of the definition of "worker" as contained in section 2 (1) of the .
The respondents have raised a preliminary objection that the appeal is incompetent on the ground that respondent No, 29 (T. A. Kolalkar) had died after the order of the High Court but his name continued to appear in the array of respondents.
As his legal representatives had not been brought on the record, the appeal against him is incompetent and since there was a joint application on behalf of all the respondents which was dealt with and decided by a common order by the learned Magistrate, the appeal against the other respondents must also be held to be incompetent.
The impugned order having become final as the 728 deceased T. A. Kolalkar, the present appeal against other respondents should, according to the argument, be held to be incompetent because the reversal of the impugned order as against them would give rise to conflicting decisions on the point.
Recently this Court disallowed.a similar objection in Indian Oxygen Ltd. vs Shri Rani Adhar Singhand others(1) and when the attention of the respondent 's learned counsel was drawn to that decision, the objection was not seriously pressed.
We now turn to the merits of the appeal.
The word "worker" is defined in section 2(1) of the to mean "a person employed directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process.
" This definition seems to us to be fairly wide because it takes within its sweep not only persons employed in any manu facturing 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 word " manufacturing process" is defined in section 2(k) of the in fairly wide language.
It means any process for : "(i) making, altering, repairing, ornamenting, finishing, packing. oiling, washing, cleaning breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water or sewage, or (iii) generating, transforming or transmitting power; or (iv) composing types for printing by letter press, lithography, photogravure or other similar process or book binding; (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels;" Now the conclusion of the learned Additional District Judge on the nature of work of the respondents, which, in our opinion, (1) Civil Appeal No. 1444 of 1966 decided on 24th Sept. 1968.
729 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 on revision, is that, the time keepers prepare the pay sheets of the workshop staff, maintain leave account, dispose of settlement cases and maintain records for statistical purposes.
Fourteen of the respondents, according to this conclusion, are timekeepers who maintain attendance of the staff, job card particulars of the various jobs under operation and time sheets of the staff working on various shops dealing with the production of Railway spare parts and repairs etc.
Four of the respondents are head time keepers entrusted with the task of supervising the work of other respondents.
The question arises if on this conclusion it can be held that as a matter of law the respondents fall outside the definition of "worker" as contemplated by section 2( 1) of the and that the High Court erred in dismissing the revision.
The appellant 's learned counsel has submitted that the expression "incidental to" or "connected with" connotes a direct connection with the manufacturing process and therefore if the duties assigned to the respondents have no such direct connection with the manufacturing process then they cannot fall within the purview of the word "worker".
In support of his submission lie has referred to some law dictionaries.
In Law Lexicon in British India by Ramanathan Iyer "incidental power" is stated to be, power that is directly and immediately appropriate to the existence of the specific power granted and not one that has a slight or remote relation to it.
The word "incidental" in the expression "incidental labour" as used in Mechanic 's Lien Statutes allowing liens for work and labour performed in the construction, repairs etc.
of a building etc.
is stated in this Law Lexicon to mean labour directly done for and connected with or actually incorporated in the building or improvement : service indirectly or remotely associated with the construction work is not covered by this expression.
Reference has next been made by the counsel to the Law Dictionary by Ballentine where also the expression "incidental power" is stated in the same terms.
In Stroud 's Judicial Dictionary the meaning of the words "incident" and "incidental" as used in various English statutes have been noticed.
We do not think they can be of much assistance to us.
The decision in Haydon vs Taylor(1) noticed in this book at first sight appeared to us to be of some) relevance, but on going through it, we do not find it to be of much help in construing the statutory provisions with which we are concerned.
Similarly the decision in Frederick Hayes Whymper vs John Jones Harney(2) seems to be of little guidance.
(1) ; (2) 730 On behalf of the respondents our attention has been drawn to a decision of this Court.
in Nagpur Electric Light and Power Co. Ltd. V. Regional Director Employees State Insurance Corporation Etc.(1).
This decision deals with the Employees State Insurance Act and on a comparison of the definition of the word "employee" as contained in section 2(9) of that Act with the definition of the word "worker" in section 2 (1) of the , it is observed That the former definition is wider than the latter.
It is further added that the benefit of the does not extend to field workers working outside the factory whereas the benefit of the Employees State Insurance Act extends inter alia to the em ployees mentioned in section 2 (9) (i) whether working inside the factory or establishment or elsewhere.
Reliance has, however, been Placed on behalf of the respondents on the observations at page 99 of the report where reference is made to the clerks entrusted with the duty of time keeping and it is observed that all these employees are employed in connection with the work of the factory.
A person doing non manual work has been held in this case to be included in the word "employee" within the meaning of section 2 (9) (i) if employed in connection with the work of the factory.
The ratio of this decision which is concerned with the construc tion of different statutory language intended to serve a different object and purpose is of no direct assistance in construing the definition of the word "worker" as used in the .
The respondents ' counsel has then submitted that the previous history of the Act throws helpful light on the legislative intendment and in this connection he has referred to the definition of the word "worker" in the XXV of 1934.
The word "Worker in section 2 (h) of that Act was defined to mean : "a person employed, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work whatsoever incidental to or connected with the manufacturing process or connected with the subject of the manufacturing ,process, but does not include any person solely employed in a clerical capacity in any room or place where no manufacturing process is being carried on.
" It is argued that the deletion of the words conveying exclu sion of persons solely employed in a clerical capacity in a place where no manufacturing process is carried on suggests that the present definition of "worker" is wide enough to take within its fold even those persons who are employed solely in clerical capacity if otherwise they fall within the definition.
The appellant counsel has, on his part, by reference to tile definition in the Act (1) 731 of 1934, argued that the deletion of the word "whatsoever" after " any other kind of work" is indicative of the legislative intention to restrict the scope of "any other kind of work" in the current Act.
The was enacted to consolidate and amend the, law regulating labour in factories.
It is probably true that 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 enactments with which we are concerned, in our view, belong to this category and, there .
fore, demand an interpretation liberal enough to achieve the legislative purpose, without doing violence to the language.
The definition of "worker" in the , therefore, does not seem to us to exclude those employees who are entrusted solely with clerical duties, if they otherwise fall within the definition of the word "worker".
Keeping in view the duties and functions of the respondents as found by the learned Additional District Judge, we are unable to find anything legally wrong with the view taken by the High Court that they fall within the definition of the, word "worker".
Deletion of the word "whatsoever" on which the appellant 's counsel has placed reliance does not seem to make much difference because that word was, in our view, redundant.
We have not been persuaded to hold that the High Court was in error in affirming the decision of the learned Additional District Judge.
In the result this appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.
| The first respondent was the owner of some buildings within the appellant Municipality.
The appellant was governed by the Madras District Municipalities Act,, 1920, till April 1, 1965, when the Mysore Municipalities Act, 1964 came into force and thereafter by the Mysore Act.
For the year 1966 67 the appellant issued notices of demand for payment of property tax under the Madras Act.
The tax was higher than under the Mysore Act.
The first respondent challenged the levy by a writ petition, and the appellant justified the levy under section 382(1) of the Mysore Act and its provisos.
The High Court quashed the demand notices.
In appeal to this Court, HELD : Under the second and third provisos to section 382(1) of the Mysore Act if a property tax has been imposed by the Madras Act, even though the rate of such tax is higher than that under the Mysore Act, the higher tax could be collected.
The provisions of Madras Act namely sections 78, 81, 82, 124 and r. 8 of 'Schedule IV of the Act, show that the municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for such official year.
Though, ordinarily, the Municipality would have to prepare a fresh assessment list every year, r. 8 of Schedule IV of the Madras Act which, by virtue of section 124 has to be read as part of Chapter VI of the Act dealing with Taxation and Finance permits the Municipal Council to continue the same assessment list for the next 4 succeeding years and to revise it once every 5 years.
But, in order to enable the Municipal Council to levy and collect a tax, under section 78 it has to pass a resolution determining to levy a tax, the rate at which such tax has to be levied as also the date from which it shall be levied.
In the present case, no such resolution was passed by the Municipal Council.
Therefore, by merely preparing the assessment registers under the Madras Act on April 1, 1964, which will have currency for a period of 5 years till March 31, 1969, it cannot be said that a tax or that a tax at a higher rate had been imposed.
No such tax having been imposed under the Madras Act, the provisos to section 382(1) of the Mysore Act do not apply and the demands for payment of the property tax were not justified.
[757 E H; 758 D H; 759 A] Municipal Corporation vs Hiralal, ; , followed.
|
Civil Appeal No. 2065 of 1971 From the Judgment and order dated 28.7.1970 of the Calcutta High Court in original order No. 125 of 1970.
B.P. Maheshwari, S.N. Aggarwal and B.M. Bagaria for the Appellants.
D.N. Mukarjee and G.S. Chatterjee for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal by certificate from the Calcutta High Court assails the affirming judgment of the Division Bench upholding the dismissal of a writ petition challenging the vires of the Calcutta City Civil Court Act (21 of 1953) and its later amendment on the ground of want of legislative competence of the State Legislature.
The City Civil Court Act ( 'Act ' for short), empowered the State Government to establish a civil court to be called the City Civil Court and under section 5 thereof the local limits and the jurisdiction of the City Civil Court was to be the city of Calcutta.
Sub section (2) of s.5 provided: "Subject to the provisions of sub sections (3) and (4), the 549 City Civil Court shall have jurisdiction and the High Court shall not have jurisdiction to try suits and proceedings of a civil nature not exceeding Rs. 10,000 in value.
" The value of Rs. 10,000 was later enhanced to Rs.50,000 and again to Rs. 1 lakh.
The appellant moved the Calcutta High Court for a declaration that the Act was ultra vires the State legislature.
It was contended that Parliament alone had the legislative competence to make law affecting the jurisdiction of the High Court.
The learned single judge as also the Division Bench negatived the appellant 's plea and have held that the Act was intra vires the Constitution.
It is appropriate to refer to the relevant legislative entries in the three lists Union, State and Concurrent as they stood in 1953 when the Act was enacted.
In the Union List entries 77, 78 and 95 are relevant.
They provide: "77.
Constitution, organisation, jurisdiction and powers of the Supreme Court (including contempt of such Court), and the fees taken therein; persons entitled to practise be fore the Supreme Court.
Constitution and organisation (including vacations) of the High Courts except provisions as to officers and servants of High Court; persons entitled to practise before the High Court.
Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this list; admiralty jurisdiction.
" Entry 3, List II at the relevant time provided: "3.
Administration of justice, constitution and organisation of all courts except the Supreme Court and the High Courts; officers and servants of the High Court; procedure in rent and revenue courts; fees taken in all courts except the Supreme Court.
" Entry 65, List II provides: "65.
Jurisdiction and powers of all courts, except the 550 Supreme Court, with respect to any of the matters in this list.
" Entry 46, List III provides: "46.
Jurisdiction and power of all courts, except the Supreme Court, with respect to any of the matters in this list.
" A Constitution Bench of this Court in State of Bombay vs Narothamdas Jethabhai & Anr., ; , examined the validity of the Bombay City Civil Court Act of 1948.
the provisions of that Act and the impugned Act are almost similar.
The challenge to the vires of the Bombay Act had to be examined keeping the provisions of Government of India Act, 1935, in view inasmuch as that was a pre Constitution legislation.
Each of the learned Judges wrote a separate judgment but all of them were agreed that the Bombay Act was a law with respect to a matter enumerated in List II and was not ultra vires.
Entry 53 of List I was to the following effect: "53.
Jurisdiction and powers of all courts, except the Federal Court, with respect to any of the matters in this list . " Entries 1 and 2 of List II were as under: "1.
The administration of justice, constitution and organisation of all courts, except the Federal Court, and fees taken therein; . 2.
Jurisdiction and powers of all courts, except the Federal Court, with respect to any of the matters in this list; procedure in Rent and Revenue Courts.
" Entry 15 of List III was to the following effect: "15.
Jurisdiction and powers of all courts, except the Federal Court, with respect to any of the matters in this List.
" The two relevant entries in List II of the Seventh Schedule of the Constitution authorised law making on subject of administration of justice, constitution and organisation of courts and jurisdiction and pow 551 ers thereof excepting in regard to the Supreme Court.
These were the two expressions with reference to which Fazal Ali, J. in Narotham Das 's case observed thus: ". the expressions "administration of justice" and "constitution and organisation of courts", which have been used therein without any qualification or limitation, are wide enough to include the power and jurisdiction of courts, for how can justice be administered if courts have no power and jurisdiction to administer it, and how can courts function without any power of jurisdiction.
Once this fact is clearly grasped, it follows that, by virtue of the words used in Entry I of List II, the Provincial Legislature can invest the courts constituted by it with power and jurisdiction to try every cause or matter that can be dealt with by a court of civil or criminal jurisdiction and that the expression ' 'administration of justice" must necessarily include the power to try suits and proceedings of a civil as well as criminal nature irrespective of who the parties to the suit or proceeding or what its subject matter may be.
This power must necessarily include the power of defining, enlarging, altering, amending and diminishing the jurisdiction of the courts and defining their jurisdiction territorially and pecuniarily. ' The other learned Judges constituting the Bench took the same view namely, "administration of justice" authorised making of law conferring on, or taking away from, courts, jurisdiction to entertain cases.
This decision of the Constitution Bench clearly negatives the claim of the appellant that the impugned Act was ultra vires the jurisdiction of the West Bengal Legislature.
Admittedly the Act received Presidential assent and was, therefore, competent to bring about a change in the prevailing position obtaining under the Letters Patent of the Calcutta High Court.
A similar challenge as in the present dispute had also been raised before the Calcutta High Court in the case of Amarendra Nath Roy Chowdhury vs Bikash Chandra Ghose & Anr., and a learned single Judge relying on the decision of the Constitution Bench referred to above had held that the Act was intra vires the State legislature.
We are of the view that the decision of the Constitution Bench is a clear and binding precedent against the appellant 's stand.
552 The appeal has no merit and is, therefore.
dismissed.
There will be no order as cost in this Court.
S.R. Appeal dismissed.
| The prosecution alleged that the accused respondents set fire to deceased 's body and his shop after sprink ling kerosene oil, that on seeing the fire P. Ws. 4, 5 and 6 rushed to the place and put off the fire from the body of the deceased who had come out of the shop ablaze, and that C.W. 1, the Assistant Sub Inspector of Police, who was on law and order duty also came to the place of occurrence simultaneously and witnessed the incident.
The deceased made a dying declaration before these witnesses stating that the said two accused had set fire to his body after pouring kerosene.
One of the accused was caught hold of by the public red handed at the shop whereas the other accused fled away.
The Officer in charge of Police Station was informed of the incident on the telephone.
The deceased was removed to the hospital where he later died.
Cases of murder and arson were thereafter registered against the accused.
P.Ws. 4 and 6 made statements under section 164 Cr.
P.C. before the Magistrate and deposed to the factum of dying declaration made by the deceased implicating the accused.
The Sessions Court after considering the evidences of P.W. 4 and C.W. 1 as well as the statements recorded under section 164 Cr.
P.C. accepted the dying declaration made by the deceased and convicted the accused under section 302 read with section 34 I.P.C. and sentenced them to 1039 rigorous imprisonment for life.
They were further convicted and sentenced under section 436 read with section 34 I.P.C.
The High Court on appeal, however, found that the prosecution had failed to prove beyond doubt the offences for which the appellants were charged, that the entire evidence in the case was circumstantial as there was no eye witness to the occurrence, that the evidence of P.W. 4 as to the dying declaration was wholly unreliable, and therefore, set aside the conviction and sentence passed against the accused.
The appeal by the State to this Court was opposed by the accusedrespondents contending that there was no evidence to show that the deceased made the dying declaration and even if such a declaration has been made the same having not been corroborated cannot be taken into consideration in convicting them.
Allowing the Appeal, the Court, ^ HELD: The accused were rightly convicted by the Sessions Court.
The prosecution has proved beyond reasonable doubt the charges framed against them.
The order of acquittal passed by the High Court is, therefore, liable to be set aside.
[1048G] The dying declaration made by the deceased while he was suffering severe pain from grievous injuries clearly implicating the two accused persons as his assailants is truthful and reliable.
[1048E] The eye witnesses, P. Ws. 4, 5 and 6 and C.W. 1 had undoubtedly arrived at the place of occurrence immediately on seeing the fire.
They had seen that the shop was ablaze and there was fire on the person of the deceased.
Then there is the specific evidence of P.W. 4 and C.W. 1 that the deceased was crying a lot in pain due to burn injuries and that he stated clearly that the accused persons poured kerosene on him and set fire to his body.
There are also the statements of P.W. 4 and 6 made under section 164 Cr.
P.C. to the effect that the deceased made a dying declaration.
P.W. 2, who held post mortem on the body of the deceased has stated in his evidence that a person sustaining burn injuries of such nature may have been conscious for some time before his death.
It cannot, therefore, be ruled out that the deceased was conscious in spite of the burn injuries on his person and he could speak and make dying declaration as testified to by P.W. 4 and C.W. 1.
[1046A D; 1045E] There is no infirmity in the action of the Sessions Court treating as a court witness.
It has assigned cogent reasons as to why P.W. 1 was examined as a court witness under the provisions of section 311 Cr.
P.C. He has been found an independent and disinterested witness, to be reliable and trustworthy.
He was an important witness of the case and his examination was for the just decision of the case.
His evidence has full corroborations with another independent and distinterested witness, P.W. 4, who was also found to be trustworthy and reliable.
The evidence of C.W. 1 cannot, therefore, be underestimated merely because he was a police officer.
[1046E G] The Court of appeal has acted illegally in discarding the evidence of P.W. 4 as well as his statement recorded under section 164 Cr.
P.C. There is no criticism regarding the evidence of this witness on behalf of the respondents as to why his testimony regarding the dying declaration shall not be taken into consideration.
[1044H; 1045A B] There is also the testimony of P.W. 4 and C.W. 1 that one of the accused was caught hold red handed at the spot and was detained by the public while the other fled away from the place of occurrence.
[1043F G] All these lead to the only conclusion that the two accused persons poured kerosene in the shop as well as on the deceased and set them on fire [1047C D] Ramnath Madho Prasad & Ors.
vs State of Madhya Pradesh, AIR 1953 SC 420; Khushal Rao vs State of Bombay, ; ; Kusa & Ors.
vs State of Orissa, ; at 562 para 9; State of Assam vs Muaizuddin Ahmed, ; at 19 para 10; and Jayaraj vs State of Tamil Nadu, AIR 1976 SC 1519 at 1522 para 16 referred to.
|
Civil Appeal No. 761 of 1988.
From the Order dated 14.7.1987 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 2139/81 D. A.K. Ganguli, Ms. Indu Malhotra and Mrs. Sushma Suri for the Appellant.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal under section 130 E(b) of the (hereafter called 'the Act ') directed against the order dated 14th of July, 1987 of the Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'CEGAT ').
By the impugned order the Tribunal allowed the appeal of the respondent.
On 7th June, 1980 the respondent M/s. Sun Industries of Calcutta had shipped 6000 bundles containing 1,00,000 sets of plywood panels for tea chests on the M.V. Mohur Gang.
The shipment of the said goods was intended for delivery at Colombo under claim for drawback on the said goods under section 75 of the Act against shipping bill.
On 20th June, 1980 on proceeding to the vogage after shipment of the goods, the ship developed engine trouble on the way and returned back and ran aground in Indian territorial waters at the port of Paradeep.
The fitting stores and cargo vessel had been salvaged into India under the supervision of Port Trust Paradeep.
The respondent thereafter applied for drawback under section 75 of the Act.
By an order dated 25th October, 1986, the Assistant Collector of Customs rejected the claim for drawback on the said goods under section 75 of the Act read with section 2(18) and rule 2(c) of the Customs and Central Excise Duties Drawback Rules, 1971.
Being dissatisfied the respondent appealed to the Appellate Collector of Customs, Calcutta.
By the order dated 12th February, 1981 the Appellate Collector rejected the appeal holding that the ship ran aground in territorial waters of India, therefore, the said goods could not be deemed to have been exported.
Dissatisfied with the said order the respondent preferred a revision under section 131 of the Act.
The revision petition was thereafter transferred to the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi.
Section 75 of the Act provides drawback on imported materials 503 used in the manufacture of goods which are exported.
The said section reads as follows: "75(1) Where it appears to the Central Government that in respect of goods of any class or description manufactured in India, being goods which have been entered for export and in respect of which an order permitting the clearance and loading thereof for exportation has been made under section 51 by the proper officer, or being goods entered for export by post under section 82 and in respect of which an order permitting clearance for exportation has been made by the proper officer a drawback should be allowed of duties of customs chargeable under this Act on any imported materials of a class or description used in the manufacture of such goods, the Central Government may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such goods in accordance with, and subject to, the rules made under sub section (2).
"(1A) Where it appears to the Central Government that the quantity of a particular material imported into India is more than the total quantity of like material that has been used in the goods manufactured in India and exported outside India, then, the Central Government may, by notification in the Official Gazette, declare that so much of the material as is contained in the goods exported shall, for the purpose of sub section (1), be deemed to be imported material.
(2) The Central Government may make rules for the purpose of carrying out the provisions of sub section (1) and, in particular, such rules may provide: (a) for the payment of drawback equal to the amount of duty actually paid on the imported materials used in the manufacture of the goods or as is specified in the rules as the average amount of duty paid on the materials of that class or description used in the manufacture of export goods of that class or description either by manufacturers generally or by any particular manufacturer; (b) for the production of such certicates, docu 504 ments and other evidence in support of each claim of drawback as may be necessary; (c) for requiring the manufacturer to give access to every part of his manufactory to any officer of customs specially authorised in this behalf by the Assistant Collector of Customs to enable such authorised officer to inspect the processes of manufacture and to verify by actual check or otherwise the statements made in support of the claim for drawback." Section 2(18) states "export" with its grammatical variations and cognate expressions, means taking out of India to a place outside India.
The Customs and Central Excise Duties Drawback Rules, 1971 framed under the Act by section 2(c) also provides as follows: "28(c) 'export ' with its grammatical variations and cognate expressions, means taking out of India to a place outside India and includes loading of provisions or store or equipment for use on board vessel or aircraft proceeding to foreign port.
" The Tribunal found that the shipment was under a C.I.F. contract and that on the loading of the goods on board the title passed to the purchaser.
The Tribunal found that the ship left Calcutta and in fact it had passed beyond the territorial waters of India and the engine trouble developed while the ship was in the High seas and, thus, by reason of the ship having passed beyond territorial waters with the goods on board, the export of the goods out of India had been completed.
It appears that subsequently the ship decided to sail into the territorial waters was of no relevance.
The Tribunal accepted that where the ship developed engine trouble, it was beyond the territorial waters.
In that view of the matter, the Tribunal was of the view that under the scheme of section 75, export having been completed, the respondent was entitled to the benefit of the drawback scheme.
On behalf of the revenue it had been contended before the Tribunal and it was reiterated before us by Shri Ganguly that proof must be given that the goods had reached 'a place outside India ' in view of section 2(18) of the Act.
It was emphasised that in order to be export under section 2(18) of the Act the goods must be taken out to a place 505 outside India.
Shri Ganguly submitted that taking out to a place outside India meant and comprehended delivery of goods to a place outside India.
Section 35 of the Act as it stood prior to the amendment in 1983 was relied on.
The Madras High Court has occasion to consider this question in the case of Lucas TVS vs Assistant Collector, [1987] Vol.
We are of the opinion that in view of the wording of the section, the goods went out of the territorial waters.
When the ship got clearance and moved out of the territorial waters the export was complete.
The title to the same goods passed to the exporters.
The facts as they emerge are that the goods reached a place in the high seas which is outside India and the title of the goods also passed to the purchasers.
It is true that the goods did not land in any place because of the defect in the ship.
But the expression "taking out to a place outside India" would also mean a place in high seas.
It is beyond the territorial waters of India.
High Seas would also mean a place outside India, if it is beyond the territorial waters of India.
Therefore, the goods were taken out to the high seas outside territorial waters of India, they will come within the ambit of expression "taking out to a place outside India".
Indubitably the goods had been taken out of India.
"Place" according to Webster Comprehensive Dictionary, International Edition page 964 means a particular point or portion of space, especially that part of space occupied by or belonging to a thing under consideration; a definite locality or location.
It also means an open space or square in a city.
Therefore, in international trade the ship beyond the territorial waters of a country would be a place outside the country, if the goods are taken to that place, that is to say, a situation outside the territorial waters of a country and the title to the goods passes to the purchasers.
Then, in our opinion, the goods are taken to a place outside India.
The expression "place" will depend for its connotation on the context in which it is used.
In clause of charter party requiring charterer to procure safe "place" for discharge of cargo, quoted word meant spot selected to drop anchor plus area over which tanker might swing on tide and charter 's duty was not fulfilled merely by selecting area containing both safe and unsafe berths.
The word "place" as used in a statute relating to searching for stolen goods in any store, shop, warehouse, or other building or place in a town, includes a steam boat or vessel moored at the wharf.
See Words and Phrases, Permanent Edition, Vo.
32A, page 128.
The word "place" is generally found in conjunction with other words which give it a colour, and is usually controlled by its context.
For example, "place for water" includes a well.
See Stroud 's Judicial Dictionary, third edition, volume 3 pages 2199 and 2208.
506 In that view of the matter in our opinion, there was export of the goods in terms of section 75 of the Act.
The fact that the ship was brought back to India because of the damages in the ship does not, in our opinion, affect the position.
In the premises, we are of the opinion that the Tribunal was right in the view it took and the respondent was entitled to the benefit of section 75 of the Act.
In the aforesaid view of the matter, we decline to admit the appeal and the same is accordingly rejected.
G.N. Appeal dismissed.
| The Education Department of the State of Haryana which was administering Adult Education Centres for providing functional literacy to illiterates in the age group of 15 35 years and Non Formal Education Centres to impart learning by Special Contact Courses to student drop outs from schools in the age group of 6 15 years, appointed the petitioners as supervisors from time to time since the years 1978 on a fixed salary and continued to treat them as temporary gov ernment servants by giving them a deliberate break in serv ice of one day after the lapse of every six months.
Contend ing that this was violative of articles 14 and 16 since they were discharging similar duties as other Supervisors such as respondents 2 6 in the Education Department who had been absorbed as regular government servants, the petitioners prayed for issue of a Writ directing the State Government to give them the same scale of pay and benefits of continuous service, etc.
by declaring them to be permanent government servants.
The State Government contended that the petitioners were not full time employees, that their mode of recruitment was different from the mode of recruitment of regular Supervi sors, that the nature of functions discharged by them was different from those of the latter and that they had been appointed on six monthly basis as the posts were sanctioned from year to year in view of the temporary nature of the schemes.
The documentary evidence placed on record established that the petitioners were functioning as full time Supervi sors and had been 715 given the status equivalent to masters of formal schools and their functions were also like the Block Education Officers of formal schools.
Allowing the petition partly, HELD: The petitioners are entitled to be paid on the same basis of same pay scale as per which respondents 2 to 6 who are discharging similar duties as Supervisors just like the petitioners, are being paid.
(i) The Respondent State has failed to establish its plea that the nature of the duties are different.
In the regular cadre, the essential qualification for appointment is B.A. B.ED.
Petitioners also possess the same qualification viz., B.A., B.ED.
In fact many of them even possess higher degrees such as M.A., M.ED.
In what manner and in what respect are the duties and functions discharged by those who are in the regular cadre different? The petitioners having discharged the initial burden of showing similarity in this regard, the burden is shifted on the Respondent State to establish that these are dissimilar in essence and in substance.
We are unable to uphold the bare assertion made in this behalf by the State of Haryana in its Counter affidavit.
[723F G] (ii) So long as the petitioners are doing work which is similar to the work performed by respondents 2 to 6, from the stand point of 'Equal work for equal pay ' doctrine, the petitioners cannot be discriminated against in regard to pay scales.
Whether equal work is put in by a candidate, select ed by a process whereat candidates from all parts of the country could have competed or whether they are elected by a process where candidates from only a cluster of a few vil lages could have competed is altogether irrelevant and immaterial, for the purpose of the applicability of 'Equal work for equal pay ' doctrine.
A typist doing similar work as another typist cannot be denied equal pay on the ground that the process of selection was different inasmuch as ultimately the work done is similar and there is no rational ground to refuse equal pay for equal work.
It is quite possible that if he had to compete with candidates from all over the country, he might or might not have been selected.
It would be easier for him to be selected when the selection is limited to a cluster of a few villages.
That however is altogether a different matter.
It is possible that he might not have been selected at all if he had to compete against 716 candidates from all over the country.
But once he is select ed, whether he is selected by one process or the other, he cannot be denied equal pay for equal work without violating the said doctrine.
[723B E] (iii) Whether appointments are for temporary periods and the Schemes are temporary in nature is irrelevant once it is shown that the nature of the duties and functions discharged and the work done is similar and the doctrine of 'Equal pay for equal work ' is attracted.
[724B C] (iv) The petitioners have been appointed in the context of a Scheme which is by the very nature of things transient and temporary.
No doubt it has been extended from year to year.
But by the very nature and scope of the scheme, once the objective of Adult Education is accomplished in the sense that the illiterate adults of the cluster of villages become literate pursuant to the education imported at the centres, the need for adult education would diminish progressively and ultimately cease.
Having regard to these facts and circumstances we do not think that the Respondent State can be accused of making appointments on a temporary six months ' basis with any ulterior or oblique motive.
In our opinion, therefore, the prayer of the petitioners to absorb them as regular employees on a permanent basis from the date of their initial appointment has no justification.
That however does not mean that the petitioners should be deprived of the legitimate benefits of being fixed in a pay scale corre sponding to the one applicable to respondents 2 to 6 by treating them as employees who have continued from the date of initial appointment by disregarding the breaks which have been given on account of the peculiar nature of the Scheme.
While, therefore, the petitioners cannot claim as a matter of right to be absorbed as permanent and regular employees from the inception, they would be justified in claiming pay on the basis of the length of service computed from the date of their appointment depending on the length of service by disregarding the breaks which have been given for a limited purpose.
Having regard to the facts and circumstances of the present case, ends of justice would be met if the petition ers are paid the difference in salaries with effect from the date of the institution of the Writ Petition viz. September 18, 1985.
But it will be convenient to direct the implemen tation with effect from September 1, 1985.725B G; 726A B] 717
|
ivil Appeal No. 297 of 1956.
Appeal by special leave from the judgment and order dated August 30, 1955, of the Labour Appellate Tribunal of India, Calcutta in Appeal No. Cal.
220 of 1954.
C. B. Aggarwala and K. P. Gupta, for the appellants.
Purshottam Tricumdas for N. C. Chatterjee, P. K. Goswami, section N. Mukheree and B. N. Ghosh, for the respondent.
February 4.
The Judgment of Das, C. J., and section K. Das J., was delivered by section K. Das, J. Sarkar, J., delivered a separate Judgment.
section K. DAS J.
This appeal by special leave raises a question of some nicety and of considerable importance in the matter of industrial relations in this country.
The question is the true scope and effect of the definition clause in section 2 (k) of the (hereinafter referred to as the Act).
The question has arisen in the following circumstances.
1158 The appellants before us are the workmen of the Dimakuchi tea estate represented by the Assam Chah Karmachari Sangha, Dibrugarh.
The respondent is the management of the Dimakuchi tea estate, district Darrang in Assam.
One Dr. K. P. Banerjee was appointed assistant medical officer of the Dimakuchi tea estate with effect from November 1, 1950.
He was appointed subject to a satisfactory medical report and on probation for three months.
It was stated in his letter of appointment: " While you are on probation or trial, your suitability for permanent employment will be considered.
If during the period of probation you are considered unsuitable for employment, you ",ill receive seven days ' notice in writing terminating your appointment.
If you are guilty of misconduct, you are liable to instant dismissal.
At the end of the period of probation, if you are considered suitable, you will be confirmed in the garden 's service." In February 1951 Dr. Banerjee was given an increment of Rs. 5 per mensem, but on April 21, Dr. Banerjee received a letter from one Mr. Booth, manager of the tea estate, in which it was stated : " It has been found necessary to terminate your services with effect from the 22nd instant.
You will of ' course receive one month 's salary in lieu of notice." As no reasons were given in the notice of termination, Dr. Banerjee wrote to the manager to find out why his services were being terminated.
To this Dr. Banerjee received a reply to this effect The reasons for 'your discharge are on the medical side, which are outside my jurisdiction, best known to Dr. Cox but a main reason is because of the deceitful manner in which you added figures to the requirements of the last medical indent after it had been signed by Dr, Cox, evidence of which is in my hands.
" The cause of Dr. Banerjee was then espoused by the Mangaldai Circle of the Assam Chah Karmachari Sangha and the secretary of that Sangha wrote to the manager of the Dimakuchi tea estate, enquiring about the reasons for Dr. Banerjee 's discharge.
The manager wrote back to say that Dr. K. P. Banerjee was discharged on the ground 1159 of incompetence in his medical duties and the chief medical officer (Dr. Cox) had found that Dr. Banerjee was incompetent and did not have sufficient " knowledge of simple everyday microscopical and laboratory work which befalls the lot of every assistant medical officer in tea garden practice.
" It was further stated that Dr. Banerjee gave a faulty, inexpert and clumsy quinine injection to one Mr. Peacock, and assistant in the Dimakuchi tea estate, which produced an extremely acute and severe illness very nearly causing a paralysis of the patient 's leg.
The reasons given by the manager for the termination of the services of Dr. K. P. Banerjee did not satisfy the appellants herein and certain conciliation proceedings, details whereof are not necessary for our purpose, were unsuccessfully held over the question of the termination of the service of Dr. Banerjee.
The matter was then referred to a Board known as the tripartite Appellate Board consisting of the Labour Commissioner, Assam, and two representatives of the Assam branch of the Indian Tea Association and the Assam Chah Karmachari Sangha respectively.
This Board recommended that Dr. Banerjee should be reinstated with effect from the date of his discharge.
After the recommendation of the Board, the respondent herein appears to have offered a sum equal to 28 month 's salary and allowances in lieu of re instatement; to this, however, the appellants did not agree.
In the meantime, Dr. K. P. Banerjee received a sum of Rs. 306 1 0 on May 22, 1951 and left the tea garden in question.
Then, on December 23, 1953, the Government of Assam published a notification in which it was stated that whereas an industrial dispute had arisen between the appellants and the respondent herein and whereas it was expedient that the dispute should be referred for adjudication to a Tribunal constituted under section 7 of the Act, the Governor of Assam was pleased to refer the dispute to Shri U. K. Gohain, Additional District and Sessions Judge, under cl.
(c) of sub section
(1) of section 10 of the Act.
The dispute which was thus referred to the Tribunal was described in these terms: 1160 " (i) Whether the management of Dimakuchi Tea Estate was justified in dismissing Dr. K. P. Banerjee, A. M. O.? (ii) If not, is he entitled to reinstatement or any other relief in lieu thereof ?" Both parties filed written statements before Mr. ohain and the respondent took the plea that Dr. K. P. Banerjee was not a "workman" within the meaning of the Act; therefore, there was no industrial dispute in the sense in which that expression was defined in the Act and the Tribunal had no jurisdiction to make an adjudication on merits.
Mr. Gohain took up as a preliminary point the question if Dr. Banerjee was a " workman " within the meaning of the Act and came to a conclusion which may be best expressed in his own words: "Dr. Banerjee being not a ' workman ', his case is not one of an " industrial dispute " under the and his case is therefore beyond the jurisdiction of this Tribunal and the Tribunal has therefore no jurisdiction to give any relief to him.
" There was then an appeal to the Labour Appellate Tribunal of India, Calcutta.
That Tribunal affirmed the finding of Mr. Gohain to the effect that Dr. Banerjee was not a workman within the meaning of the Act.
The Appellate Tribunal then said: " A dispute between the employers and employees to be an industrial dispute within the meaning of section 2 (k) of the , must be between the employers and the workmen.
There cannot be any industrial dispute between the employers and the employees who are not workmen.
" The appeal was accordingly dismissed by the Labour Appellate Tribunal.
The appellants herein then moved this Court for special leave and by an order dated March 14, 1956, special leave was granted, but was " limited to the question whether a dispute in relation to a person who is not a workman falls within the scope of the definition of industrial dispute contained in section 2 (k) of the .
" It is clear from what has been stated above that the 1161 question whether Dr. K. P. Banerjee is or is not a workman within the meaning of the Act is no longer open to the parties and we must proceed on the footing that Dr. K. P. Banerjee was not a workman within the meaning of the Act and then decide the question if the dispute in relation to the termination of his service still fell within the scope of the definition of the expression " industrial dispute " in the Act.
We proceed now to read the definition clause the interpretation of which is the only question before us.
That definition clause is in these terms: " section 2 (k) : " Industrial dispute" means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person;" It must be stated here that the expression " workman is also defined in the Act, and the definition which is relevant for our purpose is the one previous to the amendments of 1956; therefore, in reading the various sections of the Act, we shall read them as they stood prior to the amendments of 1956 and refer to the amendments only when they have a bearing on the question before us.
The definition of 'workman ' as it stood at the relevant time stated : " 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. " Now, the question is whether a dispute in relation to a person who is not a workman within the meaning of the Act still falls within the scope of the definition clause in section 2 (k).
If we analyse the definition clause it falls easily and naturally into three parts: first, there must be a dispute or difference; second, the dispute or difference must be between employers and employers, or between employers and workmen or 1162 between workmen and workmen; third, the dispute or difference must be connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person.
The first part obviously refers to the factum of a real or substantial dispute; the second part to the parties to the dispute; and the third to the subject matter of that dispute.
That subject matter may relate to any of two matters (i) employment or non employment, and (ii) terms of employment or conditions of labour, of any person.
On behalf of the appellants it is contended that the conditions referred to in the first and second parts of the definition clause are clearly fulfilled in the present case, because there is a dispute or difference over the termination of service of Dr. K. P. Banerjee and the dispute or difference is between the employer, namely, the management of the Dimakuchi tea estate on one side, and its workmen on the other, even taking the expression " workmen " in the restricted sense in which that expression is defined in the Act.
The real difficulty arises when we come to the third part of the definition clause.
Learned counsel for the appellants has submitted that the expression " of any person " occurring in the third part of the definition clause is an expression of very wide import and there are no reasons why the words "any person" should be equated with " any workman ", as the Tribunals below have done.
The argument is that inasmuch as the dispute or difference between the employer and the workmen is connected with the non employment of a person called Dr. K. P. Banerjee (even though he was not a workman), the dispute is an industrial dispute within the meaning of the definition clause.
At first sight, it does appear that there is considerable force in the argument advanced on behalf of the appellants.
It is rightly pointed out that the definition clause does not contain any words of qualification or restriction in respect of the expression " any person " occurring in the third part, and if any limita tions as to its scope are to be imposed, they must be such as can be reasonably inferred from the definition clause itself or other provisions of the Act.
1163 A little careful consideration will show, however, that the expression " any person " occuring in the third part of the definition clause cannot mean anybody and everybody in this wide world.
First of all, the subject matter of dispute must relate to (i) employment or non employment or (ii) terms of employment or conditions of labour of any person; these necessarily import a limitation in the sense that a person in respect of whom the employer employee relation never existed or can never possibly exist cannot be the subject matter of a dispute between employers and workmen.
Secondly, the definition clause must be read in the context of the subject matter and scheme of the Act, and consistently with the objects and other provision 's of the Act.
It is well settled that " the words of a statute, when there is a doubt about their meaning are to be understood in the sense in which they best harmonise with the subject of the enactment and the object which the Legislature has in view.
Their meaning is found not so much in a strictly grammatical or etymological propriety of language, nor even in its popular use, as in the subject or in the occasion on which they are used, and the object to be attained." (Maxwell, Interpretation of Statutes, 9th Edition, p. 55).
It is necessary, therefore, to take the Act as a whole and examine its salient provisions.
The long title shows that the object of the Act is " to make provision for the investigation and settlement of industrial disputes, and for certain other purposes.
" The preamble states the same object and section 2 of the Act which contains definitions states that unless there is anything repugnant in the subject or context, certain expressions will have certain meanings.
Chapter 11 refers to the authorities set up under the Act, such as, Works Committees, Conciliation officers, Boards of Conciliation, Courts of Enquiry, and Industrial Tribunals.
The primary duty of a Works Committee is to promote measures for securing and preserving amity and good relations between the employer and his workmen and, to that end, to comment upon matters of their common 148 1164 interest or concern and endeavour to compose any material difference of opinion in respect of such matters.
Conciliation Officers are charged with the duty of mediating in and promoting the settlement of industrial disputes.
A Board of Conciliation may also be constituted for the same purpose, namely, for promoting the settlement of an industrial dispute.
A Court of Enquiry may be appointed for enquiring into any matter which appears to be connected with or relevant to an industrial dispute.
Section 7 of the Act empowers the appropiate Government to constitute one or more Tribunals for the adjudication of industrial disputes in accordance with the provisions of the Act.
Chapter III contains provisions relating to the reference of industrial disputes to Boards of Conciliation, Courts of Enquiry or Industrial Tribunals, and the reference in the present case was made under section 10 of that Chapter.
Under section 10(c) of the Act where an appropriate Government is of opinion that any industrial disputes exist or are apprehended, it may, at any time, by order in writing, refer the dispute or any matter appearing to be connected with or relevant to the dispute to a Tribunal for adjudication.
Chapter IV of the Act deals with procedure, powers and duties of the authorities set up under the Act.
Where an industrial dispute has been referred to a Tribunal for adjudication, section 15 requires that the Tribunal shall hold its proceedings expeditiously and shall as soon as practicable on the conclusion thereof submit its award to the appropriate Government.
Section 17 lays down inter alia that the award of a Tribunal shall within a period of one month from the date of its receipt by the appropriate Government be published in such manner as it thinks fit.
Section 17 A lays down that the award of a Tribunal shall become enforceable on the expiry of thirty days from the date of its publication under section 17; it also contains certain other provisions which empower the appropriate Government to modify or reject the award.
Section 18 is important for our purpose, and in so far as it relates to awards it states that an award which has become enforceable ,shall be binding on 1165 (a) all parties to the industrial dispute; (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Tribunal records the opinion that they were so summoned without proper cause; (c) where a party referred to under clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates; and (d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who are employed in the establishment or part of establishment as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.
Section 19 lays down the period of operation of settlements and awards and states inter alia that an award shall, subject to the provisions of the section, remain in operation for a period of one year.
Chapter V of the Act deals with strikes and lock outs, Chapter V A with lay off and retrenchment, Chapter VI with penalties and Chapter VII with miscellaneous matters.
It is important to note that though in the definition of "lock out", section 2 (1) of the Act, and "strike", section 2 (q) of the Act, the expression any person ' has been used, in sections 22 (2) and 23 of the Act which deal with "lock out" and "strike", only the word 'workmen ' has been used.
Section 33 provides that during the pendency of any conciliation proceedings or any proceedings before a tribunal of any industrial dispute, no employer shall (a) alter to the prejudice of the workmen concerned, the conditions of their service etc.
or (b) discharge or punish by dismissal or otherwise any workman concerned in the dispute.
Section 33 A, however, uses the word 'employee ', but read with section 33, the word employee must mean there a workman.
Section 36 which deals with representation of parties has some bearing on the question before us.
It layns down that a workman who is a party to a dispute shall be entitled to be represented in any proceeding under the Act by 1166 (a) an officer of a registered trade union of which he is a member; (b) an officer of a federation of trade unions to which the trade union referred to in clause (a) is affiliated; and (c) where the worker is not a member of any trade union, by an officer of any trade union connected with, or by any other workman employed in the industry in which the worker is employed and authorised in such manner as may be prescribed.
An employer who is a party to a dispute shall be entitled to be represented in any proceedings under the Act by (a) an officer of an association of employers of which he is a member; (b) an officer of a federation of associations of employers to which the association referred to in clause (a) is affiliated; and (c) where the employer is not a member of any association of employers, by an officer of any association of employers connected with, or by any other employer engaged in, the industry in which the employer is engaged and authorised in such manner as may be prescribed.
Sub section (3) of section 36 states that no party to a dispute shall be entitled to be represented by a legal practitioner in any conciliation proceedings under the Act or in any proceedings before a court.
Sub section (4) states that in any proceeding before a Tribunal a party to a dispute may be represented by a legal practitioner with the consent of the other parties to the proceeding and with the leave of the Tribunal.
The point to note is that there is no particular provision for the representation of a party other than a workman or an employer, presumably because under the second part of the definition clause the parties to an industrial dispute can only be employers and employers, employers and workmen, or workmen and workmen.
Thus, an examination of the salient provisions of the Act shows that the principal objects of the Act are 1167 (1) the promotion of measures for securing and preserving amity and good relations between the employer and workmen; (2) an investigation and settlement of industrial disputes, between employers and employers, employers and workmen, or workmen and workmen, with a right of representation by a registered trade union or federation of trade unions or association of employers or a federation of associations of employers; (3) prevention of illegal strikes and lock outs; (4) relief to workmen in the matter of lay off and retrenchment; and (5) collective bargaining.
The Act is primarily meant for regulating the relations of employers and workmen past, present and future.
It draws a distinction between 'workmen ' as such and the managerial or supervisory staff, and confers benefit on the former only.
It is in the context of all these provisions of the Act that the definition clause in section 2(k) has to be interpreted.
It seems fairly obvious to us that if the expression "any person" is given its ordinary meaning, then the definition clause will be so wide as to become inconsistent not merely with the objects and other provisions of the Act, but also with the other parts of that very clause.
Let us see how the definition clause works if the expression " any person " occurring therein is given its ordinary meaning.
The workmen may then raise a dispute about a person with whom they have no possible community of interest; they may raise a dispute about the employment of a person in another industry or a different establishments dispute in which their own employer is not in a position to give any relief, in the matter of employment or non employment or the terms of employment or conditions of labour of such a person.
In order to make our meaning clear we may take a more obvious example.
Let us assume that for some reason or other the workmen of a particular industry raise a dispute with their employer about the employment or terms of employment of the District Magistrate or District 1168 Judge of the district in which the industry is situate.
It seems clear to us that though the District Magistrate or District Judge undoubtedly comes within the expression " any person " occurring in the definition clause, a dispute about his employment or terms of employment is not an industrial dispute; firstly, because such a dispute does not come within the scope of the Act, having regard to the definition of the words " employer" industry ", and " workman and also to other provisions of the Act; secondly, there is no possible community of interest between the District Magistrate or District Judge on the one hand and the disputants, employer and workmen, on the other.
The absurd results that will follow such an interpretation have been forcefully expressed by Chagla C. J., in his decision in Narendra Kumar Sen vs All India Industrial Disputes (Labour Appellate) Tribunal (1): " If "any person " were to be read as an expression without any limitation and qualification whatsoever, then we must not put even any territorial restriction on that expression.
In other words, it would be open to the workmen not only to raise a dispute with regard to the terms of employment of persons employed in the same industry as themselves, not only to raise a dispute with regard to the terms of employment in corresponding or similar industries, not only a dispute with regard to the terms of employment of people employed in our country, but the terms of employment of any workman or any labourer anywhere in the world The proposition has only to be stated in order to make one realise how entirely untenable it is.
Take, for example, another case where the workmen raise an objection to the salary or remuneration paid to a Manager or Chief Medical Officer by the employer but without claiming any benefit for themselves, and let us assume that a dispute or difference arises between the workmen on one side and the employer on the other over such an objection.
If such a dispute comes within the definition clause and is referred to an industrial tribunal for adjudication, the parties to the (1) ,129, 130.
1169 dispute will be the employer on one side and his workmen on the other.
The Manager or the Chief Medical Officer cannot obviously be a party to the dispute, because he is riot a 'workman 'within the meaning of the Act and there is no dispute between him and his employer.
That being the position, the award, if any, 7 given by the Tribunal will be binding, under cl.
(a) of section 18, on the parties to the dispute and not on the Manager or the Chief Medical Officer.
It is extremely doubtful if in the circumstances stated the Tribunal can summon the Manager or the Chief Medical Officer as a party to the dispute, because there is no dispute between the Manager or Chief Medical Officer on one side and his employer oil the other.
Furthermore, section 36 of the Act does not provide for representation of a person who is not a party to the dispute.
If, therefore, an award is made by the Tribunal in the case which we have taken by way of illustration, that award, though binding on the employer, will not be binding on the Manager or Chief Medical Officer.
It should be obvious that the Act could not have contem plated an eventuality of this kind, which does not promote any of the objects of the Act, but rather goes against them.
When these difficulties were pointed out to learned counsel for the appellants, he conceded that some limitations must be put on the width of the expression " any person " occurring in the definition clause.
He formulated four such limitations: (1) The dispute must be a real and substantial one in respect of which one of the parties to the dispute can give relief to the other; e. g., when the dispute is between workmen and employer, the employer must be in a position to give relief to the workmen.
This, according to learned counsel for the appellants, will exclude those cases in which the workmen ask for something which their employer is not in a position to give.
It would also exclude mere ideological differences or controversies.
(2) The industrial dispute if raised by workmen must relate to the particular establishment or part of establishment in which the workmen are employed so 1170 that the definition clause may be consistent with section 18 of the Act.
(3) The dispute must relate to the employment, non employment or the terms of employment or with the conditions of labour of any person, but such person must be an employee discharged or in service or a candidate for employment.
According to learned counsel for the appellants, the person about whom the dispute has arisen need not be a workman within the meaning of the Act, but he must answer to the description of an employee, discharged or in service, or a candidate for employment.
(4) The workmen raising the dispute must have a nexus with the dispute, either because they are personally interested or because they have taken up the cause of another person in the general interest of labour welfare.
The further argument of learned counsel for the appellants is that even imposing the aforesaid four limitations on the width of the expression " any person " occurring in the definition clause, the dispute in the present case is an industrial dispute within the meaning of section 2 (k) of the Act, because (1) the employer could give relief in the matter of the termination of service of Dr. K. P. Banerjee, (2) Dr. K. P. Banerjee belonged to the same establishment, namely, the same tea garden, (3) the dispute related to a discharged employee (though not a workman) and (4) the workmen raising the dispute were vitally interested in it by reason of the fact that Dr. Banerjee (it is stated) belonged to their trade union and the dismissal of an employee without the formulation of a charge and without giving him an opportunity to meet any charge was a matter of general interest to all workmen in the same establishment.
We now propose to examine the question whether the limitations formulated by learned counsel for the appellants are the only true limitations to be imposed with regard to the definition clause.
In doing so we shall also consider what is the true scope and effect of the definition clause and what are the correct tests to be applied with regard to it.
We think that there is no real difficulty with regard to the first two limitations.
1171 They are, we think, implicit in the definition clause itself.
It is obvious that a dispute between employers and employers, employers and workmen, or between workmen and workmen must be a real dispute capable of settlement or adjudication by directing one of the parties to the dispute to give ' necessary relief to the other.
It is also obvious that the parties to the dispute must be directly or substan tially interested therein, so that if workmen raise a dispute, it must relate to the establishment or part of establishment in which they are employed.
With regard to limitation (3), while we agree that the expression I any person ' cannot be completely equated with 'any workman ' as defined in the Act, we think that the limitation formulated by learned counsel for the appellants is much too widely stated and is not quite correct.
We recognise that if the expression ' any person ' means 'any workman ' within the meaning of the Act, then it is difficult to understand why the Legislature instead of using the expression 'any workman ' used the much wider expression 'any person ' in the third part of the definition clause.
The very circumstance that in the second part of the definition clause the expression used is " between employers and workmen or between workmen and workmen " while in the third part the expression used is "any person" indicates that the expression "any person cannot be completely equated with 'any workman '.
The reason for the use of the expression " any person" in the definition clause is, however, not far to seek.
The word 'workman ' as defined in the Act (before the amendments of 1956) included, for the purposes of any proceedings under the Act in relation to an industrial dispute, a. workman discharged during the dispute.
This definition corresponded to section 2.(j) of the old Trade Disputes Act, 1929 except that the words ,,including an apprentice " were inserted and the words " industrial dispute " were substituted for the words " trade dispute ".
It is worthy of note that in the Trade Disputes Act, 1929, the word 'workman ' meant any person employed in any trade or industry to do I49 1172 any skilled or unskilled manual or clerical work for hire or reward.
It is clear enough that prior to 1956 when the definition of ' workman ' in the Act was further widened to include a person dismissed, discharged or retrenched in connection with, or as a consequence of the dispute or whose dismissal, discharge or retrenchment led to the dispute, a workman who had been discharged earlier and not during the dispute was not a workman within the meaning of the Act.
If the expression " any person " in the third part of the definition clause were to be strictly equated with 'any workman ', then there could be no industrial dispute, prior to 1956, with regard to a workman who had been discharged earlier than the dispute, even though the discharge itself had led to the dispute.
That seems to be the reason why the Legislature used the expression 'any person ' in the third part of the definition clause so as to put it beyond any doubt that the non employment of such a dismissed workman was also within the ambit of an industrial dispute.
There was a wide gap between a 'workman ' and an 'employee ' under the definition of the word 'workman ' in section 2 (s) as it stood prior to 1956; all existing workmen were no doubt employees; but all employees were not workmen.
The supervisory staff did not come within the definition.
The gap has been reduced to some extent by the amendments of 1956; part of the supervisory staff (who draw wages not exceeding five hundred rupees per mensem) and those who were otherwise workmen but were discharged or dismissed earlier have also come within the definition.
If and when the gap is completely bridged, I workmen will be synonymous with 'employees ', whether engaged in any skilled or unskilled manual, supervisory, technical or clerical work, etc.
But till the gap is completely obliterated, there is a distinction between workmen and non workmen and that distinction has an important bearing on the question before us.
Limitation No. (3) as formulated by learned counsel for the appellants ignores the distinction altogether and equates 'any person ' with any employee ' past, 1173 present or future: this we do not think is quite correct or consistent with the other provisions of the Act.
The Act avowedly gives a restricted meaning to the word I workman ' and almost all the provisions of the Act are intended to confer benefits on that class of persons who generally answer to the description of workmen.
The expression 'any person ' in the definition clause means, in our opinion, a person in whose employment, or non employment, or terms of employment, or conditions of labour the workmen as a class have a direct or substantial interest with whom they have, under the scheme of the Act, a community of interest.
Our reason for so holding is not merely that the Act makes a distinction between workmen and non workmen, but because a dispute to be a real dispute must be one in which the parties to the dispute have a direct or substantial interest.
Can it be said that workmen as a class are directly or substantially interested in the employment, non employment, terms of employment or conditions of lab our of persons who belong to the supervisory staff and are, under the provisions of the Act, non workmen on whom the Act has conferred no benefit, who cannot by themselves be parties to an industrial dispute and for whose representation the Act makes no particular provision ? We venture to think that the answer must be in the negative.
Limitation (4) formulated by learned counsel for the appellants is also too generally stated.
We recognise that solidarity of labour or general interest of tabour welfare may furnish, in some cases, the necessary nexus of direct or substantial interest in a dispute between employers and workmen, but the principle of solidarity of the labour movement or general welfare of labour must be based on or correlated to the principle of community of interest; the workmen can raise a dispute in respect of those persons only in the employment or non employment or the terms of employment or the conditions or labour of whom they have a direct or substantial interest.
We think that Chagla C. J., correctly put the crucial test when he said in Narendra Kumar Sen vs All India Industrial Disputes (Labour Appellate) Tribunal (1).
(1) ,129, 130.
1174 " Therefore, when section 2 (k) speaks of the employment or non employment or the terms of employment or the conditions of labour of any person, it can only mean the employment or non employment or the terms of employment or the conditions of labour of only .those persons in the employment or non employment or the terms of employment or with the conditions of labour of whom the workmen themselves are directly and substantially interested.
If the workmen have no direct or substantial interest in the employment or non employment of a person or in his terms of employment or his conditions of labour, then an industrial dispute cannot arise with regard to such person.
" We reach the same conclusion by approaching the question from a somewhat different standpoint.
Ordinarily, it is only the aggrieved party who can raise a dispute; but an industrial dispute ' is put on a collective basis, because it is now settled that an individual dispute, not espoused by others of the class to which the aggrieved party may belong, is not an industrial dispute within the meaning of a. 2 (k).
As Isaacs J. observed in the Australian case of George Hudson Ltd. vs Australian Timber Workers ' Union(1): "The very nature of, an I industrial dispute ' as distinguished from an individual dispute, is to obtain new industrial conditions, not merely for the specific individuals then working from the specific individuals then employing them, and not for the moment only, but for the class of employees from the class of em ployers. . . .
It is a battle by the claimants, not for themselves alone.
" Section 18 of the Act supports the aforesaid observations, in so far as it makes the award binding not merely on the parties to the dispute, but where the party is an employer, on his heirs, successors or assigns and where the party is composed of workmen, on all persons employed in the establishment and all persons who subsequently become employed therein.
If, therefore, the dispute is a collective dispute, the party raising the dispute must have either a direct interest in the subject matter of dispute or a substantial interest therein in the sense that the class to which the (I) ,441.
1175 aggrieved party belongs is substantially affected there.
It is the community of interest of the class as a whole class of employers or class of workmen which furnishes the real nexus between the dispute and the parties to the dispute.
We see no insuperable difficulty in the practical application of this test.
In a case where the party to the dispute is composed of aggrieved workmen themselves and the subject matter of dispute relates to them or any of them, they clearly have a direct interest in the dispute.
Where, however, the party to the dispute also composed of workmen, espouse the cause of another person whose employment, or non employment, etc., may prejudicially affect their interest, the workmen have a substantial interest in the subject matter of dispute.
In both such bases, the dispute is an industrial dispute.
Learned counsel for the appellants has also drawn our attention to the definition of a ' trade dispute ' in the Indian .
That definition is also in the same terms, but with this vital difference that the word ' workmen ' means there "all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises.
" It is obvious that the very wide definition of the word 'workmen ' determines the ambit of the definition, of a 'trade dispute ' in the .
The provisions of that Act have different objects in view, one of which is the expenditure of the funds of a registered Trade Union I on the conduct of trade disputes on behalf of the Trade Union or any member thereof.
We do not think that that definition for the purposes of an Act like the is of any assistance in construing the definition in the Act with which we are now concerned, even though the words employed are the same; for one thing, the meaning of the word `workman ' completely changes the ambit of the definition clause, and for another, the objects, scheme and purpose of the two Acts are not the same.
For the same reasons, we do not think that with regard to the precise problem before us much assistance can be obtained by a detailed examination of English, 1176 American or Australian decisions given with regard to the terms of the statutes in force in those countries.
Each Act must be interpreted on its own terms particularly when the definition of a 'workman ' varies from statute to statute and, with changing conditions, from time to time, and country to country.
The interpretation of section 2 (k) of the Act has been the subject of consideration in various Indian decisions from different points of view.
Two recent decisions of this Court considered the question if an individual dispute of a workman was within the definition of an industrial dispute.
The decision in C. P. Transport Services Ltd. vs Raghunath (1), related to the C. P. and Berar Industrial Disputes Settlement Act (No. XXIII of 1947) and the decision in Newspapers Ltd. vs State Industrial Tribunal, U. P.(2), to the U. P. Industrial Disputes Act (No. XXVIII of 1947).
Both these decisions considered section 2 (k) of the Act, but with reference to a different problem.
The definition clause in section 2 (k) was considered at some length by the Federal Court in Western India Automobile Association vs The Industrial Tribunal, Bombay (3), and learned counsel for the appellants has placed great reliance on some of the obervations made therein.
The question which fell for decision in that case was whether " industrial dispute" included within its ambit a dispute with regard to reinstatement of certain dismissed workmen.
It was held that reinstatement was connected with non employment and, therefore, fell within the words of the definition.
It appears that the finding of the Court from which the appeal was preferred to the Federal Court was that the workmen whose reinstatement was in question were discharged during the dispute and were, therefore, workmen within the meaning of the Act, Therefore, the problem of interpretation with which we are faced in this case was not the problem before their Lordships of the Federal Court.
The observations on which learned counsel for the appellants has relied are these: " The question for determination is whether the (1) ; (2) A. 1.
R. (1957) section C. 532.
(3) [1949] F. C. R 321, 329 330 346 347.
1177 definition of the expression "industrial dispute" given in the Act includes within its ambit, a dispute in regard to reinstatement of dismissed employees. .
The words of the definition may be paraphrased thus: " any dispute which has connection with the workmen being in, or out of service or employment ".
" Non employment " is the negative of " employment" and would mean that disputes of workmen out of service with their employers are within the ambit of the definition.
It is the positive or the negative act of an employer that leads to employment or to non employment.
It may relate to an existing employment or to a contemplated employment, or it may relate to an existing fact of non employment or a contemplated non employment.
The following four illustrations elucidate this point: (1) An employer has already employed a person and a trade union says " Please do not employ him ".
Such a dispute is a dispute as to employment or in connection with employment.
(2) An employer gives notice to a union saying that he wishes to employ two particular persons.
The union says " no ".
This is a dispute as to employment.
It arises out of the desire of the employer to employ certain persons.
(3) An employer may dismiss a man, or decline to employ him.
This matter raises a dispute as to non employment.
(4) An employer contemplates turning out a number of people who are already in his employment.
It is a dispute as to contemplated non employment.
" Employment or non employment " constitutes the subject matter of one class of industrial disputes, the other two classes of disputes being those connected with the terms of employment and the conditions of labour.
The failure to employ or the refusal to employ are actions on the part of the employer which would be covered by the terms " employment or non employment ".
Re instatement is connected with non employment and is therefore within the words of the definition." " It was contended that the re instatment of the discharged workmen was not an industrial dispute 1178 because if the union represented the discharged employees, they were not workmen within the definition of that word in the .
This argument is unsound.
We see no difficulty in the respondents (union) taking up the cause of the discharged workmen and the dispute being still an industrial dispute between the employer and the workmen.
The non employment " of any person " can amount to an industrial dispute between the employer and the workmen, falling under the definition of that word in the .
It was argued that if ' the respondents represented the undischarged employees, there was no dispute between them and the employer.
That again is fallacious, because under the definition of industrial dispute, it is not necessary that the parties to the proceedings can be the discharged workmen only.
The last words in the definition of industrial dispute, viz., " any person " are a complete answer to this argument of the appellants.
" It is true that two of the illustrations Nos.
(2) and (3) given in the aforesaid observations seem to indicate that there can be an industrial dispute relating to persons who are not strictly speaking "workmen"; but whether those persons would answer to such description or what community of interest the workmen had with them is not stated and in any view we do not think that illustrations given to elucidate a different problem can be taken as determinative of a problem which was not before the court in that case.
A reference was also made to the decision of this Court in D. N. Banerji vs P. R. Mukherjee (1).
The question there was whether the expression " industrial dispute " included disputes between municipalities and their employees in branches of work analogous to the carrying on of a trade or business.
More in point is the decision of the Full Bench of the Labour Appellate Tribunal in a number of appeals reported in 1952 Labour Appeal Cases, p. 198, where the question now before us, arose directly for decision.
The same question arose for decision before the All India.
Industrial Tribunal (Bank Disputes) and the majority of members (Messrs. K. C. Sen and (1) ; 1179 J. N. Majumdar) expressed the view that a dispute between employers and workmen might relate to employment or non employment or the terms of employment or conditions of labour of persons who were not workmen, and the words any person ' used in the definition clause were elastic enough to include an officer, that is, a member of the supervisory staff.
The majority view will be found in Chap.
X of the Report.
The minority view was expressed by Mr. N. Chandra sekhara Aiyar, who said: " It is fairly clear to my mind that "any person ') in the Act means any one whe belongs to the employer class or the workmen class and the cases in whose favour or against whom can be said to be adequately presented by the group or category of persons to which he belongs.
As stated already it should be remembered that the cases relied upon for the view that 'any person ' may mean others also besides the workmen were all cases relating to workmen.
They were discharged or dismissed workmen and when their cases were taken up by the Tribunal the point was raised that they had ceased to be workmen and were therefore outside the scope of the Act.
This argument was repelled.
In my opinion, there is no justification for treating such cases as authorities for the wider proposition that a valid industrial dispute can be raised by workmen about the employment or non employment of someone else who does not belong and never belonged to their class or category.
My view therefore is that the Act does not apply to cases of non workmen, or officers, if they may be so called.
" Both these views as also other decisions of High Courts and awards of Industrial Tribunals, were considered by the Full Bench of the Labour Appellate Tribunal and the Chairman of the Tribunal (Mr. J. N. Majamdar) acknowledged that his earlier view was not correct and expressed his opinion, concurred in by all the other members of the Tribunal, at p. 210 150 1180 " I am, therefore, of opinion that the expression 'any person ' has to be interpreted in terms of 'workmen. ' The words 'any person ' cannot have, in my opinion, their widest amplitude, as that would create incongruity and repugnancy in the provisions of the Act.
They are to be interpreted in a manner that persons, who would come within that expression, can at some stage or other, answer the description of workman as defined in the Act.
" It is necessary to state here that earlier a contrary view had been taken by the Calcutta High Court in Birla Brothers, Ltd. vs Modak (1), by Banerjee J. in The Dalhousie Jute Co. Ltd. vs section N. Modak (2), and by the Industrial Tribunal, Madras, in East India Industries (Madras) Ltd. vs Their Workmen (3).
It is necessary to emphasise here two considerations which have generally weighed with some of the learned Judges in support of the view expressed by them: these two Considerations are that (1) normally workmen will not raise a dispute in which they are not directly or substantially interested and (2) Government will not make a reference unless the dispute is a real or substantial one.
We think that these two considerations instead of leading to a strictly grammatical or etymological interpretation of the expression " any person " occurring in the definition clause should lead, on the contrary, to an interpretation which, to use the words of Maxwell, is to be found in the subject or in the occasion on which the words are used and the object to be attained by the statute.
We are aware that anybody may be a potential workman and the concept of "a potential workman" introduces an element of indefiniteness and uncertainty.
We also agree that the expression " any person " is not co extensive with any workman, potential or otherwise.
We think, however, that the crucial test is one of community of interest and the person regarding whom the dispute is raised must be one in whose employment, non employment, terms of employment or conditions of labour (as the case may be) the parties (1) I.L.R. (2) (3) 1181 to the dispute have a direct or substantial interest.
Whether such direct or substantial interest has been established in a particular case will depend on its facts and circumstances.
Two other later decisions have also been brought to our notice : Prahlad Rai Oil Mills vs State of Uttar Pradesh (1) in which Bhargava J. expressed the view that the expression 'any person ' in the definition clause did not mean a workman and the decision in Narendra Kumar Sen vs All India Industrial Disputes (Labour Appellate) Tribunal (2), being the decision of Chagla C. J. and Shah J. from which we have already quoted some extracts.
An examination of the decisions referred to above undoubtedly discloses a divergence of opinion : two views have been expressed, one based on the ordinary meaning of the expression 'any person ' and the other based on the context, with reference to the subject of the enactment and the objects which the legislature has in view.
For the reasons which we have already given, we think that the latter view is correct.
To summarise.
Having regard to the scheme and objects of the Act, and its other provisions, the expression 'any person ' in section 2 (k) of the Act must be read subject to such limitations and qualifications as arise from the context; the two crucial limitations are (1) the dispute must be a real dispute between the parties to the dispute (as indicated in the first two parts of the definition clause) so as to be capable of settlement or adjudication by one party to the dispute giving necessary relief to the other, and (2) the person regarding whom the dispute is raised must be One in whose employment, non employment, terms of employment, or conditions of labour (as the case may be) the parties to the dipute have a direct or substantial interest.
In the absence of such interest the dispute cannot be said to be a real dispute between the parties.
Where the workmen raise a dispute as against their employer, the person regarding whose employment, non employment, terms of employment or conditions of labour the dispute is raised need not be, strictly (1) A.I.R. (1955) NUC (Allahabad) 2664.
(2) (1953) 55 Bo .
L.R. 125.
1182 speaking, a 'workman ' within the meaning of the Act but must be one in whose employment, non employment, terms of employment or conditions of labour the workmen as a class have a direct or substantial interest.
In the case before us, Dr. K.P. Banerjee was not a workman '.
He belonged to the medical or technical staff a different category altogether from workmen.
The appellants had no direct, nor substantial interest in his employment or non employment, and even assuming that he was a member of the same Trade Union, it cannot be said, on the tests laid down by us, that the dispute regarding his termination of service was an industrial dispute within the meaning of section 2(k) of the Act.
The result, therefore, is that the appeal fails and is dismissed.
In the circumstances of this case there will be no order for costs.
SARKAR J.
On November 1, 1950, Dr. K. P. Banerjee was appointed the Assistant Medical Officer of the Dimakuchi Tea Estate, whose management is the respondent in this appeal.
On April 21, 1951, the respondent terminated Dr. Banerjee 's service with effect from the next day and he was offered one month 's salary in lieu of notice.
He accepted this salary and later left the Tea Estate.
The workmen of the Tea Estate raised a dispute concerning the dismissal of Dr. Banerjee.
On December 23, 1953, the Government of Assam made an order of reference for adjudication of that dispute by the Industrial Tribunal under the provisions of section 10 of the .
The order of reference was in the following terms: Whereas an industrial dispute has arisen in the matters specified in the schedule below between: (1) The workmen of Dimakuchi Tea Estate, P. O. Dimakuchi, District Darrang, Assam represented by the Secretary, Assam Chah Karmachari Sangha, I.N.T.U.C. Office, P.O. Dibrugarh, Assam and, (2) The management of Dimakuchi Tea Estate, P.O. Dimakuchi, District Darrang, Assam whose agents are Messrs. Williamson Magor and Company Limited, Calcutta.
1183 And whereas it is considered expedient by the Govt.
of Assam to refer the said dispute for adjudication to a Tribunal constituted under section 7 of the (Act XIV of 1947).
Now, therefore, in exercise of the powers conferred by clause (e) of sub section (1) of section 10, as amended, of the (XIV of 1947), the Governor of Assam is pleased to refer the said dispute to Sri Uma Kanta Gohain, Additional District and Sessions Judge (retired) who has been appointed to constitute a Tribunal under the provisions of the said Act.
SCHEDULE.
(i) Whether the management of Dimakuchi Tea Estate was justified in dismissing Dr. K. P. Banerjee, A. M. 0. ? (ii)If not, is he entitled to reinstatement or any other relief in lieu thereof ? The Tribunal held that Dr. Banerjee was not a workman as defined in the Act and, therefore, the dispute referred was not an industrial dispute and consequently it had no jurisdiction to adjudicate upon such a dispute.
The workmen preferred an appeal to the Labour Appellate Tribunal.
That Tribunal dismissed the appeal holding that Dr. Banerjee was not a workman within the definition of that term in the Act and as the dispute was connected with his employment or non employment, it was not an industrial dispute, and was therefore beyond the jurisdiction of the Industrial Tribunal.
From that decision the present appeal by the workmen of the Tea Estate arises with leave granted by this Court under article 136 of the Constitution.
In granting the leave this Court limited it to the question whether a dispute in relation to a person who is not a workman, falls within the scope of the definition of " Industrial Dispute " contained in section 2(k) of the Act.
That, therefore, is the only question before us.
Section 2(k) is in these terms: " Industrial dispute means any dispute or difference between employers and employers or 1184 between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person.
" The dispute that was raised was between an employer, the respondent in this appeal and its workmen, the appellants before us and concerned the employment or non employment of Dr. Banerjee, a person employed by the same employer but who was not a workman.
The question that we have to decide has arisen because of the use of the words " any person " in the definition.
These words are quite general and very wide and according to their ordinary meaning include a person who is not a workman.
If this meaning is given to these words, then the dispute that arose concerning Dr. Banerjee 's dismissal would be an industrial dispute because the dispute would then be clearly within section 2(k).
This indeed is not disputed.
Unless there are reasons to the contrary these words have to be given their ordinary meaning.
In Birla Brothers Ltd. vs Modak (1) and in Western India Automobile Association vs Industrial Tribunal of Bombay (2) it was held that the words " any person " were not meant to refer only to workmen as defined in the Act but were wide and general and would include others who were not such workmen.
In The Dalhousie Jute Co. Ltd. vs section N. Modak (3), Banerjee J. said, " Any person means whatever individual is chosen.
I see no reason to restrict the meaning of the word 'Person '".
The same view was expressed in East India Industries (Madras) Ltd. vs Their Workmen (4), which was the decision of an Industrial Tribunal.
There is then some support for the view that the words I any person ' should have no restriction put upon them.
It is pointed out on behalf of the respondent that it is not its contention that the words 'any person ' should be understood as referring only to a " workman " as defined in the Act but that those words, should include all persons of the workman class and (1) I.L.R. (2) (3) (4) 1185 so they would include discharged workmen.
It is then stated that the first two of the cases mentioned above were concerned with a dispute regarding discharged workmen and did not therefore decide that the words (I any person ' included all.
It is no doubt true that these cases were concerned with a dispute regarding discharged workmen but I do not understand the decision to have proceeded on that basis.
Sen J. said in Birla Brothers case (1) (p. 213) that, " It cannot be argued that workmen dismissed prior to the Act are not 'persons" '.
And in the Western India Automobile Association case (2), it was said (p. 346 7), " It was contended that the reinstatement of the discharged workmen was not an industrial dispute because if the union represented the discharged employees, they were not workmen within the definition of that word in the .
This argument is unsound.
We see no difficulty in the respondents (union) taking up the cause of the discharged workmen and the dispute being still an industrial dispute between the employer and the workmen.
The non employment " of any person " can amount to an industrial dispute between the employer and the workmen, falling under the definition of that word in the .
It was argued that if the respondents represented the undischarged employees, there was no dispute between them and the employer.
That again is fallacious, because under the definition of industrial dispute, it is not necessary that the parties to the proceedings can be the discharged workmen only.
The last words in the definition of industrial dispute, viz., " any person ", are a complete answer to this argument of the appellants.
" The last two of the cases mentioned earlier were not however concerned with any dispute regarding discharged workmen.
In The Dalhousie Jute Co. case (3) the dispute was with regard to the employment of persons who sought employment as workmen and in the East India Industries (Madras) Ltd. case (4) the (1) I.L.R. (2) (3) [1951] 1 L.L.J. I45.
(4)[1952] 1186 dispute concerned the dismissal of a member of the supervisory staff, that is, another employee of the same employer who was not a workman.
It is however said that in none of these cases the arguments that are now advanced appear to have been advanced and they were not considered in the judgments.
This comment is justified.
I shall therefore lay these cases aside in deciding the question that has arisen.
Are there then good reasons for not giving to the words " any persons " their plain meaning ? Several have been advanced and I shall examine them a little later.
I wish now to discuss how it is proposed to restrict the meaning of these words.
I have already stated that the contention is that the words are not confined to a workman but refer only to a person of the workman class.
This, I confess, I do not follow.
The word " workman " is a term defined in the Act.
Outside the definition it, is impossible to say who is a workman and who is not.
That being so, the words " workman class " would be meaningless unless they meant all persons who were workmen as defined in the Act.
So read the words " any person " would mean only a workman.
But it is conceded that this is not so.
And, of course, it cannot be so, for, if that was intended, there was no reason for the legislature not to have used the words " any workman " instead of the words it any person ".
Again if this was the intention, then a dispute concerning the dismissal of a workman would not be an industrial dispute for a dismissed workman was not a workman within the definition of that word in the Act as it stood in 1953, that being the Act with which we are concerned.
Such a result is against all conceptions of industrial disputes laws.
It is indeed not contended that a dispute concerning the dismissal of a workman would not be an industrial dispute.
It therefore seems to me that the words " any personal cannot be said to refer only to persons of the workman class.
If they cannot be restricted as being understood to refer only to a person of the workman class, it is not suggested that they can be restricted in any other manner.
It is then said that the words refer to "workmen 1187 dismissed as well as in employment as also those, who in future, become "workmen".
Again I am in difficulty.
So understood the words would not include a person who seeks employment as a workman because he has not become a workman till he is employed.
That being so, it would have to be said that a dispute raised by workmen in employment when new workmen are to be appointed, that only those of the candidates as agree to join their union should be appointed and others should not be, would not be an industrial dispute.
That again seems to me to be against all con ceptions of industrial dispute laws.
Furthermore, I am wholly unable to appreciate what is meant by a dispute concerning a person, who is not at the time the dispute arises, a workman but in future becomes one.
When is such a person to become a workman ? I find no answer.
Again, is it to be said that whether a dispute is an industrial dispute or not may have to depend on future circumstances for there is no knowing whether the person concerning whom the dispute arises will later become a workman or not ? If he becomes one, there can be no dispute concerning him referable to a point of time before he became one, and, if he does not, he cannot be one who in future becomes a workman.
It is said that the words "any person " were used instead of the word workman because it was intended to include within them persons who had been dismissed before the dispute arose and who were not within the definition of workmen in the Act as it stood in 1953.
If that was the reason, why could not the legislature use the words " workmen and dismissed workmen ?" There was nothing to prevent that being done.
In fact the definition of "workman" has been amended in 1956 to include workmen discharged in consequence of an industrial dispute or whose discharge has led to that dispute.
So, as the definition now stands, it includes persons dismissed before the dispute arose.
Yet the words " any person " have been left untouch ed in section 2 (k) and not been replaced by the word workman.
This, to my mind, shows that it was not the 1151 1188 intention to confine the words " any person to workmen in employment or discharged.
But it is said that the words " any person were left in the Act because it was intended to include not only workmen in employment and dismissed workmen bat also persons who in future become workmen.
It is said that, that this is so appears from section 18 of the Act.
I shall presently consider this section but I desire to observe now that this argument much weakens the argument noticed in the preceding paragraph for if the words " any person " were used so that persons who in future become workmen might be included in them, they could not have been used to avoid such dismissed workmen as were not workmen as defined in the Act being excluded from them.
It seems to me that if it is argued that the words " any person " were used so that persons who in future become workmen may be included in them,; it cannot be argued that those words were used instead of the word "workman" because it was intended to include within them certain dismissed workmen who were not workmen within the definition of that term in the Act as it stood in 1953.
Coming now to section 18 it is in these terms: A settlement arrived at in the course of conciliation proceedings under this Act or an award which has become enforceable shall be binding on (a) all parties to the industrial dispute; (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Board or Tribunal, as the case may be, records the opinion that they were so summoned without proper cause; (c) where a party referred to in clause (a) or clause (b)is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates; (d) where a party referred to in clause (a) or clause (b)is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.
1189 1 entirely fail to see how that section assists at all in finding out who were meant to be included in the words any person ".
Is it to be said that section 18(d) by, making the award binding on those who become in future employed in the establishment as workmen, indicates that such persons are treated in the same way as workmen in actual employment and therefore it must have been intended to include them within the words " any person " along with present and dismissed workmen.
I am wholly unable to agree.
The object of section 18(d) is quite clear.
The Act is intended to compose a dispute between an employer and his workmen by a settlement or an award brought about by the machinery provided in it and the period during which an award or a settlement is to remain in force is also provided.
The idea behind section 18 is that whoever takes up appointment as a workman in the establishment to which the dispute relates during the time when the award or settlement is in force, would be bound by it.
If it were not so, the award or settlement would have little effect in settling a dispute, for any newly recruited workmen could again raise the dispute.
Any one having any experience of industries knows that workmen are largely a shifting population and that the need for replacement of the workmen leaving and for addition to the strength of the workmen employed, is not infrequent.
To meet the exigency arising from this need and to make the award or settlement effective it was necessary to enact section 18(d).
Its object was not to place workmen in employment and workmen recruited in future in the same position for all purposes of the Act.
On the same reasoning, in view of section 18(a), it has to be said that it was the intention of the Act to give the heirs, successors or assignees of an employer the same position for all purposes of the Act as that of the employer.
But that would be absurd.
Section 18(d) deals with a person who in future becomes employed.
The section does not say employed as a workman but I will assume that that is what is meant.
I do not understand what is meant by saying that such a person is within the words " any person " in section 2(k).
What is the point of time that has to be considered ? 1190 If it is after he has become employed, then he is a workman and admittedly within the words "any person ".
Is it to be said that before such employment also he is within the meaning of those words.
But it is difficult to follow this.
It is conceivable that any person whatsoever may in future be employed as a workman for there is nothing in the quality of a human being that marks him out as a workman.
In this way the words " any person " would include all.
That, however, is not meant, for it will defeat the very argument based on section 18(d).
Is it to be said then, only such future workmen are meant as apply for jobs as such ? But the section makes no reference to such people at all and cannot therefore be of any assistance in showing that it was intended that such applicants would be included within the words " any person ".
I am therefore wholly unable to accept the argument that section 18(d)shows that future workmen were intended to be included within the words "any person".
I wish also to say this.
Assume that section 18(d) shows that it was intended to include within the words ,any person " one who in future becomes a workman.
But where is the reason for saying that the words do not also include others ? Section 18 provides none.
I proceed now to discuss the reasons advanced for restricting the generality of the words " any person They were put as follows: 1.
In certain sections of the Act the words " any person " have been used but there the reference is to workmen, and therefore in section 2(k) the words " any person " should mean persons of the workman class. 2.
The scheme and the purpose of the Act generally and the object of the Act specially being to benefit workmen, the words "any person " should be confined to people of the workman class.
The word "dispute" in section 2(k) itself indicates that the person raising the dispute must be interested in the dispute and therefore since the dispute must concern the employment, non employment, terms of employment or the conditions of labour of a person, that person must be of the workman class.
1191 The first reason, then, is that in certain sections, the Act uses the words " any person".
I will assume that by the use of these words only workmen are intended to be referred to in these sections.
But the question arises why is such intention to be inferred? Clearly, because the context requires it.
I will refer to some of these sections to make my point clear.
Section 2(1) defines a lock out as " the closing of a place of employment, or the suspension of work, or the refusal by the employer to continue to employ any number of persons employed by him." Section 2(q) defines a strike as " a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment.
" Lock outs and strikes are dealt with in sections 22, 23 and 24 of the Act.
Section 22(2) says that no employer carrying on any public utility service shall lock out any of his workmen except on certain conditions mentioned in the section.
Section 23 says that no employer of any workman employed in any industrial establishment shall declare a lock out during the periods mentioned in the section.
Section 24 states that a strike or a lock out shall be illegal if commenced or declared in contravention of section 22 or section 23.
The definitions of lock outs and strikes are for the purposes of sections 22, 23 and 24.
There are other sections in which lock outs and strikes are mentioned but they make no difference for our present purpose.
The lock outs and strikes dealt with in sections 22(2), 23 and 24 are lock outs of and strikes by, workmen.
It may hence be said that in section 2(1) and (q) by the word person a workman is meant.
Therefore, it is these sections, viz., 22(2), 23 and 24, which show what the meaning of the word 'person ' in the definitions is.
I would like to point out in passing that section 22(1) says that no person employed in a public utility service shall go on strike except on certain conditions and there is nothing in the Act to show that the word "person" in section 22(1) means only a workman.
Proceeding however with the point we are 1192 concerned with, the question is, is there any provision in the Act which would show that the words " any person" in section 2(k) were meant only to refer to persons of the workman class.
I have not been able to find any and none has been pointed out.
Therefore the fact that in section 2, sub sections
(1) and (q) the word " persons " means workmen is no reason for concluding that the same word must be given the same restricted meaning in section 2(k).
The position with regard to section 33A, in which the word employee has to be read as meaning a workman because of section 33, is the same and does not require to be dealt with specially.
I may add that if it has to be said that because in certain other sections the word "person" has to be understood as referring to a workman only, in section 2(k) also the same word must have the same meaning, then we have to read the words " any person" in section 2(k) as meaning only a workman as defined in the Act.
This however is not the contention of the learned counsel for the respondent.
I may further say that it was not contended that the word " person" in section 2, sub sections (1) and (q) and the word employee in section 33A has to be read as including not only a workman in employment but also a discharged workman and a person who in future becomes a workman, and it seems to me that such a contention would not have been possible.
I proceed now to deal with the second group of reasons based on the object and scheme of the Act.
It is said that the Act makes a distinction between employees who are workmen and all other employees, and that the focus of the Act is on workmen and it was intended mainly for them.
This was the view taken in United Commercial Bank Ltd. vs Kedar Nath Gupta (1).
I will assume all this.
It may also be true that the Act is not much concerned with employees other than workmen.
But I am unable to see that all this is any reason for holding that the words " any person " must mean a person of the workman class.
The definition in section 2(k) would be fully concerned with workmen however the words " any person " in it may (1) 1193 be understood because the dispute will be one to which a workman is a partyl Is it to be said that the Act would cease to be intended for workmen or the focus of it displaced from workmen or that the distinction between workmen and other employees would vanish if a dispute relating to the dismissal of one who is not a workman is held to be an industrial dispute, even though the dispute is one to which workmen are parties ? I am unable to subscribe to such an argument.
But it is said that in such a case the workmen would not be interested in the dispute, the dispute would not really be with them and they would not be in any real sense of the word parties to it.
So put the argument comes under the last of the three reasons earlier stated, ,namely, that in order that there may be an industrial dispute the workmen must be interested in that dispute.
This contention I will consider later.
It is also said in the United Commercial Bank Case (1) that the main purpose of the Act is to adjust the relations between employers and workmen by securing for the latter the benefit provided by the Act.
It is really another way of saying that the workmen must be interested in the dispute, for if they are not interested no benefit can accrue to them from an adjustment of it.
This, as I have said, I will discuss later.
It is also said that the Act is for the benefit of workmen and therefore if a dispute concerning a person who is not a workman, is an industrial dispute capable of being resolved by adjudication under the Act, then, if the award goes in favour of the workmen raising it, a benefit would result to a person whom the Act did not intend to benefit.
So it is said, an industrial dispute cannot be a dispute concerning one who is not a workman.
But the benefit resulting to the person in such a case would only be incidental.
The workmen themselves would also be benefited by it at the same time.
To adopt this argument would be to deprive the workmen of this benefit and there is no justification for doing so.
How the workmen would be benefited would appear later when I discuss the question of the workmen 's interest in the dispute.
I will show later (1) [1952] 1 L. L. J .
1194 that if the workmen were not interested in the dispute so that they could get no benefit under it, there would be no reference by the Government and there would be no benefit to a person who was not a workman.
Further, I am unable to agree that the Act is intended to confer benefit on workmen.
Its object is admitted by all to preserve industrial peace.
It may confer some benefit on workmen but at the same time it takes away their power and right to strike and puts them under a disadvantage.
We were referred to the note of dissent to the award of the majority of the All India Industrial Tribunal (Bank Disputes), dated July 31, 1950.
This note was by Mr. Chandra Sekhar Aiyer who later became a Judge of this Court.
In that note he expressed the view that " any person " in section 2(k) means any one who belongs to the employer class or the workmen class and the cases in whose favour or against whom, can be said to be adequately represented by the group or category of persons to which he belongs.
I have already stated my difficulties in agreeing that the words "any person " mean only persons of the work.
man class.
I will presently deal with the reasoning on which Mr. Aiyer bases his view but I wish to say now that it seems to me that the words "any person" cannot refer to anyone belonging to the employer class because the dispute must be in connection with the employment, non employment, or terms of employment or the conditions of labour of any person and it is not possible to conceive of any such thing in connection with a person in his capacity as an employer.
Mr. Aiyar first stated that a necessary limitation to be put on the words " any person " is that the person should have something to do with the particular establishment where the dispute has cropped up.
He said that it could not be that the workmen in Bank A could raise a valid and legitimate industrial dispute with their employer because some one in Bank B had not been treated well by his employer.
Assume this is so.
But it does not follow that an industrial dispute must be one concerning a person of the workman class alone, for, a person having something to do with an 1195 establishment need not necessarily belong to the workman class.
An officer in an establishment where the dispute crops up would be as much a person having something to do with that establishment as a workman there and, therefore, even assuming that the limitation suggested by Mr. Aiyar applies, there would be nothing in it to prevent an industrial dispute concerning him arising.
The question is not whether the person concerning whom an industrial dispute may arise, has to be employed in the establishment where the dispute arises, but whether he must belong to what has been called the workman class.
The decision of the former question which has not arisen in this case, is of no help in deciding the question that has arisen and I do not therefore feel called upon to express any opinion with regard to it.
Mr. Aiyar next referred to a case where workmen of a Bank raise a dispute with that Bank, about an employee of the Bank who was not a workman, for example an officer who had been dismissed.
He assumed that the Bank and the officer had no dispute as between themselves.
In his view, if in such a case the dispute was an industrial dispute and could be made the subject matter of an award by an Industrial Tribunal, the award would not be binding on the officer because he had no concern with the dispute.
According to him, it would be absurd to suggest that the Bank was under an obligation to give effect to the award.
Therefore, in his view, such a dispute would not be an industrial dispute.
Now, whether the award would be binding on the officer or not, would depend on whether he could be made a party to the dispute under section 18(b).
It is not necessary to discuss that question now.
But assume that the award was not binding on the officer.
Why should not the bank be under an obligation to give effect to the award in so far as it lay in its power to do so ? If the dispute was an industrial dispute, the award would be binding on the Bank and it must give effect to it.
Then the argument comes to this that the dispute is not an industrial dispute because the award would not, as 152 1196 assumed, be binding on the officer concerning whom the dispute arose.
I cannot accept this view.
Take this case.
An employer dismisses five of his workmen.
The workmen dismissed make no grievance.
Three months later the employer dismisses twenty five more and again neither the dismissed workmen nor the workmen in employment raise any dispute.
Two months after the second dismissal the employer dismisses fifty workmen.
These workmen make no complaint and leave.
The workmen in employment now begin to take notice of the dismissals and think that the employer is acting on a set policy and raise a dispute about all the dismissals.
The dispute is then referred for adjudication and an award is made in favour of the workmen.
Assume that all the dismissed workmen could be made parties to the adjudication proceedings but for one reason or another, were not made parties.
This award would not be binding on the dismissed workmen and certainly not on those who had been dismissed on the two earlier occasions.
They would not be covered by any of the provisions of section 18.
Is it to be said that for that reason the dispute is not an industrial dispute? I am wholly unable to agree.
Such a dispute would be entirely within the definition even on the assumption that the words "any person" mean only persons of the workman class.
It follows, therefore, that in order to decide whether a dispute is or is not an industrial dispute, the question whether the award would be binding on the person concerning whose employment the dispute was raised, is no test.
I therefore find nothing in the minute of dissent of Mr. Aiyar to justify the putting of any restriction on the plain meaning of the words "any person" in section 2(k).
As I shall show later, if certain disputes concerning foremen who are not workmen and who I will assume would not be bound by the award, are not to be industrial disputes, the object of the Act would clearly be defeated.
I cannot therefore agree that the fact that an award is not binding on one affords a reason for holding that there cannot be an industrial dispute concerning him.
The matter was put from another point of view.
It 1197 is said that if workmen could raise an industrial dispute with their employer concerning the salary of a manager, who was not a workman, and an award was made directing the employer to pay a smaller salary to the manager, the employer would be bound by the award but not the manager.
Then it is said, suppose, the employer had made a contract with the manager to employ him at the higher salary for a number of years.
It is pointed out that in such a case the award being binding on the employer, he would be compelled to commit a breach of his contract and be liable to the manager in damages.
It is said that it could not have been the intention of the Act to produce a result whereby an employer would become liable in damages and therefore such a dispute cannot be an industrial dispute.
But I do not agree that the employer would be liable in damages.
The award being binding on him under the Act, the performance of his contract with the manager would become unlawful after the award and therefore void under section 56 of the Contract Act.
The employer would not, by carrying out the award, be committing any breach of contract nor would he be liable in damages.
To hold that the dispute contemplated is an industrial dispute, would not produce the absurd result suggested.
The reason suggested for not holding that dispute to be an industrial dispute, therefore, fails.
Take another case.
Suppose there was a dispute between two employers A and B concerning the wage to be paid by B to his workmen, A complaining that B was paying too high wages, and the dispute was referred for adjudication by a Tribunal and an award was made that B should reduce the wages of his workmen.
Assume the workmen were not parties to the dispute and were not made parties even if it was possible to do so.
The award would not be binding on the workmen concerned under section 18.
None the less it cannot be said that the dispute was not an industrial dispute.
It completely satisfies the definition of an industrial dispute even on the basis that the words SC any person " mean only workmen.
So again it would appear that the words may include one on 1198 whom the award would not be binding.
I may add here, though I do not propose to decide the question it being wholly unnecessary for the case before us, that it seems to me that when a dispute concerns a person whether a workman or not, who is riot a party to the dispute, he can, under section 18(b), be properly made a party to appear in the proceedings arising out of that dispute.
I find nothing in that section to prevent such a course being adopted.
If he is made a party, there is no doubt that the decision, whichever way it went, would be most satisfactory to all concerned.
If this is the right view, then all argu ments based on the fact that the words " any person " can only include one on whom the award would be binding would disappear, for on being made a party the award would be binding on that person.
It would on the contrary show that it was intended that the words " any person " should include one who is not a party to the dispute, and therefore not in the workman class.
An argument based on section 33 was also advanced.
That is this.
The section provides that during the pendency of conciliation proceedings or proceedings before a Tribunal in respect of an industrial dispute the conditions of service of workmen concerned in the dispute cannot be changed by the employer, nor such workmen dismissed or otherwise punished by him except with the permission of the Board or Tribunal.
It is said that this section shows that it was intended to protect only workmen and therefore the words " any person " in section 2(k) should be understood as meaning workmen only.
I do not follow this argument at all.
Section 33 gives protection to workmen concerned in the dispute which can only mean workmen who are parties to the dispute.
A workman concerning whom a dispute arises may or may not be a party to the dispute.
The object of the section is clear.
If workmen could be punished during the pendency of the proceedings, then no workman would raise a dispute or want to take part in the proceedings under the Act concerned with its adjudication.
Further, such punishment would surely give rise to 1199 another dispute.
All this would defeat the entire object of the Act which is to compose disputes by settlement or adjudication.
Section 33 gives protection to workmen who are parties to the dispute and does not purport to concern itself with the person concerning whom the dispute arises.
Such being the position, the section can throw no light on the meaning of the words "any person " in section 2(k).
Suppose a workman was dismissed and thereupon a dispute arose between the employer and the other workmen in employment concerning such dismissal.
Such a dispute would be undoubtedly an industrial dispute.
And it is none the less so, though no protection can be given to the dismissed workman under section 33 for he is already dismissed.
Reference was also made to section 36 which provides for the representation of the parties to a dispute in a proceeding arising under the Act out of such dispute.
Sub section (1) of section 36 provides how a workman, who is a party, shall be represented and sub section (2) provides how an employer who is likewise a party, shall be represented.
The section does not provide for representation of any other person.
It is said that this shows that the words " any person " must mean only a workman, because they must mean an employee, past, present or future and only such employees as are workmen can be parties to the dispute under the definition.
I am unable to agree.
Section 36 provides for the representation of workmen besides employers and of no one else, because no one but a party need be represented in the proceedings and under the definition, a party to an industrial dispute must either be an employer or a workman.
This section has nothing to do with the person concerning whom the dispute arises.
If, however, he is also a party to the dispute, then the section makes a provision for his representation in the proceedings arising out of that dispute as such a party and not as one concerning whom the dispute has arisen.
I have earlier said that there may be a case in which though the person concerning whom the dispute arises is a workman, still he may not be a party to it.
The fact that besides an em 1200 ployer, the Act makes provision for the representation in the proceedings arising out of an industrial dispute of workmen alone does not show that an industrial dispute can only arise concerning a workman.
In my view, therefore section 36 is of no assistance in finding out the meaning of the words " any person ".
I come now to the last of the reasons advanced for restricting the natural meaning of the words " any person ".
It is said that the word dispute in the definition shows that the person raising it must have an interest in it and therefore since the dispute must concern the employment, non employment, terms of employment or conditions of labour of a person that person must be a workman.
I confess I do not follow the reasoning.
It is said that this is the view expressed by a Bench of the Bombay High Court consisting of Chagla C. J. and Shah J. in Narendra Kumar Sen vs The All India Industrial Disputes (Labour Appellate) Tribunal (1).
I have some difficulty in seeing that this is the view expressed in that case.
What happened there was that certain workmen raised a dispute against their employer which included a demand for fixing scales of pay and for bonus not only for themselves but also for the foremen and divisional heads under the same employers who were not work men and this dispute had been referred by the Government for adjudication by the Industrial Tribunal.
The Tribunal refused to adjudicate the dispute in so far as it concerned the pay and bonus of persons who were not workmen as, according to it, to this extent it was not an industrial dispute.
The workmen then applied to the High Court for a writ directing the Tribunal to decide the dispute relating to the claims made for the pay and bonus of the persons who were not workmen.
The High Court held that the dispute was not an industrial dispute and refused the writ.
Chagla C. J. expressed himself in these words (p. 130): "A controversy which is connected with the employment or non employment or the terms of employment or with the conditions of labour is an industrial controversy.
But it is not enough that it (1) 1201 should be an industrial controversy; it must be a dispute; and in my opinion it is not every controversy or every difference of opinion between workmen and employers which is constituted a dispute or difference within the meaning of section 2(k).
A workman may have ideological differences with his employer; a workman may feel sympathetic consideration for an employee in his own industry or in other industry; a workman may feel seriously agitated about the conditions of labour outside our own country; but it is absurd to suggest that any of these factors would entitle a workman to raise an industrial dispute within the meaning of section 2(k).
The dispute contemplated by section 2(k) is a controversy in which the workman is directly and substantially interested.
It must also be a grievance felt by the workman which the employer is in a position to remedy.
Both the conditions must be present; it must be a grievance of the workman himself; it must be a grievance which the employer as an employer is in a position to remedy or set right.
" Then he said (p. 131): " It is only primarily in their own employment, in their own terms of employment, in their own conditions of labour that workmen are interested and it is with regard these that, they are entitled to agitate by means of raising an industrial dispute and getting it referred to a Tribunal by the Government under section 10.
" I find some difficulty in accepting all that the learned Chief Justice said.
But assume he is right.
How does it follow that because an industrial dispute is one in which workmen must be interested it must be concerning themselves ? I do not see that it does.
Neither do I find Chagla C. J. saying so.
In the case before him the dispute concerned persons who were not workmen and he found on the facts before him that the workmen were not interested in that dispute and thereupon held that the dispute was not an industrial dispute.
But that is not saying that an industrial dispute can only be a dispute concerning workmen.
Even the observations that I have read from p. 131 of the report would not support this view.
It is not 1202 difficult to conceive of a dispute concerning the employment of a person who is not a workman which at the same time is one which affects the conditions of labour or terms of employment of the workmen themselves.
I shall give examples of such disputes later.
What I wish now to point out is that even if an industrial dispute has to be one in which workmen are interested, that would be no reason for saying that it can only be a dispute concerning workmen and that therefore the words " any person " in section 2(k) must mean only workmen.
I also think it right to say now that this argument is not really open to the respondent, for the contention of the learned counsel for the respondent is, as I have earlier stated, that the words " any person" do not mean a workman only but mean all persons of the workman class, or past, present and future workmen.
Now I find nothing in the judgment of Chagla, C. J. to show that workmen can be interested in the workman class or in past or future workmen.
On the contrary be says that workmen are interested primarily and by the word " primarily " I think he means, directly and substantially only in their own employment, terms of employment or conditions of labour.
Reliance on the judgment of the Bombay High Court will therefore land the respondent in contradiction.
I find great difficulty in saying that it is a condition of the existence of an industrial, dispute that workmen must be interested in it.
The Act does not say so.
But it is said that the word dispute in the definition implies it.
No doubt, one does not raise a dispute unless he is interested in it, and as the Act must be taken to have in contemplation normal men it must have assumed that workmen will not raise a dispute unless they are interested in it.
But that is not to my mind saying that it is a condition of an industrial dispute as contemplated by the Act that workmen must be interested in it.
So to hold would, in my opinion, lead to grave difficulties and might even result in defeating the object of the Act.
This I will endeavour to show presently.
What I have to say will also show that even assuming that an industrial 1203 dispute is one in which workmen have to be interested, the dispute that we have in this case concerning Dr. Banerjee 's dismissal is an industrial dispute for the appellant workmen are directly and substantially interested in it.
The question that first strikes me, is what is the 2 interest which workmen must have? I find it impossible to define that interest.
If it cannot be defined, it cannot of course be made a condition of the existence of an industrial dispute, for we would then never know what an industrial dispute is.
Now, " interest ", as we understand that word in courts of law, means the well known concepts of proprietary interest or interest in other recognised civil rights.
Outside these the matter becomes completely at large.and well nigh impossible of definition.
To say that the interest that the workmen must have is one of the well known kinds of interest mentioned above is, to my mind, to make the Act largely infructuous.
We cannot lose sight of the fact that the Act is not dealing with interest as ordinarily understood.
It cannot be kept in mind too well that the Act is dealing with a new concept, namely, that of the relation between employer and employed or to put it more significantly, between capital and labour, a concept which is undergoing a, fast and elemental change from day to day.
The numerous and radical amendments made in the Act since it came on the Statute book not so long ago, testify to the fast changing nature of the concept.
Bearing all these things in mind, I find it almost impossible to define adequately or with any usefulness an interest which will serve the purposes of the Act.
I feel that an attempt to do so will introduce a rigidity which will work harm and no good.
Nor does it, to my mind, in any manner help to define such interest by calling it direct and substantial.
I will illustrate the difficulty that I feel by an example or two.
Suppose a workman was dismissed by the employer and the other workmen raised a dispute about it.
Such a dispute comes completely within the definition even assuming that the words 153 1204 "any person " only refer to persons of the workman class, as the respondent contends.
There is therefore no doubt that such a dispute is an industrial dispute.
The question then is what interest have the disputing workmen in the reinstatement of the dismissed work man if they must have an interest ? The reinstatement would not in any way improve their financial condition or otherwise enhance any interest of theirs in any sense of the term, in common use.
The only interest that I can think of the workmen having for themselves in such a dispute is the solidarity of labour.
It is only this that if the same thing happens to any one of them, the others would rally round and by taking up his cause prevent the dismissal.
Apart from the Act how would the workmen have prevented the dismissal from taking effect ? They would have, if they wanted to prevent the dismissal, gone on strike and thereby tried to force the employer 's hands not to give effect to the dismissal.
That would have destroyed the industrial peace which the object of the Act is to preserve.
It is in order to achieve this object that the Act recognises this dispute as an industrial dispute and provides for its settlement by the methods of conciliation or adjudication contained in it and preserves the industrial peace by preventing the parties being left to their own devices.
If what I have described as solidarity of labour is to be considered as direct and substantial interest for the purposes of an industrial dispute, as I conceive is not disputed by any one, then it will appear that we have embarked on a new concept of interest.
I will now take another case which in regard to interest is the same as the previous one.
Suppose the employer engages some workmen at a low rate of wages and the other workmen raise a dispute demanding that the wages of these low paid workmen be increased.
This case would be completely within the definition of an industrial dispute even according to the most restricted meaning that may be put upon the words "any person ", namely that they refer only to work.
men as defined in the Act, because the dispute concerns the terms of employment of such a workman.
1205 So this has admittedly to be held to be an industrial dispute.
What then is the interest of the workmen in this dispute ? The increase in the wages claimed would not in any manner improve the financial condition of the disputing workmen, nor serve any of their interests as ordinarily understood.
It would however help the workmen in seeing that their own wages were not reduced by preventing the employer from being able to engage any low paid workman at all.
Apart from this I can think of no other interest that the disputing workmen may have in the dispute.
If therefore it is essential that the disputing workmen must have an interest in the dispute, this must be that interest, for, as already stated, the dispute is undoubtedly an industrial dispute.
If this is sufficient interest to constitute an industrial dispute I fail to see why the workmen have no sufficient interest in a dispute in which they claim that a foreman who is particularly rude and brutal in his behaviour should be removed and they should have a more human foreman.
This is surely a matter in which the workmen raising the dispute have a personal and immediate interest and not, as in the last case, an interest in the prevention of something happening in future, which conceivably may never happen at all.
Such an interest is plainly nearer to the ordinary kinds of interest than the interest in solidarity of labour or in the prevention of future harm which in the preceding paragraphs have been found to be sufficient to sustain an industrial dispute.
The dispute last imagined would undoubtedly be an industrial dispute if the foreman was a workman for then it would be entirely within the definition of an industrial dispute.
Now suppose the foreman was not a workman.
Can it be said that then the dispute would not be an industrial dispute ? Would the interest of the workmen in the dispute be any the less or in any way different because the foreman whose dismissal was demanded was not a workman ? I conceive it impossible to say so.
Therefore if interest is the test, the dispute that I have imagined would have to be held to be an industrial dispute whether or not 1206 the foreman concerned was a workman.
Now assume that the dispute did not arise out of a demand for the dismissal of a foreman but against his dismissal on the ground that he was a particularly kind and sympathetic man and the workmen were happy to work under him.
In such a case the interest of the workmen in the dispute would be the same as their interest in the dispute demanding the foreman 's dismissal.
They would be demanding his reinstate ment in their own interest; they would be demanding it to make sure that their work would be easy and smooth and that they would be happy in the discharge of it.
Such a dispute therefore also has to be held to be an industrial dispute and as in the last case, it would make no difference for this purpose that the foreman concerned was not a workman.
If this is right, as I think it is, then similarly the dispute concerning the dismissal of Dr. Banerjee would be an industrial dispute for the workmen have sufficient personal and immediate interest in seeing that they have a doctor of their liking to look after them.
It is indeed the case of the workmen that by his devotion to duty and good behaviour Dr. Banerjee became very popular with the workmen.
Whether the contention of the workmen is justified or not and whether it would be upheld by the Tribunal or not, are wholly different matters and do not affect the question whether in an industrial dispute the work.
men must be interested.
It is enough to say that I find no reason to think that the appellant had no interest in the dispute concerning the dismissal of Dr. Banerjee.
Therefore, I would hold that even if it is necessary to constitute an industrial dispute that workmen must have an interest in it, the dispute before us is one in which the appellants ' have a direct and substantial interest and it is an industrial dispute.
For myself however I would not make the interest of the workmen in the dispute a condition of the existence of an industrial dispute.
The Act does not do so.
I repeat that it would be impossible to de no 1207 such interest.
In my view, such a condition would defeat the object of the Act.
It is said that otherwise the workmen would be able to raise disputes in which they were not interested.
Supposing they did, the Government is not bound to refer such disputes for adjudication.
Take a concrete case.
Suppose the workmen raise a dispute that the manager of the concern should have a higher pay.
It would be for the Government to decide whether, the dispute should be referred for adjudication or not.
The Government is not bound to refer.
Now, how is the Government to decide ? That must depend on the Government 's evaluation of the situation.
That this is the intention is clear from the object that the Act has in view.
I will here read from the judgment of the Federal Courtin Western India Automobile Association case(1) what the object of the Act is.
It was said at PP.
331 332.
" We shall next examine the Act to determine its scope.
The Act is stated in the preamble to be one providing for the investigation and settlement of industrial disputes.
Any industrial dispute as defined by the Act may be reported to Government who may take such steps as seem to it expedient for promoting conciliation or settlement.
It may refer it to an Industrial Court for advice or it may refer it to an Industrial Tribunal for adjudication.
The legislation substitutes for free bargaining between the parties a binding award by an impartial tribunal.
Now, in many cases an industrial dispute starts with the making of number of demands by workmen.
If the demandsare not acceptable to the employer and that is what often happens it results in a dismissal of the leaders and eventually in a strike.
No machinery for reconciliation and settlement of such disputes can be considered effective unless it provides within its scope a solution for cases of employees who are dismissed in such conditions and who are usually the first victims in an industrial dispute.
If reinstatement of such persons cannot be brought about by (1) [1949] F.C.R 321.
1208 conciliation or adjudication, it is difficult, if not im possible, in many cases to restore industrial peace which is the object of the legislation ".
This is the view of the object of the Act that is accepted by all including the decisions in Narendra Kumar Sen 's case(2) and United Commercial Bank case (2).
In Narendra Kumar Sen 's case (1) Chagla C. J. said at p. 130: "The was enacted, as Mr. Desai rightly says, to bring about industrial peace in the country, to avoid conflicts between employers and labourers, to prevent strikes and lock outs, to see that the production in our country does not suffer by reason of constant and continuous labour troubles ".
Therefore in deciding whether to refer or not, the Government is to be guided by the question whether the dispute is such as to disturb the industrial peace and hamper production.
I find no difficulty in thinking that the Government would realise that there was no risk of the peace being disturbed or production being hampered by the dispute raised by the work men demanding a higher salary for the manager, for being normal men the workmen were not likely to suffer the privations of a strike to enforce their demand for a cause of this nature.
The Government must be left to decide this primary question for itself, and therefore the Government must be left to decide in each case whether the workmen had sufficient interest in the dispute.
If Government thought that the workmen had no such interest as would lead them to disturb industrial peace by strike or otherwise if the dispute was not ended, the Government might not in its discretion refer the dispute for adjudication by a tribunal.
It must be left free to decide as it thinks best in the interest of the country.
It is not for the Court to lay down rigid principles of interest which interfere with the Government 's discretion, for that might defeat the object of the Act.
If the Government feels that the dispute is such that it might lead to the disruption of industrial peace, it is the policy of the Act that it should exercise its powers under it (1) (2) 1209 to prevent that.
Assume a case in which the workmen raised a dispute without having what the court considers sufficient interest to make it an industrial dispute and therefore, on the matter coming to the court the dispute was held not to be an industrial dispute.
Upon that the Government 's hands would be tied and it would not be able to have that dispute resolved by the processes contemplated in the Act.
Suppose now that, the workmen then go on strike and industrial peace is disturbed and production hamper.
The object of the Act would then have been defeated.
And why ? Because it was said that it was not a dispute in which the workmen were interested and therefore not a dispute which was capable of being adjusted under the provisions of the Act.
It would be no answer to say that the workmen would not go on strike in such a case.
If they would not, neither would the Government refer the dispute for adjudication under the Act and it would not be necessary for the court to decide whether the workmen were interested in the dispute or not or whether the dispute was an industrial dispute or not.
Therefore, I think that it is not necessary to say that a dispute is an industrial dispute within the meaning of the Act only when workmen are interested in it.
Such a test of an industrial dispute would make it justiciable by courts and also introduce a rigidity in the application of the Act which is incompatible with the fast changing concepts it has in view and so defeat the object of the Act.
It is enough to assume that as normal men, workmen would not raise a dispute or threaten industrial peace on account of it unless they are interested in it.
I wish however to make it clear, should any, doubt exist as to this, that I do not intend to be understood as saying that the question whether a dispute is an industrial dispute or not is never justiciable by courts of law and that a dispute is an industrial dispute only if the Government says so.
Such a larger question does not arise in this case.
All that I say is that it is not a condition of an industrial dispute that workmen must be interested in it and no question of interest 1210 falls for decision by a court if it can be called upon to decide whether a dispute is an industrial dispute or not.
The question of interest can only be of practical value in that it helps the Government to decide whether a dispute should be referred for adjudication or not.
Then it is said that if workmen were allowed to raise a dispute concerning a person who was not a workman, then it would be possible for such a person to have his dispute with the employer adjudicated through the workmen.
This case was put.
Suppose the manager wanted his salary to be increased but could not make the employer agree to his demand, he could then instigate the workmen and make them raise a dispute that his salary should be increased and if such a dispute is an industrial dispute and the award goes in favour of the workmen then the result would be that the Act could be used for settling disputes between the manager and his employer, a dispute which the Act did not intend to concern itself with.
So it is said that the words " any person" in section :2 (k) cannot include an employee who is not a work.
I am unable to agree.
First, in interpreting an Act, the Court is not entitled to assume that persons would use its provisions dishonestly.
The words in the Act cannot have a different meaning than their natural meaning because otherwise there would be a possibility of the Act being used for a purpose for which it was not meant.
The remedy against this possibility is provided in the Act, in that it has given complete freedom to the Government not to refer such a dispute.
It is not necessary to meet a somewhat remote apprehension that the Act may be used for purposes other than those for which it was meant, to construe its language in a manner different from that which it plainly bears,.
Lastly, in doing this many cases like Chose earlier mentioned including the present, which are clearly cases of industrial disputes would have to be excluded in the attempt to prevent by interpretation a remote apprehension of a misuse of the Act.
This would do more harm than good.
1211 1 have therefore come to the conclusion that a dispute concerning a person who is not a workman may be an industrial dispute within section 2 (k).
As it has not been said that the dispute with which we are concerned is for any other reason not an industrial dispute, I hold that the Industrial Tribunal had full jurisdiction to adjudicate that dispute and should have done so.
I would therefore allow the appeal and send the case back to the Industrial Tribunal for adjudication in accordance with law.
ORDER OF THE COURT.
In view of the opinion of the majority, the appeal is dismissed.
But there will be no order as to costs.
Appeal dismissed.
| % These appeals together with a petition for special leave raised a common question of law whether against an order of a District Court in revision under section 20 of the Kerala Buildings (Lease & Rent) Control Act 2 of 1965, a further revision would lie to the High Court under section 115 of the Code of Civil Procedure.
Though the question was not res integra in view of the decision of this Court in Aundal Ammal vs Sadasivan Pillai, , the matters were listed for consideration, by a Bench of three Judges, of the very same question in order to see whether there was any conflict between the views taken in Aundal Ammal 's case above said and a later decision of this Court in Shyamaraju Hegde vs G. Venkatesha Bhatt & Ors., ; , and whether the view taken in the earlier case required reconsideration.
Aundal Ammal 's case arose under the Kerala Act afore mentioned, and the Shyamaraju Hegde 's case was under the karnataka Rent Control Act, and there were essential differences between the two Acts.
The scope and effect of section 20(1) read with section 18(5) of the Kerala Act came to be examined by a full Bench of the Kerala High Court in Vareed vs Mary, A.I.R. 1969 Kerala 103, which held that a decision of a District Court under section 20 of the Kerala Act was undoubtedly amenable to the revisional jurisdiction of the High Court under section 115 of the Code of Civil Procedure.
The question decided by the full Bench of the Kerala High Court as above mentioned, came to be considered by this Court (a Bench of two Hon. Judges) in Aundal Ammal 's case (supra), and the Court held that the ratio laid down by the Kerala High Court in Vareed 's case (supra) could not be approved because the High Court had not properly construed the sections 18(5) 872 and 20 of the Kerala Act, and was in error.
So far as the Karnataka Act was concerned, this Court held in Shyamaraju Hegde 's case (supra) that an order of a District Judge under section 50(2), though it conferred finality under the Act, was nevertheless open to challenge before the High Court by revision under section 115 C.P.C. by the aggrieved party.
What fell for consideration in the present cases was whether there was any conflict between the decisions in Aundal Ammal 's case (supra) and Shyamaraju Hegde 's case (supra) and whether the ratio in the former case required reconsideration.
Disposing of the Appeals and the Petition for Special Leave, the Court, ^ HELD: Per Sabyasachi Mukharji & section Natarajan, JJ.
After examining the differences between the two Acts in detail, the Court concluded that there was really no conflict between the two decisions of this Court in Aundal Ammal 's case (supra) and Shyamaraju Hegde 's case (supra), because the provisions in the two Acts were materially different.
As to the question whether a fresh thinking was called for on the scope of section 20 read with section 18(5) of the Kerala Act, the Court did not find any grounds for reconsidering the view taken in the Aundal Ammal 's case; on the contrary, the renewed discussion by the Court of the matter called for a reiteration of the view expressed in Aundal Ammal 's case.
[889C D] The Court was unable to conntenance in the circumstances of the case, the argument advanced that since the decision of the Kerala High Court in Vareed vs Mary aforementioned had been a good law for a number of years in the Kerala State and since the High Court had been entertaining revision petitions under section 115 C.P.C. against the revisional orders of the District Courts under sections 20(1) of the Kerala Act, the decision should have been allowed to stand even though the reasoning therein was not commendable for acceptance by this Court, and the reason therefore, the Court observed, could be set out by referring to certain English decisions and the reasoning adopted therein, in West Ham Union vs Edmonten Union, 13 at 4; Robinson Brothers (Brewers) Ltd. vs Hongton V. Chester i.e. Street Assessment Committee, 12 , affirmed in These decisions had been followed in Brownsee Haven Proper 873 ties Ltd. vs Poole Corporation, On similar lines, this Court deemed it necessary to overrule the ratio in Vareed vs Mary (supra), as the decision suffered from miscontruction of the relevant sections in the Act, and the weakness in the reasoning became manifest in the light of the subsequent decision of this Court such as in Vishesh Kumar vs Shanti Prasad, ; = ; = ; ; 890A C] In the light of the conclusion of the Court, all the appeals succeeded in so far as the challenge to the right of the High Court to entertain revision petitions under section 115, C.P.C., was concerned.
In Civil Appeals Nos.
626 of 1981 and 624 of 1985, the High Court allowed the revision petitions under section 115 C.P.C., and ordered the eviction of the tenants.
In Civil Appeal No. 2079 of 1981, the District Judge set aside the order of eviction but the High Court restored the order of eviction.
In the Civil Appeal No. 1619 of 1986, the District Judge allowed the Revision and restored the order of eviction passed by the Rent Controller and the High Court confirmed the said order in revisions.
In the Civil Appeal No. 7505 of 1983, the District Judge reversed the decisions of the Rent Controller and the Appellant Authority and ordered eviction and the High Court confirmed the order of the District Judge.
In the petition for special leave listed with the appeals, the Appellate Authority sustained the claim of the landlord for eviction under section 11(3) of the Act but remanded the case to the Rent Controller for deciding the question whether the tenant was entitled to resist the claim for eviction.
The District Court and the High Court confirmed the order of remand.[890D G] In accordance with the pronouncement of the Court, the order of the High Court under section 115 C.P.C., in each of the appeals above mentioned was set aside and the revisional order of the District Judge in each case, restored to become operative.
The appeals were directed only against the orders of the High Court passed in revision, and they were disposed of with the pronouncement of the Court on the above lines.
[890G H; 891A] In the petition for special leave also, the order of the High Court under section 115 C.P.C., was not sustainable, but even so, the Court did not find any merit in the petition, because the finding of the Appellate Authority and the order of remand passed by it had been confirmed by the District Court 'and as such, there were no merits in the petition.
[891B] 874 Per section Ranganathan, J. (dissenting) While a number of enactments of various States on rent control confer specific jurisdiction on the State High Courts, some others are broadly on the same pattern as the Kerala and Karnataka enactments.
Though the Court was concerned only with Kerala and Karnataka enactments in these matters, a similar question might well arise under the corresponding enactments of some other States as well.[891C D] The Kerala and Karnataka Rent Control Acts vest power of revision in the District Judge against certain orders.
The question in these matters was whether the jurisdiction of the High Court under section 115 C.P.C., could be invoked to seek a further revision of the revisional order passed by the District Judge.
This question was answered in the negative in Aundal Ammal vs Sadasivan Pillai, [1987] 1 SCC 133 (a decision under the Kerala Act) but in the affirmative in Shyamaraju Hegde vs Venkatesha Bhat, ; (a decision under the Karnataka Act), and hence this reference to a larger Bench.[891E F] Normally, a revision lies to the High Court under section 115 of the C.P.C. against any order of the District Judge/Court.
The fact that the order might have been passed under a special statute or that the statute contained expressions purporting to confer finality on the order of the District Judge/Court or a subordinate authority or Court, had been held insufficient to take away this jurisdiction.
This was the effect of the decisions in Chhagan Lal vs The Municipal Corporation, Indore, ; and Krishandas Bhatija vs Venkatachala Shetty, S.L.P. No. 913 of 1978 decided on 13.2.1978 and Shyamaraju 's case (supra), which were direct decisions under the Karnataka Act.
In the opinion of his Lordship, there was no vital or material difference between the two enactments in this respect and that the same result should follow under the Kerala Act also.
[891G H; 892A B] Under the Karnataka Act, after its amendments in 1975, the rent control matters are decided, in the first instance, by the District Munsiff or the Civil Judge/Rent Controller.
There is no provision for an appeal from this order but there is one for revision.
This revisional power is bifurcated under section 50 between the High Court and the District Court.
The High Court is empowered to revise the order of the Civil Judge/Rent Controller and the District Judge that of the District Munsiff.
Section 50(2) specifically declares that the order of the District Judge under this provision is final.
The Kerala pattern is the same except that section 18 provides for an appeal from the Rent Controller 875 to an officer or an authority of the rank of a Subordinate Judge or of a superior rank.
Section 20 provides for revision.
The revisional power is to be exercised by the District Court where the appellate authority is the subordinate Judge, and the High Court, in other cases.
Section 20 does not provide, as does section 50 of the Karnataka Act, that the decision of the District Judge would be final.
The much wider and more emphatic language of the Karnataka Act does not exclude the jurisdiction of the High Court under section 115 of the C.P.C., as had been held in the two cases referred to above, and it was difficult to see the justification for reading any such exclusion into the Kerala Act.
[892C H] This led to the question of a choice between the two views of this Court one in Shyamaraju and the other, in Aundal Ammal.
Shyamaraju followed the earlier decisions of this Court in Chhagan Lal vs The Municipal Corporation, Indore, AIR 1977 SC 1955 and Krishnadas Bhatija vs A.S. Venkatachala Shetty, SLP (Civil) No. 913 of 1978, decided on February 13, 1978.
The only other decision of this Court, having relevance in the present context, was Vishesh Kumar vs Shanti Prasad, ; , relied upon in Aundal Ammal.
His Lordship was in agreement with the view in Shyamaraju that Vishesh Kumar was rendered in a totally statutory context.
That decision turned largely on legislative history of section 115 of the C.P.C. and section 25 of the Provincial Small Causes Courts Act, in their application to the State of Uttar Pradesh.
His Lordship was, therefore, inclined to lean in favour of the view that had commended itself to this Court as to the interpretation of the Karnataka Act, and to hold that the High Court had a power of revision over the order of the District Judge under the Kerala Act as well.
The result of applying Aundal Ammal would be to completely exclude the High Court in the Rent Control matters, and, this, as the two Acts were in pari materia according to his Lordship 's view, would leave the litigant in Karnataka only a right of revision to the District Court.
It was doubtful whether, in the absence of clear language, the Legislature could be held to have intended to completely exclude the jurisdiction of the High Court in such an important Branch of law.
The provisions did not and could not, in his Lordship 's view, preclude the applicability of section 115 of the C.P.C. to an order passed by the District Court, not as a persona designata, but as a civil court of the land.
Section 18 and 20 had a vital role to pay but their effect was not to eliminate the revisional jurisdiction of the High Court under section 115.
[893A F; 894B C] As a result of the various decisions of the Courts, the position had been that right through in the State of Karnataka and for at least a 876 period of 20 years in the State of Kerala, the prevalent view had been in favour of the maintainability of a second revision by the High Court.
In a matter of procedure, such a long standing practice should not be disturbed unless the statutory indication was quite clear to the contrary.
[894F] The revision petitions before the High Court were maintainable.[894G] Aundal Ammal vs Sadasivan Pillai, [1987] 1 S.C.C. 133; Shyamaraju Hegde vs G. Venkatesha Bhatt & Ors.
, ; ; Balagangadhara Menon vs T.V. Peter, [1984] K.L.T. 845; Vareed vs Mary, AIR 1969 103; Vishesh Kumar vs Shanti Prasad, ; Krishnaji Venkatesh Shirodkar vs Gurupad Shivram Kavalekar & Ors., ILR 1978 Karnataka 1585; Chhaganlal vs The Municipal Corporation, Indore, ; ; Krishnadas Bhatija vs A.S. Venkatachala Shetty, SLP (Civil) No. 913 of 1978, decided on February 13, 1978; M.M. Yaragatti vs Vasant & Ors., AIR 1987 Karnataka 186; S.S. Khanna vs F.J. Dillon, AIR 1954 S.C. 497; West Ham Union vs Domonton Union, 13 at 4; Robinson Brothers (Brewers) Ltd. vs Honghton & Chester_ie_Street Assessment Committee, 12 and and Brownsee Haven Properties Ltd. vs Poole Corporation, referred to.
|
Civil Appeal No. 1178 of 1984 From the Judgment and Order dated the 15th July, 1982 of the High Court of Madras in Civil Revision Petition No. 3396 of 1981.
AND Civil Appeal No. 6211 of 1983 From the Judgment and Order dated the 5th November, 1982 of the High Court of Andhra Pradesh in Civil Revision Petition No. 2477 of 1982.
WITH Civil Appeal No. 1992 of 1982 From the Judgment and Order dated the 17th December, 1981 of the High Court of Madras in Civil Revision Petition No. 152 of 1981 .
WITH Civil Appeal No. 1959 of 19X2 From the Judgment and Order dated the 14th December, 1981 of the High Court of Madras in Civil Revision Petition No. 1630 of 1980.
WITH Civil Appeal No. 3668 of 1982 From the Judgment and Order dated the 20th October, 1982 of the High Court of Madras in Civil Revision Petition No. 4087 of 1982.
WITH Civil Appeal No. 2246 of 1982 From the Judgment and Order dated the 5th November, 1981 of the High Court ot Madras in Civil Revision Petition No. 1397 of 198( ' AND Civil Appeal No. 4012 of 1982 From the Judgment and Order dated the 23rd November, 1982 of the High Court of Madras in Civil Revision Petition No. 3983 of 1981 Y. section, Chitale and P. N. Ramalingam for the Appellant in Civil Appeal No. 1178 of 1984.
652 P.G. K. K Mani, V. shekher and P.R. Setharaman for the Respondents in Civil Appeal No. 1178 of 1984 A.K. Sen and A.T.M. Sampath for the Appellant in Civil Appeal No. 6211 of 1983.
T.V.S. Narasimhachari for the Respondent K Ramkumar for the Appellant in Civil Appeal No. 1992 of A. T. M. Sampath for the Respondent.
A. section Nambiar for the Appellant in Civil Appeal No. 1659 of 1982.
K section Ramamurthy, and A.T.M. Sampath, for the Appellant in Civil Appeal No. 3668 of 1982.
C. section Vaidianathan and K. K Mani for the Respondents.
M. G. Ramachandran, and A.V. Rangam for the Appellant in Civil Appeal No. 2246 of 1982.
T. section Krishnamurthy Iyer for the Respondent.
T. section Krishnamurth Iyer.
and section Balakrishna for the Appellant in Civil Appeal No. 4012 of 1984.
Padmanbhan and D.N. Gupta for the Respondent in Civil Appeal No. 4012 of 1982.
The following Judgments were delivered FAZAL ALI, J.
These appeals invlove more or less an identical point of law relating to the interpretation of the term 'wilful default ' appearing in the proviso to section 10 (2) of the Tamil Nadu Buil dings (Lease and Rent Control) Act, 1960 (hereinafter referred to as the 'Act ') coupled with the Explanation which seeks to explain the intent Or the proviso.
We have heard counsel for the parties at great length and a large number of authorities have been cited before us in support of both the parties.
Before we take up the points of law involved in these appeals we would briefly narrate the bare facts of each of these cases in order to test the correctness of the points argued before us.
653 In Civil Appeal No. 1178 of 1984, the respondent landlord let A out the suit premises No. 3 B, New No 2 B, Davidson Street, Broadway Madras, to the appellant tenant on a monthly rent of Rs. 600 for non residential use.
The appellant, despite repeated reminders, did not pay the rent for the period from October 1978 to August 1979.
The respondent filed a suit on 2 12.79 for evicting the appellant on two grounds wilful default in payment of rent, and (2) material acts of waste committed in the building.
It may be mentioned here that before filing a suit for eviction of the appellant, the respondent on 17.9.79 sent a two months` notice to the appellant.
through his Advocate to clear up the dues.
The appellant on receipt of the notice paid up the amount of the arrears, amounting to Rs. 6,600 on 3.10.79, i.e., within the stipulated period of two months.
But, the respondent contended that in view of the past conduct of theappellant he was guilty of wilful default within the meaning of proviso to section 10 (2) of the Act.
So far as this appeal is concerned, as the entire rent had been paid up in pursuance of the notice dated 17.9.79 even prior to the filing of the suit, it is manifest that on the date of filing of the suit no cause of action in presenti having arisen, the suit should have been dismissed on this short ground alone as being not maintainable.
As indicated above, it was not open to the landlord after having received the entire amount of arrears before filing of the suit to have filed a suit for past conduct of the tenant.
This appeal, therefore, merits dismissal on this ground alone.
In Civil Appeal No. 6211 of 1983, the respondent tenants were given the suit premises No. 171582, Ward B, Old corresponding No. 2, New No. 5181582 Abid Road, Hyderabad, on a monthly rent of Rs. 225 which was, by mutual consent, increased to Rs. 275 per month in the year 1964.
From 1.7.66, the rent was again agreed to be increased to Rs. 300 per month.
The appellants landlord filed a suit under section 10 of the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act, 1960 on 12.11.71, against the respondents for eviction on three grounds; (1) wilful default by the tenants in payment of rent for the months of September, October and November 1971 (total amount being Rs. 900, (2) the tenants sublet the premises to one Hanumantha, and (3) that the premises were required bona fide for their own use.
However, during toe pendency of the matter, the original landlords sold away their interest in the property in favour of the present appellants before us and, therefore, the question of bona fied requirement abated there itself.
654 The Rent Controller upheld both the grounds of wilful default and subletting.
Aggrieved by the said decision, the respondents tenant filed an appeal to the Chief Judge, City Small Causes Court, Hyderabad and the learned Chief Judge by his judgment held that wilful default in payment of rent for the month of September 1971 as also the question of sub letting was proved.
Against this decision of the Chief Judge, City Small Causes, the respondents filed a revision petition in the High Court.
It is not in dispute that the rent from September, 1971 on wards has not been paid and that by the time the eviction petition was filed, the default was only for the month of September 1971.
The High Court agreed with the lower courts with regard to wilful default for the month of September, 1971 and reversed the finding with regard to subletting but on the ground of wilful default ordered eviction of the respondents.
In civil Appeal No. 1992 of 1982, the respondent landlord filed an eviction petition against the appellant tenant on the grounds of wilful default and the premises needing repairs.
However, the second ground was not pressed and the only point which survived for deter mination was whether there was any wilful default on the part of the appellant.
The brief facts are that the appellant became a tenant under the father of the respondent in 1953 at a monthly rent of Rs. 15 which was subsequently mutually agreed to be increased to Rs. 49 per month.
The respondent contended in his petition that the appellant became a defaulter in payment of the rent as he did not pay the rent for the months of June 1977 to January 1978.
The respondent also issued a notice on 16.1.78 demanding the dues amounting to Rs. 392.
The appellant sent a detailed reply on 30.1.78 alongwith a Bank Draft for Rs. 392 which was, however, not encashed by the respondent and returned to the appellant subsequent to the filing of an eviction petition which was filed on 11.8.1978.
The Rent Controller found the tenant to be a wilful defaulter and consequently order his eviction.
However, on appeal the Appellate Authority reversed the finding of the Rent Controller and accepted the plea of the tenant that as he was ill he was not able to pay the rent.
In revision, the High Court did not agree with the finding of the Appellate Authority and restored the finding of the Rent Con troller and ordered the eviction of the appellant, holding that the explanation offered by the tenant could not be accepted as his sons were carrying on the business in the same premises and nothing pre vented them from paying the rent to the landlord of the appellant was ill.
655 In Civil Appeal No. 1659 of 1982, the respondent landlord filed an eviction petition against the appellant tenant in respect of a nonresidential premises on two grounds: (1) wilful default in payment of rent from 1.5.77 to 31,8.77, and (2) bona fide requirement for personal use.
The Rent Controller, after an equiry, ordered eviction of the tenant on both the grounds and the Appellate Authority confirmed the findings of the Rent Controller.
The landlord issued a lawyer 's notice on 1.9.77 to the tenant to clear up the dues.
After receipt of the notice the tenant paid the rent of two months ' only and for the remaining two months the tenant could not offer any satisfactory explanation and, therefore, the High Court in revision agreed with the findings of both the courts below in regard to wilful default of payment of arrears of rent and ordered eviction of the tenant on this ground alone.
The High Court, however, did not agree with the findings of the courts below with regard to bona fide requirement of the landlord and held that the landlord could not ask for a non residential portion for residential purposes having leased it out for a non residential purpose.
In Civil Appeal No. 3668 of 1982, the appellant took out the premises from the respondent for non residential use on a monthly rent of Rs. 350.
There was some misunderstanding between the parties over payment of rent and as a result of which it was agreed that the tenant would deposit the rent in the Bank.
The respondent landlord filed an eviction petition on 1.4.1980 in the court of the Rent Controller, after verifying from the Bank, that the tenant had not deposited the rent for the months of January and February 1980, thereby committing a wilful default.
The authorities below found against the arrangement of depositing the rent in the Bank and ordered the eviction of the appellant on the ground of wilful default.
The High Court upheld the decision of the courts below and held that the appellant had wilfully defaulted in the payment of rent and ordered the eviction of the appellant.
In Civil Appeal No. 2246 of 1982, the respondent landladies let out the premises to the tenant appellant for non residential use on a monthly rent of Rs. 105.
The respondents filed an eviction petition on 2.11.76 against the tenant on the ground of wilful default for non payment of rent for the period from January 1976 to September 1976, i.e., for a period of 9 months.
But before filing the eviction petition, the respondents on 6.7,1976 issued a notice to the tenant to pay the dues and on 17.7.76 the appellant paid a sum of Rs. 630 which was accepted by the landladies without prejudice.
The Rent 656 Controller found that the default in payment of rent was not wilful and therefore dismissed the appl.cation of the landladies.
On appeal, the Appellate Authority reversed the finding of the Rent Controller and held that the default, was wilful.
In revision, the High Court did not agree with the contention of the appellant that he was not wilful defaulter as immediately after filing of the eviction petition he had paid the entire arrears even before the serving of summons The High Court held that there was no satisfactory explanation by the tenant for nonpayment of rent for the period from January to June 1976 before the issue of notice Even after the payment of rent the tenant committed further default till the petition for eviction was filed on 2.11.76.
The high Court, therefore, upheld the finding of the Appellate Authority and ordered eviction of the tenant on the ground of wilful default.
In civil appeal No. 4012 of ' 1982, the appellant is in occupation of the residential premises bearing No 17 (New No 59), Burkit Road T. Nagar, Madras on a monthly rent of Rs. 325 payable according to English calendar month.
The respondent filled an eviction petition against the appellant on the ground of wilful default and bona fide requirement for her own occupation.
It was stated on behalf of the respondent landlady that the appellant committed wilful default in payment of rent from June 1976 onwards and after repeated demands a sum of Rs. 1000 was paid by him on 1.4.1977.
He had paid rent for five months to the Income Tax Department on behalf of the respondent but he did not produce any receipt evidencing payment to the Income Tax Department.
Assuming that the appellant had made the said payment, the respondent further contended that from February 1977 to July 1978 the appellant was in arrears, thereby committing a wilful default.
The Rent Controller did not agree with the contentions of the respondent and held that the default was not wilful and the requirement for own Occupation of the landlay was not bona fide.
On appeal, the Appellate Court came to the conclusion that the tenant had committed wilful default in payment of rent from May 1976 onwards as on 1.4.77 and from December 1976 as on 10.4.77.
However, the appellate authority was of the view that the respondent had not been able to prove her case for bona fide requirement.
But, on the around of wilful default, the eviction of the appellant was ordered.
In reviston, the High Court agreed with the findings of the Appellate Court and confirmed the eviction of the appellant on the ground of wilful default.
From a detailed survey of the provisions of the various Rent Acts prevailing in the States and various Union Territories of our 657 country, it appears that the provisions regarding eviction for default A in payment of rent are not uniform and differ from State to State.
Some Acts do not mention `wilful default ' at all, some mention it in a negative form while some put it in an affirmative form.
To cut the matter short, from a review of the various Rent Acts the position that emerges is that the provisions relating to eviction are couched in three different types of default (1) Acts which expressly mention 'wilful default ' without defining the same, (2) Acts which do not mention the words 'wilful default ' at all but confer a right on the landlord to evict the tenant on pure and simple default after a certain period of time when the rent has become due, which is also different in different States, (3) Acts which use the expression 'wilful default ' but in a negative form rather than in an affirmative form.
D These are the A.P. Buildings (Lea5e, Rent and Eviction) Control Act of 1960, The Orissa House Rent Control Act, 1967 and the Pondicherry Buildings (Lease & Rent Control) Act, 1969 (hereinafter referred to as the 'A P. Act, 'Orissa Act ' and 'Pondicherry Act ' respectively) The last category of the Acts is the Tamil Nadu Act, which is the Statute in question and which makes a marked improvement by broadening the ambit of 'wilful default ' in the proviso to section 10 (2) which is further clarified by virtue of the Explanation added to the said proviso by Act No 23 of 1973.
There are other Rent Acts which not only use the expression 'wilful default ' but which also give a sort OF a facility to a tenant even for an ordinary default to pay the entire rent together with interest, on payment of which the suit for eviction is dismissed or, at any rate, they contain provisions by which even if a suit for eviction is filed, the tenant is required to pay the entire arrears of rent, costs and interest, failing which his defence is struck out and the suit for eviction is decreed automatically.
In these circumstances, for the purpose of the present cases, it is not necessary for us to make a roving enquiry into or carry on a detailed survey of the Acts which do not use the term 'wilful default '.
We might usefully refer only to those Acts which contain the term 'wilful default ' either in a negative or in a positive form.
These Acts, as already indicated, are the A.P., Orissa, Pondicherry and the Tamil Nadu Acts.
Though we are concerned mainly with the Tamil Nadu 658 Act yet in order to understand the contextual background of the words 'wilful default ' and its proper setting, we might briefly examine the relevant provisions of the aforesaid Acts.
Section 10 (2) of the A.P. Act is the only provision which confers protection to the tenant from eviction under certain conditions.
Proviso to that sub section runs thus: "Provided that in any case falling under clause (i), if the Controller is satisfied that the tenant 's default to pay or tender rent was not wilful, he may notwithstanding anything in section 11, give the tenant a reasonable time, not exceeding fifteen days, to pay or tender the rent due by him to the landlord up to the date of such payment or tender and on such payment or tender, the application shall be rejected.
" It may be noticed that although the default contemplated by the Act is wilful yet it has been put in a negative form which undoubtedly gives sufficient leeway to the tenant to get out of the rigours of the statutory provision.
The proviso to s.7 (2J of the Orissa Act is similarly worded and the relevant portion of which runs thus: "Provided that in any case falling under clause (i) if the Controller is satisfied that the tenant 's default to pay or tender rent was not wilful." Pondicherry Act is another statute which also contains the word 'wilful ' in a negative form, the relevant portion of which runs thus: "Provided that in any case falling under clause (i) if the Controller is satisfied that the tenant 's default to pay of tender rent was not wilful. " The aforesaid Acts undoubtedly contemplate that a default simpliciter would not be sufficient to evict the tenant but it must further be shown that the default was not wilful.
The Act, however is silent on the mode and the manner in which a court may decide as to what is wilful and what is not wilful.
Thus, the Act has left it to the courts to decide this question.
So far as the Tamil Nadu Act is concerned, it clearly defines as to what is 'wilful default '.
Proviso to section 10 (2) of the Act runs thus: "Provided that in any case falling under clause (i) if the Controller is satisfied that the tenant 's default to pay or tender rent was not wilful, he may, notwithstanding anything 659 contained in section 11, give the tenant a reasonable time, t not exceeding fifteen days, to pay or tender the rent due by him to the landlord up to the date of such payment or tender and on such payment or tender, the application shall be rejected.
" This proviso was clarified by an Explanation added to it by Act No. 23 of 1973 which provides a clear criterion to determine as to what is wilful default and what is not.
in this connection, it was submitted by counsel for the tenants that despite the Explanation it is open to the Court on an appraisement of the circumstances of each case to determine whether or not the default was wilful and in doing, so it cannot be guided wholly and solely by the Explanation which is merely clarificatory in nature.
If the Court in the circumstances of each case finds that the default is not wilful then it can come to this finding despite the Explanation.
On the other hand, the argument ot the counsel for the landlords is that the very purpose of the Explanation is to briny about uniformity in court decisions by laying down a conclusive yardstick in the shape of the Explanation which says that a default would be wilful only if the landlord gives two months ' notice to the tenant and the tenant does not pay the rent after the expiry of this period.
In other words, the argument seems to be that the Explanation is to be read into the proviso so that the word 'wilful ' will have to be defined and interpreted in accordance with the criterion laid down by the said Explanation, i.e., 'issue of two months ' notice. ' The arguments merits consideration but before coming to any conclusion it may be necessary for us to examine the exact meaning of the words 'Wilful default ' as also the interpretation and the scope of the Proviso and the Explanation.
Prima facie, there seems to be some force in the argument of the counsel for the tenants that unless the conditions of the Explanation are fulfilled, whatever may be the nature of the default, it cannot be a 'wilful default ' as contemplated by the Proviso.
Before, however, going into this question further, let us find out the real meaning and content of the word 'wilful ' or the words 'wilful default '.
In the book 'A Dictionary of Law ' by L.B. Curzon, at page 361 the words 'wilful ' and 'wilful default ' have been defined thus: 'Wilful ' deliberate conduct of .l person who is a free agent, knows what he is doing and intends to do what he is doing.
660 'Wilful default ' Either a consciousness of negligence or breach of duty; or a recklessness in the performance of a duty.
In other words, 'wilful default ' would mean a deliberate and intentional default knowing full well the legal consequences thereof.
In Words and Phrases ', Volume 11 A (Permanent Edition) at page 268 the word 'default ' has been defined as the non performance of a duty, a failure to perform a legal duty or an omission to do something required.
In volume 45 of 'Words & Phrases ', the word 'wilful ' has been very clearly defined thus: 'Wilful ' intentional; not incidental or involuntary: done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from an act done carelessly; thoughtlessly, heedlessly or inadvertently: in common parlance word 'wilful ' is used in sense of intentional, as distinguished from accidental or involuntary.
P. 296 "Wilful" refers to act consciously and deliberately done and signifies course of conduct marked by exercise of volition rather than which is accidental, negligent or involuntary.
In Volume III of Webster 's Third New International Dictionary at page 2617, the word 'wilful ' has been defined thus: "governed by will without yielding to reason or with out regard to reason; obstinately or perversely self willed.
" The word 'default ' has been defined in Vol.
I of Webster 's Third New International Dictionary at page 590 thus; "to fail to fulfil a contract or agreement, to accept a responsibility; to fail to meet a financial obligation.
" In Black 's Law Dictionary (4th Edn.) at page 1773 the word 'wilful ' has been defined thus: "Wilfulness" implies an act done intentionally and designedly; a conscious failure to observe care; Conscious; knowing; done with stubborn purpose, but not with malice.
The word "reckless" as applied to negligence, is the legal equivalent of "willful" or "Wanton".
661 Thus, a consensus of the meaning of the words 'wilful default ' appears to indicate that default in order to be wilful must be intentional, deliberate, calculated and conscious, with full knowledge of legal consequences flowing therefrom.
Taking for instance a case where a tenant commits default after default despite oral demands or reminders and fails to pay the rent without any just or lawful cause, it cannot be said that he is not guilty of wilful default because such a course of conduct manifestly amounts to wilful default as contemplated either by the Act or by other Acts referred to above.
The next question that arises for consideration is as to what is the scope of a proviso and what is the ambit of an Explanation either to a proviso or to any other statutory provision.
We shall first take up the question of the nature, scope and extent of a proviso.
The well established rule of interpretation of a proviso is that a proviso may have three separate functions.
Normally, a proviso is meant to be an exception to something within the main enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment In other words, a proviso cannot be torn apart from the main enactment nor can it be used to nullify or set at naught the real object of the main enactment.
Craies in his book 'Statute Law ' (7th Edn.) while explaining the purpose and import of a proviso states at page 218 thus: "The effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it.
The natural presumption is that, but for the proviso, the enacting part of the section would have included the subject matter of the proviso.
" Odgers in 'Construction of Deeds and Statutes ' (Fifth Edn.) while referring to the scope of a proviso mentioned the following ingredients: P. 317 "Provisos These are clauses of exception or qualification in an Act, excepting something out of, or qualifying something in, the enactment which, but for the proviso, would be within it.
" P. 318 "Though framed as a proviso, such a clause may exceptionally have the effect of a substantive enactment.
" 662 Sarathi in 'Interpretation of Statutes ' at pages 294 295 has collected the following principles in regard to a proviso: (a) When one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject matter of the proviso.
(b) A proviso must be construed with reference to the preceding parts of the clause to which it is appended.
(c) Where the proviso is directly repugnant to a section, the proviso shall stand and be held a repeal of the section as the proviso speaks the later intention of the makers.
(d) Where the section is doubtful, a proviso may be used as a guide to its interpretation; but when it is clear, a proviso cannot imply the existence of words of which there is no trace in the section.
(e) The proviso is subordinate to the main section.
(f) A proviso does not enlarge an enactment except for compelling reasons.
(g) Sometimes an unnecessary proviso is inserted by way of abundant caution.
(h) A construction placed upon a proviso which brings it into general harmony with the terms of section should prevail.
(i) When a proviso is repugnant to the enacting part, the proviso will not prevail over the absolute terms of a later Act directed to be read as supplemental to the earlier one.
(j) A proviso may sometimes contain a substantive provision.
" In the case of Local Government Board vs South Stoneham Union,( ') Lord Macnaghten made the following observation: "I think the proviso is a qualification of the preceding enactment, which is expressed in terms too general to be quite accurate." In Ishverlal Thakorelal Almaula vs Motibhai Nagjibhai(2) it was held that the main object of a proviso is merely to qualify the main enactment.
In Madras & Southern Maharatta Railway Co. Ltd. vs Bezwada Municipality,(3) Lord Macmillan observed thus: (1) (2) [1966] 1 SCR 367.
(3) ATR 663 "The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment, and its effect is confined to that case.
" The above case was approved by this Court in Commissioner Of Income Tax, Mysore, etc.
vs Indo Mercantile Bank Ltd.
,(l) where Kapur, J. held that the proper function of a proviso was merely to qualify the generality of the main enactment by providing an exception and taking out, as it were, from the main enactment a portion which, but for the proviso, would fall within the main enactment.
In Shah Bhojraj Kuverji Oil Mills & Ginning Factory vs Subhash Chandra Yograj Sinha,(2) Hidayatullah, J, as he then was, very aptly and succinctly indicated the parametres of a proviso thus: "As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not interpreted as stating a general rule.
" In West Derby vs Metropolitan Life Assurance Co.(3) while guarding against the danger of interpretation of a proviso, Lord Watson observed thus: "a very dangerous and certainly unusual course to import legislation from a proviso wholesale into the body of the statute.
" A very apt description and extent of a provio was given by Lord Oreburn in Rhodda Urban District Council vs Taff Vale Railway Co.(q) where it was pointed out that insertion of a proviso by the draftsman is not always strictly adhered to its legitimate use and at times a section worded as a proviso may wholly or partly be in substance a fresh enactment adding to and not merely excepting something out of or qualifying what goes before.
To the same effect is a later decision of the same Court in Jennings add Another vs Kelly(5) where it was observed: "We must now come to the proviso, for there is, I think, no doubt that in the construction of the section the (1) [1959] 2 supp.
SCR 256.
(2) ; (3) (4) [l909] AC 253.
(5) 664 whole of it must be read and a consistent meaning if possible given to every part of it The words are "provided that such licence shall be granted only for premises situate in the ward or district electoral division in which such increase in population has taken place".
There seems to be no doubt that the words "such increase in population" refer to the increase of not less than 25 per cent of the population mentioned in the opening words of the section " While interpreting a proviso care must be taken that it is used to remove special cases from the general enactment and provide for them separately.
In short, generally speaking, a proviso is intended to limit the enacted provision so as to except something which would have other wise been within it or in some measure to modify the enacting clause.
Sometimes a proviso may be embedded in the main provision and becomes an integral part of it so as to amount to a substantive provision itself.
Apart from the authorities referred to above, this Court has in a long course of decisions explained and adumbrated the various shades; aspects and elements of a proviso.
In State of Rajasthan vs Leela Jain,( ') the following observations were made: "So far as a general principle of construction of a proviso is concerned, it has been broadly stated that the function of a proviso is to limit the main part of the section and carve out something which but for the proviso would have been within the operative part." In the case of Sales Tax Officer, Circle 1, Jabalpur vs Hanuman Prasad(2), Bhargava, J. Observed thus: "It is well recognised that a proviso is added to a principle clause primarily with the object of taking out of the scope of that principal clause what is included in it and what the legislature desires should be excluded." In Commissioner of Commercial Taxes and Ors.
vs R.S. Jhaver and Ors.,(3) this Court made the following observations: (1) [1965]1 S C.R. 276.
(2) [1967] I S.C.R. 831.
(3) [1968]1 S.C.R. 148.
665 "Generally speaking, it is true that the proviso is an exception to the main part of the section; but it is recognised that in exceptional cases a proviso may be a substantive provision itself " In Dwarka Prasad vs Dwarka Das Saraf,(l) Krishan Iyer, J. speaking for the Court observed thus: B "There is some validity in submission but if, on a fair construction, the principal provision is clear, a proviso can not expand or limit it.
Sometimes a proviso is engrafted by an apprehensive draftsman to remove possible doubts, to make matters plain, to light up ambiguous edges.
Here, such is the case If the rule of construction is that prima facie a proviso should be limited in its operation to the subject matter of the enacting clause, the stand we have taken is sound.
To expand the enacting clause, inflated by the proviso, sins against the fundamental rule of construction that a proviso must be considered in relation to the principal matter to which it stands as a proviso.
A proviso ordinarily is but a proviso, although the golden rule is to read the whole section, inclusive of the proviso, in such manner that they mutually throw light on each other and result in a harmonious construction.
In Hiralal Rattanlal etc.
vs Staie of U.P. and Anr.(2) etc.
this Court made the following observations: "Ordinarily, a proviso to a section is intended to take out a part of the main section for special treatment.
It is not expected to enlarge the scope of the main section.
But cases have arisen in which this Court has held that despite the fact that a provision is called proviso, it is really a separate provision and the so called proviso has substantially altered the main section.
" We need not multiply authorities after authorities on this point because the legal position seems to be clearly and manifestly well established.
To sum up, a proviso may serve four different purposes: (1) [1976]1 S.C.R. 128.
(2) [1973] 1 S.C.C.216.
666 (1) qualifying or excepting certain provisions from the main enactment; (2) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; (3) it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and (4) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision.
These seem to be by and large the main purport and parameters of a proviso.
So far as the Act in question is concerned, the matter does not rest only on the question of wilful default, but by an amendment (Act No. 23 of 1973) an Explanation, in the following terms, was added to the proviso to section 10 (2) of the Act: "Explanation For the purpose of this sub section, default to pay or tender rent shall be construed as wilful, if the default by the tenant in the payment or tender of rent continues after the issue of two months ' notice by the landlord claiming the rent.
" We have now to consider as to what is the impact of the Explanation on the proviso which deals with the question of wilful default.
Before, however, we embark on an enquiry into this difficult and delicate question, we must appreciate the intent, purpose and legal effect of an Explanation.
It is now well settled that an Explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision.
Sarathi in 'Interpretation of Statutes ' while dwelling on the various aspects of an Explanation observes as follows: "(a) The object of an explanation is to understand the Act in the light of the explanation.
667 (b) It does not ordinarily enlarge the scope of the original A section which it explains, but only makes the meaning clear beyond dispute." (P. 329) Swarup in 'Legislation and Interpretation ' very aptly sums up the scope and effect of an Explanation thus: "Sometimes an explanation is appended to stress upon a particular thing which ordinarily would not appear clearly from the provisions of the section.
The proper function of an explanation is to make plain or elucidate what is enacted in the substantive provision and not to add or substract from it.
Thus an explanation does not either restrict or extend the enacting part; it does not enlarge or narrow down the scope of the original section that it is supposed to explain .
The Explanation must be interpreted according to its own tenor; that it is meant to explain and not vice versa." (P.P. 297 298.) Bindra in 'Interpretation of Statutes ' (5th Edn.) at page 67 states thus: "An explanation does not enlarge the scope of the original section that it is supposed to explain.
It is axiomatic that an explanation only explains and does not expand or add to the scope of the original section.
The purpose of an explanation is, however, not to limit the scope o the main provision.
The construction of the explanation must depend upon its terms, and no theory of its purpose can be entertained unless it is to be inferred from the language used.
An 'explanation ' must be interpreted according to its own tenor .
" The principles laid down by the aforesaid authors are fully supported by various authorities of this Court.
To quote only a few, in Burmah Shell Oil Storage and Distributing Co.
Of India Ltd. and Anr.
vs Commercial Tax Officer and Ors.(l) a Constitution Bench decision, Hidayatullah, J. speaking for the Court.
Observed thus: "Now, the Explanation must be interpreted according to its own tenor, and it is meant to explain cl.(1)(a)of the (1) [1961] I S.C.R. 902.
668 Article and not vice versa.
It is an error to explain the Explanation with the aid of the Article, because this reverses their roles.
" In Bihta Cooperative Development Cane Marketing Union Ltd. and Anr.
v The Bank of Bihar and Ors(i).
, this Court observed thus: "The Explanation must be read so as to harmonise with and clear up any ambiguity in the main section, It should not be so construed as to widen the ambit of the section.
" In Hiralal Rattanlal 's case (supra), this Court observed thus: "On the basis of the language of the Explanation this Court held that it did not widen the scope of clause (c) But from what has been said in the case, it is clear that if on a true reading of`an Explanation it appears that it has widened the scope of the main section, effect be given to legislative intent notwithstanding the fact that the Legislature named that provision as an Explanation." In Dattatraya Govind Mahajan and Ors.
vs State of Maharashtra and Anr(2).
, Bhagwati, J. Observed thus: "It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity in it.
Therefore, even though the provision in question has been called an Explanation, we must construe it according to its plain language and not on any a priori considerations.
" Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so a to make it consistent with the dominant object which it seems to subserve, (1) [1967]1 S.C.R. 848.
(2) [l977]2 S C.R. 790.
669 (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same.
Having, therefore, fully discussed the main scope and ambit of a proviso and an Explanation, we shall now proceed to elucidate the various provisions of the Act and other Acts.
We have already discussed that although almost every State has its own Rent Act, neither the Explanation nor the statutory clause concerning the term 'wilful default ' is mentained therein These Acts seem to proceed only on the simple word 'default ' and perhaps to buttress their intention they have laid down certain guidelines to indicate the grounds of ejectment wherever a default takes place.
Looking generally at such Acts, they seem to have first provided statutorily a particular date or time when the tenant on being inducted under the contract of tenancy, is to pay the rent.
Such a provision may or may not be against the contract of the tenancy and if it is to that extent, it overrides the contract.
This, therefore, gives sufficient notice to any tenant inducted in any premises that he must pay the rent according to the yard stick set out by the Act, failing which he runs the risk of being evicted for default.
Some Acts, however, have provided a particular number of defaults to enable the Rent Controller or Court to find out whether such a default would entitle the landlord to get an order of eviction.
There are some other Acts which have made rather ingenious and, if we may say so, apt provisions for expediting the process of eviction in case of default by providing that whenever a suit for eviction is filed against a tenant on the ground of default, the tenant in order to show his bona fides must first deposit the entire rent, arrears and cost in the court of the Rent Controller where the action is filed on the very first date of hearing, failing which the court or the authority concern 670 ed would be fully justified in striking down the defence and passing an order of eviction then and there.
The dominant object of such a procedure is to put the tenants on their guard.
It is true that such provisions are rather harsh but if a tenant goes on defaulting then there can be no other remedy but to make him pay the rent punctually unless some drastic step is taken.
These Acts, therefore, strike a just balance between the rights of a landlord and those of a tenant.
For deciding these cases, it is not necessary for us to go either into the ethics or philosophy of such a provision because we are concerned with statutes having different kinds of provisions.
With this little preface we would now examine the working and relevant provisions of the Act alongwith similar provisions contained in the other three Acts, viz., A.P., Orissa, and Pondicherry Acts, which are almost in pari materia the proviso to section 10 (2) of the Act.
The only difference between the Act and the other Acts is that where as an Explanation is added to the proviso to section 10 (2) of the Act, no such Explanation has been added to the provisions of the other three Acts; hence we have now to consider the combined effect of the proviso taken in conjunction with the Explanation.
We may, therefore, extract the Explanation again to find out what it really means and to what extent does it affect the provisions of the Proviso: Explanation For the purpose of this sub section, default to pay or tender rent shall be construed as wilful, if the default by the tenant in the payment or tender of rent continues after the issue of two months ' notice by the landlord claiming the rent;" If we analyse the various concomitants of the Explanation, the position seems to be that (a) there should be a default to pay or tender rent, (b) the default should continue even after the landlord has issued two months ' notice claiming the arrears or rent, (c) if, despite notice, the arrears are not paid the tenant is said to have committed a wilful default and consequently liable to be evicted forthwith.
The question is; do these three conditions whittle down the effect of the proviso or merely seeks to explain the intendment of a wilful default ? One view which may be possible and which form the basis of the argument of the connsel for the tenants is that mere non 671 payment of arrears of rent after issue of two months ' notice cannot in A all circumstances automatically amount to a wilful default if the nonpayment does not fulfil the various ingredients pointed out by us while defining the term 'Wilful default '.
The other view which has been canvassed before us by the counsel for landlords is that in view of the Explanation once it is proved that after issue of two months ' notice if the tenant does not pay the arrears within the stipulated period of two months he is liable to be ejected straightaway.
Another view is that such an interpretation would be extremely harsh and penal in nature because if, after receipt of the notice, the tenant is not able to pay the arrears due to circumstances beyond his control, of which the court is satisfied it will be putting a serious premium or handicap on the right of the tenant.
In the same token, it was argued that if such an interpretation is put on the Explanation then the entire provisions of the Proviso become otiose thus rendering the said Proviso nugatory.
Another aspect that must be stressed at this stage is that where a tenant has committed default after default without any lawful or reasonable cause and the said defaults contain all the qualities of a wilful default, viz., deliberate, intentional, calculated and conscious, should he be given a further chance of locus paenitentiae ? After hearing counsel for the parties at great length, we feel that although the question is difficult one yet it is not beyond solution.
If we keep the objects of the proviso and the Explanation separate, there would be no difficulty in deciding these cases.
To begin with, section 13 (2) (i) of the Act lays down that where the Controller is satisfied that the tenant has not paid or tendered the rent within 15 days after the expiry of the time fixed in the Agreement of tenancy or in the absence of any such Agreement, by the last date of the month next following that for which the rent is payable, he (tenant) undoubtedly commits a default.
Two factors mentioned in section 10 (2) (i) seem to give a clear notice to a tenant as to the mode of payment as also the last date by which he is legally supposed to pay the rent.
This, however, does not put the matter beyond controversy because before passing an order of eviction under the proviso, it must also be proved that the default was wilful and if the Controller is of the opinion that the default in the circumstances and facts of the case was not wilful, in the sense that it did not contain any of the qualities or attributes of a wilful default as indicated by us above, he may give the tenant a reasonable time, not exceeding 15 days, to pay the entire rent and if this is complied with, 672 the application for ejectment would stand rejected.
The difficulty, however, is created by the Explanation which says that once a land lord gives a two months ' notice to his tenant for paying the arrears of rent but the tenant continues in default even thereafter, then he is liable to be evicted.
There is a good deal of force in this argument which has its own advantages.
In the first place, it protects the court from going into the intricate question as to what is a wilful default and whether or not the conditions of a wilful default have been satisfied which, if permitted would differ from case to case and court to court.
But the difficulty is that if such a blanket ban is put on the court for not examining the question of wilful default once the conditions laid down in the Explanation are satisfied then it would undoubtedly lead to serious injustice t l the tenant.
A subsidiary consequence of such an interpretation would be that even though the tenant, after receipt of the notice, may be wanting to pay the arrears of rent but is unable to do so because of unforseen circumstances like, death, accident, robbery, etc., which prevent him from paying the arrears, yet under the Explanation he has to be evicted.
Another view which, in our opinion, is a more acceptable one and flows from the actual words used by the proviso is that where the Explanation does not apply in the sense that the landlord has not issued two months ' notice, it will be for the Court to determine in each case whether the default is wilful having regard to the tests laid down by us and if the Court finds that default is wilful then a decree for eviction can be passed without any difficulty.
Another difficulty in accepting the first view, viz., if two months notice is not given, the tenant must not be presumed to be a wilful defaulter, is that in such a case each landlord would have to maintain a separate office so that after every default a two months ' notice should be given and if no notice is given no action can be taken against a tenant.
We are unable to place such an unreasonable restriction on the landlord to give two months ' notice after every default which may or may not be possible in every case.
A correct interpretation, in our opinion, would be that where (1) no notice, as required by the Explanation, is given to the tenant, the Controller or the court can certainly examine the question whether the default has been wilful and to such a case the Explanation would have no application, 673 (2) where the landlord chooses to issue two months ' notice and the rent is not paid then that would be a conclusive proof of the default being wilful unless the tenant proves his incapability of paying the rent due to unavoidable circumstances.
B The argument of the counsel for landlords was that even if a notice under the Explanation is given that does not take away the jurisdiction of the proviso to determine whether or not the default has been wilful if it contains the qualities and attributes referred to above because what the Explanation does is merely to incorporate an instance of a wilful default and is not conclusive on the point and would have to be construed by the court in conjunction with the conditions mentioned in the proviso.
We are, however unable to go to this extreme extent because that will actually thwart the object of the Explanation.
As we read the Explanation, it does not at all take away the mandatory duty cast on the Controller in the proviso to decide if a default is wilful or not.
Indeed, if the landlord chooses to give two months ' notice to his tenant and he does not pay the rent, then, in the absence of substantial and compelling reasons, the controller or the court can certainly presume that the default is wilful and order his eviction straightaway.
We are unable to accept the view that whether two months ' notice for payment of rent is given or not, it will always be open to the Controller under the proviso to determine the question of wilful default because that would render the very object of Explanation otiose and nugatory.
We express our view in the matter in the following terms: (1) Where no notice is given by the landlord in terms of the Explanation, the Controller, having regard to the four conditions spelt out by us has the undoubted discretion to examine the question as to whether or not the default committed by the tenant is wilful.
If he feels that any of the conditions mentioned by us is lacking or that the default was due to some unforeseen circumstances, he may give the tenant a chance of locus paenitentiae by giving a reasonable time, which the statute puts at 15 days, and if within that time the tenant pays the rent, the application for ejectment would have to be rejected.
(2) If the landlord chooses to give two months ' notice to the tenant to clear up the dues and the tenant does not 674 pay the dues within the stipulated time of the notice then the Controller would have no discretion to decide the question of wilful default because such a conduct of the tenant would itself be presumed to be wilful default unless he shows that he was prevented by sufficient cause or circumstances beyond his control in honouring the notice sent by the landlord.
We would, however, refer to some case law on the question of wilful default as interpreted by the Madras High Court because there appear to be three decisions of the Madras High Court taking some what contrary views.
In Rajeswari vs Vasumal Lalchand(1) it was held that non payment of rent amounted to such supine and callous in difference on the part of the tenant as to amount to a wilful default.
However, the learned Judge does not appear to have noticed the effect of the Explanation to section 10 (2) introduced in 1973.
This decision undoubtedly supports the view that a wilful default is not merely a pure and simple default but a default which is per se deliberate and intentional.
In N. Ramaswami Reddiar vs S.N. Periamuthu Nadar,(2) Explanation to the proviso to section 10 (2) of the Act was expressly considered and Ratnam, J. Observed as follows: "A reading of the Explanation indicates that it is not exhaustive of all cases of wilful default, but it specifies only one instance where the default should be construed as wilful.
If a tenant does not pay the rents at all for a considerable time and the landlord files a petition for an order of eviction on the basis that the tenant had committed wilful default without issuing any notice, then, in the absence of any other explanation by the tenant, the default should be construed as wilful, in spite of the fact that the landlord had not chosen to issue a notice to the tenant claiming the rents.
In this view, I hold that counsel for the petitioner cannot be of any assistance to him.
" We feel ourselves in complete agreement with the view taken by the learned Judge On the interpretation of the proviso read with the Explanation.
In the case of Khivraj Chordia vs G. Maniklal Bhattad.(3) Ramamurti, J. has drawn a very apt and clearcut distiction (1) AIR 1983 Madras 97.
(2) [1980] Law Weekly (vol. 93) 577 (3) AIR 1966 Madras 67 675 between a simple default and a wilful default and has pointed out A that in order to be a 'wilful default ' it must be proved that the con duct of the tenant was such as would lead to the inference that his omission was a conscious violation of his obligation to pay the rent.
In this connection, the learned Judge observed thus: "The decisions of this court have reportedly pointed B` out that there is a clear difference in law between default and wilful default and that non payment of rent within the time specified by the Act, though would amount to default, cannot by itself be treated as wilful default, and that if the rent was paid after the expiry of the time in the following month within a short time thereafter, the default cannot be said to be wilful to warrant the punishment of eviction Keeping in mind the main object of the enactment, namely, prevention of unreasonable eviction of tenants, the principle that emerges from the several decisions is that for default to be regarded as wilful default, the conduct of the tenant should be such as to lead to the inference that his omission was a conscious violation of his obligation to pay r the rent or reckless indifference.
If the default was due to accident or inadvertence or erroneous or false sense of security based upon the conduct of the landlord himself, the default cannot be said to be wilful default.
" Having, therefore, enunciated the various principles and tests to be applied by courts in deciding the question of wilful default we now proceed to decide the various appeals filed before us.
The brief facts of each appeal have already been narrated in the opening part of our judgment and we would like to sum up our conclusions flowing from the facts found by, the High Court in each case.
In civil appeal No. 1178 of 1984, it would appear that though the tenant had committed a default but he had paid the entire rent well before the filing of the suit by the landlord.
In fact, the suit for eviction was filed by the landlord not on the ground of pending arrears but to penalise the tenant for having defaulted in the past.
Such a suit cannot be entertained because once the entire dues are paid to the landlord the cause of action for filing of a suit completely vanishes.
Hence, the suit arising out of civil appeal No. 1978 of 1984 must be dismissed as being not maintainable and the order of ejectment passed by the High Court is hereby set aside.
H 676 In civil appeal No. 6211 of 1983, having regard to the tests and the criteria laid down by us there can be no doubt that wilful default in the payment of arrears to the tune of Rs. 900 has been proved and as there is nothing to show that the arrears were not paid or withheld due to circumstances beyond the control of the tenant, the order of eviction passed by the High Court is confirmed, and the appeal is allowed.
In civil appeal No. 1992 of 1982, a somewhat peculiar position seems to have arisen.
It is true that, to begin with, the tenant did not pay the rent for the months of June 1977 to January 1978 which led the landlord to issue a notice on 16.1.78 demanding payment of arrears amounting to Rs. 392.
The tenant within 15 days of receipt of the notice (on 30.1.783 sent a detailed reply to the landlord and enclosed a Bank Draft of Rs. 39.2 which was, however, not encashed by the landlord and returned to the tenant after filing of the eviction petition, for reasons best known to him.
Therefore, since the tenant had already complied with the notice within the stipulated time envisaged by the Explanation to Proviso to section 10 (2) of the Act, by no stretch of imagination could be called guilty of wilful default.
On the other hand, the conduct of the landlord in filing a suit and not encashing the Bank Draft was motivated with a view to get a decree for eviction on false excuse.
Such a state of affairs could not be countenanced by the court.
In these circumstances, we are of the opinion that the arrears having been paid through the Bank Draft, the question of eviction of the tenant did not arise nor did the question of default come into the picture merely because the landlord wanted to harass him by filing an eviction petition.
The High Court was, therefore, clearly in error in passing the decree of ejectment against the tenant.
We, therefore, allow the appeal and set aside the order of the High Court evicting the tenant.
In civil appeal No. 1659 of 1982, as it was clearly a case of wilful default on the part of the tenant we affirm the order of the High Court evicting the tenant and dismiss the appeal.
In civil appeal No. 3668 of 1982, some dispute arose between the parties as to whether the rent was to be deposited in Bank, resulting in the filing of the present suit for eviction on 1.4.80 in the court of the Rent Controller by the landlord after verifying from the Bank that the tenant had not deposited the rent for the months of January and February 1980.
This default, in our opinion, was undoubtedly deliberate, conscious and without any reasonable or rational basis 677 and the High Court was perfectly right in holding that the tenant A was guilty of wilful default and passing a decree for ejectments.
As no notice was given by the landlord, Explanation to proviso to section 10 (2) of the Act does not apply at all.
The appeal is accordingly dismissed.
In civil appeal No. 2246 of 1982, the respondent landladies had let out the premises to the tenant at a monthly rent of Rs. 105.
A petition for eviction was filed by them on 2.11.76 for non payment of rent by the tenant from January 1976 to September 1976, a period of 9 months.
But, we might state here that before filing the eviction petition, the respondents had issued a notice on 6.7.76 asking the tenant to pay the dues, which the tenant paid on 17 7.76, i.e., within 10 days of the receipt of the notice, which was accepted by the landladies without any prejudice.
The Rent Controller held that the default was not wilful as in pursuance of the notice the payment had already been made.
The Appellate Authority reversed the finding of the Rent Controller and held that the default was wilful.
The High Court in revision upheld the order of eviction O n the ground that there was no satisfactory explanation for non payment of rent for the period January to June 1976.
In coming to this finding, the High Court was clearly in error because the tenant had already deposited the entire dues including the rent from January to June, on 17.7.76.
Thus, the question of wilful default could not arise nor could it be said that the default was either conscious or deliberate or international.
Moreover, in view of the Explanation since the tenant had paid the amount within the time of the notice, there could be no question of wilful default.
This fact seems to have been completely overlooked by the High Court.
We, therefore, allow the appeal and set aside the order of the High Court directing eviction of the tenant.
In civil appeal No. 4012 of 1982, the tenant occupied the premises at a monthly rent of Rs. 325.
It appears that the tenant defaulted in payment of tent from June 1976 onwards and after repeated demands, only a sum Or Rs. 1000 was paid by him on 1.4 77.
leaving a substantial balance of arrears unpaid.
The plea of the tenant that he had made payments to the Income Tax Department has not been proved, nor did the tenant have any right under the contract to pay any amount to the Income Tax Department and if he did so on his own, he must he held responsible for his conduct.
Even so, the landlord contended that right from February 1977 to July 1978, the appellant was in arrears without any lawful cause.
This was, therefore, a clear case of wilful default where the tenant did not pay the 678 rent deliberately, consciously and intentionally.
In these circumstances, the High Court was fully justified in holding that the default was wilful and affirming the decree passed by the Appellate court.
The appeal is accordingly dismissed.
The result is that all the appeals are disposed of as indicated above but in the circumstances there will be no order as to costs in any of the appeals.
Civil Appeal No. 5769 of 1983 already stands disposed of in terms of our Order of September 12,1984.
SABYASACHI MUKHARJI, J.
With great respect to my learned brothers, I regret I am unable to agree on the construction put on the expression 'wilful default ' in the Explanation to the Proviso of sub section (2) of section 10 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960.
It may be borne in mind that The Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 hereinafter called the 'Act ' was an Act to amend and consolidate the law relating to the regulation of letting of residential and non residential buildings and the control of rents of such buildings and the prevention of unreasonable eviction of tenants therefrom in the State of Tamil Nadu.
The Act was from time to time amended and was last amended by Act 1 of 1980.
By Act 23 of 1973, an Explanation was added to the Proviso to sub section (2) of section 10 of the Act.
Section 10 of the Act deals with the eviction of tenants.
In order to appreciate the scheme of the section and the meaning of the expression 'wilful ' introduced by the Explanation to the Proviso of sub section (21 of section 10, we have to examine the provisions of section 10 and the various sub sections of the section.
As mentioned hereinbefore section 10 deals with the eviction of tenants and postulates that a tenant shall not be evicted whether in execution of a decree or otherwise except in accordance with the provisions of section 10 or sections 14 to 16.
For these appeals we are not concerned with the provisions of sections 14 to 16.
The first Proviso to sub section (l) of section 10 stipulates that the said sections 14 to 16 would not apply to a tenant whose land lord is the Government The second Proviso also provides that if the tenant denies the title of the landlord or claims right of permanent tenancy, the Controller shall decide whether the denial or claim is bona fide and if he records a finding to that effect, the landlord shall be entitled to sue for eviction of the tenant in a Civil Court and the Court may pass a decree for eviction on any of the grounds 679 mentioned in the said sections, notwithstanding that the Court finds that such denial does not involve forfeiture of the lease or that the claim is unfounded.
Sub section (2) of section 10 of the Act deals with the procedure which a landlord must follow in order to evict his tenant.
It provides that a landlord should apply to the Controller for a direction for eviction if he wants it and, if the Controller, after giving the tenant a reasonable opportunity of showing cause against the application, is satisfied with any of the various conditions which are stipulated in clause (i), (ii), (iii), (iv), (v), (vi) and (vii) then he shall make an order directing the tenant to put the landlord in possession of the building and if the Controller is not satisfied, he shall make an order rejecting the application.
The Proviso to sub section (2) of section 10 is as follows: "Provided that in any case falling under clause (i) if the Controller is satisfied that the tenant 's default to pay or tender rent was not wilful, he may, notwithstanding any thing contained in section 11, give the tenant a reasonable time, not exceeding fifteen days, to pay or tender the rent due by him to the landlord up to the date of such payment or tender and on such payment or tender, the application shall be rejected.
" The Explanation which was added by Act 23 of 1973 to the said Proviso stipulates that for the purpose of this sub section, default to pay or tender rent shall be construed as wilful, if the default by the tenant in the payment or tender of rent continues after the issue of two months ' notice by the landlord claiming the rent.
It is this Explanation that falls for consideration in these appeals.
Clause (i) of sub section (2) of section 10 of the Act requires the Controller to be satisfied that the tenant has not paid or tendered rent due by him in respect of the building within fifteen days after the expiry of the time fixed in the agreement of the tenancy with his landlord or in the absence of any such agreement, by the last day of the month next following that for which the rent is payable.
For the purpose of these appeals, it is not necessary to consider the grounds of eviction mentioned in other clauses of sub section (2) of section 10 of the Act.
If the Controller is satisfied of any of the grounds mentioned in clause (i) to clause (vii) of sub section (2) of section 10, then the shall, so the section stipulates, make an order directing the tenant to put the landlord in possession of the building and if he is not so satisfied, he shall make an order rejecting the application; the Proviso provides that in any case falling under clause (i) which we have noted 680 hereinbefore, if the Controller is satisfied that the tenant 's default to pay or tender rent was not wilful, he may, notwithstanding anything contained in section l l, give the tenant a reasonable time, not exceeding fifteen days, to pay or tender the rent due by him to the landlord upto the date such payment or tender and on such payment or tender, the application shall be rejected.
The Explanation which is the subject matter of interpretation before us and which was added, as noted before, by Act 23 of 1973 by section 10, stipulates that for the purpose of the said sub section, namely sub section (2) of section 10, default to pay or tender rent shall be construed as wilful, if the default by the tenant in the payment or tender of rent continues after the issue of two months ' notice by the landlord claiming the rent.
The question, therefore, is can the default be construed as wilful under any other circumstances apart from default continuing after the issue of two months ' notice by the landlord claiming the rent ? In other words, for the purpose of this section, will the wilful default be only when notice has been given by the landlord and two months have expired and the tenant has not paid the rent ? My learned brethren say that there may be other circumstances constituting wilful default.
With respect, I differ.
I will briefly note the reasons.
As I read the provision, it appears to me that there must be satisfaction of the Controller whether default was wilful and a default will be construed as wilful, in my opinion, only where the landlord has given notice and two months have expired without payment of such rent.
Default has been construed in various ways depending upon the context. 'Default ' would seem to embrace every failure to perform part of one 's contract or bargain.
It is a purely relative term like negligence.
(See in this connection Stroud 's Judicial.
Dictionary Vol. 1, Third Edition, page 757).
It means nothing more, nothing less, than not doing what is reasonable under the circumstances; not doing something which you ought to do, having regard to the transaction.
Similarly, default in payment imports some thing wrongful, the omission to do some act which, as between the parties, ought to have been done by one of them.
It simply means non payment, failure or omission to pay.
(See Prem 's Judicial Dictionary, Vol.
I, 1964 page 483).
Earl Jowitt defines 'default ' as omission of that which a man ought to do.
(See The Dictionary of English Law.
page 597).
The Privy Council in the case of Fakir Chander Dutt and Others 681 vs Ram Kumar Chatterji(1) observed that 'Default ' did not necessarily A mean breach of contractual obligation, but simply non payment of rent by a person capable of protecting his tenure by doing so.
Default happens in payment of rents under various contingencies and situations.
Default is a fact which can be proved by evidence.
Whether the default is willful or not is also a question of fact to be proved from evidence, direct and circumstantial, drawing inferences from certain conduct.
If the Courts are free to decide from varying circumstances whether default was wilful or not, then divergence of conclusions are likely to arise, one judicial authority coming to the conclusion from certain circumstances that the default was wilful, another judicial authority coming to a contrary conclusion from more or less same circumstances.
That creates anomalies.
In order to obviate such anomalies and bring about a uniform standard, the explanation as I read, explains the expression 'wilful ' and according to the Explanation added, a default to pay or tender rent "shall be construed", as wilful if the default by the tenant in the payment of rent continues after issue of two months ' notice by the landlord claiming the rent If that is the position, in a case where the landlord has given notice to the tenant claiming the rent and the tenant has not paid the same for two months, then the same must be construed as wilful default, whatever may be the cause for non payment bereavement on the date of payment in the family of near or dear ones or serious heart attack or other ailment of the tenant or of any person sent by the tenant to pay the rent cannot be excused and cannot be considered to be not wilful because the legislature has chosen to use the expression "shall be construed as wilful" if after a notice by the landlord for two months, failure to pay or tender rent on the part of the tenant continues, and if it is wilful then under sub section (2) clause (i) read p with the proviso as explained by the Explanation, the Controller must be satisfied and give an order for eviction.
The question is whether in other cases, that is to say, in cases where admittedly or by other facts or aliunde the Court comes to the conclusion that the default is wilful, for instance, in a case where there is chronic default, regular defaults or habitual defaults, the two months ' notice is necessary or not.
It was the argument on behalf of the respondents that in those circus stances such notice was not necessary and this is the view which has found acceptance by my learned Brethren: I am unable to agree, (1) Indian Appeals, Vol.
XXXI, p. 195.
682 with respect.
If in cases where there are genuine and bona fide reasons for failure or non payment of rent which cannot be excused after two months ' notice to pay rent, then other causes which lead to inference of wilful default cannot also be construed as 'wilful default ' in the context of the Explanation.
The legislature has provided an absolute and clear definition of 'wilful default '.
Other circumstances cannot be considered as wilful default.
In my opinion, the expression "shall be construed" would have the effect of providing a definition of wilful default in the proviso to sub section (2) of section 10.
If a definition is provided of an expression, then the Courts are not free to construe the expression otherwise unless it is so warranted by the use of the expression such as "except otherwise provided or except if the context otherwise indicates".
There is no such expression in the instant case.
There may be in certain circumstances intrinsic evidence indicating otherwise.
Here there is none.
The whole scheme of section 10 is that in order to be entitled to eviction on the ground of arrears of rent, the ingredients of which the Controller must be satisfied are; (a) default, (b) default was wilful.
Whether in a particular case default is wilful or not, must be considered in accordance with the definition provided in the Explanation to Proviso to sub section (2) of section 10 of the Act.
If it was intended that the Courts would be free to judge whether in a particular set up of facts, the default was wilful or not where no notice has been given, then in such a case there was no necessity of adding this Explanation to the Proviso which is a step to the making of the findings under clause (1 of sub section (2) of section 10 of the Act.
It is well settled that the Legislature does not act without purpose or in futility.
lt was contended on behalf of the landlords that the Legislature has not used the expression default to pay or tender rent shall be construed as wilful only if the default by the tenant in the payment or tender of rent continues after the issue of two months ' notice by the landlord claiming the rent It is true that legislature has not chosen to use language to indicate that in no other cases, the default could be considered to be wilful except one case which has been indicated in the Explanation.
683 As I read the Explanation it is not so necessary because Legislature has defined 'wilful d fault ' by the expression that 'default to pay or tender rent shall be construed ' meaning thereby that it will mean only this and no other.
My learned brethren have given instances of difficulties and hardships, if the other defaults, that is to say, default apart from tenant not paying after the expiry of notice by the landlord are not considered as wilful default.
It is true that there may be hardships and many problems might arise.
I share the apprehension of these problems and hardships but I find no justification to read that these hardships of which Legislature must have been aware, were also intended to be covered by the Explanation.
It appears to me that the meaning is clear about the purpose of introduction of the Explanation, i.e, to obviate the difficulties and divergence of judicial opinions depending upon varying circumstances, the legislature has provided a uniform definition to the concept of 'wilful default '.
It is true that where two constructions are possible, one which avoids anomalies and creates reasonable results should be preferred but where the language is clear and where there is a purpose that can be understood and appreciated for construing in one particular manner, that is to say, avoidance of divergence of judicial opinions in construing wilful default and thereby avoiding anomalies for different tenants, one judge taking a particular view on the same set of facts, another judge taking a different view on the same set of facts, in my opinion, it would not be proper in such a situation to say that this definition of wilful default was only illustrative and not exhaustive.
I cannot construe the expression used in the Explanation to the Proviso to sub section (2) of section 10 as illustrative when the Legislature has chosen to use the expression "shall be construed".
It has been observed that statutory provisions must be so construed, if it is possible, that absurdity and mischief may be avoided.
Where the plain and literal interpretation of statutory provision proviso produces a manifestly absurd and unjust result, the Court might modify the language used by the legislature or even do some violence to it so as to achieve the obvious intention of the legislature and produce rational construction and just results.
(See vs in this connection the observations in the No. 1451 (NCE) of 1984).
Lord Denning in the case of Seaford Court Estates Ltd. vs Asher(l) has observed: "If the makers of the Act had themselves come across this 1. 164(CA) 684 ruck in the texture of it, how would they have straightened i out ? He must then do as they would have done A judge must not alter the material of which it is woven, but he can and should iron out the creases.
" Ironing out the creases is possible but not re writing the language q to serve a notion of public policy held by the judges.
Legislature must have legislated for a purpose by Act 23 of 1973 and used the expression "shall be construed" in Explanation in the manner it did.
The fact that in interpreting the statutory language, judges should avoid policy as an approach was emphasised by Lord Scarman in the decision of the House of Lords in the case of Regina vs Barnet London Borough Council Exparte Nilish Shah.(l) User of policy in interpretation of statutory language, Lord Scarman observed, was an impermissible approach to the interpretation of statutory language.
Judges should not interpret statutes in the light of their own views as to policy.
They may, of course, adopt a purposive interpretation if they can find in the statute read as a whole or in material to which they are permitted by law to refer as aids to interpretation an expression of Parliament 's purpose or policy.
In the case of Carrington and Others vs Therm a Stor Ltd,(2) the Master of the Rolls observed that "If regard is had solely to the apparent mischief and the need for a remedy, it is only too easy for a judge to persuade himself that Parliament must have intended to provide the remedy which he would himself have decreed if he had legislative power.
In fact Parliament may not have taken the same view of what is a mischief, may have decided as a matter of policy not to legislate for a legal remedy or may simply have failed to realise that the situation could ever arise.
This is not to say that statutes are to be construed in blinkers or with narrow and legalistic literalness, but only that effect should given to the intentions of Parliament as expressed in the statute, applying the normal canons of construction for resolving ambiguities or any lack or clarity.
" 1. 1983(2) Weekly Law Reports, 16 at 30.
2. 1983 (1) Weekly Law Reports 138 at 142.
685 In the aforesaid view of the matter, I would construe the expression 'wilful default ' in the Explanation to Proviso to subsection (2) of section 10 of the Act in the manner l have indicated.
In that view of the matter, I would decide the appeals accordingly, that is to say, l would agree with my learned brethren in the order passed in those cases where eviction orders have been passed after two months ' notice had been given and there was continuance of default by the tenant thereof.
Appeals which have been disposed of on the basis of wilful default as understood in the manner indicated in the aforesaid observations of mine, I respectfully agree.
Appeals which have been disposed of on wilful default other than in the manner I have indicated hereinbefore, I respectfully differ.
The individual appeals are disposed of accordingly.
There will be no order as to costs.
M.L.A. Appeals dismissed.
741 fair return on the 'capital employed ' which is to be exempted from A tax under sub section (1) of Section 80J, the owner 's capital alone should be taken into account and borrowed monies should be excluded.
Even in regard to the provisions of the above mentioned four statutes, an argument could well be advanced that borrowed monies are as much part of capital employed in the undertaking as the owner 's capital and when monies are borrowed on payment of interest by way of hire charges, they become part of the owner 's capital originally brought in by the owner and there is no reason why capital partaking of the samd characteristics as the fair return should not be allowed on it.
This has precisely been the argument advanced on behalf of the assesses in support of their contention that 'capital employed ' must include borrowed monies in sub section (1) of Section 80J.
But this argument has not prevailed with the Legislature in the enactment of any of the above mentioned four statutes and despite this argument the Legislature has chosen to exclude borrowed monies in computing the 'capital employed ' or the capital of the company for determining what should be regarded as fair return, so that profits in excess of such fair return may be subjected to additional tax.
The Central Board of Revenue cannot therefore be accused of any irrationality or whimsicality in providing that fair return on the 'capital employed ' eligible for exemption under subsection :1) of Section 80J should be calculated by applying the statutory percentage to the owner 's capital, that is, the paid up share capital and reserves without taking into account long term borrowings or for the matter of that, any borrowed monies and debts.
We cannot appreciate the contention of Mr. Palkhivala that when the Legislature was offering a tax incentive it could not have intended that the tax incentive should be measureable by reference only to the owner 's capital and that borrowed capital should b e left out of account, because that would, in the submission of Mr. Palkhivala, result in favouring the affluent assessees who are able to employ their own capital and discriminate against the indigent who have to borrow funds to finance their undertakings.
Having regard to the legislative practice and usage referred to by us, it is obvious that if the Legislature intended that the capital employed ' must include long term borrowings, the Legislature would not have used the flexible expression 'capital employed ' but would have expressed itself unambiguously by providing that the 'capital employed ' shall include long term borrowings.
It is clear from the language used by the section that the Legislature proceeded on the basis that the expression 'capital employed ' has no fixed definite meaning including or excluding long term borrowings and deliberately chose to leave it to the Central Board of Revenue to prescribe 742 how the 'capital employed ' shall be computed or in other words, what items shall be included and what items excluded in computing the 'capital employed ' and by incorporating Rule 19A with retrospective effect in Section 80J by the Finance (No. , the Legislature clearly expressed its aproval of the manner of computation of the 'capital employed ' prescribed by the Central Board of Revenue by making sub rule (3) of Rule 19A.
The consequence of this interpretation would undoubtedly be that the assessees would get relief only with reference to their own capital and not with reference to any monies which might have been borrowed by them for employment in the undertaking but that is a matter of policy which clearly falls within the province of the Executive and the Courts are not concerned with it.
It is obvious that the Central Board of Revenue intended and having regard to the retrospective amendment of Section 80J by Finance Act (No. 2) of l980 that must also be taken to be the intention of the legislature that the assessees should be given relief only with reference to their own capital and not with reference to any borrowed monies, presumably because the object of giving relief was to encourage assessees to bring out their own monies for starting new industrial undertakings and the intention was not that the assessees should be given relief with reference to monies which did not belong to them but which were borrowed from financial institutions and other parties and which would have to be repaid.
Mr. Palkhivala then contended that if sub section (1) of Section 80J were construed as leaving it to the Central Board of Revenue to prescribe what items shall be included and what items excluded in computation of the 'capital employed ' it would be vulnerable to attack on the ground of excessive delegation of legislative power and would consequently be void.
We do not think there is any substance in this contention, for there is in the present case no question of excessive delegation of legislative power.
The essential legislative policy of allowing relief to an assessee who starts a new industrial undertaking or business of a hotel and declaring the period for which such relief shall be granted, is laid down by the Legislature itself in the various sub sections of Section 80J and all that is left to the Central Board of Revenue to prescribe is the manner of computation of the 'capital employed ' with reference to which the quantum of the relief is to be calculated.
It is only the details relating to the working of the exempting provision contained in Section 80J which are left by the Legislature to be determined by the Central Board of Revenue.
This 743 is clearly permissible without offending the inhibition against excessive delegation of legislative power.
It must be remembered that Section 80J enacts an exemption in a taxing statute and a certain margin of latitude is always allowed to the Executive in working out the details of exemption in a such taxing statute.
It was laid down by this Court as far as back as 1959 in Pt.
Banaarsi Dass Bhanol vs State of Madhy a Pradesh(l).
"Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like." So also in Sitaram Bishambardas and Ors.
vs State of U.P. and Ors.(Z) this Court upheld the validity of Section 3D (1) of the U.P. Sales Tax Act 1948 which authorised the levy of a tax on the turnover of first purchases made by dealer or through a deal r acting as a purchasing agent, in respect of such goods or class of goods and at such rates, subject to a maximum, as may from time to time be notified by the State Government and Hegde, J. speaking on behalf of the Court observed: E 'It is true that the power to fix the rate of a tax is a legislative power but if the legislature lays down the legislative policy and provides the necessary guidelines, that power can be delegated to the executive.
Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various economic and social aspects, such as the availability of the goods, administrative convenience, the extent of evasion, the impact of tax levied on the various sections of the society etc have to be considered.
In a modern society taxation is an instrument of planning.
It can be used to achieve the economic and social goals of the State For that reason the power to tax must be a flexible power.
It must be capable of being modulated to meet the exigencies of the situation.
In a Cabinet form of Government, the executive (1) ; (2) ; H 744 is expected to reflect the views of the legislatures.
In fact in most matters it gives the lead to the legislature.
However, much one might deplore the "New Depotism" of the executive, the very complexity of the modern society and the demand it makes on its Government have set in motion forces which ha e made it absolutely necessary for the legislatures to entrust more and more powers to the Executive.
Text book doctrines evolved in the 1 9th century have become out of date.
Present position as regards delegation of legislative power may not be ideal, but in the absence of any better alternative, there is no escape from it.
The legislatures have neither the time, nor the required detailed information nor even the mobility to deal in detail with the innumerable problems arising time and again.
In certain matters they can only lay down the policy and guidelines in as clear a manner as possible.
" The validity of Section 3D of the U.P. Sales Tax Act 1948 was again challenged before this Court in Hiralal Ratan Lal vs State of U.P. and Anr (1) the same ground that it suffered from the vice of legislative power and again, the challenge was negatived by this Court with the following observations: "The only remaining contention is that the delegation made to the executive under section 3D is an excessive delegation.
It is true that the legislature cannot delegate its legislative function, to any other body.
But subject to that qualification, it is permissible for the legislature to delegate the power to select the persons on whom the tax is to be levied or the goods or the transactions on which the tax is to be levied.
In the Act, under section 3 the legislature has sought to impose multi point tax on all sales and purchases.
After having done that it has given power to the executive, a high authority and which is presumed to command the majority support in the legislature; to select for special treatment dealings in certain class of goods.
In the very nature of things, it is impossible for the legislature to ennumerate goods.
dealings in which Sales.
Tax or Purchase tax should be imposed.
It is also impossible for the legislature to select the goods which should be subjected to (1) ; 745 a single point sales or purchase tax.
Before making such selections several aspects such as the impact of the levy on the society, economic consequences and the administrative convenience will have to be considered.
These factors may change from time to time.
Hence in the very nature of things, these details have got to be left to the executive.
" The principles laid down in these observations from the decided cases clearly govern the present case and conclusively repel the contention or Mr. Palkhivala that if sub section (1) of Section 80J were construed in the manner suggested by the learned Attorney General on behalf of the Revenue, it would be rendered void on the ground of excessive delegation of legislative power.
the Legislature having laid down the legislative policy of giving relief to an assessee who is starting a new industrial undertaking or the business of a hotel.
had necessarily to leave it to the Central Board of Revenue to determine what should be the amount of capital employed that should be required to be taken into that account for the purpose of determining the quantum of the relief allowable under the Section.
What should be the quantum of the relief allowable to the assessee would necessarily depend upon diverse t`actors such as the impact of relief on the industry as a whole, the response of the industry to the grant of the relief, the adequacy or inadequacy of the relief granted in promoting the growth of new industrial undertakings, the state of the economy prevailing at the time, whether it is buoyant or depressed and administrative convenience.
These are factors which may change from time to time and hence in the very nature, of thin as, the working out of the mode of computation of the 'capital employed ' for the purpose of determining the quantum of the relief must necessarily be left to the Central Board of Revenue which would be best in a position to consider what should be the quantum of the relief necessary to be given by way of tax incentive in order to promote setting up of new industrial undertakings and hotels and for that purpose, what amount of the 'capital employed ' should form the basis for computation of such relief.
Moreover, it may be noticed that under Section 29(, of the Income Tax 1961 every Rule made under the Act is required to be laid before each House of Parliament so that both Houses of Parliament have an opportunity of knowing what the rule is and considering whether any modification should be made in the rule or the rule should not be made or issued and if both Houses agree in making any modification in the rule or both Houses agree that the H 746 Rule should not be made or issued, then the Rule would thereafter have effect only in such modified form or have no effect at all.
as the case may be.
Parliament has thus not parted with its control over the rule making authority and it exercises strict vigilance and control over the rule making power exercised by the Central Board of Revenue.
This is a strong circumstance which militates against the argument based on excessive delegation of legislative power.
This view receives considerable support from the decision of the Privy Council in Powell vs
Appollo Company Limited(1) where the Judicial Committee, while negativing the challenge to the constitutionality of Section 133 of the Customs Regulation Act of 1879 which conferred power on the Governor to impose tax on certain articles of import, observed as follows: "It is argued that the tax in question has been imposed by the Governor and not by the Legislature who alone had power to impose it.
But the duties levied under the Order in V Council are really levied by the authority of the Act under which the Order is issued.
The Legislature has not parted with its perfect control over the Governor, and has the power, of course, at any moment, of withdrawing or altering the power which they have entrusted to him.
In these circumstances, their Lordships are of opinion that the judgment Of the Supreme Court was wrong in declaring Section 133 of the Customs Regulation Act of 1879 to be beyond the power of the Legislature.
The same approach was adopted by this Court in D. section Grewal vs State of Punjab(2) where upholding the validity of Section 3 of the All India Services Act 1951 which was challenged on the ground of excessive delegation of legislative power, Wanchoo, J. speaking on behalf of the Court said: "Further, by section 3 the Central Government was given the power to frame rules in future which may have the effect of adding to, altering, varying or amending the rules accepted under s.4 as binding.
Seeing that the rules would govern the all lndia services common to the Central Government and the State Government provision was made by s.3 that rules should be framed only after consulting the State (1)11885]10 A.C. 282.
(2)11959] Supp. 1 S.C.R. 792.
747 Governments.
At the same time Parliament took care to A see that these rules were laid on the table of Parliament for fourteen days before they were to come into force and they were subject to modification, whether by way of repeal or amendment on a motion made by Parliament during the session in which they are so laid.
This makes it perfectly clear that Parliament has in no way abdicated its authority, but is keeping strict vigilance and control over its delegate.
It will thus be seen that there is no question of excessive delegation of legislative power in the present case and, even on the view as to interpretation taken by us, sub section (1) of Section 80J cannot be assailed as unconstitutional on the ground of excessive delegation of legislative power.
We must therefore hold that subrule (3) of Rule 19A in so far as it provided for exclusion of borrowed monies and debts and particularly long term borrowings in computation of the 'capital employed ' could not be said to be outside the rule making authority conferred on the Central Board of Revenue under sub section (1) of Section 80J and was a perfectly valid piece of subordinate legislation.
That takes us to the second point urged by Mr. Palkhivala relating to the dimension of time in regard to the expression 'capital employed '.
The argument of Mr. Palkhivala was that the concept of 'capital employed ' in respect of the previous year is a concept which compels attention to the reality of the capital used during the whole year and not merely on the first day of the computation period and therefore Rule 19A in so far as it provided for computation of the 'capital employed ' as on the first day of the computation period was ultra vires the rule making authority of the Central Board of Revenue under sub section (1) of Section.
80J This argument of Mr. Palkhivala is also unsustainable and must be rejected.
It may be noted that when sub section (1) of Section 80J speaks of 'capital employed ' in an industrial undertaking or business of a hotel, it does not refer to 'capital employed ' during the previous year but it uses the expression 'capital employed ' in respect of the previous year, There is a vital difference between the expression "during the previous year" and the expression "In connection with the previous year".
The argument of Mr. Palkhivala would have had great force if the reference in sub section (1) of Section 80J would have been to 'capital employed ' during the previous year Then it could have been contended with considerable plausibility that the 'capital employed ' 11 748 cannot be computed as on the first day of the previous year, but it should be taken to be the average amount of 'capital employed ' during the previous year.
But the expression used by the Legislature in sub section (1) of Section 80J being "capital employed. computed in the prescribed manner in respect of the previous year", the computation has to be in respect of the previous year and it need not take into account the average amount of 'capital employed ' during the previous year but it can legitimately take the first day of the previous year as the point of time at which the 'capital employed ' must be computed.
The 'capital employed ' so computed would clearly fall within the expression "capital employed. computed in the prescribed manner in respect of the previous year".
Mr. Palkhivala relied on the description given in the parenthetical portion at the end of sub section (1) of Section 80J which describes the amount calculated by applying the statutory rate of six per cent to the 'capital employed ' computed in the prescribed manner in respect of the previous year as "the relevant amount of capital employed during the previous year", but that is merely a description given to the amount calculated as provided in the main part of sub section (1) of Section 80J and in the main part, we find the words "in respect of the previous year" and not "during the previous year".
It may be pointed out that the words "in respect of the previous year" were introduced for the first time when Section 80J came to be enacted as a result of the Report of Shri section Boothalingam, where he recommended that the prevailing "base for the calculation of profits, nemely, average 'capital employed ' in the business during each year" was complicated and difficult to establish and it was therefore desirable to adopt the basis of computation of the 'capital employed ' as "at the beginning of the year but ignoring the fresh introduction of capital in the course of the year".
It was following upon the introduction of the words 'in respect of the previous year" in subsection (1) of Section 80J that Rule l9A was made providing for computation of the 'capital employed ' as on the first day of the computation period.
Moreover, if we refer to the definition of 'statutory deduction ' in sub section (8) of Section ' and Rule I of the Second Schedule of the , it would be apparent that.
according to the Legislature, the process of computation of the capital of the company includes also the specification of the point of time as on which the capital of the company shall be computed.
Therefore" even if the words "in respect of the previous year" were absent, it would have been competent to the Central Board of Revenue as the rule making authority to provide for the computation of the 'capital employed as on the 749 first day of the computation period, as was done by the Legislature in the case of the .
The words "in respect of the previous year" are facilitative of the computation of the 'capital employed ' being prescribed as on the first day of the computation period.
We cannot therefore accept the contention of Mr. Palkhivala that Rule l9A in so far as it provided for computation of the 'capital employed ' as on the first day of the computation period was outside the rule making authority of the Central Board of Revenue under sub section (1) of Section 80J.
We are therefore of the view that Rule 19A in so far as it excluded borrowed monies and debts in computation of the 'capital employed ' and provided for computation of the 'capital employed ' as on the first day of the computation period was not ultra vires Section 80J and was a perfectly valid rule within the rule making authority conferred upon the Central Board of Revenue.
So also, for the same reasons, Rule 9A in so far as it provided that the 'capital employed ' in a ship shall be taken to be the written down value of the ship as reduced by the aggregate of the amounts owed by the assessee as on the computation date on account of monies borrowed or debts incurred in acquiring that ship must be held to be valid as being within the rule making authority of the Central Board of Revenue.
Since, on the view taken by us, Rule 19A did not suffer from any infirmity and was valid in its entirety, Finance Act (No.2) of 1980 in so far as it amended Section 80J by incorporating Rule l9A in the Section with retrospective effect from 1st April 1972, was merely clarificatory in nature and must accordingly be held to be valid.
F The writ petitions will therefore stand dismissed but having regard to the importance of the questions involved in the writ petitions, we think it would be fair and just to direct each party to bear its own costs of the writ petitions.
A.N. SEN, J. I have had the benefit of reading the judgment prepared by my learned brother Bhagwati, J.
I regret I cannot pursuade myself to agree.
The material facts have been fully stated in the judgment of my learned brother.
My learned brother in his judgment has set out all the relevant provisions of the Income Tax Act and the Income Tax Rules.
He has also traced the legislative history of S.80J of the 750 Income Tax Act, 1961 and has noted the various amendments effected to that section from time to time.
It does not, therefore, become necessary to reproduce the same at any length in my judgment.
The two questions which fall for determination are : (1) Whether rule 19A of the Income Tax Act Rules insofar as the said rule excludes borrowed capital and fixes the first day of the year in the matter of computation of capital employed for the purpose of relief under section 80J is valid.
(2) Whether the amendment introduced in section 80J by the Finance (No.2) Act of 1980 incorporating in the section the provisions of the rule in relation to the exclusion of borrowed capital and the fixing of the first day of the year for the purpose of computation of the capital employed for granting relief under section 80J with retrospective affect from 1st April, 1972 is valid ? The material provisions Of Rule 19A read as follows: (1) For the purposes of section 80J, the capital employed in an industrial undertaking or the business of a hotel shall be computed in accordance with sub rules (2) to (4), and the capital employed in a ship shall be computed in accordance with sub rule 5).
(2) The aggregate of the amounts representing the values of the assets as on the first day of the computation period, of the undertaking or of the business of the hotel to which the said section 80J applies shall first be ascertained in the following manner: (i) in the case of assets entitled to depreciation, their written down value; (ii) in the case of assets acquired by purchase and not entitled to depreciation, their actual cost to the assessee: (iii) in the Case of assets acquired other wise then by purchase and not entitled to depreciation, the value of the assets when they became assets of the business; 751 (iv) in the case of assets being debts due to the person carrying on the business the nominal amount of those debts; (v) in the case of assets being cash in hand or bank, the amount thereof.
Explanation 1: In this rule, "Computation period" means the period for which profits and gains of the industrial undertaking or business of the hotel are computed under sections 28 to 43A. Explanation 2: The value of any building, machinery or plant or any part there of as is referred to in cl.
(a) or clause (b) of the explanation at the end of sub section (6) of section 80J shall not be taken into n account in computing the capital employed in the industrial undertaking or, as the case may be, the business of the hotel.
Explanation 3: Where the cost of asset has been satisfied other wise than in cash, the then value of the consideration actually given for the asset shall be treated as the actual cost of the asset.
(3) From the aggregate of the amount as ascertained under sub rule (2) shall be deducted the aggregate of the amounts, as on the first day of the computation period, of borrowed moneys and debts due by the assessee (including amount due towards any liability in respect of tax ) Rule l9A forms a part of the Income Tax Rules 1962 which have been framed by virtue of the authority conferred under section 295 of the Income tax Act 1961.
Section 295 lays down: "(1) The Board may subject to the control of the Central Government, by notification in the Gazette of India, make rules for the whole or any part of India for carrying out the purposes of this Act; 752 (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters: xxx x It may be noted that the matters mentioned in sub section (2) do not refer to section 80J of the Act The relevant provisions of section 80J as it stood prior to the impugned amendment by the Finance Act 2 of 1980 material for the purpose of the present proceedings may be set out: "(1).
Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the aggregate of the deductions, if any.
admissible to the assessee under section 80H and section 80HH) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent per annum on the capital employed in the industrial undertaking or ship or business of the hotel as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year) (2) The deduction specified in sub section (1) shall be allowed in computing the total income in respect of the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning (such assessment year being hereafter, in this section, referred to as the initial assessment year) and each of the four assessment years immediately succeeding the initial assessment year.
x x x (4) This section applies to any industrial undertaking which fulfills all the following conditions, namely: 753 (i) it is not formed by the splitting up, or the reconstruction, of a business already in existence; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose; B (iii) it manufactures or produced articles, or operates one or more cold storage plant or plants.
in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of (thirty three years) next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the official Gazette, specify with reference to any particular industrial undertaking; D (iv) in a case where the industrial undertaking manufactures or produces articles, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power: E Provided that the condition in clause (i) shall not apply in respect of any industrial undertaking which is formed as a result of the re establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; Provided further that, where any building or any part thereof previously used for any purpose is transferred to the business of the industrial undertaking, the value of the building or part so transferred shall not be taken in to account in computing the capital employed in the industrial undertaking: Provided also that in the case of an industrial undertaking which manufactures or produces any articles specified in the list in the Eleventh Schedule, the provisions of clause (iii) shall have effect as if for the words 'thirty three years ', the word 'thirty one years ' had been substituted.
" 11 754 I propose to take up first the question of the validity of the Rule.
I consider this will be the proper course to adopt lf the Rule is held to be valid, the question of the amendment with retrospective effect may not require any consideration at all.
If, on the other hand, the Rule is held to be invalid, the question of the validity of the amendment assumes vital importance.
The invalidity of the Rule, on the basis of the arguments advanced, may also have a bearing in deciding the validity or otherwise of the amendment.
The rule must be held to be valid, if the rule is found to be in conformity with and consistent with the section If, however, the rule is found to be inconsistent with and contrary to the provisions of the section, the rule has to be pronounced invalid.
Whether the rule is in conformity with and is consistent with the section or whether the rule is inconsistent with and contrary to the provisions of the section, must necessarily be determined on a proper interpretation of the section.
Principles of construction of any statute or any statutory provision are well settled.
The purpose of interpretation of any statute is to gather the true intention of the Legislature.
It is well settled that "if the words of a statue are clear and unambiguous, they themselves indicate what must be taken to have been the intention of Parliament and there is no need to look elsewhere to discover their intention or their meaning".
(See Halsbury 's Laws of England, 4th Edn.
44 at P. 522).
When the words of a statue are clear, plain or unambiguous, it becomes the duty of the Court to expound those words in their natural and ordinary sense, as the words used themselves best declare the intent of the Legislature If on a fair reading of a section, the words used appear to be plain and unambiguous and are reasonably susceptible to one meaning only, Courts must give effect to that meaning, unless such a meaning makes a non sense of the section or leads to absurdity.
The Court is not concerned with the policy involved or with the results, injurious or otherwise, which may follow from giving effect to the language 0 used.
In Emperor vs Banoari Lal Sarma,(l) Viscount Simon, L.C. Observed at P.55: "Again and again, this Board has insisted that in enacted words we are not concerned with the policy involved (1) A.I.R. 1945 P.C.48.
755 construing or with the results, injurious or otherwise, which A may follow from giving effect to the language used".
In Kanti Lal Sur vs Paramnidhi Sadhukhan,(l) this Court at P. 910 held: "lf the words used are capable of one construction only, then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act".
If, however, the words of a statute are not clear and are ambiguous; different considerations may apply in interpreting the provisions for gathering the true intention of the law giver.
It is stated in Halsbury 's Laws of England, 4th Edn.
44, in para 858 at P. 523, as follows: "If the words of a statute are ambiguous, the intention of Parliament must be sought first in the statute itself, then in other legislation and contemperaneous circumstances and finally in the general rules laid down long ago, and often approved namely, by ascertaining (1)what was the common law before the making of the Act; (2) what was the mischief and defect for which the common law did not provide; (3) what remedy Parliament resolved and appointed to cure the disease of the commonwealth, and (4) the true reason of the remedy".
As on a fair reading of section 80J, I am satisfied that the section is sufficiently clear and the language used therein suffers from no ambiguity, it does not become necessary for me in the instant case to consider at length the principles of interpretation which are required to be observed in construing an ambiguous statute.
The material provisions of section 80J of the Income tax Act, prior to the impugned amendment by the Finance Act, 1980, have been earlier set out.
The relevant provisions of the said section provide that where the gross total income of an assessee includes profits and gains derived from an industrial undertaking or ship or the business of a hotel to which the section applies, there shall, in accordance with and subject to the provisions of the section, be allowed in (1) A.l.
R. H 756 computing total income of the assessee, a deduction from such profits and gains (reduced by the deduction, if any, admissible to the assessee under section 80HH or section 80HHA) of so much of the amount thereof as does not exceed an amount calculated @, 6 % per annum on the capital employed in the industrial undertaking or ship or business of the hotel as the case may be, computed in the manner prescribed in respect of the previous year relevant to the assessment year (the amount calculated aforesaid being hereinafter, in this connection referred to as the relevant amount of capital employed during the previous year) For qualifying for relief under this section, an assessee must derive profits and gains from an industrial undertaking or ship or the business of a hotel to which the section must be applicable.
It is not in dispute that the assessees who have approached the Court have derived profits and gains from industrial undertaking set up by them and they qualify for relief under this section.
A plain reading of the section with reference to the language used therein clearly postulates that relief as contemplated in the section is to be allowed on the capital employed in the undertaking in the previous year, producing the profits and gains of the under taking in the previous year.
An undertaking might have had capital which might not have been employed in the undertaking in previous year for earning profits and gains which were earned in the previous year.
Such capital, though forming part of the capital of the undertaking, will not be entitled to the benefit of the relief under this section.
Relief is contemplated only on the capital which was employed in the undertaking in the previous year and which produced the previous year the profits and gains of the undertaking which were included in the total income of the assessee in the previous year.
Relief under this section for the undertaking is clearly intended on the capital employed in the undertaking which produced the profits and gains of the undertaking in the previous year.
This intention is made manifestly clear, as relief has to be granted on the basis of the profits and gains earned by the undertaking in the previous year by virtue of employment of capital in the undertaking in the previous year.
The capital employed in the undertaking` which qualifies for relief under this Section clearly refers to and must necessarily be the capital employed in the undertaking in the previous year for the purpose of earning the profits.
If the capital employed in the undertaking is own capital, such capital qualifies for relief.
If capital employed is borrowed capita], such capital will equally 757 qualify for relief.
If capital employed consists of assessee 's own capital and also his borrowed capital, the capital so employed, assessee 's own and borrowed, will both qualify for the relief.
The capital employed in the undertaking in the previous year which qualifies for relief under this section has to be computed in the manner prescribed.
There is nothing in the section to suggest or indicate that in prescribing the manner of computation of the capital employed in the undertaking for the purpose of relief, any part of the capital which was employed in the undertaking for producing the profits and gains can be excluded.
If the Legislature had any such intention for excluding any part of the capital employed in the undertaking producing profits and gains of the undertaking, the Legislature would have and could have easily made suitable provisions.
The Legislature must be presumed to have known that the capital employed in an undertaking may consist of and, in fact, does consist of assessee 's own capital and also capital borrowed by the assessee.
It is common knowledge that most of the undertakings carry on their activities with borrowed capital in addition to own capital employed in the undertakings.
Inspite of the knowledge of the Legislature that undertakings are carried on with borrowed capital, the Legislature in its wisdom has in this section mentioned capital employed in the undertaking for earning profits and gains of the undertaking without making any distinction between own capital and borrowed capital and has provided for relief in respect of the capital employed in the undertaking on the basis of profits and gains of the undertaking earned by virtue of employment of such capital.
It is not disputed and cannot be disputed that profits and gains of the undertaking to be ultimately included in the total income of the assessee are produced by the capital, whether assessee 's own or borrowed, employed in the undertaking in the relevant year and while computing profits and gains of the undertaking the borrowed capital is as important as the assessee 's own capital and both play the same role in earning the profits and gains of the undertaking.
It is the capital employed in the undertaking which qualifies for relief under this section.
irrespective of the nature and source of the capital employed in the undertaking.
It is, however, to be emphasised hat the capital to qualify for relief under this section, whether borrowed or own, must be employed in the undertaking in the previous year for earning profits and gains and any capital of the undertaking, borrowed or assessee 's own which remains idle and is not employed in the undertaking for earning profits and gains dose not qualify for any relief under this section ` H 758 Sub section 4 of section 80J lays down the conditions which have to be fulfilled by an undertaking to qualify for the relief granted under this section.
Even in this sub section there is no indication that any undertaking set up with borrowed capital or with capital part of which may be borrowed will not be entitled to the benefits n of this section.
An industrial undertaking which satisfies all the conditions laid down in sub section 4 will undoubtedly be entitled to the benefits of section 80J.
An undertaking with borrowed capital can also very well satisfy the conditions of sub section (4) and qualify for the relief, as there is nothing in this sub section which prevents an undertaking set up with wholly or partly borrowed capital from fulfilling the conditions laid down in the sub section 4.
An undertaking satisfying all the conditions in sub section (4) and there by qualifying for relief if, however, set up with borrowed capital, will be denied the relief to which the undertaking in terms of the clear provisions of the section is justly entitled, merely on the ground that the rule prescribed for computing the relief excludes the borrowed ` capital in the computation of the capital employed for the purpose of granting the relief under this section.
In other words, an industrial undertaking qualifying for the relief under section 80J by virtue of the clear and unambiguous provisions made in the section will be denied the relief because of the rule, as on computation on the basis of the rule excluding borrowed capital, no relief will be available.
As the sub section in clear and unequivocal terms provides that section 80J will apply to such an undertaking, the benefit intended to be given to the undertaking under this section cannot be denied to such an undertaking by any rule which will clearly have the effect of negativing the clear and unambiguous statutory provisions.
The argument of Mr. Palkhivala that the expression 'capital employed ' is a term of art and is usually understood in business parlance and commercial circles and also in commercial accountancy in the sense that it includes not only owner 's capital but also borrowed capital, particularly if the borrowing is on a long term basis, to my mind, has considerable force.
It may be true that in different context and particularly in the context of return of capital, capital employed may not include borrowed capital.
Unless the content otherwise requires and except in the case of return of capital, the expression 'capital employed ' in its ordinary sense is understood to include borrowed capital.
It refers to the capital, whatever may be the source, which is employed in any undertaking or venture for carrying on the business for the purpose of earning the profits and gains.
759 In the instant case, the words capital employed have to be A understood and interpreted in the context the said words have been used in section 80J.
It is quite clear from the text of the section that the words capital employed have been used in the context of the capital which has been employed in the under taking for producing profits and gains of the undertaking in the relevant year.
If borrowed capital is also employed in the undertaking, capital employed necessarily and clearly includes such borrowed capital which has teen employed in the undertaking and which has contributed to the profits and gains of the undertaking.
To my mind, therefore, on a proper interpretation, section 80J is clear language postulates that capital employed in the undertaking includes own capital and also borrowed capital employed in the undertaking in the relevant year and the section plainly and unequivocally makes this intention of the Parliament manifestly clear.
As the Section is clear and unambiguous it is indeed not proper and necessary to refer to any other consideration for its construction.
It may, however, be pointed out that this interpretation not only makes perfect sense but also clearly promotes the object for which this section was incorporated.
To my mind, the object of section 80J which indeed replaces the earlier section 84 which came in place of section 15C of the earlier Income Tax Act, is to give impetus and encouragement to the setting up of new industrial undertaking by offering tax incentives or tax reliefs.
The object clearly is to encourage persons to set up new industrial undertakings for rapid industrialisation of the country by offering incentives in respect of undertakings covered by this section by way of grant of tax relief on the capital employed in such undertakings.
In the case of Textile Machinery Corporation vs Commissioner of Income tax, West Bengal,(1) this Court while considering the object of a similar provision in section 1 5C observed at page 202: The principal object of section 15C is to encourage setting up of new industrial undertaking by offering tax incentives within a period of 13 years from April 1, 1948.
Section 1 5C provides for a fractional exemption from tax of profits of a newly established undertaking for five assessment years as specified there in.
This section was inserted in the Act in 1949 by section 13 of the Taxation Laws (,Extension to (1) 760 Merged States and Amendment) Act 1949 (Act 67 of '919), extending the benefit to the actual manufacture or production of articles commencing from a prior date, namely, April 1, 1948.
After the country had gained independence in 1947 it was most essential to give fillip to trade and industry from all quarters.
That seems to be the background for insertion of section 15C.
It is also significant that the limit of the number of years for the purpose of claiming exemption has been progressively raised from the initial 3 years in 1949 to 6 years in 1953.
7 years in 1951, 13 years in 1956 and 18 years in 1968.
The incentive introduced in 1949 has been thus stopped up ever since and the only object is that which we have already mentioned.
" In the case of Rajapopalayan Mills Ltd. vs Commissioner of Income Tax Madras,(1) this Court had also held at page 783: "The law of income tax in a modern society is intended to achieve various social and economic objectives.
It is often used as an instrument for accelerating economic growth and development.
section 15C is a provision introduced in the .
Indian I.T. Act, 192, with a view to carrying out this objective and it is calculated to encourage setting up of new industrial undertakings in the country.
" The rapid industrialisation of the country for economic growth in the larger interests of the country is the main object of this section which seeks to afford an incentive or tax relief to new industrial undertakings which satisfy the requirements of the section.
To my mind, the argument of the learned Attorney General that the provision contained in the Section requiring 'the capital employed to be computed in the manner prescribed ' authorises the rule making authority to include or to exclude borrowed capital at its discretion by making appropriate provision in the rules as to exclusion of a part of the capital employed for computation of capital employed for the purpose of granting relief under the section is clearly untenable.
The section only enjoins that capital employed is to be computed in the manner to be prescribed and the (1) 761 manner of computation of the capital employed only authorises A, the rule making authority to deal with the details regarding computation of capital employed for carrying out the provisions of the section and the provision regarding the manner of computation does not empower or authorise the rule making authority to lay down which part of the capital employed or how much of it will have to be included or excluded and to what extent, if any: The question whether there should be any such exclusion or inclusion in the matter of consideration of the grant of relief, is essentially a matter of policy for the Legislature to decide and is not a matter for the rule making authority to prescribe.
The power of the rule making authority in terms of the provision contained in section 295 of the Income tax Act which confers such power is limited to the framing of rules for carrying out the purposes of the Act.
The rule making authority is not competent to prescribe any rule which will be in the nature of a substantive provision of the Act itself and more particularly, which will be in conflict with the substantive provision of the section itself and which will in any way defeat or frustrate the purpose for which any provision in the Act has been enacted.
In the instant case I am clearly of the opinion on a construction of section 80J that the said section unequivocally and in clear terms provides that capital employed for earning the profits of the undertaking is the capital which is entitled to the benefit of the relief.
The exclusion of borrowed capital by the rule making authority in the rules prescribed for computation of the relief under section 80J is inconsistent with and derogatory to the provisions of the statute.
The said rule not only fails to carry out the purpose of the said section but in fact tends to defeat the same and the rule runs clearly contrary to the provisions of the statute.
The rule excluding borrowed capital must, therefore, be held to be bad and invalid.
The argument of Mr. Palkhivala that any such rule framed by the rule making authority including or excluding any part of the capital employed in the undertaking in the absence of any guideline will also be clearly beyond the power of the rule making authority, to my mind.
is sound.
In the section itself or in any other provision of the Act it does not appear that there is any provision laying down any guideline which may entitle the rule making authority to exclude any part of the capital employed, whether it is borrowed capital or own capital.
No such provision or guideline is there in the Act.
To my mind, there could not possibly be any such provision or guideline in the Act, as the section itself clearly provides that the entire amount of capital employed for earning the profits will qualify for 762 the relief.
If it be held that the rule making authority enjoys and such power of excluding any part of the capital employed in the undertaking because of the provision in the section regarding "computation of capital employed in the manner prescribed" it must necessarily be held that the rule making authority enjoys the power of framing a rule contrary to the provision of the section.
It must further be held that the rule making authority at its discretion enjoys the power to exclude the whole or part of owner 's capital and also the whole or part of the borrowed capital.
this interpretation will mean that interpretation the power will be available with the rule making authority which at its discretion and in the absence of any guideline will be entitled to exclude any or every part of the capital employed even to an extent of rendering the section itself nugatory.
This interpretation will have the effect of justifying a delegation of power to the rule making authority to an extent which cannot be permitted.
l have no hesitation in coming to the conclusion that the rule making authority does not enjoy any such power or jurisdiction.
No such power or jurisdiction in the absence of specific provision and clear guideline in the Act could be delegated to the rule making authority.
In the case of Sales Tax Officer vs KS.
Abraham(l) this Court had the occasion to construe the meaning of the phrase "in the prescribed manner" occurring in section 84 of the Central Sales Tax Act, 1956.
In dealing with the vires of rule 6 of the Central Sales Tax (Kerela) Rules, 1967 in so far as the said rule purported to prescribe a time limit within which ' the declaration was to be filed by the registered dealer, this Court held, "In our opinion, the phrase 'in the prescribed manner ' occurring in section 8 (4) of the Act only confers power on the rule making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form the nature and value of the goods sold, the parties to whom they are sold, and to which authority the form is to be furnished.
But the phrase 'in the prescribed manner ' in section 8 (4) does not take in the time element.
In other words, the section does not authorise the rule making authority to prescribe a time limit within which the declaration is to be filed by the registered dealer.
The view that we have taken is supported by the language of section 13 (4) (g) of the Act (1) ; 763 which states that the State Government may make rules for 'the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished. ' This makes it clear that the Legislature was conscious of the fact that the expression 'in the manner ' would denote only the mode in which an act was to be done, and if any time limit was to be prescribed for the doing of the act, specific words such as 'the time within which ' were also necessary to be put in the statue.
The Privy Council in the case of Utah Construction & Engineering Pvt. Ltd. and Anr.
vs Pataky,(l) observed at pages 653 654: "Their lordships now pass to section 22 (2) (g) (iv) and (v).
Sub paragraph (iv) empowers the Governor to make regulations "relating to the manner of carrying out. excavation work '.
The relevant portion of reg.
9X provides 'Every drive and tunnel shall be securely protected and made safe for persons employed therein '.
The expression 'manner of carrying out ' the work plainly envisages a system of working, and does not in their lordships view justify a regulation imposing an absolute duty of protecting the drive and tunnel or an absolute duty of ensuring the safety of persons employed in the drive or tunnal.
The relevant portion of reg. 98 does not prescribe the manner of doing the work.
Sub paragraph (iv) therefore cannot in their lordships opinion empower the making of the relevant portion of reg. 98. ' F The proposition that the rule making authority does not have any power to encroach upon any substantive provision in the statute appears to be beyond dispute.
By virtue of S 295 (1) of the Income tax Act, the rule making authority is empowered to make rules for carrying out the purposes of the Act and sub section 2 which specifically refers that such rules may provide for all or any of the matters mentioned in the said subsection does not make any reference to section 80J.
In prescribing the manner of computation of capital employed, the rule making authority, in the absence of specific provision in the section itself or in the absence of any statutory provision, cannot exclude any (1) [196513 All.
E.R. 650, 764 part of capital employed in the undertaking at its discretion under the guise of the process of prescribing the manner of computation.
The argument of the learned Attornney General that as an undertaking which employs borrowed capital gets relief because in calculating the profits and gains the interest paid on the borrowed capital is taken into account, the rule making authority in prescribing the manner of computation of capital employed is entitled to exclude borrowed capital to avoid grant of double relief to the undertaking, is without any merit.
Interest paid on borrowed capital by any undertaking, whether it is an undertaking within the meaning of S.80J J or not, is taken into account as business expenditure in calculating the profits and gains of any undertaking.
It is the prescribed mode of calculating the profits and gains of every undertaking and is no special benefit for any undertaking: and, undoubtedly it affords no incentive of special relief to a new undertaking which has necessarily to satisfy the required conditions laid down in S 80J for being entitled to the relief intended to be granted to an undertaking which comes within the purview of S.80J.
In any event, such inclusion or exclusion on any consideration will be a matter of policy to be determined by the Legislature and not a matter for the rule making authority to lay down in prescribing the mode of computation.
The decision of the Calcutta High Court in the case of Century Enka Ltd. vs I.T.0.,(1) the decision of the Madras High Court in the case of Madras Industrial Linings Ltd. vs I.T.0.(2), the decision of the Allahabad High Court in Kota Box Manufacturing Co. vs I.T.0.(3) the decision of the Punjab and Haryana High Court in the case of Ganesh Steel Industries vs I.T.0.(4), the decision of the Andhra Pradesh High Court in the case of Warner Hindustan Ltd. vs I.T.0.(5) holding the rule to the extent it excludes borrowed capital in the computation of capital employed for the purpose of granting relief under section 80J to be invalid, are correct and l have no hesitation in upholding these decisions 'The contrary view expressed .
by the Madhya Pradesh High Court in the case of Commissioner of Income Tax, M.P. Il vs Anand Bahri Steel and Wire Products(n) must necessarily be held to be erroneous.
(1) (2) (3) (4) (5) [1982] 134 lTR .158.
(6) [l982] 765 It may be noticed that the Madhya Pradesh High Court proceeded to hold the rule to be valid mainly on the ground that this rule has been in existence for a long time under S.15C of the earlier Act which subsequently came to be replaced by S.80J and the Parliament must have been aware at the time of enacting S.80J of the existence of the rule framed by the rule making authority which held the field for a long period without any challenge.
The decision proceeds on the basis that the Parliament must have, therefore, accepted the interpretation put by the rule making authority at the time the Parliament enacted S 80J.
This decision does not take into consideration the fact that the interpretation put by the rule making authority has not been the same all throughout and has undergone changes from time to time and the rule making authority has in certain years also permitted certain classes of borrowed capital to be taken into account in computation of capital employed for the purpose of relief.
The decision of the Madhya Pradesh High Court does not also take into consideration the question whether the rule seeking to include or exclude borrowed capital at the discretion of the rule making authority in the absence of any statutory provision or guideline, becomes bad on account of unjustified excessive delegation of authority.
The decision of the Madhya Pradesh High Court has not proceeded to construe S.80J correctly to gather the true intention of the Parliament before deciding the question as to whether the rule excluding borrowed capital is consistent with the intention of Parliament clearly expressed in S.80J.
In my opinion, the mere existence of an invalid rule without any challenge for any length of time does not affect the question of validity of the rule and cannot render a rule otherwise invalid to be valid only on the ground that the rule had remained in existence without any challenge for a number of years.
In the case of Proprietary Articles Trade Association vs Attorney General for Canada(l), the Judicial Committee while considering the vires of a statute namely, Combines Investigation Act R.S. Can.
1927, c. 26 passed by the Parliament of Canada observed at p. 317: "Both the Act and the section have a legislative history, which is relevant to the discussion.
Their Lordships entertain no doubt that time alone will not validate an Act which when challenged is found to be ultra vires; nor will a history of a gradual series of advances till this boundary is finally crossed avail to protect the ultimate encroachment.
" In the case of Campbell College Belfast (Governors) vs Commis (1) 766 sioner of Valuation for Northern Ireland(l), the House of Lords while considering the validity of payment of rates by fee paying public school in Northern Ireland which has continued for over 132 year. despite the terms of section 2 of the Valuation (Ireland) Act Amendment Act, 1954, held at p. 941 to 942 : " my Lords, for my part I am quite unable to apply that principle to a statute although it was passed` over 100 years ago, but its language is plain and unambiguous and it was not misconstrued until the decision in the Alexandra College case 60 years later.
True it is that fee paying schools did always pay rates in accordance with section 2, but until 1914 that was not because it was assumed that section 2 was con trolled by the proviso, and that charitable purposes bore a limited meaning.
It may have been that it was thought that if some of the pupils were free paying, section 16 of the Act of 1852 was not satisfied.
That argument is now untenable n and, as Black L.J. point out at an early part of his judgment, Campbell College is clearly for this purpose a charitable institute.
My Lords, in these circumstances I can attach no weight whatever to this long unquestioned payment when construing section 2.
To my mind, this doctrine can have no application to the circumstances of this case.
It is also well settled that even if the rules have been laid before the Parliament and there is a resolution of the Parliament approving the rules, the validity of the rules has to be declared by the Court and the Court can declare any rule placed before the Parliament and approved by the Parliament to be ultra vires the Act and invalid.
In the case of Kerala State Electricity Board.
vs Indian Aluminium(2).
, this Court held at p.576: "In India many statutes both of Parliament and of State Legislatures provide for subordinate legislation made under the provisions of those statutes to be placed on the table of either the Parliament or the State Legislature and to be subject to such modification, amendment or annulment, as the case may be, as may be made by the Parliament or the State Legislature.
Even so, we do not think that where an executive authority is given power to frame subordinate legislation within stated limits, rules made by such authority (1) [1964] I W.L.R. 912.
(2) [1976] I S.C.R.552.
767 if outside the scope of the rule making power should be deemed to be valid merely because such rules have been placed before the legislature and are subject to such modification, amendment or annulment, as the case may be as the legislature may think fit.
The process of such amendment, modification or annulment is not the same as the process of legislation and in particular it lacks the assent either of the President or the Governor of the State, as the case may be.
We are, therefore, of opinion that the correct view is that notwithstanding the subordinate legislation being laid on the table of the House of Parliament or the State Legislature and being subject to such modification, annulment or amendment as they may make, the subordinate legislation cannot be said to be valid unless it is within the scope of the rule making power provided in the statute." The other impugned provision of the rule, prescribing that capital employed should be computed on the basis of the capital employed on the first day of the year, must on a proper construction of the section be also held to be invalid.
The section clearly provides that the deduction to be allowed is to be computed in the prescribed manner in respect of the previous year relevant to the assessment year.
The deduction to be allowed is on the profits and gains of the undertaking earned in the relevant year in respect of the previous year relevant to the assessment year.
Profits and gains which are to be taken into account are the profits and gains earned in the relevant year and the year must necessarily mean and include the whole of the year and not some days or months of the year.
The capital employed for earning the posts and gains dring the whole year must necessarily be the capital which is entitled to the benefit of the section.
Capital employed on the 1st day of the year does not produce the profits of the entire relevant year, unless the very same amount of capital remains employed throughout the year.
It does not usually happen and in any event it may not happen.
Therefore, by prescribing the 1st day of the year to be the date of .
computation of the capital employed, the capital employed during the whole year is sought to be denied by the rule the benefit to which it is entitled under the section.
This provision, therefore, is clearly contrary to and inconsistent with the specific provision of the statute, as by fixing the 1st day of the year to be the date of computation of the capital employed for the year, the rule making authority is seeking to deny the benefit conferred by the statute.
Andhra Pradesh High Court in the case of Warner Hindustan H 768 Ltd. and Anr.
vs Income tax Officer and Ors.
(supra) in dealing with this question has referred to the decision of the Calcutta High Court in Century Enka Ltd. vs Income tax Officer (supra) on this very point and in agreement with the decisions of the Calcutta High Court, the Andhra Pradesh High Court held at p. 195: "As observed by a learned Judge of the Calcutta High Court in Century Enka Ltd. vs Income tax Officer(l),the main consideration upon which this question has to be resolved is (p. 132), 'whether having regard to the purpose for which provisions of section 80J of the Act was introduced, it was the legislative intent to restrict the capital employed in any manner so as to limit it to the first day of the computation period '.
So far as section 80 J is concerned, it does not give any such indication.
That apart, such computation of capital employed in an industrial undertaking would defeat the very purpose of the undertaking and would lead to incongruous and anomalous results.
While an assessee who has employed the capital in an industrial undertaking on the very first day but has withdrawn it for the major part of the year would be entitled to the full benefit, an assesses who has not employed the capital on the first day but has employed it during the major part of the previous year would be deprived of the benefit.
If the intendment of the Act is to give tax holiday for the new industrial undertaking with a view to help them find their roots and encourage entrepreneur to establish new industrial undertakings and pave the way for rapid industrial growth in the country then the purpose would be not served.
In fact, it would be defeated if the capital employed is computed with reference to the first day of the computation period and not in respect of the previous year relevant to the assessment year".
The Calcutta High Court and Andhra Pradesh High Court have both held this part of the rule fixing the first day of the year for computing the capital employed for the purpose of granting relief under section 80J to be invalid.
I find no difficulty in upholding the decision of the Calcutta High Court and of the Andhra Pradesh High Court on this question.
I know proceed to consider the other question about the validity of the amendment of section 80J introduced by the Finance (1) of 1980.
By the amendment the provisions contained in the A rule excluding borrowed capital and fixing the first day of the year for computation of capital employed for the purpose of relief under section 80J have been incorporated in the section itself with retrospective effect from 1.4.72.
On behalf of some of the assessees the amendment both with; regard to its prospective and retrospective operation has been challenged.
Dr. D. Pal, supported by other learned counsel, addressed us mainly on the aspect of prospective operation, while supplementing and supporting the submissions of Mr. Palkhivala on the aspect of retrospective operation.
Mr. Palkhivala who has been the principal spokesman for the assessees, confined his challenge to the validity of the amendment mainly to the retrospective part, although he made it clear that he was not conceding the validity of the prospective operation.
I propose to consider the submission of Dr. Pal in the first instance.
If the submission of Dr. Pal that the entire amendment is invalid is accepted, the submission of Mr. Palkhivala that the amendment in so far as it is made retrospective is also bad must necessarily succeed.
Dr. Pal has argued that the amendment seeks to make an invidious distinction between own capital and borrowed capital in the matter of granting relief under this section.
It is the argument of Dr. Pal that having regard to the object of the section which is to promote new industries and to give relief on the basis of the capital employed in such new industries by way of incentive, distinction between own capital and borrowed capital is wholly irrelevant , and does not have any nexus with the object sought to be achieved and this distinction between own capital and borrowed capital in the matter of computation of capital employed in the undertaking for the purpose of granting relief results in justified discrimination and is therefore violative of article 14 of the constitution.
To my mind, there is no merit in the submission of Dr. Pal.
It is entirely a matter for the Parliament to decide whether any relief by way of incentive should be allowed and if so to what extent and in what manner.
There is no obligation on the part of the Parliament to make any provision for granting relief to promote new industries.
The Legislature in its wisdom may decide to grant relief and may equally decide not to grant any relief.
It is essentially for the Legislature to decide as to whether any incentive for promoting industrial growth of the country is called for and if the Legislature feels that in the 770 situation prevailing in the country such incentive should be provided it will be again for the Legislature to decide what kind of incentive and in what form and to what extent the same should be provided and to pass appropriate legislation in this regard.
The Parliament would have been legally competent to withdraw the entire relief under section 80J and to abrogate the said section in its entirety, if the Parliament had considered such withdrawal to be necessary.
The Parliament is equally competent to increase or reduce the quantum of relief intended to be given under this section.
In providing that relief intended under section 80J would be allowed only to owner 's own capital and not to any borrowed capital, there can be no infringement of article 14.
No entrepreneur or businessman can claim as a matter of right that relief by way of incentive should be provided to new undertakings to be set up by him.
The Parliament provides for such relief in pursuance of a policy and policy may change from time to time in view of the situation prevailing from time to time.
The Parliament may legitimately feel that borrowing by businessman may not be encouraged and persons should be encouraged to bring their own money for setting up new undertakings and Parliament may provide for appropriate relief by way of incentive to the owner 's capital employed to the exclusion of borrowed capital in the setting up of any new industrial undertaking.
Whether it is prudent to do so is essentially a matter for the Parliament in its wisdom to decide.
It is not for this Court to sit in judgment over the wisdom of the Parliament in the framing of its policy.
The discrimination in the matter of granting relief to own capital to the exclusion of borrowed capital in pursuance of a policy cannot be said to be violative of Art 14, as the two classes of capital, though forming a part of the total capital of the undertaking, are distinct p and they stand on a different footing.
A classification between these two classes of capital for encouraging investment of own capital in setting up new industrial undertakings, cannot be held to be unreasonable and unjustified.
The contention of Dr. Pal that the amendment in discriminating between borrowed capital and owner 's own capital in the enjoyment of relief under section 80J infringes article 14, must therefore, be rejected.
Very properly in challenging the validity of the amendment in so far as it operates prospectively, no grievance in regard to violation of article 19 of the Constitution has been made.
I now pass on to the question of the validity of the amendment with retrospective effect from 1.4 1972.
It has been contended by the learned counsel for the assessees that the retrospective operation of the provision is unreasonable arbitrary and violative of articles 14 and 19 of the Constitution.
The 771 main argument is that the withdrawal of relief granted by the statute A before the present amendment and lawfully enjoyed by the assessee during all these years and thereby imposing on the assessee an unjust, unmerited and accumulated huge financial liability, cannot be considered to be reasonable; and such imposition of accumulated liability will seriously affect the financial stability of the undertakings and will further create various other difficulties which may be almost impossible for the assessees to overcome.
It has been argued that the present amendment has not been necessitated as a result of any provision of the statute being declared ultra vires for any lacuna in the statutory provision and there is no question of any liability being foisted on the Government of refunding any large sun of money collected as tax from the assessees on account of any statutory provision imposing any levy being declared invalid or unconstitutional.
It is submitted that in view of the unequivocal provision of the statute granting relief to borrowed capital which was sought to be negated and denied by an invalid rule which has been struck down, the assessees are legitimately entitled to the relief and they have rightly and justifiably arranged their affairs on the basis of the law as it stood.
The existence of an invalid rule and the tendency of appeals in this Court against the judgment of the various High Courts declaring the rule to be invalid cannot be considered to be relevant factors, particularly when the statutory provision is clear, for guiding the assessee who has to carry on its normal trading activities, in arranging its affairs.
The submission is that the withdrawal or relief lawfully granted and properly enjoyed by the assessees after this long lapse of time, when no serious prejudice is caused or is likely to be caused to the public exchequer and on the other hand a heavy unwarranted financial burden along with other difficulties and problems are created for the assessee, cannot be said to be in public interest and must be held to be unreasonable, arbitrary and violative of article 14 and 19 of the Constitution.
The learned Attorney General has submitted that retrospective operation of the provision does not suffer from any infirmity and is not arbitrary or unreasonable nor is it violative of article 14 and 19 of the Constitution.
He argues that prior to rule 19 A being considered by some of the tribunals and by various High Courts, the said rule excluding borrowed capital in the matter of computation of relief and fixing the 1st day of the year as the relevant date for the computation of relief has remained in force for a number of years.
It is his argument that after the said rule had been struck down, the validity of the decisions has been challenged and was pending appeal in this Court; and the appeal was pending at the time when the present 772 amendment came to b enacted in 1980.
The Learned Attorney General contends that as rule 19 A excluding borrowed capital and fixing the first day of the year as the date for computation of relief had remained in force for a number of years and as the decision striking down the rule is now pending appeal, the assessees were not justified in arranging their affairs on the basis of the said rule being invalid and as prudent men of business they should have so arranged their affairs as to cover every contingency and particularly the contingency of the validity of the rule being upheld by this Court.
The Learned Attorney General has submitted that the amendment has been introduced before the decision of this Court in the pending appeals, as the Parliament wanted to clarify the position in the interest of all concerned and more so in the interest of the assessees to enable the undertakings which qualified for relief under section 80J to enjoy the benefit intended to be conferred by the Section.
It is the submission of the Learned Attorney General that in the absence of any valid rule prescribing the manner of computation of relief to which the assessee may be entitled under section 80J, the benefit cannot be computed and, therefore, no benefit contemplated under section 80J may be at all available to the assessees.
He submits that if the rule is held to be valid by this Court in these appeals, the arguments of the assessee that the assessee has arranged its affairs on the basis of invalidity of the rule will be of no avail; and he further submits that if the invalidity is upheld by this Court in these appeals, the assessee in the absence of any valid rule prescribing the manner of computation of the relief will not be entitled to the benefit of any relief under the section.
It is his submission that in these circumstances the Parliament with the object of seeing that the assessee who is entitled to any relief under section 80J is not denied such relief over these years for lack of provision of a suitable rule prescribing the manner p of computation of such relief, has amended the section itself with retrospective effect from 1972 in the interest of the assessees them selves.
It is the submission of the Attorney General that as the amendment with retrospective effect has been made essentially in the interest of the assessees to enable them to enjoy the relief intended to be given under section 80J, the retrospective effect of the amendment cannot be said to be unreasonable or arbitrary and the retrospective amendment dose not violate either article 14 or 19 of the Constitution, even if the retrospective effect may operate harshly on some assessees.
Before considering the arguments advanced on behalf of the parties, I propose at this stage to refer to some of the decisions cited from the Bar on this aspect. 773 In the case of Epari Chinna Krishna Moorthy, Proprietor Epari A Chinna Moorty and Sons, Berhampur Orissa vs State of Orissa,(l) it was observed at p. 191: "Mr. Sastri also argued that the retrospective operation of the impugned section should be struck down as unconstitutional, because it imposes an unreasonable restriction on the petitioners ' fundamental right under article 19 (1) (g).
It is true that in considering the question as to whether legislative power to pass an Act retrospectively has been reasonably exercised or not, it is relevant to enquire how the retrospective operation operates.
But it would be difficult to accept the argument that because the retrospective operation may operate harshly in some cases.
, therefore, the legislation itself is invalid.
Besides, in the present case, the retrospective operation dose not spread over a very long period either.
Incidentally, it is not clear from the record that the petitioners did not recover sales tax from their customers when they sold the gold ornaments to them".
D In the case of Rai Ram Krishna & Ors.
vs State of Bihar(2).
this Court observed at pp.
914 917: "Mr. Setalvad contends that since it is not disputed that the retrospective operation of a taxing statute is a relevant fact to consider in determining its reasonableness, it may not be unfair to suggest that if the retrospective operation covers a long period like ten years, it should be held to impose a restriction which is unreasonable and as such, must be struck down as being unconstitutional.
In support of this plea, Mr. Setalvad has referred us to the observations made by Sutherland. 'Tax Statute, ' says Sutherland, "nay be retrospective if the legislature clearly so intends.
If the retrospective feature of a law is arbitrary and burdensome, the statute will not be sustained.
The reasonableness of each retrospective tax statute will depend on the circumstances of each case.
A statute retroactively imposing a tax on income earned between the adoption of an amendment making income taxestes legal and the passage of the income tax Act is not unreasonable Likewise an Income tax not retroactive beyond the year of its passage is clearly valid.
The longest (1) ; (2) [1964] I S.C.R.897 774 period of retroactivity yet sustained has been three years.
In general, income taxes are valid although retroactive, if they affect prior but recent transaction. ' Basing himself on these observations Mr. Setalvad contends that since the period covered by the retroactive operation of the Act is between April 1, 1950 and September 25, 1961, it should be held that the restrictions imposed by such retroactive operation are unreasonable, and so, the Act should be struck down in regard to its retrospective operation.
We do not think that such a mechanical test can be applied in deter mining the validity of the retrospective operation of the Act.
It is conceivable that cases may arise in which the retrospective operation of a taxing or other statute may introduce such an element of unreasonableness that the restrictions imposed by it may be open to serious challenge as unconstitutional, but the test of the length of time covered by the retrospective operation cannot, by itself, necessarily be a decisive test.
We may have a statute whose retrospective operation covers a comparatively short period and yet it is possible that the nature of the restriction imposed by it may be of such a character as to introduce a serious infirmity in the retrospective operation.
On the other hand we may get cases where the period covered by the retrospective operation of the statute, though long, will not introduce any such infirmity.
Take the case of a Validating Act.
If a statute passed by the legislature is challenged in proceedings before a Court, and the challenge is ultimately sustained and the statute is struck down, it is not unlikely that the judicial proceedings may occupy a fairly long period and the legislature may well decide to await the final decision in the said proceedings before it p uses its legislative power to cure the alleged infirmity in the earlier Act.
In such a case, if after the final judicial verdict is pronounced in the matter the legislature passes a validating Act, it may well cover a long period taken by the judicial proceedings in Court and yet it would be in appropriate to hold that because the retrospective operation covers a long period, therefore, the restriction imposed by it is unreasonable.
That is why we think the test of the length of time covered by the retrospective operation cannot by itself be treated as a decisive test".
It the case of Jawaharlal vs State of Rajasthan & Ors.(l) this Court held at p. 905: (1) [l966] 1 S.C.R.890.
775 "We have already stated that the power to make laws A involves the power to make them effective prospectively as well as retrospectively, and tax laws are no exception to this rule.
So it would be idle to contend that merely because a taxing statute purports to operate retrospectively, the retrospective operation per se involves contravention of the fundamental right of the citizen taxed under article 19(1)(f) or (g).
It is true that cases may conceivably occur where the Court may have to consider the question as to whether excessive retrospective operation prescribed by a taxing statute amounts to the contravention of the citizens ' fundamental right; and in dealing with such a question, the Court may have to take into account all the relevant and surrounding facts and circumstances in relation to the taxation".
In the case of Assistant Commissioner of Urban Land Tax vs The Buckingham & Carnatic Co. Ltd.l etc.
it was observed at P.287: "It is contended on behalf of the petitioners that the retrospective operation of the law from 1st July, 1963 would make it unreasonable.
We are unable to accept the argument of the petitioners as correct.
It is not right to say as a general proposition that the imposition of tax with retrospective effect per se renders the law unconstitutional.
In E: applying the test of reasonableness to a taxing statute it is of course a relevant consideration that the tax is being enforced with retrospective effect but that is not conclusive in itself".
In the case of M/s. Krishnamurthi & Co. Etc.
vs State of p Madras & Anr.(2j this Court observed at P. 61: "The object of such an enactment is to remove and rectify the defeat in phraseology or lacuna of other nature and also to validate the proceedings, including realisation of tax, which have taken place in pursuance of the earlier enactment which has been found by the Court to be vitiated by an infirmity.
Such an amending and validating Act in the very nature of things has a retrospective operation.
Its aim is to effectuate and carry out the object for which the earlier principal Act had been enacted.
Such an amending (1) [1970] I S.C.R. 268.
(2) 1197312 S.C.R. 54, i 11 776 and validating Act to make small repairs ' is a permissible mode of legislation and is frequently resorted to in fiscal enactments.
" Similar observations have been made by this Court in the case of Hira Lal Rattan Lal etc.
vs State of U.P. & Anr.
etc(l) at P. 511: "A feable attempt was made to show that the retrospective levy made under the Act is violative of article 19(t) (f) and (g).
But we see no substance in that contention.
As seen earlier, the amendment of the Act was necessitated because of the legislature 's failure to bring out clearly in the principal Act its intention to separate the processed or split pulses from the unsplit or unprocessed pulses.
Further the retrospective amendment became necessary as otherwise the State would have to refund large sum of money".
In the case of State of Gujarat vs Ramanalal Keshave Lal Soni(2), this Court observed at p. 62: "The Legislature is undoubtedly competent to legislate y with retrospective effect to take away or impair any vested right acquired under existing laws but since the laws are made under a written Constitution, and have to conform to do 's and don 'ts of the Constitution; neither prospective nor retrospective laws can be made so as to contravene fundamental rights.
The law must satisfy the requirements of the Constitution today taking into account the accrued or acquired rights of the parties today.
The law cannot say 20 years ago the parties had no rights, therefore, the requirements of the Constitution will be satisfied if the law is dated back by 20 years.
We are concerned with today 's rights an i not yesterday 'section A legislature cannot legislate today with reference to a situation that obtained 20 years ago and ignore the march of events and the constitutional rights accrued in the course of the 20 years.
That would be most arbitrary, unreasonable and a negation of history".
The power and competence of the Parliament to amend any (1) ; (2) [1983] 2 S.C.C. 33. 777 statutory provision with retrospective effect cannot be doubted.
Any A retrospective amendment to be valid must, however, be reasonable and not arbitrary and must not be violative of any of the fundamental rights guaranteed under the Constitution.
The mere fact that any statutory provision has been amended with retrospective effect does not by itself make the amendment unreasonable.
Unreasonableness or arbitrariness of any such amendment with retrospective effect has necessarily to be judged on the merits of the amendment in the light of the facts and circumstances under which such amendment is made.
In considering the question as to whether the legislative power to amend a provision with retrospective operation has been reasonably exercised or not, it becomes relevant to enquire as to how the retrospective effect of the amendment operates.
C In the large interest of administration and for promotion of public interest and welfare of the country power has been conferred by the Constitution on the Parliament to mobilize resources and to levy tax.
In view of the complexity of fiscal adjustment of diverse elements the Parliament necessarily enjoys a very wide discretion in the matter of fiscal legislation.
To meet various expenses for proper administration, maintenance of defense and security, for promoting peace and prosperity and for development of social, economic and all round growth of the country, the Government must have resource and sufficient funds at its disposal.
Suitable provisions have necessarily to be made for raising the revenue and for proper realisation of funds to be collected to meet such expenses.
Appropriate legislations including various fiscal laws are enacted for this purpose.
Imposition of any tax by the Parliament is therefore considered to be made in public interest.
It may so happen that any provision of any enactment imposing a particular levy may be challenged in Court and may be challenged successfully; and the particular levy may, for some reason or other, be held to be constitutionally invalid.
If any particular provision of any statute imposing any tax which has been or is being collected, is struck down as unconstitutional, the financial arrangement of the State may become upset and the Government which might have already collected and even utilised the tax, may be called upon to refund taxes so collected.
If such a situation arises the economy of the State may get unbalanced and difficulties may arise for meeting the various commitments and obligations.
Under such circumstances a Validating Act may be passed and is often enacted to remove the infirmities which might have led to the invalidation of the provision imposing the levy.
Validating Acts for meeting such situations have necessarily to be passed with retrospective operation so that the fiscal arrangement of the State and its financial commitments 778 may not in any way be in jeopardy and the State may be relieved of the liability of refunding any tax already collected.
A validating Act validating any fiscal provision with retrospective operation is usually held not to be unreasonable or arbitrary.
In the case of any Validating Act, the intention of the legislature is generally made sufficiently clear in the section or in the Act which is declared invalid on account of some flaw or defect which is within the competence of the Parliament to rectify.
Such Validating Acts, it may be observed, do not in fact have the effect of imposing a fresh tax with retrospective effect and they only legalese the levy already imposed.
There is in effect and substance no imposition of any new tax for the earlier years by virtue of the retrospective operation and the retrospective operation merely validates the levy already imposed and possibly collected.
The present amendment, has been necessitated not as a result of any part of section 80J being declared invalid.
There was no lacuna or defect in section 80J prior to the impugned amendment and the section which was perfectly valid granted relief in clear and unambiguous language to the assessee in respect of capital employed, whether assesses ' own or borrowed, in an undertaking which qualified for relief under the section.
The rule making authority by framing an invalid rule sought to deny the asks the benefit of the relief lawfully and validly granted by the section.
The rule was contrary to the clear provisions of the statute and the invalid rule has been rightly struck down.
By the present amendment the Parliament is seeking to validate not any provision of the State declared invalid because of any flaw or defect, as there was none, but is seeking to validate an invalid rule which had sought to deprive the assessee of the benefit which the Parliament had clearly bestowed on the assessee by the section.
The effect of the present amendment by seeking to incorporate the provisions of the rule declared invalid in the section itself is to withdraw with retrospective effect the relief which had been earlier granted by the Parliament in so far as the relief extends to borrowed capital employed in the undertaking and thereby to impose on the assessee a burden of tax which was not there for all these years.
As a matter of policy it may be open to the Parliament to withdraw the relief granted to borrowed capital by an amendment with prospective effect consequent on any such amendment.
To withdraw with retrospective effect the benefit of relief unequivocally granted by the section to an assessee who qualified for such relief and was lawfully entitled to enjoy the benefit of such relief and has in fact in many cases enjoyed the benefit for all these years, prior to the present amendment with retrospective effect, cannot, in my opinion, be said to on any just and valid grounds and cannot be considered to be reasonable.
If any fiscal statute grants relief to any assessee and the assessee enjoys the benefit of that relief, 779 as the assessee is legally entitled under the statute, the withdrawal of the relief validly and unequivocally granted and enjoyed by any A assessee must necessarily in the absence of proper grounds be held to be unreasonable and arbitrary.
The relief granted under section 80J before the present amendment was not merely a promise on the part of the Government relying on which the assessee might have set up new undertakings, but it was in the nature of a statutory right confer red on any assessee might have set up new undertakings, but it was in the nature of a statutory right conferred on any assessee who qualified for such relief under the section.
The withdrawal with retrospective effect of any relief granted by a valid statutory provision to an assessee, depriving the assessee of the benefit of the relief vested in the assessee, stands on a footing entirely different from the footing which may necessitate the passing of a Validating Act seeking to validate any statutory provision declared unconstitutional.
When Parliament passes an amendment validating any provision which might have been declared invalid for some defect or lacuna, the Parliament seeks to enforce its intention which was already there by removing the defect or lacuna.
The Parliament indeed seems to remedy the situation created as a result of the statutory provision being declared invalid.
As I have earlier observed, this is done in public interest for properly regulating the fiscal structure and to relieve the Government of any financial burden by way of refund of taxes collected for enabling the State to implement its budget by proper collection of revenue expected to be realised.
When the Parliament in any fiscal statute proposes to grant any relief to any assessee the Parliament must be presumed to do so in public interest.
In the instant case section 80J granted relief for the purpose of promoting the industrial growth of the country by affording incentive for the setting up of new undertakings.
As a matter of policy again the Parliament may withdraw such relief or any part thereof or modify the nature, extent and kind of relief, if Parliament may withdraw such relief or any part thereof or modify the nature, extent and kind of relief, if Parliament in its wisdom may consider any such action necessary and proper and any such act done by the Parliament must also be regarded to have been done in public interest.
However, the withdrawal or modification with retrospective effect of the relief properly granted by the statute to an assessee which the assessee has lawfully enjoyed or is entitled to enjoy as his vested statutory right depriving the assessee of the vested statutory right, has the effect of imposing a levy with retrospective effect for the years for which there was no such levy and cannot, unless there be strong and exceptional circumstances justifying such withdrawal or modification, be held to be reasonable or in public interest.
This kind of retrospective amendment, seeking to defeat an accrued statutory right 780 is likely to affect the sanctity of any statuory provision and may A create a state of confusion.
The only circumstance which appears to have led to the present retrospective amendment is the existence of the invalid rule.
The existence of any invalid rule seeking to deny an assessee a benefit clearly and unequivocally granted to an assessee by the Legislature, lawfully and properly enjoyed or to be impugned amendment in 1980 the relief granted by section 80J had been in force and had been legitimately available to the assessee.
In view of the clear provision made in the statute by Parliament itself the Parliament must be presumed to have been aware that the relief as contemplated under section 80J was available to the assessee and the assessee had been enjoying and were entitled to enjoy the benefit of the said relief.
The Parliament must have and in any event must be presumed to have arranged the financial affairs of the State on the footing that the relief allowed to an assessee under section 80J was being enjoyed and would be enjoyed by the assessee In view of the clear provision of the statute which must be held to manifest the true intention of the Parliament it will be idle to contend that Parliament could have intended that the relief so granted would not be available to the assessees who would be liable to pay a larger amount of tax.
The years for which relief had remained in force had already passed out.
It does not appear that as a result of the relief enjoyed by the assessee, the financial position of the state for all these years, had been or could be in any way affected.
The facts and circumstances also do not indicate that there will be any heavy burden on the State to sound taxes collected which may upset the economy of the State.
It appears that in the majority of the cases, the assessees have succeeded and they have been assessed after being allowed the relief and under section 80J in respect of the borrowed capital also.
On the other hand it is quite clear that if the relief granted is to be withdrawn with retrospective operation from 1972 the assessees who have enjoyed the relief for all those years will have to face a very grave situation.
The effect of the withdrawal of the relief with retrospective operation will be to impose on the assessee a huge accumulated financial burden for no fault of the assessee and this is bound to create a serious financial problem for the assessee.
Apart from the heavy financial burden which is likely to upset the economy of the undertaking, the assessee will have to face other serious problems.
On the basis that the relief was legitimately and legally available to the assessee, the assessee had proceeded to act and to arrange its affairs.
If the relief granted is now permitted to be withdrawn with retrospective operation, the assessee may be found guilty of violation provision of other state and may be visited with panel consequen 781 ces.
This position cannot be and is not disputed by the learned A Attorney General who has, however, argued that taking into consideration the peculiar facts and circumstances, penal provisions may not be enforced.
This argument does not impress me.
The assessee has, in any event, to run the risk and for no fault on his part has to place itself at the mercy of the authorities for facing consequences of violation of statutory provisions, which but for the introduction of retrospective amendment, would not have been violated by the assessee.
To establish arbitrariness or unreasonableness it does not become necessary to prove that the undertaking of the assessee will be completely crippled and will have to be closed down in consequence of the withdrawal of the relief with retrospective effect.
There cannot be any doubt about the real possibility of very serious prejudice being caused to the assessee for no fault of the assessee.
In my opinion, the possibility of very grave prejudice to the assessee by the withdrawal of the relief with retrospective effect, in the absence of any justifiable ground and any serious prejudice to the interest of revenue, establishes unreasonableness and arbitrariness of the retrospective amendment is bound to have very serious effect on the assessee and there is reasonable possibility of the business of the assessee being adversely affected and seriously prejudiced.
The retrospective amendment, therefore, is also violative of Art 19 (1) (g) of the Constitution.
The argument of the Attorney General that the amendment had to be made with retrospective effect in the interest of the assessee, as otherwise, the assessee would not be entitled to the benefit of there lief intended to be given under the section because there will be no valid rule for computing the relief, to my mind, is clearly untenable.
I see no reason as to why there should be any difficulty in the computation of relief if the invalid part of the rule is struck down.
It may be noted that the rule in so far it excludes borrowed capital and fixes the first day of the year for computation of the relief had been struck down by various High Courts years ago and the assessing authorities have found no difficulty in computing the relief and in proceeding to complete the assessment by granting the relief legally available to assessee under section 80J even after the invalid part of the rule had been struck down.
It may also be noted that the Parliament had also not considered it necessary to effect this amendment earlier inspite of the decisions of the High Courts, although the Parliament had introduced other amendments into this section.
Before concluding I wish to emphasise that the withdrawal with retrospective effect by amendment of any financial benefit or 782 relief granted by a fiscal statute must ordinarily be held to be unreasonable and arbitrary.
Such withdrawal makes a mockery of beneficial statutory provision and leads to chaos and confusion Such withdrawal in effect results in the imposition of a levy at a future date for past years for which there was no such levy in the relevant years.
The imposition of any fresh tax with retrospective effect for years for which there was no such levy is entitled to arrange and normally arranges his financial affairs on the basis of the law as it exists.
Such retrospective taxation imposes an unjust and unwarranted accumulated burden on the assessee for no fault on his part and the assessee has to face unnecessarily without any just reason very serious financial and other problems.
Imposition of any tax with retrospective effect for years for which no such tax was there, cannot also be considered to be just and reasonable from the point of view of revenue.
The years for which levy is sought to be imposed with retrospective effect had already passed and there cannot be any proper justification for imposition of any fresh tax for those years.
Such retrospective taxation is likely to disturb and unsettle the settled position; and because of such imposition of retrospective levy for the years for which there was no such levy, assessments for those years which might already have been completed and concluded will get upset.
If the State is in need of more funds, the State instead of seeking to levy any tax with retrospective effect can always take appropriate steps to collect any larger amount so required by imposition of higher taxes or by other appropriate methods.
I have already observed that Validating Acts which seek to validate the levy of any tax with retrospective effect do not in effect impose any fresh tax with retrospective effect and Validating Acts stand on an entirely different footing.
T, therefore, hold that the impugned amendment in so far as it is sought to be made retrospective with effect from the 1st day of April 1972 is invalid and unconstitutional, though the amendment in so far as it operates prospectively is valid.
In the result I dismiss the appeals filed by the Union of India against the decisions of the High Courts declaring Rule 19 A to be invalid in so far as the said rule excludes borrowed capital and fixes the first day of the year for computation of the relief to be granted to an assessee under S.80J.
I set aside the judgment of the Madhya Pradesh High Court which upholds the validity of the Rule and I allow the appeal of the assessee against the judgment of the Madhya Pradesh High Court.
I hold and declare that Rule 19 A is so far as it seeks to exclude the borrowed capital and fixes the first day of the year for the computation of relief under section 80J is invalid and unconstitutional and the same has to be struck down and has been struck down 783 by the various High Courts.
I hold and declare that the impugned amendment of 1980 incorporating the provision of the invalid rule l9 A in the section itself, excluding the borrowed capital and fixing the first day of the year for computation of the relief under section 80J is valid in its prospective operation from the date of the amendment and is unconstitutional and invalid insofar as the said amendment is sought to brought into operation retrospectively with effect from 1st B April 1972.
Accordingly, I allow the writ petitions challenging the validity of the amendment only to the extent of its retrospective operation and I dismiss the writ petitions in so far as the amendment in its entirety is sought to be challenged.
I propose to make no order as to costs.
| To fill in the vacancy arising from the setting aside of the election of the returned candidate from the 59 Taoru Assembly Constituency in Haryana, by the Supreme Court, the appellant Commission sent a message and programme on April 6, 1984 to the Chief Electoral officer for the State of Haryana.
According to that programme, the notification under section 150 of the Representation of the People Act, 1951 was to be issued on April 18, 1984, the last date for filing nominations was April 25, 1984 while the date of poll was May 20, 1984 The Election Commission fixed an identical programme for filling 23 other vacancies in the legislative assemblies of Andhra Pradesh, Karnataka and West Bengal.
On April 7, 1984, the Election Commission was requested by the Haryana Government to hold the proposed by election alongwith the general elections to the Lok Sabha, due later in the year.
On April 11, 1984, the Chief Secretary wrote a letter to the Election Commissioner renewing the request to defer the by election.
On April 12, 1984 the Election Commissioner informed the Chief Election officers by a telex message that it had decided to adhere to the programme of by elections to all the 24 constituencies and copies of notifications to be published on April 18, 1984 were sent to the Chief Electoral officer, Haryana.
A Press not was issued to that effect after informing all the political parties.
The Chief Secretary, Haryana met the Chief Election Commissioner on April 14, 1984 and explained to him personally why it was neither advisable nor possible to hold the by election to the Taoru seat as proposed by the latter.
On April 16, 1984, the Chief Secretary wrote a letter reiterating the view of the Government to the Chief Election Commissioner.
On April 17, 1984, the Chief Commissioner replied to the letter of April 16, 1984 by saying that the Commission had taken the decision to hold the by election after taking the Punjab situation and taking into consideration all factors including the fact of non fact that the political parties were not opposed to the proposed byelection.
On the same day the Government of Haryana filed a writ petition in the High Court of Punjab and Haryana and obtained an ex parte order staying the issuance and publication of the 555 notification by the Election Commission under sections 30, 56 and 150 of the Representation of the People Act, 1951.
Hence the appeal by special leave of the Court.
Allowing the appeal, the Court.
^ HELD : (Per Majority) Per Chandrachud C.J. 1 : 1.
The widely prevalent practice of partices obtaining ex parte orders when they can give prior intimation of the proposed proceedings to the opposite side, without much inconvenience or prejudice has often been disapproved by this Court.
When the public authorities do so it is all the more open to disapprobation.
[561D E] 1 : 2.
The Government of Haryana obtained an ex parte order from the High Court when it could easily have given prior intimation of the intended proceedings to the Election Commission of India.
The letter is constitutionally identifiable, conveniently accessible and easily available for being contacted on the most modern systems of communication.
The Election Commission of India, too rushed to this Court on the 18th without informing the Government of Haryana that it proposes to challenge the order of the High Court and to ask for stay of that order.
The Government of Haryana is also identifiable and accessible with the same amount of case.
Were it not for the fact that this matter brooked no delay the Supreme Court would have hesitated to pass any interim order without the appellant giving prior intimation of its proposed action to the respondent.
[561E G] 1 : 3.
Despite the guideline indicated by the Supreme Court in the West Bengal poll case, A.K.M. Hassan Uzzaman vs Union of India, , regarding the passing of orders by the High Courts in exercise of their writ jurisdiction, the High Court of Punjab & Haryana far from showing any reluctance to interfere with the programme of the proposed election, the High Court has only too readily passed the interim order which would have had the effect of postponing the election indefinitely.
Considering that the election process was just round the corner, the High Court ought not to have interfered with it.
The nonspeaking order passed by it affords no assistance on the question whether there were exceptional circumstances to justify that order.
[562A C] 2.
The Government of Haryana is undoubtedly in the best position to assess the situation of law and order in areas within its jurisdiction and under its control.
But the ultimate decision as to whether it is possible and expedient to hold the elections at any given point of time must rest with the Election Commission Arbitrariness and mala fides destroy the validity and efficacy of all orders passed by public authorities.
It is therefore necessary that on an issue like the present, which concerns a situation of law and order, the Election Commission must consider the views of the State Government and all other concerned bodies of authorities before coming to the conclusion that there is no objection to the holding of the 556 elections at this point of time.
Hence the Election Commission came to its decision after bearing in mind the pros and cons of the whole situation.
It had the data before it.
It cannot be assumed that it turned a blind eye to it.
In these circumstances, it was not in the power of the High Court to decide whether the law and order situation in the State of Punjab and Haryana is such as not to warrant or permit the holding of the by election.
It is precisely in a situation like this that the ratio of the Bengal Poll case would apply in its full rigor.
[562E H, 563A B] 3 : 1.
However, it would be open to the Chief Election Commissioner to review his decision as to the expediency of holding the poll on the notified date.
In fact, not only would it be open to him to reconsider his decision to hold the poll as notified, it is plainly his duty and obligation to keep the situation under constant scrutiny so as to adjust the decision to the realities of the situation.
All the facts and circumstances, past and present, which bear upon the question of the advisability of holding the poll on the notified date have to be taken into account and kept under vigil.
That is to continuing process which can only cease after the poll is shield.
Until then, the Election Commission has the locus, for good reasons to alter its decision The law and order situation in the State, or in any art of it, or in a neighboring State, is a consideration of vital importance for deciding the question of expediency or possibility of holding an election at any particular point of time.
If he considers it necessary, he should held further discussions with the Chief Electoral officer of Haryana and consult, once again, leaders of the various political parties on the question whether it is feasible to hold the poll on the due date.
On an important issue such as the holding of an election, which is of great and immediate concern to the entire political community, there can be no question of any public official standing on prestige, an apprehension which was faintly projected in the State 's arguments.
A sense of realism, objectively and noa alignment must inform the decision of the election Commission on that issue.
[563D H] Mohd.
Yunus Saleem vs Shiv Kumar Shastri.
; @ 743 44; followed.
3 : 2.
Indeed, every citizen of this country who has some degree of political awareness, would have a fair idea of the situation in Punjab and its impact on the even flow of life in the neighbouring State of Haryana.
But the circumstance that the High Court has the knowledge of a fact will not justify the substitution by it of its own opinion for that of an authority duly appointed for a specific purpose by the law and the Constitution.
Different people hold different views on public issues, which are often widely divergent.
Even the Judges.
A Judge is entitled to his views on public issues but he cannot project his personal views on the decision of a question like the situation of law and order in a particular area at a particular period of time and hold that the Election Commission is in error in its appraisal of that situation.
[564D F] Per Thakkar, J. (Contra) : The exact parameters of the decision in Hassan 's case and the true 557 ratio cannot be known till the judgment containing reasons is born.
As on today no one can predict what exactly will be decided by the Court in Hassan 's case when the Judgment eventually comes to be pronounced (who can make a guess about the colour or shade of the eyes of a child which is yet to be born ?).
But it can be reasonably said that Hassan 's case does not enjoin that an interim order of such a nature can never be passed in any situation.
If that were not so, the court would not have said (1) that imminence of electoral process is a factor which must guide and govern the passing of orders (meaning thereby that while such order scan be passed this factor must be accorded due consideration) and (2) that "more imminent such process, the greater ought to be the reluctance of the High Court to do anything or direct anything to be done which will postpone that process indefinitely" (which means it must be done only with reluctance when elections are imminent).
In other words the power must be exercised sparingly (with reluctance) particularly when the order would be to postpone the installation of a democratically elected popular Government.
These observations were made by the Court in Hassan 's case in the context of the expiry of the term of legislature as envisioned by Article 172 of the Constitution of India and consequential general elections for such legislature as is evident from the elusion to "imminence of elections" and "indefinite postponement of elections to legislative bodies which are the essence of democratic functions of the Constitution.
" This must be so because the legislature would stand dissolved on the expiry of the term, and a new legislature has to be elected.
It is in this context (presumably) that a reference is made to "imminence of elections".
[567D E H; 568A F] For a By election like the present one, to fill a single vacancy .
there can be no question of "imminence" or "indefinite postponement of elections" which would stall the installation of a democratically elected government.
It is nobody 's case that the party position was such that the result of the election to this vacant seat would have tilted the majority one way or other.
No oblique motive has even been hinted at.
The High Court was therefore not unjustified in proceeding on the assumption that it had such a power.
[568F G] The High Court cannot be faulted for passing the impugned order faced as it was by an unprecedented situation like the present.
If the High Court had not granted the order and the Election Commission had not chosen to appear on or before April 18, 1984 the High Court would have perhaps become powerless to pass any other order, whatever be the justification for it, as the "electoral process" would have actually commenced.
The High Court was prima facie satisfied that the Election Commission had failed to take into account vital matters, appeared to have acted on non consequential considerations, and had acted arbitrarily in turning down the request of the State Government as also the Chief Election Officer of Haryana.
The High Court was therefore entitled to grant a stay.
[569A B] The Supreme Court in exercise of the jurisdiction under Article 136 of the Constitution of India should not interfere with the ad interim order passed by the High Court in such a fact situation.
On the one hand the Election Commission appeared to have been altogether oblivious to the dimension as regards the bonafide apprehension pertaining to the life and 558 security of the National leaders who might address public meetings, the Candidates the officers engaged in election work, and the voters.
The danger was further aggrevated in the face of open threats held but to the lives of the National leaders of different political parties.
What is more, the Election Commission has shown total unawareness of the circumstance that public meetings were prohibited under section 144 of the Cr. P. C. in the constituency going to the polls.
On the other hand the only consequence of granting a stay would have been to postpone the election programme by a few days in the event of the Election Commission commission not choosing to appear in the Court (to show cause why the ad interim order should no be made absolute) on or before April 18, 1984 which was the scheduled date for issuance of the notification announcing the election programme The Election Commission could have appeared before the High Court and got the stay vacated in time instead of approaching this Court by way of the present appeal by Special Leave.
The Election Commission could not have failed to refraise that no serious consequence would have flowed from the impugned order even if stay was vacated, not immediately, but a few days later, for, it was only a by election to one single seat of no significance which would not have resulted in postponement of the installation of an elected government.
Worse come to worse, the by election could not have been held along with by elections in other states on the 'same day '.
[569B G] More so when the Election Commission has not been able to show what possible detriment would have been suffered if the by election could not have been so held on that particular day.
How and by what process of ratiocination did the Election Commission convinced itself that free elections could be held in a situation where the Candidates would consider it hazardous to contest or to indulge in election propaganda, and even voters would be afraid to vote, even to this court.
[569G H, 570A] It is no doubt true that theoretically the Election Commission can still postpone the polling, if it is so minded.
But the Court should not remain a passive spectator in this extraordinary situation and leave the Nation to the mercy of an individual, however high be his office, when it is evident that he has secluded himself in his ivory tower and has shut his eyes to the realities of the situation and closed his mind to the prognosis of this matter.
The Court can certainly satisfy itself whether the Election Commissioner had kept his eyes, ears and mind open, and whether he was able to show that all relevant factors including the consideration as to what advantage was to be secured as against the risk to be faces, entered into his reckoning.
If this is not shown to have been done, as in the present case, his decision is vitiated and the Court need not feel helpless.
The High Court was therefore fully justified in passing the impugned order, and the Supreme Court should not upture it.
[571B D]
|
Special Leave Petition (Civil) No. 1008 of 1986.
From the Judgment and Order dated 25.11.1985 of the Madhya Pradesh High Court in Misc.
Petition No. 551 of 1981.
Dr. N.M. Ghatate and S.V. Deshpande for the Petitioners.
Kuldip Singh, Additional Solicitor General, B.B. Ahuja and Miss. A Subhashini for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is a petition for leave to appeal under Article 136 of the Constitution of India directed against the judgment and order dated 25th November, 1985 of the High Court of Madhya Pradesh at Jabalpur.
The petitioner herein had challenged by a petition under Article 226 of the Constitution the order dated 26th December, 1975 passed by the Collector of Central Excise, Nagpur, directing confiscation of 565 wrist watches seized from the petitioner 's possession on 12th May, 1973 under Section 111 of the (hereinafter called 'the Act ') and the imposition of penalty of Rs.2,00,000 under section 112 of the Act and as well as the order dated 10th August, 1979 passed by the Central Board of Excise and Customs dismissing the petitioner 's appeal and thereafter the order dated 8th January, 1981 passed by the Government of India dismissing the petitioner 's revision.
It appears that the petitioner along with his father and brothers migrated to India from Pakistan.
It is stated that the petitioner started business of cutlery in Indira Market Durg and has got this separate business from other two brothers.
The petitioner further asserted that he was not also associated in any business with his cousin Hariram or 800 business of his father.
He stated that he lives separately from his brother and father.
In or about April, 1966, the petitioner purchased a piece of land for Rs.6250 from one Yeshwant Ram under the registered sale deed in respect of the plot bearing Khasra No. 1167 admeasuring about 182 sq.
Similarly his brothers had also purchased plot adjoining the plot of the petitioner.
Since 1973, the petitioner stated that he was living in two temporary rooms constructed by his brothers and petitioner 's plot was lying vacant.
On or about 12th May, 1973 Superintendent of Central Excise Raipur issued search warrant under section 105 of the Act authorising one L.B. Tiwari Inspector, Central Excise to search the residential premises of the petitioner.
They searched the residential premises at Durg and it was alleged that the house belonged to the petitioner.
On 1st April, 1974, the petitioner was detained under the (hereinafter called 'COFEPOSA ').
On or about 22nd March, 1975, the petitioner while in jail received the letter issued by the Collector for the purpose of extension of six months ' time for the issuance of show cause notice under section 110(2) of the Act under which the period was extended upto 14.11.74.
The petitioner alleged that this letter was never received by him.
There was another order on or about 5th January, 1976 passed by the Collector, Central Excise under which it was held that the petitioner had acquired the possession of the wrist watches and these were smuggled goods and imposed a penalty of Rs.2,00,000.
The High Court noted the facts as below: "On 12.5.1973 in a search made of the petitioner 's bed room at Durg, a total of 565 wrist watches of foreign mark valued at Rs.87,455 were seized from a suit case, a secret cavity in a locked steel almirah, and behind the almirah concealed in a bundle of waste paper from the petitioner 's possession during his presence.
A panchnama was prepared at the same time mentioning these facts.
The petitioner found himself unable to make any statement at that time on account of which recording of his statement was deferred.
However, the petitioner went out of station on 14.5.1973.
His statement was then recorded on 30.5.1973, as soon as he was available for this purpose.
In his statement Annexure R III duly signed by him, he admitted these facts and merely denied knowledge of the manner in which the watches came to be in his house.
the 801 petitioner was also given a notice to show cause why the period of six months fixed by section 110(2) of the should not be extended but no reply was given by him till 10.11.1973 or even thereafter, therefore, by an order dated 10.11.1973 before expiry of the period of six months ' time was extended by the collector of customs for a further period of six months for giving a notice as required by section 124(a) of the Act.
Within proviso to sub section (2) of section 110, a show cause notice specifying the requisite particulars was given to the petitioner on 4.5.1974.
In reply the petitioner made a general denial.
The enquiry was fixed for giving a personal hearing to the petitioner on 31.10.1975 when the petitioner 's counsel appeared and sought an adjournment to 20.11.75 which was granted.
However, on 20.11.1975 the petitioner 's counsel stated that the petitioner did not want to avail the opportunity of personal hearing or to even cross examine the witnesses in whose presence the panchnama the time of the seizure of the watches was made.
In the above circumstances and on the basis of facts alleged in the show cause notice which the petitioner did not even care to refute by availing the opportunity given to him at the enquiry, the Collector of Central Excise passed the order dated 26.12.1975, as aforesaid.
This order has been affirmed on appeal by the Board and thereafter in revision by the Government of India.
" It was contended before the High Court by the petitioner 's counsel that the notice dated 4th May, 1974 issued under section 124(a) of the Act was issued beyond the period of six months of the seizure of goods made on 12.5.1973 and as such the entire proceedings were invalid for this reason.
It was also contended that the extension of the period of six months by another period of six months in accordance with the proviso to sub section (2) of section 110 could not be made ex parte without notice to the petitioner.
Reliance was placed on the decision of this Court in Asstt.
Collector of Customs vs Charan Das Malhotra, ; The High Court found that this contention had not been urged before the lower authorities.
However, the High Court noted that the Collector 's order dated 26th December 1975 had specifically mentioned that a show cause notice was issued to the petitioner for extension of the period for issue of notice in accordance with section 110(2) of the Act by another six months but no reply was 802 given by the petitioner and the Collector, therefore, extended the period by another six months by his order.
This order coupled with the petitioner 's failure to even raise this point at an earlier stage was sufficient, according to the High Court, to indicate that the order extended the period by another six months under the proviso to subsection (2) of section 110 was made after giving an opportunity to the petitioner which he had failed to avail.
Sub section (2) of section 110 stipulates as follows: "Where any goods are seized under sub section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months.
" Extension of time takes away a valuable right of a party whose goods are proposed to be seized.
Such deprivation of the valuable right must be upon notice otherwise it violates the principles of natural justice.
In the aforesaid decision of this Court in Asstt.
Collector of Customs vs Charandas Malhotra, (supra), this Court affirmed the view of the Calcutta High Court that the power under the proviso was quasi judicial, or at any rate, one requiring a judicial approach.
This Court reiterated that the right to restoration of the seized goods is a civil right which accrues on the expiry of the initial six months and which is defeated on an extension being granted, even though such extension is possible within a year from the date of the seizure.
Therefore, according to this Court an ex parte determination by the collectorwould expose his decision to be one sided and perhaps one based on an incorrect statement of facts.
How then can it be said that his determination that a sufficient cause exists is just and fair if he has done it before by one sided picture without any means to check it unless there is an opportunity to the other side to correct or controvert it? But in the facts of this case a notice has been given and it has been so found from the records as well as the inference drawn from in absence of pleading, which inference drawn by the High Court in the facts of this case was not an improper inference.
In our opinion, the order was passed not in violation of the principles of natural justice.
It must be reiterated whether a notice was given or not within a stipulated time for extension as contenplated under section 110(2) is a 803 question of fact.
It is also true that the onus that the order was passed without notice, was on the person who asserts it to be so and this is a question of fact.
There was an assertion to this effect in the collector 's order, the assertion remained uncontroverted by any specific evidence and also by failure to urge this point.
In that view of the matter, the inference drawn by the High Court that such notice was given as contemplated under section 110(2), in our opinion, was not unwarranted.
The next contention that was raised before the High Court was that there was no evidence to determine the value of the watches so that the quantum of penalty could not be determined for want of such evidence.
It was contended that determination of quantum was arbitrary.
It appears, however, as the High Court noted that the value of the watches was mentioned as one of the particulars in the show cause notice given to the petitioner and this value was not refuted by the petitioner in his reply.
The petitioner did not avail himself of the opportunity at any stage to oppose the extention of time or to refute the allegations made in the show cause notice given thereafter.
Furthermore, these facts must be considered in conjunction with the fact that there was a statement by the petitioner recorded on 30th May, 1973.
Section 123 of the Act provides as follows: "123(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be (a) in a case where such seizure is made from the possession of any person (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; "(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.
(2) This section shall apply to gold, diamonds, manufactures of gold or diamonds, watches, and any other class of 804 goods which the Central Government may by notification in the Official Gazette specify." (Emphasis supplied) This provision had been substituted by the Act 36 of 1973 and would be applicable in the instant case.
The petitioner failed to discharge the burden of proof of trust on him by the aforesaid section.
The next question which was canvassed before the High Court was that the quantification of the penalty was very high.
The High Court however, noted that the liability was incurred by the petitioner in 1973 and the collector made the order in 1975.
Admittedly, for about ten years even after the collector 's order imposing the penalty, the amount of penalty had not been paid by the petitioner.
The value of the smuggled goods was Rs.87,455 even at that time.
On that there is no dispute.
The penalty permissible is upto five times the value of the goods.
The High Court noted that the benefit derived by the petitioner by nonpayment of the amount of Rs.2,00,000 at least for ten years is sufficient indication that the penalty could not be treated as arbitrary.
That of course, by itself in our opinion is not always a safe guide.
But in the facts and circumstances of this case, the penalty was not heavy and the High Court was right.
It is true that this Court in Malhotra 's case (supra) had laid down that the penalty could not be arbitrary and excessive.
But in the facts of this case, it was not so.
As far as the value of the wrist watches is Rs.87,455 it was not arbitrary because it was not denied even though it was so stated in the show cause notice.
In that view of the matter, the High Court was right in not entertaining the petition under Article 226 of the Constitution.
We decline to interfere in this case under Article 136 of the Constitution.
The special leave petition is rejected.
N.V.K. Petition dismissed.
| An omission to administer an oath, even to an adult, goes only to the credibility of the witness and not his competency; so also an omission of the Court or the authori ty examining a child witness formally to record that in its opinion the witness understands the duty of speaking the truth though he does not understand the nature of an oath or affirmation, does not affect the admissibility of the evi dence given by that witness.
Though it is desirable that judges and magistrates should always record their opinion when a child is to be examined that the child understands the duty of speaking the truth, and state why they think so, whether a magistrate or judge was really of that opinion can be gathered from the circumstances when there is no formal certificate to that effect on the record.
Mohamed Sugal Esa vs The King (A.I.R. , R, vs Sewa Bhogta F.N.), Samujh vs Emperor (1907) 10 O.C. 337) referred to.
Though a woman who has been raped is not an accomplice, her evidence has been treated by the Courts on somewhat similar lines, and the rule which requires corroboration of such evidence save in exceptional circumstances has now hardened into law.
The rule laid down in King vs Baskerville (L. R. with regard to the admissibility of the uneorrobo rated evidence of an accomplice is the law in India also so far as accomplices are concerned and it is not any higher in the case of sexual offences.
The only clarification of the rule that is necessary for the purposes of India is where this class of offence is tried by a judge without the aid of a jury.
In such cases it is necessary that the judge should give some indication in his judgment that he has had the rule of caution in his mind and should proceed to give reasons for considering it unnecessary to require corrobora tion on the facts of the particular case before him and show why he considers it safe to convict without corroboration in that particular case.
There is, however, no rule of law or 378 practice that there must in every case be corroboration before a conviction can be allowed to stand.
The view that though corroboration should ordinarily be required in the case of a grown up woman, it is unnecessary in the case of a child of tender years is not correct.
The true position is that in every case of this type the rule about the advisability of corroboration should be present to the mind of the judge; whether corroboration is unnecessary is a question of fact in every case.
Bishram vs Emperor (A.I.R. not approved; Mohamed Sugal Esa vs The King (A.I.R. followed.
The nature and the extent of the corroboration that is required when it is not considered safe to dispense with it, must necessarily vary with the circumstances of each case and also according to the particular circumstances of the offence charged.
It is however clear (i) that it is not necessary that there should be independent confirmation of every material circumstance in the sense that the independ ent evidence in the case, apart from the testimony of the complainant or accomplice, should itself be sufficient to sustain conviction; all that is required is that there must be "some additional evidence rendering it probable that the story of the accomplice (or the complainant) is true and that it is reasonably safe to act upon it," (ii) The inde pendent evidence must not only make it safe to believe that the crime was committed but must in some way reasonably connect the accused with it; (iii) the corroboration must come from independent sources and thus ordinarily the testi mony of one accomplice would not be sufficient to corrobo rate that of another accomplice;(iv) the corroboration need not be direct evidence that the accused committed the crime; it is sufficient if it is merely circumstantial evidence of his connection with the crime.
A previous statement of an accomplice or a complainant is admissible as evidence of conduct; it is also admissible as corroborg live evidence provided it fulfills the condi tions laid down in see.
157 of the Evidence Act.
The main test as to whether a previous statement was made "at or about the time when the fact took place", within the meaning of sec.
157, Evidence Act, is whether the state ment was made as early as can reasonably be expected in the circumstances of the case and before there was an opportuni ty for tutoring or concoction.
Where a person was charged with having committed rape upon a girl eight years of age and the only evidence to corroborate the testimony of the girl connecting the accused with the crime was a statement made by her to her mother some four hours after the incident, that she had been raped by the accused: Held, that in the circumstances of the case the testimony of the mother was admissible as independent corroborative evidence and 379 the girl 's previous statement was sufficient corroboration of the girl 's testimony for convicting the accused.
|
iminal Appeal No. 193 of 1967.
Appeal by special leave from the judgment and order dated March 7, 1967 of the Bombay High Court, Nagpur Bench in Criminal Revision Application No. 306 of 1966.
271 G.N. Dikshit, S.K. Bisaria appellant.and R.N. Sachthey, for the appellant.
H.R. Khanna and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This Court granted special leave to appeal in this case limited to the following two points: (1 ) whether the confiscation of the foodgrains in the house of the appellant was legal; and (2) whether r. 141 (2) of the Defence of India Rules: 1962 is not ultra vires the: Defence of India Act.
The facts relevant to the first point are as follows: Certain shpherds belonging to a wandering tribe were apprehended by the police one night while they were carrying 12 baggages containing juar on the backs of 12 horses.
On being questioned they informed the police that they had purchased all this quantity of juar from the appellant at the rate of 78 paise per kg.
On this information the police raided the houses of the appellant and further found 34 quintals and 63 kgs of juar.
The appellant had two house.s at Janephal and in one house 3 quintals and 48 kgs while in the other house 31 quintals and 18 kgs.
of juar was found, which was seized by the police.
The last declaration of stock which had been given by the appellant was on June 5, 1965.
The appellant was tried and convicted o.n three courts by the Judicial Magistrate, First Class, Mehkar.
He was convicted under r. 125(9), Defence of India Rules, for contravening cl.
4(b) of the Maharashtra Jwar (Restrictions on purchases and sale and control of movement) Order, 1964, and sentenced to rigorous imprisonment for six months and fine of Rs. 500/ , in default further rigorous imprisonment for six months.
He was further convicted for contravening Buldana District Price Control Order, 1965, and sentenced to rigorous imprisonment for six months and fine of Rs. 500/ , in default rigorous imprisonment for six months.
He was also convicted for contravenvening section 3 of the Maharashtra Declaration of Stock Order, 1964, and sentenced to rigorous imprisonment for six months and fine of Rs. 500/ in default further rigorous imprisonment for six months.
The sentences of imprisonment on each count were directed to run concurrently.
The Magistrate further ordered that the maddemal before the Court be confiscated to the Government.
The appellant appealed unsuccessfully to the Sessions Judge.
He then filed a revision before the High Court.
The High Court 272 set aside the conviction and sentence passed on the appellant in respect of contravention of cl. 3 of the Maharashtra Foodgrains (Declaration of Stocks) (Second) Order, 1964.
But while maintaining the conviction for the other two charges the High Court modified the sentences passed on the appellant and instead of the sentences awarded by the lower courts sentenced the accused to imprisonment already undergone and fine of Rs. 1,000 on .each of the two.
counts.
The High Court observed: "The order regarding forfeiture of the juar seized from the house of the accused is maintained.
The juar seized from the: house in the occupation of Ratanlal will however be released." The learned counsel contends that the High Court having set aside the conviction and sentence in respect of contravention of cl. 3 of the Maharashtra Foodgrains (Declaration of Stocks) (Second) Order, 1964, it was illegal to maintain the order regarding forfeiture of the Juar seized from the house of the appellant because, he says, the Maharashtra Jowar (Restriction .on Purchase and Sale and Control of Movement) Order, 1964, and the Buldana District Juar (Price Control) Order, 1965, did not contain any provision authorising the Court to forfeit the juar, the subject matter of the contravention of these two orders.
Rule 125(9) provides: "(a) If any person contravenes any provision of this rule o.r any order made: under this rule, he shall be Punishable with imprisonment for a term which may extend to three years, or with fine, or with both: Provided (b) If any order made under this rule so provides, any court trying a contravention of the order may direct that any property in respect of which the Court is satisfied that the order has been contravened shall be forfeited to Government." The learned counsel for the State has not been able to point out any provision in the two orders mentioned above containing any provision contemplated in r. 125(9)(b).
The only provision contained in the Maharashtra Jowar (Restriction on Purchase 'and Sale and Control of Movement) Order, 1964, is regarding forfeiture to the Government of packages, coverings or receptacles in which any stocks of jowar are found.
This obviously does not enable the Court to order forfeiture of Juar.
273 The Buldana District Juar (Price Control) Order, 1965, it is true, authorises the Collector to seize stocks but does not enable the Court to.
forfeit the juar.
In the result we hold that the order of the High Court maintaining the order of forfeiture is allegal and liable to be set aside.
On the second point the learned counsel for the appellant contends that r. 141(2) of the Defence of India Rules, 1962, is ultra vires because it lays down a rule of evidence contrary to.
the law contained in section 114 of the Indian Evidence Act.
Rule 141 (2) is in the following terms: "141 (2) If in the course of any judicial proceedings a question arises whether a person was duly informed of an order made in pursuance: of these Rules, compliance with sub rule (1 ), or where the order was notified, the notification of the order shall be conclusive proof that he was so.
informed; but a failure to comply with sub rule ( 1 ) (i) shall not preclude proof by other means that he had information of the order, (ii) shall not affect the validity of the order.
Section 3 of the Defence of India Act enables the Central Government, by notification in the Official Gazette, to make such rules as appear to be necessary,.
or expedient for securing the defence of India and civil defence, the public safety, the maintenance of public order or the efficient conduct of military operations, or for maintaining supplies and services essential to the life of the community.
Sub section
(2) mentions various matters on which rules can be made, but this is without prejudice to the generality of the powers conferred by sub section
It seems to us that r. 141 (2) is within the powers conferred by section 3 (1 ) of the.
Defence of India Act.
The .fact that the rule is contrary to an existing act does not matter because section 43 of the Defence of India Act provides that "the provisions of this Act or any rule made thereunder or any order made under any such rule shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument having effect by virtue of any enactment other than this Act.
" The section contemplates that the rules may be: inconsistent with existing legislation but by virtue of section 43, if otherwise.
valid, they would have effect notwithstanding that they are inconsistent with existing legislation.
We use the words "if otherwise valid" because the rules must fall within the powers given under section 3 (1).
Section 3 gives very wide powers.
It seems to us that r. 141 (2) falls within section 3 because it is essential 274 to the scheme of the Defence of India Rules.
The Rules must necessarily provide for the publication of orders made under the Rules and they must also provide for proof in judicial proceedings of the fact of publication.
The learned counsel has not been able to show us any case in which a rule like r. 141(2) has been challenged, much less declared ultra vires, both in England and in India.
In the result the appeal is partly allowed, the order of the High Court maintaining the forfeiture of the seized stock of juar set aside and the rest of the order of the High Court maintained.
Y.P. Appeal partly allowed.
| The appellants, among others applied to the Regional Transport Authority for permits to operate a direct bus service on.
a route in Meerut District, U.P., which had no direct passenger bus service.
After hearing the appellants and those who opposed them, the Regional Transport Authority was satisfied that there was no sufficient demand for such a direct service, and therefore, there was no justification for opening the proposed new route.
The. applications of "the appellants and other applicants were therefore rejected.
The Appellate Tribunal reversed the order of the Regional Transport Authority and granted permits to the three appellants.
The respondents therefore filed writ petitions in the High Court for quashing the order of the Tribunal contending that no appeal against the order of the Regional Transport Authority lay under section 64(a) of the and that consequently, the Tribunal had No. jurisdiction to entertain such appeals, and grant permits to the appellants.
A Single Bench dismissed the petitions but the Division Bench held that no appeal against the order of the Regional transport Authority lay under section 64(a) and accordingly, allowed the writ petitions and quashed the Tribunal 's order.
On appeal to this Court, HELD: The appeal must be dismissed.
The decisions of this Court clearly lay down that the R.T.A. has first to make "a general order" as stated in Abdul Mateen 's case under section 47 (3) as to the number of permits necessary for a new route and he cannot exceed that limit while he is at the next stage when he considers under section 48 read with, section 56(7) as to.
who among the applicants should be granted the permit or permits.
Such a 'general order ' limiting the number of permits presupposes that he has come to a decision that the new route either proposed by him or by an applicant or applicants is necessary in the public interest.
If the order 'as to the number of permits is a 'general order ' passed under section 47(3) with which the individual applications are not concerned and is anterior to the stage under section 48 when applications of the individual operators are taken into, consideration, and therefore is not appealable under section 64 (a) it must follow a fortiori that the decision as to whether the new route is necessary or not is equally 'a general order ' arrived at either earlier or contemporaneously with the decision as to the number of permits.
If the latter order is not appealable, it cannot be that the former i.e. the decision whether the new route is necessary or not, is not an equally 'general order ' with which individual applications are not concerned and can appeal against it under section 64 (a).
However, the powers of the R.T.A. in connection with the decision as to whether a proposed route should be opened or not are not un 244 limited and unbridled.
The power is subject to the revisional power of the State Government under section 64 A. [250 E 251 C] Abdul Mateen vs
R.K. Pandev ; ; M/s Java Ram Motor Service vs
section Rajarathinam C.A. 95 of 1965, dec.
on October 27, 1967; R. Obliswami Naidu vs The Addl.
State Transort Appellate Tribunal Madras C.A. 1426 of 19 '68, dec.
on Feb. 17, 1969, applied.
|
Appeal No. 270 of 1959.
Appeal by special leave from the judgment and order dated December 23, 1957, of the Allahabad High Court (Lucknow Bench) at Lucknow in Civil Miscellaneous Application (0.
J.) No. 86 of 1954.
C. B. Aggarwala, G. C. Mathur and C. P. Lal, for the appellants.
Achhru Ram, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent.
November, 25.
The Judgment of Sarkar, Subba Rao and Mudholkar, JJ., was delivered by Subba Rao, J., and that of Gajendragadkar and Wanchoo, JJ., was delivered by Wanchoo, J. SUBBA RAO, J. This is an appeal by special leave against the judgment and order of the High Court of Judicature at Allahabad, Lucknow Bench, allowing the petition filed by the respondent under article 226 of the Constitution.
The facts are in a small compass and may be briefly stated.
In the year 1933 the respondent was appointed a constable in U. P. Police Force; on December 1, 1945, he was promoted to the rank of head constable and in May, 1952 he was posted as officer incharge of Police Station, Intiathok, District Gonda.
Complaints were received by the District Magistrate, Gonda, to the effect that the respondent was receiving bribes in the discharge of his duties.
On September 16, 1952, the District Magistrate, Gonda, directed the Sub Divisional Magistrate to make an enquiry in respect of the 674 said complaints.
On November 3,1952, the Sub Divisional Magistrate, after making the necessary enquiries, submitted a report to the District Magistrate recommending the transfer of the respondent to some other station.
On November 17, 1952, the District Magistrate sent an endorsement to the Superintendent of Police to the effect that the Sub Divisional Magistrate had found substantial complaints against the integrity of the respondent, that he had also received such complaints and that his general reputation for integrity was not good, but that his transfer should, however, come after sometime and that in the meantime his work might be closely watched.
On being called upon by the Superintendent of Police to submit an explanation for his conduct, the respondent submitted his explanation on November 29, 1952.
On December 17, 1952, the respondent was forced to go on leave for two months.
Before the expiry of his leave, he was reverted to his substantive post of head constable and transferred to Sitapur.
On February 17, 1953, he was promoted to the rank of officiating Sub Inspector and posted as Station Officer at Sidholi.
On February 27, 1953, the Superintendent of Police made the following endorsement in his character roll: "A strong officer with plenty of push in him and met with a strong opposition in this new charge.
Crime control was very good but complaints of corruption were received which could not be substantiated.
Integrity certified.
" Meanwhile on further complaints, the C.I.D. probed the matter further and on July 26, 1953, the Superintendent of Police, Investigation Branch, C.I.D., reported that the respondent was a habitual bribetaker.
On July 28, 1953, he was placed under suspension and on August 18, 1953, he was charged under section 7 of the Police Act with remissness in the discharge of his duty and unfitness for the same inasmuch as while posted as a Station Officer, Police Station, Intiathok, he had been guilty of dishonesty, corruption and misbehaviour in that he had on nine occasions, particulars of which were given in the charge, accepted bribes.
it may be mentioned that the magisterial inquiry 675 related to seven of the nine charges alleged against the respondent.
The trial was conducted by the, Superintendent of Police and the respondent submitted his explanation on September 12, 1953.
The Superintendent of Police, who conducted the trial, examined many witnesses and found that seven out of the nine charges had been established.
Thereafter he issued a notice to the respondent calling upon him to show cause why he should not be dismissed from the police force.
On February 20, 1954, the respondent sub mitted his explanation and the Superintendent of Police, by his order dated February 22, 1954, dismissed the respondent from service with effect from the said date.
The appeal preferred by the respondent to the Deputy Inspector General of Police was dismissed by his order dated June 2, 1954.
Thereafter the respondent on August 5, 1954, filed a petition under article 226 of the Constitution before the High Court of Judicature at Allahabad, Lucknow Bench, for quashing the order of dismissal.
Before the High Court three points were raised, namely, (1) as the petitioner was officiating.
as Sub Inspector of Police at the time of the departmental trial the Suprintendent of Police had no power to dismiss him, since an order in such circumstances could only be made by a police officer senior in rank to a Superintendent; (2) the trial was vitiated by a number of serious irregularities; and (3) the specific acts with which the petitioner was charged were cognizable offences and, therefore, the Superintendent of Police had no jurisdiction to proceed with a departmental trial without complying with the provisions of subparagraph (1) of para.
486 of the Police Regulations.
The learned Judges of the High Court held that the respondent was charged with committing cognizable offences and therefore sub paragraph (1) of para.
486 governed the situation and that, as no case, as required by the said sub paragraph, was registered against the respondent in the police station, the order of dismissal was invalid.
They further held that the case was not covered by the first proviso to sub paragraph (1) of para.
486, as, in their opinion, the information 676 about the commission of the offences was not in the first instance received by the Magistrate and forwarded to the police for inquiry.
In view of that finding they found it unnecessary for them to express any opinion upon other arguments which had been advanced on behalf of the respondent.
In the result they issued a writ in the nature of certiorari quashing the impugned orders.
Hence the appeal.
Mr. C. B. Agarwala, learned counsel appearing for the appellants, raised before us the following points: (1) The Governor exercised his pleasure through the Superintendent of Police, and, as the Police Regulations were only administrative directions, the non compliance therewith would not in any way affect the validity of the order of dismissal.
(2) If the order of dismissal was held to have been made under the statutory power conferred upon the Superintendent of Police, the regulations providing for investigation in the first place under chapter XIV of the Criminal Procedure Code were only directory in nature, and inasmuch as no prejudice was caused to the respondent the non compliance with the said regulations would not affect the validity of the order of dismissal.
(3) The Superintendent of Police was authorized to follow the alternative procedure prescribed by subparagraph (3) of para.
486 and, therefore, the inquiry held without following the procedure prescribed by rule I was not bad.
(4) As the magisterial inquiry was held in regard to practically all the charges, the subject matter of the departmental trial, the case is not covered by the provisions of para.
486 of the Police Regulations.
In the case of The State of U. P. vs Babu Ram Upadhya (1) in which we have just delivered the judgment, we have considered the first three point; and for the reasons mentioned therein we reject the first three contentions.
The appellants must succeed on the fourth contention.
From the facts already narrated, the conduct of the respondent, when he was officer incharge of the Police Station, Intiathok, was the subject matter of (1) Civil Appeal No. 119 of 1950; ; 677 magisterial inquiry.
The Sub Divisional Magistrate made inquiry in respect of seven of the charges which were the subject matter of the departmental trial and.
submitted a report to the District Magistrate.
The District Magistrate, in his turn, made an endorsement on the report and communicated the same to the Superintendent of Police recommending the transfer of the respondent and suggesting that in the meanwhile the work of the respondent might be closely watched.
Though the Superintendent of Police gave at first a good certificate to the respondent, in respect of the same a further probe was made through the C.I.D. Thereafter the Superintendent of Police conducted a departmental trial in respect of the aforesaid seven charges and two other new charges of the same nature.
The inquiry ended in the dismissal of the respondent.
In the circumstances it would be hypertechnical to hold that there was no magisterial inquiry in respect of the matter which was the subject matter of the departmental trial.
On the said facts we hold that the departmental inquiry was only a further step in respect of the misconduct of the respondent in regard whereto the magisterial inquiry was held at an earlier stage.
If so, the question is whether para.
486 would govern the present inquiry or it would fall out side its scope.
The relevant provisions of the Police Regulations read: Paragraph 486: "When the offence alleged against a police officer amounts to an offence only under s: 7 of the Police Act, there can be no magisterial inquiry under the Criminal Procedure Code.
In such cases, and in other cases until and unless a magisterial inquiry is ordered, inquiry will be made under the direction of the Superintendent of Police in accordance with the following rules;" Paragraph 489: "A police officer may be departmentally tried under section 7 of the Police Act (1) after he has been tried judicially; (2) after a magisterial inquiry under the Criminal Procedure Code; 86 678 (3) after a police investigation under the Criminal Procedure Code or a departmental enquiry under paragraph 486 III above." A combined reading of these provisions indicates that para.
86 does not apply to a case where a magisterial inquiry is ordered; and that a police officer can be departmentally tried under section 7 of the Police Act after such a magisterial inquiry.
In this case the departmental trial was held subsequent to the completion of the magisterial inquiry and therefore it falls within the express terms of para.
489(2).
The fact that in the interregnum the police received further complaints or that the C.I.D. made further enquiries do not affect the question, if substantially the subject matter of the magisterial inquiry and the departmental trial is the same.
In this case we have held that it was substantially the same and therefore the departmental trial was validly held.
We, therefore, set aside the order made by the High Court.
As we have pointed out earlier, the High Court, in the view taken by it, did not express its opinion on the other questions raised and argued before it.
In the circumstances, we remand the matter to the High Court for disposal in accordance with law.
The costs of this appeal will abide the result.
WANCHOO, J.
We have read the judgment just delivered by our learned brother Subba Rao J.
We agree with the order proposed by him.
Our reasons for coming to this conclusion are, however, the same which we have given in C.A. 119 of 1959, The State of Uttar Pradesh vs Babu Ram Upadhya.
Appeal allowed.
Case remanded.
| The respondent was posted as officer incharge of a police station when complaints were received by the District Magis trate that the respondent was receiving bribes.
The District Magistrate got an enquiry made by the Sub Divisional Magistrate and forwarded the report toghether with his own endorsement to the Superintendent of Police.
The respondent was forced to go on 2 months leave and was reverted to his substantive post of Head Constable, but later he was promoted to the rank of officiating Sub Inspector and posted at another police station.
Meanwhile on further complaints an investigation was made and it was reported that the respondent was a habitual bribe taker.
He was charged under section 7 Police Act for 9 charges of bribery and after departmental trial was dismissed by the Superintendent of Police.
He filed a Writ Petition before the High court challenging the order of dismissal inter alia on the ground that the offences charged being cognizable offences the Superintendent of Police had no jurisdiction to hold the departmental trial without first complying with the provisions of para.
486(1) of the U. P. Police Regulations.
The High Court accepted this contention and quashed the order of dismissal.
673 Held (per Sarkar, Subba Rao and Mudholkar, JJ.) that the subject matter of the magisterial enquiry and of the depart mental trial was substantially the same and that the depart 'I mental trial was validly held.
The fact that there was an interregnum between the magisterial enquiry and the departmental trial did not affect the question.
Paragraph 486 did not apply to a case where a magisterial enquiry was ordered and a police officer could be departmentally tried under section 7 Police Act after such magisterial enquiry.
Per Gajendragadkar and Wanchoo, JJ.
The provisions of para.
486 were merely directory and even if there was non compliance therewith the order of dismissal was not invalidated.
|
Special Leave Petition (Civil) No. 4826 of 1987 etc.
From the Judgment and order dated 6.4.1987 of the Allahabad High Court in C.M.A. No. 4555 (W) of 1987 in W.P. No. 2214 of 1987.
K. Parasaran, Attorney General, Milon K. Banerjee, Solicitor General, F.S. Nariman, Dr. Y.S. Chitale, H.L. Anand, K.K. Venugopal, A.K. Ganguli, S.N. Kacker, Anil B. Diwan, A.K. Sharma, Harish N. Salve, K.J. John, section Swarup, T.V.S.N. Chari, Vrinda Grover, Miss A. Subhashini, A. Subba Rao, R.B. Mehrotra, B.B. Sawhney, N.K. Sharma, P.V. Kapur, P.P. Malhotra, Miss Annoradha Dutt, P. Parmeshwaran, Navin Prakash and Naresh K. Sharma for the appearing parties.
973 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
What falls for consideration in all these matters is a common question of law, namely, whether equity shares in the two companies i.e. 10,00,000 shares in Swadeshi Polytex Limited and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Limited, held by the Swadeshi Cotton Mills, vest in the Central Government under Section 3 of the Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986 (hereinafter referred to as 'the Act ').
The other subsidiary question is whether the immovable properties, namely, the bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur have also vested in the Government.
The question as to one more property known as Shrubbery property whether it has been taken over or not is still to be argued and is not covered by this judgment.
In order to appreciate the question in these matters it has to be borne in mind that there were six original proceedings initiated by various parties which gave rise to these civil appeals, special leave petitions and the transferred cases to this Court.
These six original proceedings are as follows: (1) On 18th of February, 1987 Suit No. 418 of 1987 was filed before the Delhi High Court by one Naresh Kumar Parti against Dr. Raja Ram Jaipuria, Swadeshi Polytex and others, praying for an order of injunction restraining the company from holding the 17th annual general meeting on the ground that 34% shares in Swadeshi Polytex have vested in National Textile Corporation (briefly referred to as NTC) in view of sections 3 and 4 of the said Act.
In this suit an application for grant of interim injunction was also filed praying that in the event the annual general meeting of the company is allowed to be held, an independent Chairman should be appointed to conduct the meeting.
Notice in respect of the said application was served upon the respondents on 20th of February, 1987.
On 4th March, 1987 the Delhi High Court refused to pass any order in view of the order already passed by the Allahabad High Court mentioned hereinafter.
Against this order of the Delhi High Court, two special leave petitions were filed in this Court one by Doypack Systems Pvt. Ltd., which was defendant No. 10 in the Delhi suit.
(Consequent upon grant of leave, the special leave petition came to be registered as Civil Appeal No. 577 of 1987).
The other special leave petition was filed by the plaintiff in the Delhi suit, Naresh Kumar Parti.
(Consequent upon grant of leave, the special leave petition came to be registered as Civil Appeal 974 No. 578 of 1987).
On 24th of February, 1987 one Hari Prasad Aggarwal, filed a suit being Case No. 183 of 1987 in the Court of Third Additional Civil Judge, Kanpur praying, inter alia, that Shri Raja Ram Jaipuria should not preside over the 17th annual general meeting of the Company.
On 27th of February, 1987, the application for interim injunction filed in the said suit was dismissed by the learned trial Judge.
In appeal which is not yet numbered preferred by the plaintiff before the Allahabad High Court an order was passed by the Court on 2nd March, 1987 appointing Shri M.P. Wadhawan as the Chairman of the said annual general meeting.
The consenting parties to the said proceedings before the Allahabad High Court were Shri Raja Ram Jaipuria and Swadeshi Polytex Limited.
Against this order of 2nd March, 1987 passed by the Allahabad High Court M/s. Doypack Systems Private Limited preferred a special leave petition in this Court.
Leave was granted and as mentioned hereinbefore it was registered as Civil Appeal No. 577 of 1987.
The three special leave petitions were heard together as Civil Appeals Nos. 577, 578 and 579 of 1987 and were disposed of by a common order on 6th March, 1987 by this Court appointing Shri Jaswant Singh as the Chairman of the said annual general meeting.
On 26th of February, 1987 another suit being Suit No. 506 of 1987, was filed in the Delhi High Court by one Mukesh Bhasin praying, inter alia, for a declaration that Swadeshi Cotton and Swadeshi Mining had no right in respect of 34% of the shareholdings in Swadeshi Polytex and that the said shares were vested in NTC by virtue of the said Act.
By an order dated 9th March, 1987 the Delhi High Court disposed of that application.
The learned Judge in that case was prima facie satisfied that the plaintiff in that case was entitled to an injunction claimed by him in the meeting to be presided over by Shri Jaswant Singh.
He granted injunction restraining the defendants Nos.3 and 4 in that suit from exercising any right whatsoever attached to 34% shares of defendant No.2 held by them and particularly any voting rights in the annual general meeting which was scheduled to be held on 9th of March, 1987 till decision of that suit.
This order was brought to the notice of this Court by CMP forming part of Civil Appeal Nos.
577 79 of 1987.
On 9th of March, 1987 on that CMP this Court passed an order directing that NTC, Swadeshi Cotton and Swadeshi Mining, all shall be entitled to vote at the annual general meeting and the question as to who were the rightful voters would be decided by the Chairman of the meeting.
It was further directed that the Chairman would keep these votes separately.
This is the Transferred Case No. 14 of 1987 herein.
On 7th of March, 1987 one Mukesh Jasnani a shareholder in Swadeshi 975 Polytex filed a writ petition in the Allahabad High Court (Lucknow Bench).
The High Court by its order dated 7th of March, 1987 dismissed that writ petition.
The High Court in the said order observed that Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the 17th annual general meeting in respect of their shares which, according to NTC had vested in them.
Against this order dated 7th March, 1987, Doypack Systems preferred a special leave petition being SLP (Civil) No. 3112 of 1987.
On 9th March, 1987 this Court passed orders in this special leave petition directing that the meeting would be held under the Chairmanship of Shri Jaswant Singh notwithstanding any order made by any court, including the order dated 3rd March, 1987 passed by the Division Bench of the Allahabad High Court.
This Court also vacated the operative portion of the directions contained in the order dated 7th March, 1987 passed by the Allahabad High Court.
On 6th of April, 1987 M/s. Swadeshi Mining and Manufacturing Company filed a civil writ petition No. 2214 of 1987 in the Allahabad High Court (Lucknow Bench) praying, inter alia, for stay of the operation of the letters dated 24/30th March, 1987 addressed by NTC to Swadeshi Mining and Manufacturing and Swadeshi Cotton Mills Company Limited, calling for an Extraordinary General Meeting of the shareholders for removal of the Directors of Swadeshi Mining and Manufacturing Company Limited.
The Division Bench of the High Court (Lucknow Bench) passed an order on 6th of April, 1987, staying the operation of the said letters addressed by NTC to the companies.
Against that order, M/s. Doypack Systems Pvt.
Ltd. filed a Special Leave Petition No. 4826 of 1987.
NTC also filed a special leave petition against the said order, being SLP No. 5240 of 1987 in this Court.
Both these petitions were heard by this Court on 5th May, 1987.
By an order passed on 5th May, 1987 this Court directed that Suit No. 506 of 1987 filed in the Delhi High Court and Writ Petition No. 2214 of 1987 pending in the Allahabad High Court (Lucknow Bench) be transferred to this Court, (subsequently, registered as Transferred Cases Nos. 14 and 13 of 1987 respectively).
Consequent upon leave granted by this Court by the order dated 21st of January, 1987 NTC filed a civil suit in the District Court at Kanpur.seeking a declaration of its title in respect of Shrubbery property in Kanpur.
The learned Trial Judge refused any interlocutory injunction in the said suit against which an appeal was preferred before the High Court of Allahabad which was also declined and, consequently, NTC filed Special Leave Petition No. 7045 of 1987 in this Court.
This application is still pending and is awaiting disposal.
In this background these matters will have to be disposed of.
976 Swadeshi Mining and Manufacturing Co. Ltd. and others submitted that these shares did not vest in the Central Government.
The main thrust of Shri Nariman 's contention, who appeared on their behalf, was that section 3 of the Act provided that every textile undertaking and right, title and interest of the company, i.e. Swadeshi Cotton Mills Company Limited vested in the Central Government.
The "textile undertakings" mentioned in section 3 included all assets 'pertaining ' to the textile undertaking as per section 4 of the Act.
It is common ground that whether a particular asset is part of the textile undertaking and vests under section 3 or not, has to be considered in the context of the Act with reference to the language used in section 4 of the Act.
Shri Nariman submitted that there are different modes by which Parliament can resort to nationalisation.
These modes, according to him, are: (a) acquisition of 100% shares of the Company; (b) all assets under the ownership, possession or control of the company being vested in the Government; (c) only those assets in the ownership, possession or control of the company in relation to the undertakings which are taken over or "all properties pertaining to the undertaking" vest in the Government.
According to him, the expressions "pertaining to" or "in relation to" are expressions of limitation and restriction, in the absence of which each and every asset of the company would have vested in the Government.
The background and sequence of events leading to the enactment of this Act through which Shri Nariman took us in detail and it is useless to set them up in extenso, he submitted that the shares in question were all along being considered and treated as not comprising part of the textile undertaking.
He referred to the order dated 13th of April, 1978 issued by the Central Government under section 18AA of the Industries (Development and Regulation) Act, 1951 (hereinafter referred to as 'the IDR Act ').
This order did not purport to take over those shares held in the two companies by the Swadeshi Cotton Mills Company Limited.
He also drew our attention to Volume III pages 53 and 54 of the present volumes before us, which is the reply of the Minister of Law, Justice and Company Affairs.
It was clarified to the Parliament that the shares were distinct from the undertakings of the company whose management was taken over.
On 27th of March, 1979 in answer to a question 977 the Minister stated that apart from the six undertakings taken over and presently run by the National Textile Corporation Limited, the business of the company comprised of: (i) Investments in Swadeshi Polytex Limited, Ghaziabad.
(ii) Investments in Swadeshi Mining and Manufacturing Company Limited, a subsidiary company.
(iii) Land development business.
He drew our attention to the letter dated 9th of April, 1979 from the Chairman, Cotton Mills Ltd. in answer to a letter by the Director, Department of Company Affairs, stating that the shares in question and the voting rights in respect thereof continued to vest in the company, i.e. Swadeshi Cotton Mills Limited in spite of the taken over of the management.
Before we proceed further we must deal with the decision of this Court in Balkrishan Gupta and others vs Swadeshi Polytex Ltd. and others; , There it was observed that the fact that 3,50,000 shares had been pledged in favour of the Government of Uttar Pradesh would not make any difference.
The contention that was urged on behalf of the appellant therein, namely Balkrishan Gupta related to the effect of an order made by the Central Government on 13th of April, 1978 under section 18AA(1)(a) of the IDR Act taking over the management of Swadeshi Cotton Mills along with five other industrial units belonging to the Company which was the subject matter of dispute in Swadeshi Cotton Mills vs Union of India, ; and the order of extension passed by the Central Government on 26th November, 1983 which was the subject matter of dispute in that case before this Court It was urged in Balkrishan vs Swadeshi Polytex (supra) on behalf of the appellants therein that on the passing of the above orders under Section 18AA(1)(a), the Cotton Mills Company lost its voting rights in respect of the shares in question.
This Court held that was not so.
This Court emphasised that what was taken over was the management of the six industrial units referred to therein and not all the rights of the Cotton Mills Company.
The shares belonged, it was observed, to the company and the orders referred to above could not have any effect on these.
In that context, it was observed that the Department of Company Affairs, Government of India rightly expressed its view in the letter written by the Director in the Department of Company Affairs on 9th of April, 1979 to the 978 Chairman of the Cotton Mills Company that the voting rights in respect of these shares continued to vest with the Cotton Mills Company and the manner in which those voting rights were to be exercised was to be determined by the Board of Directors of the Cotton Mills Company.
Hence the passing of the orders under section 18AA(1)(a) of the IDR Act had no effect on the voting rights of the Cotton Mills Company.
It was further observed that the Polytex Company had in that case rightly treated the registered holder i.e. the Cotton Mills Company as the owner of the shares in question and to call the meeting in accordance with the notice issued under section 169 of the .
Therefore, a challenge to the validity of the meeting was negatived.
As good deal of reliance was placed on behalf of the petitioners on this decision, it must be emphasised that the decision must, however, be understood in the context of the facts and the language used in the order passed under section 18AA of the IDR Act whereby only the management had been taken over and not the rights of the company therein.
But by the present Act in question on the appointed day "every textile undertaking" and "the right, title and interest of the company in relation to every textile mill of such textile undertakings" were transferred to and vested in the Central Government and such textile undertakings would be deemed to include "all assets" and so in the context of this provision the reference and the reliance on the decision of the Balkrishan Gupta & others vs Swadeshi Polytex Ltd. and others (supra) is not, in our opinion, appropriate.
It is true by the IDR Act only management was taken over, but a further point was sought to be built up on behalf of the petitioners that the Act in question was passed to regularise what was taken over.
So because of this decision shares were not taken over by the Act.
In view of the significant difference between the objects of taking over of the assets and the taking over of the management this submission has to be stated to be rejected.
Reliance was also placed before us on the decision of the Delhi High Court in Writ Petition No. 408 of 1978.
The Delhi High Court held that the shares did not vest in the Government under the order dated 13th of April, 1978 issued under section 18AA of the IDR Act.
This judgment of the Delhi High Court was challenged in appeal before this Court.
This Court in its judgment in Swadeshi Cotton Mills vs Union of India (supra) set aside the order of take over dated 13th April, 1978 for violation of the principles of natural justice.
But this Court did not give any finding or order with regard to the finding of the High Court that the shares were not included in the take over order.
979 It was further urged before us that this Act was preceded by an ordinance namely, Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Ordinance, 1986 which was promulgated on 19th of April, 1986.
Section 10 of the ordinance entitled, it was submitted, NTC to exercise control over the business of the undertakings taken over.
the NTC passed an order to this effect on 25th April, 1986, but did not purport to take over the shares, according to Shri Nariman.
We cannot attach much significance to that fact as Shri Nariman sought us to do.
Shri Nariman referred us to the Statement of Objects and Reasons appended to the Bill and urged that it was not intended that the shares were included in the undertaking.
He submitted that the Statement of Objects and Reasons showed that the acquisition of the undertaking had to be resorted to since the order of taking over the management of the company issued under section 18AA of the IDR Act could not be continued any further.
The preamble to the Act, however, reiterated that the Act provided for the acquisition and transfer of textile undertakings and reiterated only the historical facts that the management of the textile undertakings had been taken over by the Central Government under section 18AA of the IDR Act and further that large sums of money had been invested with a view to making the textile undertakings viable and it was necessary to make further investments and also to acquire the said undertakings in order to ensure that interests of general public are served by the continuance of the undertakings.
The Act was passed to give effect to the principles specified in clauses (b) and (c) of Article 39 of the Constitution.
In our opinion, this was indicative of the fact that shares were intended to be taken over.
Shri Nariman, however, contended that NTC on 17th June, 1986 had issued an order under section 6 of the Ordinance transferring four of the textile undertakings to its subsidiary, the NTC, U.P. Limited.
According to him, the shares were not purported to be transferred under this Order.
This, however, in our opinion, is non sequitur.
It appears from the written statement filed by NTC on 8th of February, 1987 in the suit filed by one G.G. Bakshi in Ghaziabad Court, it was claimed that NTC was entitled to take over company 's shares and investments.
On 24/30th March, 1987 NTC issued notice to the petitioners 1 and 2 stating that they were entitled to shares.
It was urged by Shri Nariman that this belated assertion indicated that the 980 shares were not intended to be taken over.
We are unable to accept this suggestion or to draw that inference.
It does not logically follow.
On the date of the take over of the undertakings, according to Shri Nariman, 10,00,000 shares in Swadeshi Polytex Limited were attached for recovery of electricity dues of Swadeshi Cotton Mills and 3,50,000 shares were already pledged with the State Government of U.P. for securing the loans and advances made by the State Government for payment of wages.
These dues fall in Part II of the Schedule to the Act and are not payable under section 25 of the Act by the Government.
Shri Nariman submitted that compensation payable under the Act was not enough to pay all the dues falling in Part I.
He drew our attention to the Financial Memorandum of the Bill which showed that the Government would have to pay a further sum of Rs. 15 crores over and above the compensation amount.
It could not have been the intention of the Act to discharge these encumbrances, according to him, if they were to vest in the Central Government under section 3 of the Act and the result of which would be that the State of U.P. and the Electricity Board would not get anything towards their large dues.
We are unable to accept this submission.
This, in our opinion, is not the proper approach to the construction of the Act on the question whether the shares were taken over or not.
Shri Nariman submitted that while applying the rules of construction of contemporanea expositio, it must be held that the shares in question did not vest in the Central Government under section 3 of the Act.
This contention was to be supported from the external aids, namely, the background and history of the legislation.
There were internal aids in the Act itself to support this contention.
The internal aids, according to Shri Nariman, were (a) long title of the Act which used the expression "certain textile undertakings" and "ensuring contiuned manufacture, production and distribution of different varieties of cloth and yarn"; (b) the Preamble to the Act also emphasises, according to Shri Nariman, that the textile undertakings which were taken over under section 18AA should be continued for purposes of manufacture, production and distribution of cloth and yarn; (c) He further submitted that the Objects and Reasons appended to the Bill also supported that view; (d) section 2(k) of the Act enumerated only six textile undertakings which alone were taken over by the order issued under section 18AA; (e) sections 7 and 8 also provided an intrinsic aid to the construction of section 4, according to him.
Section 7 provided that an amount equal to the value of the assets which will vest in the NTC, would be deemed to be the Central Government 's 981 contribution to the equity capital of NTC and NTC shall issue shares to the Government having a face value equal to the amount specified in section 8.
The amount equal to the value of the assets was Rs.24.32 crores, which was the share capital of the Government in NTC.
This figure of Rs.24.32 crores does not take into account the value of the shares and hence the shares did not vest under sections 3 and 4 of the Act, according to him.
(f) the expression "pertaining to" appearing in section 4(1) means "forming part of".
Therefore, only those assets which formed part of the textile undertakings could vest in the Central Government, it was submitted by Shri Nariman.
It was for this reason that section 25 of the Act, while dealing with penalties, used the expression "assets forming part of" the textile undertakings.
Shri Nariman further submitted that Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited were two separate undertakings distinct from the six textile undertakings belonging to Swadeshi Cotton Mills Company Limited.
Acquisition of these shares having controlling interests in the said two companies was never intended and could never be said to be within the scope of the Act.
The expression "in relation to the six textile undertakings" appearing in sections 3 and 4 of the Act, was an expression of limitation, according to him, indicative of the intention of acquiring of only the textile undertakings and no other.
There existed no public purpose, according to Shri Nariman, for acquiring these shares.
The public purposes mentioned in the Act with reference to Article 39(b) and (c) related to the acquisition of only the textile undertakings of Swadeshi Cotton Mills and not acquisition of the synthetic fibre undertakings of Swadeshi Polytex or sugar undertakings of Swadeshi Mining and Manufacturing Company Limited.
Dr. Chitale appearing on behalf of Swadeshi Mining and Manufacturing Company Limited (as respondent in SLP (Civil) No. 5240 of 1987 in which NTC is the petitioner) supported Shri Nariman and advanced certain arguments.
His main arguments were: (1) Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited were two distinct undertakings different from the six textile undertakings belonging to Swadeshi Cotton Mills Company Limited.
Section 3 of the Act, therefore, according to him, could not be so construed as to enable the Government to indirectly acquire altogether different undertakings belonging to a different company.
982 (2) Swadeshi Mining and Manufacturing Company Limited had also coal mines.
When Coal mines (Nationalisation) Act, 1973 was passed with reference to sections 3 and 6 thereof, it were the coal mines belonging to the said company along with the right, title and interest of the owners in relation to the coal mines which vested in the Central Government by operation of the Act, we were reminded.
(3) Dr. Chitale submitted that the Act with which we are concerned uses the expression "pertaining to" in section 4, which according to him is narrower than the expression "in relation to" used in section 3 of the Coal mines (Nationalisation) Act, 1973.
When the coal mines were nationalised, the sugar undertakings of Swadeshi Mining were not taken over since these constituted separate undertakings distinct from the coal mines.
He referred to Entries 655, 656 and 657 of the Schedule to the Coal mines (Nationalisation) Act, 1973.
(4) Dr. Chitale submitted that the expression "investment" may belong to a fund which may be created, the interests of which may be used for payment of gratuity or provident fund to the employees.
The expression "investment" cannot be applied in the context of the shareholdings of a separate undertaking, according to him.
Shri S.B. Mukerjee, appearing on behalf of Swadeshi Cotton Mills had relied on the decision of the Delhi High Court, See Volume III pages 64 to 169, which according to him, clearly held that the shares in question were not part of the textile undertakings and, in fact, the said shares were not taken over along with the six textile undertakings belonging to Swadeshi Cotton Mills Limited, which we have discussed.
Shri Mukerjee further relied on the clarification given by the Company Law Board which showed that the voting rights in respect of the shares continued to vest in Swadeshi Cotton Mills and not in NTC.
He referred to the decision in Balkrishan Gupta and others vs Swadeshi Polytex Ltd. and another (supra), which has also been discussed.
The expression "relating to" and "pertaining to" are words of limitation and they cannot be so construed as to take within their fold shares held by Swadeshi Cotton Mills, an independent company doing its business, according to him.
Learned Solicitor General of India appearing on behalf of the National Textile Corporation in all these cases submitted that the facts 983 stated by way of background and the sequence of events up to the date of enactment of the Act were not relevant to the decision as to the scope, ambit and effect of the vesting provisions contained in sections 3 and 4 of the Act.
The sequence of events narrated by the petitioners prior to the enactment of the Act all related to the order of take over of the undertakings of Swadeshi Cotton Mills Company issued on 13th April, 1978 by the Central Government in exercise of its powers under section 18AA of the IDR Act.
The object and purpose of the said order of take over of management of the textile undertakings was completely different from the object and purpose of the Act which related to acquisition and transfer of the undertakings.
We agree.
The scope of the vesting provisions contained in section 3 of the Act would have to be determined per force of its own language employed by Parliament and not with reference to what transpired either before or after the order of take over of the management dated 13th April, 1978 passed under section 18AA of the IDR Act.
Section 3 of the Act, according to Solicitor General, contained the vesting provisions as was evident from its own language and also from the marginal note appended thereto.
For determining the question involved in these matters, it is necessary to bear in mind the relevant provisions of law.
The preamble to the Act in question provided as indicated before that this was an Act for the acquisition and transfer of certain textile undertakings of the Swadeshi Cotton Mills Company Limited with a view to securing the proper management of such undertakings so as to subserve the interests of the general public by ensuring the continued manufacture, production and distribution of different varieties of cloth and yarn.
The preamble further reiterated that it was to give effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 of the Constitution.
It reiterated that large sums of money had been invested with a view to making the said textile undertakings viable.
It further reiterated that large sums of money were necessary for the purpose of securing the optimum utilisation of the available facilities.
Section 3 of the said Act provides for transfer and vesting of the textile undertakings.
The material portions of sections 3 and 4 are as follows: "3(1) On the appointed day, every textile undertaking and the right, tilte and interest of the Company in relation to every such textile undertaking shall, by virtue of this Act, 984 stand transferred to, and shall vest in the Central Government.
(2) Every such textile undertaking which stands vested in the Central Government by virtue of sub section (1) shall, immediately after it has so vested, stand transferred to, and vested in the National Textile Corporation.
4.(1) The textile undertakings referred to in section 3 shall be deemed to include all assets, rights, lease holds, powers, authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, cash balances, cash on hand, reserve funds, investments and book debts pertaining to the textile undertakings and all other rights and interests in, or arising out of such property as were immediately before the appointed day in the ownership, possession, power or control of the Company in relation to the said undertakings, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto.
(2)All property as aforesaid which have vested in the Central Government under sub section (1) of section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation mortgage, charge, lien and all other encumbrances affecting it, and any attachment, injunction or decree or order of any court or other authority restricting the use of such property in any manner shall be deemed to have been withdrawn.
(3). . . (4). . . (5). . . (6). . .
Section 7 deals with the shares to be issued by the National Textile Corporation for the value of the assets transferred to it by the Central Government.
It reads as follows: 985 "7.
An amount equal to the value of the assets of the textile undertakings transferred to and vested in the National Textile Corporation under sub section (2) of section 3 shall be deemed to be the contribution made by the Central Government to the equity capital of the National Textile Corporation; and for the contribution so made, the National Textile Corporation shall issue (if necessary after amending its memorandum and articles of association) to the Central Government paid up shares, in its equity capital having a face value equal to the amount specified in section 8.
" Section 8 which is material provides as follows: "8.
For the transfer to, and vesting in, the Central Government, under section 3, of the textile undertakings of the Company, and the right, title and interest of the Company in relation to such undertakings, there shall be given by the Central Government to the Company in cash and in the manner specified in Chapter VI, an amount of rupees twenty four crores and thirty two lakhs.
" Section 10 of the Act deals with the management etc.
of the textile undertakings.
Section 12 of the Act deals with the provisions relating to the employees of the textile undertakings.
Section 24 of the Act provides that the provisions of this Act 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 law, other than this Act, or in any decree or order of any court, tribunal or other authority.
Section 25 provides for the assumption of liability.
It is the true effect and purport of these sections that requires consideration and adjudication.
It appears to us that section 27 of the Act where the expression "forming part of" is used, would have no bearing on the vesting provisions and its wide language.
The expression "forming part of" according to the learned Solicitor General is merely descriptive of what is actually vested under the vesting provision.
The properties which, on the appointed day, i.e. with effect from 1.4.1985, became part of the taken over properties which might not be dealt with in any manner contrary to the provisions of the Act.
Shri K.K. Venugopal, appearing on behalf of Doypack Systems 986 Private Limited in Transferred Case No. 13 of 1987 submitted that the present case is directly covered by several decisions of this Court.
He referred to the following decisions National Textile Corporation vs Sita Ram Mills, ; ; Minerva Mills vs Union of India, ; ; Goverdhan Das Narasingh Das Daga vs Union of India, ; Vidharba Mills Berar Ltd. vs Union of India, and Fine Knitting Co. Ltd. vs Union of India, It was emphasised that section 3 of the Act provided that in addition to the textile undertaking "the right, title and interest of the company in relation to every such textile undertaking is to vest".
Therefore, it was urged by Shri Venugopal that so applying the five decisions cited earlier, if the shares were held for the benefit of and/or utilised for the textile undertakings they would vest in the Government under the provisions of section 3 of the Act itself.
He emphasised like others that "pertaining to" would mean "in relation to" in the species of properties mentioned in section 4(1) of the Act.
He further submitted that if the amount of compensation declared to be payable to the erstwhile owners of the undertakings acquired, was a test for deciding whether a particular piece of property also stood acquired or not, then it was submitted that it may be open to the erstwhile owners to contend that even what is expressly stated to have been vested in the Government, would not vest in the absence of compensation paid.
That was untenable.
In any event as against the clear words, according to Shri Venugopal, of section 3 and section 4 read with section 2(k), the failure to provide for compensation for three out of the six undertakings would not result in three out of six undertakings being not vested in the Government.
Shri Venugopal submitted that the antecedent computation of value by the executive is wholly irrelevant for determining the intention of Parliament.
Reference was made to Kumari Sunita Ramachandra vs State of Maharashtra and another; , at 704, c to e and Doctor (Mrs.) Sushma Sharma vs State of Rajasthan; , at 263.
Shri Anil B. Diwan on behalf of Mukesh Bhasin, in Suit No. 506 of 1987 (Transferred Case No. 14 of 1987) submitted that the Objects and Reasons of the mover of the Bill are not admissible as aids to construction since it is impossible to contend that the Objects and Reasons in the minds of some officials of the Government before the matter is discussed by the Cabinet, would at all be relevant.
Reference 987 may be made to State of West Bengal vs Union of India, [1964] 1 S.C.R. 371 at 379, 380, 381, 382; The Central Bank of India vs Their Workmen, ; at 217.
It was further submitted that subsequent documents and/or views of the officers of the Government are not admissible as legitimate aids to the construction of a statute.
Reliance placed by the petitioners on the documents at pages 452 456 of Volume II as an aid to the interpretation or construction of sections 3 and 4 of the Act was totally misconceived.
See the observations in Babaji Kondaji Garad vs Nasik Merchants Cooperative Bank Ltd., Nasik and others; , paragraphs 14 and 15 and Dr.(Mrs.) Sushma Sharma and others vs State of Rajasthan and others (supra).
It was, therefore, urged that the material not availed by the Parliament could never affect or influence the collective intention of the Parliament.
The authentic voice is only that of the Parliament.
Reference may be made to the observations in Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd. and another; , at 1029.
It was submitted that the documents which were prepared for the submission to the Cabinet and which related to the inner working of the Government were not admissible and/or legitimate aids to the construction of statute and therefore not relevant in deciding which assets of SCM vested in the Central Government under sections 3 and 4 of the Act.
It was further submitted that etymological and plain meaning of the word "relation" is relation by birth or relation by sacrament like marriage or relation in the form of business connection or dealings.
It was further submitted that an asset or investment which is created from the earnings of the undertakings is clearly related to the undertakings by its inception or birth.
An asset or investment, according to Shri Anil B. Diwan, which is utilised to preserve and/or give vitality to an undertaking is equally related or pertained to the same.
Shri A.K. Ganguli, counsel appearing on behalf of M/s. Doypack Systems Pvt. Ltd. in SLP (Civil) Nos. 4826 and 7045 of 1987 submitted that even assuming (though not admitting) that the expressions "pertaining to" and "in relation to" appearing in sub section (1) of section 4 of the Act have limited or restricted meaning, by the plain language of section 3, which is the vesting provision read with sections 2(k) and 4(1), the shares in question would also vest in the Central Government.
Under section 3 of the Act what vests in the Central Government on the appointed day are: (i) every textile undertaking; and (ii) the right, title and interest of the company in relation to every such textile undertaking.
The meaning, scope and effect of the expression "textile undertaking" appearing in section 3(1) of the Act would 988 have to be understood by a combined reading of sections 2(k) and 4(1) of the Act.
Section 2(k) while defining the expression "textile undertaking", identifies the textile mills concerned while section 4(1), by adoption of deeming provisions, spells out the properties which vest along with the concerned textile mills by reason of their direct nexus with the mills.
The expression "forming part of" appearing in section 27, according to Shri Ganguly, is merely descriptive of the properties already vested in the Central Government under section 3.
Section 1(2) of the Act provided that the provisions of the Act including sections 3 and 4 shall be deemed to have come into force retrospectively with effect from 1.4.1985 and sections 27 and 28 shall come into force at once.
Thus the properties which stood vested in the Central Government with effect from 1.4.1985 already "formed part of" the textile undertakings on the date of the Act when section 27 came into force (i.e. w.e.f. 30.5.1986).
The properties which already stood vested and formed part of the textile undertakings could not be dealt with in any manner other than those permissible under the Act.
Section 27 containing the penalty provisions could, therefore, validly and justifiably be given effect to after it came into force on 30.5.1986 when the Act was enacted.
The meaning of the expression "pertaining to" appearing in the first limb of section 4(1), therefore, cannot be gathered from the language employed in section 27.
Shri Ganguli further submitted that the first part of section 7 provided that the amount equal to the value of the assets of the textile undertakings which is vested under section 3 would be the contribution of Central Government made to the equity capital of the National Textile Corporation.
The second part of section 7 provided that for the contribution so made by the Central Government, National Textile Corporation shall issue to the Government paid up shares in its equity capital having a face value equal to the amount specified in section 8.
If the legislative intention, it was urged by Shri Ganguli, was that the National Textile Corporation shall issue paid up shares (in its equity capital) to the Central Government of the value equal to the value of the assets, which was deemed to be the contribution of the Central Government, then the language of the second part of this section would have been the same as used in the opening words of section 7 itself.
Shri S.N. Kacker elaborated the submissions of the petitioner 989 mentioned hereinbefore and submitted that the shares could not have been intended in view of the facts and circumstances of the case, the language used and the data available to take over by sections 3 and 4 of the Act.
Before we deal with the main question we have to consider the application made by Shri Nariman for production of certain documents.
The production of the documents has been resisted by the learned Attorney General on the ground that these are not relevant and in any event most of these documents are privileged being part of the documents leading to the tendering of the advice by the Cabinet to the President as contemplated by Article 74(2) of the Constitution.
The petitioner in Transferred Case No. 13 of 1987, has sought production of certain documents enumerated at page 82, para 85 of Vol.
IV, which are as follows: (1) Proposal of the Textile Ministry in respect of Nationalisation of the six textile undertakings including the notes and memorandum specially in respect of calculation and determination of assets and liabilities in respect of six textile undertakings of Petitioner No. 2 in the year 1983 84 and the opinion of the Law Department then obtained.
(2) Proposal of the Textile Ministry in respect of nationalisation of the six textile undertakings in the year 1985 86 including all notes and memorandum in respect thereof.
(3) Opinion of Law Department as rendered to the Textile Ministry.
(4) Proposal of the Textile Ministry in respect of the drafting of the Ordinance and the Act by the Legislative Ministry.
(5) Details of properties taken into consideration for the determination of amount under section 8 of the Ordinance/Act.
(6) Proposal of the Textile Ministry in the form of Cabinet Notes for the approval of the Cabinet in the matter of promulgation of Ordinance/framing of the Act, and (7) Notes and Memorandum prepared by the Ministry of Textile/Ministry of law at or before framing of the Ordinance/Act and subsequent thereto relating to the acquisition of the textile undertakings.
990 It was contended that production of these was necessary to establish that the shares were never intended to be taken over and these were never considered as part of the textile undertaking.
It was urged that the shares were not taken into account in computing the figure of compensation amounting to Rs.24.32 crores referred to in section 8 of the Act.
It was submitted that these documents are definitely relevant as they would throw light on the merits of the case.
They would advance the case of the petitioners and destroy, according to the petitioners, the case of the respondent.
It was submitted that sections 7 and 8 of the said Act, were intrinsic aids to construe section 4.
The factual foundation necessary for the argument based on sections 7 and 8 of the said Act, was that the shares etc., were excluded in computing the figures of 24.32 crores.
It was submitted that these documents were required to establish this factual foundation.
The petitioner alleged that shares had been excluded in the computation of compensation and the petitioner had been so informed by the Hon 'ble Minister.
In reply the Central Government asserted that compensation has been computed lumpsum and not itemwise.
According to the petitioner, the stand of the Government that the compensation was computed lumpsum, was not borne out by the documents.
It was, therefore, necessary to seek production of those documents.
It was submitted by Shri Nariman that the submissions of the Solicitor General in so far as these dealt with the balance sheet made it even more important that the Government should be directed to produce these documents.
The calculations made by the petitioner had merely been denied by NTC which had in its possession the books of account as also all balance sheets prior to the balance sheet as on April 1, 1985.
It is wrongly suggested that the calculations are hypothetical.
It was urged by the petitioner that the calculations made by the petitioners were not hypothetical.
The correctness or otherwise of the said figure, according to the petitioners, would be demonstrated from the said documents.
On behalf of the Union of India, the learned Attorney General submitted that records and documents whose production was sought for, were not relevant for deciding the matters of controversy in the instant case.
In our opinion Sections 3 and 4 of the Act interpreted either on their own language or along with sections 7 and 8, are not ambiguous; so documents are not relevant.
It was further urged, that even if to consture the language is not clear and there is need to resort to aids of construction, it is clear that such aids can be either internal or external.
991 Internal aids of construction are definitions, exceptions, explanations, fictions, deeming provisions, headings, marginal notes, preamble, provisos, punctuations, saving clauses, non obstante clauses etc.
The notings in the files of various officials do not fall in the category of internal aids for consideration.
Dictionaries, earlier acts, history of legislation, Parliamentary history, parliamentary proceedings, state of law as it existed when the Act was passed, the mischief sought to be suppressed and the remedy sought to be advanced by the Act are external aids.
Documents which have been required to be produced do not, in our view fall within the category of external aids as indicated.
Having considered the facts and circumstances of the case, we are unable to accept the prayer of the petitioner to direct disclosure and production of the documents sought for.
In our opinion, the language used in section 4 of the Act, is clear enough read with section 3 of the Act.
We have set out the provisions of the said two sections.
Section 3 states that "on the appointed day every textile undertaking and the right, title and interest of the Company in relation to every textile undertaking shall stand transferred to and shall vest in the Central Government".
Section 4 says that "section 3 shall be deemed to include all assets, leaseholds, powers, authorities, privileges and all properties, movable and immovable . pertaining to the textile undertakings and all other rights and interests in or arising out of such property".
Francis Bennion in "Statutory Interpretation 1984 Edition page 526 para 238 states that Hansard reports, and other reports of parliamentary proceedings on the Bill which became the Act in question, are of obvious relevance to its meaning.
They are often of doubtful reliability however.
(emphasis supplied) The documents in question which are sought for do not relate to the enacting history or any past enactment or the present enactment.
The notings made in various Departments at various levels by the officers namely, the Under Secretary, Deputy Secretary, Joint Secretary; Secretary etc., whatever their view might be, is not the view of the Cabinet.
The ultimate decision is taken by the Cabinet.
So the notings cannot and are not guides as to what decision the Cabinet took.
See for example the Task Force report referred to in National Textile Corporation Ltd. vs Sitaram Mills Ltd. & others (supra).
This Task Force Report demonstrated the irrelevancy of the documents summoned to be produced.
The Task Force Report manifested that certain mills were viable.
But from the circumstance under which managements of these mills were taken over, it was clear that the Cabinet had taken the decision contrary to what was contained in the Task Force Report.
But it appears 992 that the decision of the Cabinet was different from the views of the Officers at various levels.
As Bennion has stated at para 261 (page 560 of the same book) that in interpreting an enactment a two stage approach is necessary.
Here there is no real doubt on an informed basis as we shall indicate hereafter about the real meaning of the enactment.
There is therefore no question of resolving the doubt.
The second stage does not arise here.
This Court in Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd. and another (supra) held that no one may speak for the Parliament and Parliament is never before the Court.
After the Parliament has said what it intends to say, only the Court may say what the Parliament meant to say.
None else.
See also in this connection Dr. (Mrs.) Sushma Sharma and others vs State of Rajasthan and others (supra).
The objects and purposes of the person who initiated the Bill are not admissible as aids to construction since it is impossible to contend that such purposes in the minds of some officials of the Government before the matter is discussed by the Cabinet, would at all be relevant.
See in this connection State of West Bengal vs Union of India (supra) where this Court reiterated that the Statement of Objects and Reasons, accompanying when introduced in the Parliament cannot be used to determine the true meaning and effect of the substantive provisions of the statute.
Such statement cannot be used to show that the legislature did not intend to take over any particular property.
See also The Central Bank of India vs Their Workmen (supra).
It has to be reiterated, however that the objects and reasons of the Act should be taken into consideration in interpreting the provisions of the statute in case of doubt.
This is the effect of the decision of this Court in K.P. Verghese vs The Income tax Officer, Ernakulam and another; , , where this Court reiterated that the speech made by the Mover of the Bill explaining the reason for the introduction of the Bill could certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation was enacted.
It has been reiterated that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible.
See in this connection the observations of this Court in Chern Taong Shang & anr.
vs Commander S.D. Baijal & Ors., J.T.
The documents now sought for by the petitioner do not fall within this category.
It is neither the object and scheme of the enactment nor the language used therein, that is 993 sought for in the instant case.
It is certainly relevant to know the mischief that was intended to be remedied.
But in the documents in question which the petitioner is seeking no such correlation has been established.
These are, therefore, not relevant.
We reiterate that no officer of the Department can speak for the Parliament even after the Act has been passed.
This Court has to interpret the Act on the basis of informed basis by applying external and internal aids if the language is ambiguous.
In the words of Lord Scarman "We are to be governed not by Parliament 's intentions but by Parliament 's enactments".
See Cross "Statutory Interpretation" 2nd Edition page 22.
Blackstone in his "Commentaries on the Laws of England" (Facsimile of 1st edn.
1765, University of Chicago Press 1979) Vol. 1 at 59 suggests "The fairest and most rational method to interpret the will of the legislator is by exploring his intention at the time when the law was made, by signs most natural and probable.
And these signs are the words, the context, the subject matter, the effect and consequence, or the spirit and reason of the law.
" The documents whose production is sought for are none of these.
So in our opinion these are not relevant.
We must further reiterate that the Members of Parliament had before them only the Bill.
The notings of the various officials in the files were not before the Parliament.
Therefore members could not be attributed with the knowledge of the notings in the files.
Therefore, the notings made by the officials are not relevant.
In this connection reliance may be placed on the principles of interpretation as enunciated by the Federal Court in Auckland Jute Co. Ltd. vs Tulsi Chandra Goswami, at 244.
It is trite saying that the interpreter of the statute must take note of the well known historical facts.
In conventional language the interpreter must put himself in the arm chair of those who were passing the Act i.e. the Members of the Parliament.
It is the collective will of the Parliament with which we are concerned.
See in this connection the observations of the Federal Court in RM.AR.AR.R.M.AR.
Umayhal Achi vs Lakshmi Achi and others, We are therefore, of the opinion that the documents sought for are not relevant for the purpose for which they were sought for.
In this case we are concerned only with the construction of the statute to determine whether the shares vested in the Government or not.
As Lord Reid has said in Black Clawson International Ltd. vs Papierwerke Waldhof Achaffenburg A G; , at 613 "We often say that we are looking for the intention of Parliament, but that is not quite accurate.
We are seeking the meaning of the words which Parliament used.
We are seeking not what Parliament meant but the true meaning of what they said.
" See in this connection the discussion in Cross Statutory Interpretation 2nd Edition, pages 20 30.
994 The next question for consideration is that by assuming that these documents are relevant, whether the Union of India is liable to disclose these documents.
Privilege in respect of these documents has been sought for under Article 74(2) of the Constitution on behalf of the Government by learned Attorney General.
Shri Nariman however, submitted on the authority of the decision of this Court in S.P. Gupta vs Union of India and others, [1982] 2 S.C.R. 365 at page 594 that the documents sought for herein were not privileged.
The context and the nature of the documents sought for in S.P. Gupta 's case (supra) were entirely different.
In this case these documents as we see are part of the preparation of the documents leading to the formation of the advice tendered to the President of India and as such these are privileged under Article 74(2) of the Constitution which provides that the question whether any, and if so what, advice was tendered by Ministers to the President shall not be enquired into in any court.
This Court is precluded from asking for production of these documents.
In S.P. Gupta 's case (supra) the question was not actually what advice was tendered to the President on the appointment of Judges.
The question was whether there was the factum of effective consultation between the relevant constitutional authorities.
In our opinion that is not the problem here.
We are conscious that there is no sacrosanct rule about the immunity from production of documents and the privilege should not be allowed in respect of each and every document.
We reiterate that the claim of immunity and privilege has to be based on public interest.
Learned Attorney General relied on the decision of this Court in the case of State of U.P. vs Raj Narain, ; The principle or ratio of the same is applicable here.
We may however, reiterate that the real damage with which we are concerned would be caused by the publication of the actual documents of the Cabinet for consideration and the minutes recorded in its discussions and its conclusions.
It is well settled that the privilege cannot be waived.
In this connection, learned Attorney General drew our attention to an unreported decision in The Elphinstone Spinning and Weaving Mills Company Ltd. vs Union of India and others, Writ Petition No. 2401 of 1983.
This resulted ultimately in Sitaram Mills 's case (supra).
The Bombay High Court held that the Task Force Report was withheld deliberately as it would support the petitioner 's case.
It is well to remember that in Sitaram Mills 's (supra) this Court reversed the judgment of the Bombay High Court and upheld the take over.
Learned Attorney General submitted that the documents there were not tendered voluntarily.
It is well to remember that it is duty of this Court to prevent disclosure where Article 74(2) is applicable.
We are 995 convinced that the notings of the officials which lead to the Cabinet note leading to the Cabinet decision formed part of the advice tendered to the President as the Act was preceded by an ordinance promulgated by the President.
We respectfully follow the observations in S.P. Gupta and others vs Union of India and others (supra) at pages 607, 608 and 609.
We may refer to the following observations at page 608 of the report: "It is settled law and it was so clearly recognised in Raj Narain 's case (supra) that there may be classes of documents which public interest requires should not be disclosed, no matter what the individual documents in those classes may contain or in other words, the law recognises that there may be classes of documents which in the public interest should be immune from disclosure.
There is one such class of documents which for years has been recognised by the law as entitled in the public interest to be protected against disclosure and that class consists of documents which it is really necessary for the proper functioning of the public service to withhold from disclosure.
The documents falling within this class are granted immunity from disclosure not because of their contents but because of the class to which they belong.
This class includes cabinet minutes, minutes of discussions between heads of departments, high level inter departmental communications and despatches from ambassadors abroad (vide Conway vs Rimmer, [1969] Appeal Cases 910 at pp.
952, 973, 979, 987 and 993 and Reg vs Lewes J.K. Ex parte Home Secretary, [1973] A.C. 388 at 412.
Papers brought into existence for the purpose of preparing a submission to cabinet vide Lanyon Property Ltd. vs Commonwealth, 129 Commonwealth Law Reports 650 and indeed any documents which relate to the framing of government policy at a high level (vide re.
Grosvenor Hotel, London Cabinet papers are, therefore, protected from disclosure not by reason of their contents but because of the class to which they belong.
It appears to us that Cabinet papers also include papers brought into existence for the purpose of preparing submission to the Cabinet.
See Geoffrey Wilson cases and Materials on Constitutional and Administrative Law, 2nd Edition pages 462 to 464.
At page 463 para 187, it was observed: 996 "The real damage with which we are concerned would be caused by the publication of the actual documents of the Cabinet for consideration and the minutes recording its discussions and its conclusions.
Criminal sanctions should apply to the unauthorised communication of these papers.
" See in this Connection State of Bihar vs Kripalu Shankar, ; at page 1559 and also the decision of Bachittar Singh vs State of Punjab [1962] Suppl. 3 S.C.R. 713.
Reference may also be made to the observations of Lord Denning in Air Canada and others vs Secretary of State and another, at 180.
We therefore, reject the claim for production of these documents.
In view of the language used in the relevant provisions, it appears to us that section 3 has two limbs: (i) textile undertakings; and (ii) right, title and interest of the company in relation to every such textile undertaking.
The expression "textile undertaking" has been defined in section 2(k) to mean the six textile undertakings of the company specified therein.
The definition of the said expression in section 2(k) is, however, subject to the opening words of the section which provide, "In this Act, unless the context otherwise requires".
In the context of the expression "textile undertakings" employed in section 3(1) of the Act, section 4(1) provides that the textile undertakings referred to in section 3 shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores . investments and book debts pertaining to the textile undertakings and all rights and interests in or arising out of such property as are, immediately before the appointed day, in the ownership, possession, power or control of the company in relation to all six undertakings.
The expressions "pertaining to", "in relation to" and "arising out of", used in the deeming provision, are used in the expansive sense, as per decisions of courts, meanings found in standard 'dictionaries, and the principles of broad and liberal interpretation in consonance with Article 39(b) and (c) of the Constitution.
The words "arising out of" have been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur undertaking.
We are of the opinion that the words "pertaining to" and "in relation to" have the same wide meaning and have been used interchangeably for among other reasons, which may include 997 avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting.
The word "pertain" is synonymous with the word "relate", see Corpus Juris Secundum, Volume 17, page 693.
The expression "in relation to" (so also "pertaining to"), is very broad expression which pre supposes another subject matter.
These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context, see State Wakf Board vs Abdul Aziz, A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10, following and approving Nitai Charan Bagchi vs Suresh Chandra Paul, , Shyam Lal vs M. Shayamlal, A.I.R. 1933 All 649 and 76 Corpus Juris Secundum 621.
Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions.
In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term "relate" is also defined as meaning to bring into association or connection with.
It has been clearly mentioned that "relating to" has been held to be equivalent to or synonymous with as to "concerning with" and "pertaining to".
The expression "pertaining to" is an expression of expansion and not of contraction.
As to what an undertaking means, has been clarified in R.C. Cooper vs Union of India, ; at pages 567, 568, 635, where the Act of 1969 was challenged.
It was held that the meaning of the expression "undertaking" is a going concern as distinct from its assets and liabilities.
It was also observed that it covered every corner of property, right, title and interest therein.
This Court rejected one of the grounds of challenge as there was no evidence that the named banks held any assets for any distinct non banking business, which finding gives an idea as to what could have been excluded from the acquisition of the undertaking.
Reading the provisions of section 3(1), section 4(1) and section 2(k) of the Act, each throwing light on the other, it follows that (a) under the first limb of section 3(1) of the Act every textile undertaking; (b) under the second limb of section 3(2) every right, title and interest of the company in relation to every such undertaking, is transferred and vested.
(c) The deeming provision of section 4(1) amplifies and enlarges both the limbs of the vesting section, being section 3(1).
(d) The definition of section is read into these provisions, to give a 998 wider meaning and scope to the vesting provision and to what is transferred or vested.
Sections 7 and 8 of the Act relied upon by the petitioners, being provisions for payment of amounts and for the issue of shares by NTC respectively, will have no bearing on the scope of the vesting provision.
As to what properties have vested cannot proceed on the hypothesis that there is a clear numerical or mathematical link between the quantum of compensation and the items of property vested.
This correlation with regard to such legislation is not available.
In this connection reference may be made to the decision of this Court in Khajamian Wakf Estates etc.
vs State of Madras & another; , at page 796 B E. Section 8 refers to payments of amounts by the Union of India to the company.
It has no bearing either on the vesting section or on section 7 except that the figure of Rs.24 crores 32 lakhs mentioned therein was introduced into section 7.
The provisions of this section are no different from the provisions of the similar sections in the earlier Act of 1974.
For example, under section 8 of the Sick Textile Undertakings Nationalisation Act, 1974 (page 59 of Vol.
X), the amount mentioned is specified in the first schedule as there are a number of companies involved.
This provision cannot be the starting point for investigation as to which amount relates to which property or as a guide to construction.
It appears to us from the Delhi High Court decision (supra) and the decision of this Court in Balkrishan Gupta 's case (supra) as well as the statement of the Minister in December, 1985 that there were legal difficulties, in respect of taking over, under the 1951 IDR Act.
The IDR Act was (a) concerned with the management of scheduled industries in, inter alia, running of factories, where there was no deeming provision in such wide terms; (b) it was concerned with setting up of machinery for imposing controls on industrial undertakings, see Harakchand Ratanchand Banthia and others etc.
vs Union of India and others; , at page 496 F and G. We are further of the opinion that the decision in Harakchand Ratanchand (supra) would not be applicable.
In this case, the Court is concerned with a nationalisation statute.
Even with other independent management statutes, in respect of textile undertakings a series of decisions have upheld the view that the shares vest in the Government.
See National Textile Corporation Ltd. vs Sitaram Mills (supra); 999 Minerva Mills Ltd. and others etc.
vs Union of India and others (supra); Govardhandas Narasinghdas Daga and others vs Union of India and others (supra); Fine Knitting Mills Ltd. & Ors.
vs Union of India & Ors.
(supra) and Vidharbha Mills Berar Ltd. vs Union of India (supra).
The above provide the informed basis on which we make the construction of sections 3 and 4 of the Act.
The expression "and all other rights and interests in or arising out of such property, as were immediately before the appointed day, in the ownership, possession, power or control of the company in relation to the said undertakings", appearing in sub section (1) of section 4 of the Act indicates that the shares which have been purchased from out of the funds of the textile undertakings and which have been held for the benefit of the said textile undertakings, would come within the scope of section 4 of the Act and thus would also vest in the Central Government under section 3.
The origin of these shares and their connection with the textile undertakings have been fully corroborated.
The textile business is the only business of Swadeshi Cotton Mills.
There is inter connection and inter relation between all the six undertakings.
Investments in Swadeshi Polytex Limited from the funds of Kanpur undertaking have always been made.
Investments in Swadeshi Mining and Manufacturing Company Ltd. were always made from the funds of the kanpur undertaking.
Assets/investments held and used for the benefit of the textile business of SCM, were carried on in its textile undertakings.
The words in the statute must, prima facie, be given their ordinary meaning.
Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary.
Nothing has been shown to warrant that literal construction should not be given effect to.
See Chandavarkar S.R. Rao vs Asha Lata, ; at page 476, approving 44 Halsbury 's Laws of England, 4th Ed.
paragraph 856 at page 552, Nokes vs Doncaster Amalgamated Colliery Limited, [1940] Appeal Cases 1014 at 1022.
It must be emphasised that interpretation must be in consonance with the Directive Principles of State Policy in Article 39 (b) and (c) of the Constitution.
It has to be reiterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act.
The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context.
That intention, and therefore the meaning 1000 of the statute, is primarily to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand.
In the present case, the words used represent the real intention of the Parliament as we have found not only from the clear words used but also from the very purpose of the vesting of the shares.
If we bear in mind the fact that these shares were acquired from out of the investments made by these two companies and furthermore that the assets of the company as such minus the shares were negative and further the Act in question was passed to give effect to the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution, we are left with no doubt that the shares vested in the Central Government by operation of sections 3 and 4 the Act.
See in this connection the observations of Halsbury 's Laws of England, 4th Edition, Volume 44, paragraph 856 at page 522 and the cases noted therein.
There is no exact correlation between the figure of capital reserve and the figure of investments.
That, in our opinion cannot be.
These can never be exactly equal.
The submission of the petitioner fails to take into account the fact that the undertakings other than the kanpur undertaking, also have capital reserve, even though there is no allegation that these were excluded assets in respect of other undertakings and there were no figures of investments therein.
The covering letter for these documents, page 408 of Volume II, itself stated that the provisional balance sheet shows investments which included these shares as part of assets.
With regard to the figure of Rs. 11 lakhs taken in the calculation filed by the petitioner, we find that the calculations filed by the petitioner were not supportable.
Contemporanea Expositio, is a well settled principle or doctrine which applies only to the construction of ambiguous language in old statutes.
Reliance may be placed in this connection on Maxwell 13th Ed.
page 269.
It is not applicable to modern statutes.
Reference may be made to G.P. Singh, Principles of Statutory Interpretation, 3rd Edn.
pages 238 and 239.
As noted in Maxwell on The Interpretation of Statutes, 12th Edition at page 269 that the leading modern case on contemporanea expositio is the case of Campbell College, Belfast vs Commissioner of Valuation for Northern Ireland, in which House of Lords has made it clear that the doctrine is to be applied only to the construction of ambiguous language in the very old statutes.
It is therefore well to remember what Lord Watson said in Clyde Navigation Trustees vs Laird, [1983] 8 A.C. 658 that contemporanea expositio could have no application to a modern Act.
We, therefore, reject the attempt on the part of the petitioners to lead us to 1001 this forbidden track by referring to various extraneous matters which we have indicated before.
Furthermore those external aids sought before us do not support the petitioners ' approach to this question at all.
It appears that the shares held in SPL themselves were the subject matter of both pledge and attachment to secure loans from the U.P. State Government of about Rs.66 lacs for payment of wages to workers of the Kanpur undertaking and Rs.95 lacs being electricity dues of the Kanpur undertaking owing to the U.P. State Electricity Board.
From all these, the acceptance of the petitioner 's case, would mean that the State would pump in Rs.15 crores of public money to release the shares from its liabilities and thereafter hand over the shares free from such liability back to the company when the net worth of the company at the time of take over of management was negative and in the teeth of the present financial liabilities built up by the company the shares would inevitably have sold in discharge of its liabilities and in any event the shares stood charged with the very liabilities which related to the undertakings of the company which were taken over by the Government.
It appears to us that sections 3 and 4 of the Act evolve a legislative policy and set out the parameters within which it has to be implemented.
We cannot find that there was any special intention to exclude the shares in this case as seen from the existence of at least four other Acquisition Acts which used identical phraseology in sections 3 and 4 and in the other sections as well.
Reference was made to the Aluminium Corporation of India Limited (Acquisition and Transfer of Aluminium Undertakings) Act, 1984, the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982, the Britannia Engineering Company Limited (Mohameh Unit) and the Arthur Butler and Company (Muzaffarpore) Limited (Acquisition and Transfer of Undertakings) Act, 1978 and the Ganesh Flour Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1984.
In the present case we are satisfied that the shares in question were held and utilised for the benefit of the undertakings for the reasons that (a) the shares in Swadeshi Polytex Limited were acquired from the income of the kanpur Unit.
Reference may be made to page 23 of Compilation D III, (b) the shares held in Swadeshi Mining and Manufacturing Company were acquired in 1955.
Originally there were four companies and their acquisition has been explained fully in the Compilation D III with index, (c) the shares held in SPL were pledged 1002 or attached for running the Kanpur undertaking, for payment of ESI and Provident Fund dues for the workers of the Kanpur undertaking, for wages and for payment of electricity dues of the Kanpur undertaking, (d) the shares held in SMMC were pledged for raising monies and loans of Rs. 150 lakhs from the Punjab National Bank for running the Kanpur undertaking.
These loans fall in category II of Part I of the Schedule which liabilities have been taken over by the Government, (e) the shares held in SPL were offered for sale by SCM from time to time and to utilise the sale proceeds thereof by ploughing them back into the textile business for reviving the textile undertakings acquired under the Act.
It appears to us that the expression "forming part of" appearing in section 27 cannot be so read with section 4(1) as would have the effect of restricting or cutting down the scope and ambit of the vesting provisions in section 3(1).
The expression "pertaining to" does not mean "forming part of".
Even assuming that the expression "pertaining to" appearing in the first limb of section 4(1) means "forming part of", it would mean that only such assets which have a direct nexus with the textile mills as would fall under the first limb of section 4(1).
The shares in question would still vest in the Central Government under the second limb of section 4(1) of the Act since the shares were bought out of the income of the textile mills and were held by the company in relation to such mills.
The shares would also fall in the second limb of section 3(1) being right and title of the company in relation to the textile mills.
On the construction of sections 3 and 4 we have come to the conclusion that the shares vest in the Central Government even if we read sections 3 and 4 in conjunction with sections 7 and 8 of the Act on the well settled principles which we have reiterated before.
The expression 'in relation to ' has been interpreted to be the words of widest amplitude.
See National Textile Corporation Ltd. and others vs Sitaram Mills Ltd. (supra).
Section 4 appears to us to be an expanding section.
It introduces a deeming provision.
Deeming provision is intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provisions.
It is well settled that the word 'includes ' is an inclusive definition and expands the meaning.
See The Corporation of the City of Nagpur vs Its Employees, ; and Vasudev Ramchandra Shelat vs Pranlal Javanand Thakarand others, [1975] 1 S.C.R. 534.
The words 'all other rights and interests ' are words of widest amplitude.
Section 4 also uses the words "ownership, possession, power or control of the Company 1003 in relation to the said undertakings".
The words 'pertaining to ' are not restrictive as mentioned hereinbefore.
Section 8 provides for payment of compensation in lumpsum and the transfer and vesting of whatever is comprised in section 3.
As section 4 expands the scope of section 3, the compensation mentioned in section 8 is for the property mentioned in section 3 read with section 4.
The compensation provided in section 8 is not calculated as a total of the value of various individual assets in the Act.
It is a lumpsum compensation.
See in this connection the principles enunciated by this Court in Khajamian Wakf Estates etc.
vs State of Madras and another (supra).
There, it was held that even if it was assumed that no compensation was provided for particular item, the acquisition of the 'inam ' is valid.
In the instant case section 8 provides for compensation to be paid to the undertakings as a whole and not separately for each of the interests of the company.
Therefore, it cannot be said that no compensation was provided for the acquisition of the undertaking as a whole.
Section 7 of the Act, in our opinion, neither controls sections 3 and 4 of the Act nor creates any ambiguity.
It was highlighted before us and in our opinion rightly that this sum of Rs.24.32 crores paid by way of compensation comes out of the public exchequer.
The paid up shares in its equity capital can necessarily have a face value only of the amounts so paid, irrespective of whatever may be contended to be the value of the assets and irrespective of whether any asset or property in relation to the undertakings, was taken into account.
After providing for compensation of Rs.24.32 crores to be paid to the Commissioner for payments to discharge part I liabilities, Government has to undertake an additional 15 crores at least for discharging those liabilities.
To leave a company, the net wealth of which is negative at the time of take over of the management, with the shares held by it as investment in other company, in our opinion, is not only to defeat the principles of Articles 39(b) and (c) of the Constitution but it will permit the company to reap the fruits of its mismanagement.
That would be an absurd situation.
It has to be borne in mind that the net wealth of the company at the time of take over, was negative, hence sections 3 and 4 can be meaningfully read if all the assets including the shares are considered to be taken over by the acquisition.
That is the only irresistible conclusion that follows from the construction of the documents and the history of this Act.
We have to bear in mind the Preamble of the Act which expressly recites that it was to ensure the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution.
The Act must be so read that it further ensures such meaning and 1004 secures the ownership and control of the material resources to the community to subserve the common good to see that the operation of economic system does not result in injustice.
We therefore, reiterate that the shares vested in the Central Government.
Accordingly the shares in question are vested in NTC and it has right over the said 34 per cent of the shareholdings.
In the aforesaid view of the matter we hold that the 10,00,000 shares in Swadeshi Polytex Limited and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Limited held by the Swadeshi Cotton Mills vested in the Central Government under sections 3 and 4 of the Act.
We are further of the opinion that in view of the amplitude of the language used, the immovable properties, namely, the Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur have also vested in NTC.
In that view of the matter in Transferred Case No. 13 of 1987, we dismiss the Writ Petition No. 2214 of 1987.
All interim orders in the said Writ Petition will stand vacated.
This will dispose of the various other SLPs and CMPs connected with the Lucknow Writ Petition being SLP (Civil) No. 4826 of 1987 filed by Doypack Systems Pvt. Ltd., against the order dated 6th April, 1987, SLP(Civil) No. 5240 of 1987 filed by NTC against the same order of 6th April, 1987 in the Lucknow Bench and the order dated 6th April, 1987 in CMP No. 4555(W) of 1987 in the Lucknow Bench of the Allahabad High Court.
CMPs Nos. 16918 and 16919 of 1987 being CMPs in SLP No. 4826 of 1987 will stand disposed of in the above light.
In Transferred Case No. 14 of 1987 in Suit No. 506 of 1987, we hold that 10 lakhs and 17 lakhs equity shares mentioned hereinbefore and the Swadeshi House at Kanpur and all the rights, title and interest attached therewith relate to the textile undertaking of defendant No. 3 and they vest in NTC with effect from 1st of April, 1985 and defendant Nos. 3 and 4 are restrained by a decree of permanent injunction from dealing with them in any manner whatsoever.
Defendant No.2 is restrained by permanent injunction from recognising defendant Nos. 3 and 4 as owners of the aforesaid shares and the Swadeshi House.
Defendant No.2 'is directed to enter the name of defendant No. 1 namely, NTC in its register of members and to treat the said 1005 defendant No. 1 as its shareholder instead of defendant Nos. 3 and 4 in respect of the shares of defendant No. 2 held by them.
In view of the provisions of law under Section 108 of the as there was transmission of shares by operation of law, rectification is not necessary.
See in this connection Palmer 's Company Law, 24th Ed.
(1987) page 608.
See also in this connection Sahadeo Lal Agarwala and another vs The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. 1952 Cal.
58 and Unity Company Pvt. Ltd. vs Diamond Sugar Mills and others, A.I.R. 1971 Cal.
Civil Appeals Nos.
577 to 579 of 1987 stand disposed of in the above terms and we direct that the 17th annual general meeting be held in accordance with law after giving proper notice under the Chairmanship of Shri Jaswant Singh.
CMP No. 12760 of 1987 in Civil Appeal No. 577 of 1987, shall stand disposed of in terms of the orders in Transferred Case No. 14 of 1987 and it is directed that the Chairman should act in accordance with the aforesaid decision and NTC should be considered to be entitled to vote.
CMP No. 16887 of 1987 is rejected, on the grounds indicated in the judgment.
CMP No. 16888 of 1987 is an application by Doypack Systems Ltd. to be impleaded as a party respondent in Transferred Case No. 13 of 1987.
Doypack Systems has already been permitted to argue and has been heard as a party.
No further order is necessary.
CMP No. 16889 of 1987 is allowed and delay condoned.
CMP No. 17018 of 1987 is allowed.
CMP No. 18268 of 1987 is disposed of by directing that no further documents need be inspected.
In view of the orders, the other CMPs are no longer necessary to be disposed of.
We direct that irrespective of any order passed by any court the 17th annual general meeting should be held in accordance with law to be presided over by Shri Jaswant Singh recognising NTC as the rightful owner of the disputed shares.
In all these proceedings National Textile Corporation as well as Union of India wherever they are parties herein will be entitled to their costs from their respective opposite parties.
The other parties will pay and bear their own costs in these matters.
| % The appellant was in Government service.
On a number of charges framed against him, the State government referred his case to the Administrative Tribunal for enquiry.
In respect of the six charges against the appellant, the Tribunal recorded findings that the first charge was not proved but it recorded findings against the appellant in respect of the remaining charges.
The Governor issued notice with a copy of the findings of the Tribunal to the appellant to show cause why he should not be dismissed.
The appellant submitted reply to the showcause notice, which was referred to the Tribunal for its consideration.
The Tribunal submitted a report dated July 7, 1971, recording the finding that there was no convincing evidence to uphold the charges framed against the appellant.
The State Government referred the matter to the Legal Remembrancer for opinion.
The Legal Remembrancer opined that there was sufficient evidence on record to uphold charges 2 to 5 against the appellant, which were of common pattern to the effect that the appellant had claimed travelling allowance at the rate of first class railway fare without having actually travelled in that class on four different occasions.
The Governor thereupon disregarding the findings of the Tribunal issued order dismissing the appellant.
The appellant challenged the order of dismissal by a writ petition in the High Court.
The High Court (Single Judge) allowed the writ petition and quashed the order of dismissal.
The respondent State preferred a Letters Patent appeal.
The Division Bench of the High Court allowed the appeal and set aside the order of the Single Judge of the High Court.
The appellant then moved this Court for relief by this appeal.
Allowing the appeal, the Court, 80 ^ HELD: After scrutiny of the two reports of the Administrative Tribunal and the note of the Legal Remembrancer, the Court found that the view taken by the Tribunal in its subsequent report dated July 7, 1971, was positive in nature that there was no convincing evidence to sustain the charges 2 to 5 against the appellant.
[84B] There was no justification for the view taken by the High Court.
The Tribunal was the inquiring authority.
In its initial report dated May 7, 1970, it had recorded findings against the appellant, but when the Governor referred the appellant 's reply to the show cause notice to the Tribunal for reconsideration of the matter, it recorded a positive finding that there was no convincing evidence to support its earlier findings.
The Tribunal had acted within its jurisdiction in reappraising the evidence in the light of the appellant.
The State Government issued the impugned order of dismissal on the basis of the opinion of the Legal Remembrancer without recording any reasons for disregarding the findings of the Tribunal.
If the State Government chose to pass the order of dismissal, in all fairness, it should have recorded reasons for the same, and in order to afford a reasonable opportunity to the appellant, it was necessary for the Government to communicate to him the reasons for disagreement with the Tribunal 's report.
The report of the legal Remembrancer on the basis of which the Government has passed the impugned order, had never been communicated to the appellant and he was denied opportunity to meet the same.
Article 311(2) before its amendment by the Constitution (forty second Amendment) Act, 1975, contemplated reasonable opportunity of defence even at the stage of show cause notice.
The appellant had been denied opportunity of being heard at the stage of show cause notice.
[84E H; 85A B;F] The Tribunal in its report dated July 7, 1971 had categorically recorded the finding that there was no evidence on record to prove the charge that the appellant had not purchased 1st class tickets in advance relating to the journeys in question.
The Tribunal had observed that the evidence raised suspicion against the appellant but mere suspicion was not sufficient to hold that the charges stood proved.
The Legal Remembrancer, ignoring the findings of the Tribunal, concluded that the evidence on record had proved charges 2 to 5.
The entire approach of the Legal Remembrancer in considering the Tribunal 's findings suffered from errors of law.
He was of the opinion that the Tribunal had no authority to reappraise the evidence or enter into the sufficiency or adequacy of the evidence.
The principles applicable to judicial review of administrative actions or findings recorded in departmental disciplinary proceedings do not apply to a Tribunal which is like an 81 inquiring authority while assessing the evidence on charges against a delinquent officer.
The Tribunal could enter into adequacy, insufficiency or credibility of evidence on record.
The Tribunal was not discharging the functions of a court but was acting as an enquiring authority therefore it had full powers to appraise the evidence and record its findings.
The approach of the Legal Remembrancer was misconceived as a result whereof he had opined that the findings of the Tribunal in appellant 's favour be ignored.
The State Government committed a serious error of law in ignoring the findings of the Tribunal applying the principles of judicial review of administrative actions by a court of law, without giving the appellant an opportunity to show cause against the proposed view of the Government, and in passing the impugned order on the basis of the report of the Legal Remembrancer.
In view of the findings of the Tribunal dated July 7, 1971 aforementioned, the impugned order of dismissal could not legally be sustained against the appellant.
[85F G; 86C H; 87A] There was no evidence on record to sustain the findings of charges 2 to 5 against the appellant, and further, the appellant was denied a reasonable opportunity of defence contemplated by Article 311(2) as it then existed.
The State Government 's order dismissing the appellant from service was illegal and unconstitutional.
The order of the Division Bench of the High Court was set aside, the appellant 's petition was allowed and the order of dismissal was quashed.
The appellant was directed to be treated in service without a break with all the consequential benefits.
[87B C] State of Andhra Pradesh vs S.N. Nizamuddin Ali Khan, ; , referred to.
|
ivil Appeal No. 1899 of 1989.
From the Judgment and Order dated 20.2.87 of the Central Administrative Tribunal, Principal Bench, New Delhi in T.A. No. T 322/ 85 (CW 293/77).
Shankar Vaidyalingam and Ms. Seita Vaidyalingam for the Appellant.
B. Dutta, Govind Das, Mrs. Sushma Suri and Ms. Indra Sawhney for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The question for our consideration in this appeal is whether the appellant is governed by Funda mental Rule 56(c)(i) and as such entitled to superannuation at the age of 60 years.
Fundamental Rule 56(c)(i) is reproduced as under: "(c) A ministerial Government servant who entered Government service on or before the 31st March, 1958 and held on that date: (i) a lien or a suspended lien on a permanent post, or . shall retire from service on the afternoon of the 1st day of the month in which he attains the age of sixty years.
" The appellant joined service as paid apprentice in the Collectorate of Etawah, Government of Uttar Pradesh on 1st July, 1937.
On the same day he was asked to officiate in the post of Arranger.
He was sent back to the post of paid apprentice on 24th December, 1937 but was again appointed as Arranger in officiating capacity on 3rd of January 1938.
While holding the post of paid apprentice he had been ap pointed in various posts on officiating basis.
He was final ly promoted and appointed to a permanent post of Copyist in a substantive capacity on 1st of August, 1941.
He came to the Government of India on deputa 412 tion in March 1943 and thereafter retired from service on attaining the age of 58 years in February 1976.
The appellant claimed that having entered Government service on permanent basis before 31st March, 1938 he was entitled to continue in service till the age of 60 years under Fundamental Rule 56 (c)(i) and his retirement on attaining the age of 58 years was illegal.
The Central Administrative Tribunal, Principal Bench, New Delhi dis missed the application of the appellant holding that the appellant was only an apprentice under training prior to 1st of August, 1941 and as such was not holding any employment under the State on permanent basis.
According to the Tribu nal the appellant was appointed to the Government service on permanent basis to the post of Copyist on 1st of August, 1941 and as such he did not come within the purview of Fundamental Rule 56(c)(i).
We have examined the admitted entries in the service book of the appellant which are on the record.
These entries show that the appellant joined service as paid apprentice on substantive permanent basis on 1st of July, 1937.
It is correct that from 1st of July, 1937 upto 1st of August, 1941 he has been shown in the service book to be appointed in officiating capacity to various posts but the fact remains that his basic appointment as paid apprentice was permanent.
The finding of the Tribunal that the appellant was made permanent for the first time as Copyist on 1st August, 1941 cannot be accepted in the face of clear entries in the service book showing that he joined as paid apprentice on permanent basis on 1st of July, 1937.
Joining as paid ap prentice on permanent basis cannot be anything else but entering Government service on permanent basis and since the entry was before 31st March, 1938 Fundamental Rule 56(c)(i) is attracted and the appellant is entitled to remain in Government service till the age of 60 years.
In the reply affidavit on behalf of the respondents in the court below it is stated as under: "The petitioner joined Government Service under the provincial Government of Uttar Pradesh on 1.7. 1937 against a post of paid apprentice.
It appears there were a few permanent posts of paid apprentice under the State Government.
Petitioner was appointed against one of them in Collectorate, Etawah.
" 413 The respondents repeated their stand in the counter filed by them in this Court in the following terms: "It is submitted that the petitioner joined Govern ment service under the Provincial Government of Uttar Pra desh on 1.7.1937 against a post of "Paid Apprentice".
It appear that there were a few permanent posts of paid appren tice under the State Government.
The petitioner was appoint ed against one of them in the Collectorate, Etawah.
" We are, therefore, of the view that the Tribunal erred in denying the benefit of Fundamental Rule 56 (c)(i) to the appellant.
We allow the appeal with costs and set aside the judgment of the Central Administrative Tribunal under appeal and we hold that the appellant was entitled to continue in Government service till he attained the age of 60 years.
The appellant has already completed 60 years and as such he be paid two years emoluments with all consequential benefits including any enhancement in the fixation of pension and other post retirement benefits.
We quantify the costs as Rs.3,000.
G.N. Appeal allowed.
| Appellant joined State Government service, as paid apprentice on 1.7.1937.
He held various posts and was pro moted to the permanent post of Copyist on 1.8.1941.
In March, 1943 he came to Government of india service on depu tation, and retired in 1976 on attaining the age of 58 years.
Thereafter he moved the Central Administrative Tribu nal claiming that since he entered Government service on permanent basis before 31.3.1938, he was entitled to contin ue in service till the age of 60 years, as per Fundamental Rule 56(c)(i).
Dismissing the application, the Central Administrative Tribunal held that since the appellant was appointed on permanent basis to the post of Copyist on 1.8.41, he did not come within the purview of Fundamental Right 56(c)(i).
Aggrieved, the appellant has preferred this appeal.
Allowing the appeal, this Court, HELD: It is correct that from 1st of July, 1937 upto 1st of August, 1941 the appellant has been shown in the service book to be appointed in officiating capacity to various posts but the fact remains that his basic appointment as paid apprentice was permanent.
The finding of the Tribunal that the appellant was made permanent for the first time as Copyist on 1st August, 1941 cannot be accepted in the face of clear entries in the service book showing that he joined as paid apprentice on permanent basis on 1st of July, 1937.
Joining as paid apprentice on permanent basis cannot be anything else but entering Government service on permanent basis and since the entry was before 31st March, 1938, Fundamental Rule 56(c)(i) is attracted and the appellant is entitled to remain in Government service fill the age of 60 years.
[412D F] 411 [ This court observed that since the appellant has already completed 60 years, he be paid two years emoluments with all consequential benefits including any enhancement in the fixation of pension and other post retirement benefits.] [413D]
|
ivil Appeal Nos.
2366 67 of 1988 etc.
From the Judgment and order dated 21.2.1985 of the Punjab and Haryana High Court in C.W.P. No. 5353 of 1984.
Pankaj Kalra, B.S. Gupta, P.C. Kapur and section Mitter for the Appellants.
Rajinder Sachar, D.K. Garg, Mahabir Singh and A.K. Goel for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
Special leave to appeal is granted in both the special leave petitions.
The petitioners are teachers employed in various recognised aided private schools in the State of Haryana.
The schools are maintained under private management.
They receive financial aid from the State Government.
The petitioners have come to Court alleging that teachers employed in Government aided private schools are entitled to parity with the teachers employed in Government schools in the matter of pay scales and other emoluments such as Dearness Allowance, House Rent Allowance, City Compensatory Allowance, 684 Medical Reimbursement and Gratuity, etc.
It appears that prior to A 1967 there was considerable disparity in the emoluments of teachers employed in the same State, and the Government of India appointed the Kothari Commission to examine the conditions of service of teachers with the object of improving the standards of education in the country.
Among other things, the Kothari Commission recommended that the scales of pay of school teachers belonging to the same category but working under different managements such as Government, local bodies or private organisations should be the same.
Almost all the States, including the State of Haryana, decided to implement the recommendations of the Kothari Commission.
The State of Haryana declared in January, 1968 that the revised rates suggested by the Kothari Commission would be made effective from 1 December, 1967, and that the grades of teachers of privately managed schools would be revised on the pattern of the grades of teachers working in Government schools.
As the deficit between the original grades and the revised grades was found too burden some for the managements of the aided schools to bear, the State decided to meet the increased expenditure entirely in regard to Pay and Dearness Allowance.
The State Government followed the principle of parity between the teachers working in aided schools and Government schools until 1979.
In 1979, the pay scale of teachers in Government schools was revised by the State after the report of the Pay Commission, but in the case of the teachers of aided schools the revision was effected two years later.
The petitioners allege that the salary and other emoluments paid to the teachers of aided schools have fallen far behind the emoluments paid to the teachers in Government schools and this Court should interfere in order to remove such discrimination.
We are told that there are about sixty thousand teachers in Government schools while a mere four thousand teachers are employed in aided schools.
According to the petitioners, to provide education in schools is the constitutional responsibility of the Government, and this is reflected in the deep and pervasive control exercised by the Government over the running of aided schools.
It is pointed out that the control is exercised over almost all areas of management.
The Committee of management has to be approved by the State Government, so have the strength of the teaching and the other staff as well as the qualifications and other conditions of eligibility for appointment to the staff.
The mode of selection and the determination of seniority are subject to the directions of the State Government and teachers cannot be dismissed, removed or reduced in rank without the prior approval of the State authorities.
The tuition fee, as well as free ships, concession and scholarships are fixed by the State Government, which is also empowered to give instructions in 685 regard to the time table, working hours, pupil ratio, attendance and workload.
The financial resources and the heads of income and expenditure are indicated by the State Government.
We have heard learned counsel for the parties at considerable length, and we find general agreement between the parties that there is no reason for discrimination between the teachers employed in aided schools and those employed in Government schools so far as the salaries and Additional Dearness Allowances are concerned.
The State Government does not accept the claim to parity in respect of other heads of allowance put forward by the petitioners.
We were at one time disposed to ruling on the question whether the responsibility for providing education in schools belongs to the State Government, and therefore whether there is a corresponding responsibility on the State Government to ensure that in aided schools the teachers are entitled to the same emoluments as are provided for teachers in Government schools.
We do not, however, propose to enter upon this question in these cases as we are satisfied from the developments which have followed after the hearing on the merits that it would be more appropriate to dispose of these cases by a short order.
The State Government has expressed its readiness to reimburse the payment of ten instalments of the Additional Dearness Allowance, but not the twenty five Additional Dearness Allowance instalments released after 1 April, 1981.
It appears that the grant in aid given by the State Government to these aided schools covers the deficit to the extent of seventy five per cent of the approved expenditure.
The approved expenditure extends to the salaries paid to the teaching and non teaching staff, which includes the Pay and Dearness Allowance and Interim Relief before 1 April, 1981 and the Pay and Additional Dearness Allowance beyond 1 April, 1981, the deficit expenditure minus income and certain other items, but does not include House Rent Allowance, Medical Allowance, City Compensatory Allowance and the other heads claimed by the petitioners.
In our opinion, the teachers of aided schools must be paid the same pay scale and Dearness Allowance as teachers in Government schools for the entire period claimed by the petitioners, and that the expenditure on that account should be apportioned between the State and the Management in the same proportion in which they share the burden of the existing emoluments of the teachers.
The State Government meets the Dearness Allowance liability to the extent of seventy five per cent of the amount.
Ten instalments representing the State Government 's liability shall be paid by the State Government in two equal parts, the first part being payable within three months from today and the remaining part being pay 686 able by 31 March, 1989.
The State Government shall also pay the remaining twenty five instalments, the entire amount being payable in five equal parts, each part being paid every six months, the first such part being payable by 30 September, 1989.
The State Government shall not be liable to pay for the period covered by these 35 instalments any amount on account of House Rent Allowance, City Compensatory Allowance and the other allowances claimed by the petitioners.
The State Government will also take up with the managements of the aided schools the question of bringing about parity between the teachers of aided schools and the teachers of Government schools for the period following that to which the aforesaid thirty five instalments relate, so that a scheme for payment may be evolved after having regard to the different allowances claimed by the petitioners.
In the case of teachers who have retired or who have died in service during the pendency of these cases, payment of the first ten instalments shall be made to the retired teachers and to the legal representatives of the deceased teachers within three months from today.
The appeals and the writ petitions are disposed of accordingly.
H.L.C. Appeals & Petitions disposed of.
| By an unregistered document the husband of the petitioner granted her the right to take and appropriate all kinds of wood from certain forests in his Zamindary.
With the passing of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, all proprietary rights in land vested in the State under section 3 Of that Act and the petitioner could no longer cut any wood.
She applied to the Deputy Commissioner and obtained from him an order under section 6(2) of the Act permitting her to work the forest and started cutting the trees.
The Divisional Forest Officer took action against her and passed an order directing that her name might be cancelled and the cut materials forfeited.
She moved the State Government against this order but to no effect.
Thereafter she applied to this Court under article 32 of the Constitution and contended that the order of Forest Officer infringed her fundamental rights under articles 19(i)(f) and 19(1)(g) : Held (per curiam), that the order in question did not infringe the fundamental rights of the petitioner under articles 19(1)(f) and 19(i)(g) and the petition must be dismissed.
34 266 Ananda Behera vs The State of Orissa, [1955] 2 S.C.R. gig, followed.
Chhotabai jethabai Patel and Co. vs The State of Madhya Pradesh, ; , not followed.
Held (per Das C. J., Venkatarama Aiyar, section K. Das and A. K. Sarkar, jj.), that it was not necessary to examine the docu ment minutely and finally determine its real character for the purpose of deciding the matter in controversy, for whatever construction might be put on it, the petition must fail.
If the document purported to transfer any proprietary interest in land, it would be ineffective both for non registration under the Registration Act and under section 3 of the Madhya Pradesh Abolition of Proprietary Rights Act which vested such interest in the State.
If it was a profits a prendre that was sought to be transferred by it, then again the document would be compulsorily registrable as a profits a prendre was by its nature immoveable property.
If it was a contract that gave rise to a purely personal right, assum ing that a contract was property within the meaning of article 19(i)(f) and 31(1) Of the Constitution, the petitioner could not complain as the State had not acquired or taken possession of the contract which remained her property and she was free to dispose of it in any way she liked.
The State not being a party to that contract would not be bound by it, and even if for some reason or other it could be, the remedy of the petitioner lay by way of a suit for enforcement of the contract and compensation for any possible breach of it and no question of infringement of any fundamental right could arise.
Per Bose, J. The document conferred a right on the peti tioner to enter on the lands in order to cut down and carry away, not merely the standing timber, but also other trees that were not in a fit state to be felled at once.
The grant was, therefore, not merely in respect of moveable property but immoveable property as well.
Being valued at Rs. 26,ooo, the document was compulsorily registrable under the Registration Act otherwise no title or interest could pass ; and in absence of such registration the petitioner had no fundamental rights that could be enforced, as held by this court in Ananda Behera 's case.
Although standing timber is not immoveable property under the Transfer of Property Actor the Registration Act, trees attacked to the earth which are immoveable property under section 3(26) of the General Clauses Act, as also section 2(6) of the Registration Act, must be so under the Transfer of Property Act as well.
|
Appeal No. 1256 of 1969.
Appeal from the judgment and order dated February 17, 1969 of the Patna High Court in Civil Writ Jurisdiction Case No. 153 ,of 1969 with Civil Miscellaneous Petition No. 4499 of 1969.
Application by respondent No. 1 for revocation of the certificate granted by the High Court under article 133(1)(b) of the Constitution.
section T. Desai, Tarkeshwar Dayal and section N. Prasad, for the appellant.
L. M. Singhvi and U. P. Singh, for respondents Nos. 1 and 3 to 5.
7 27 Basudeva Prasad, Nawal Kishore Prasad Sinha and U. P. Singh, for respondents Nos. 2 and 6 to 10.
The Judgment of the Court was delivered by Vaidialingam, J.
In this appeal, on certificate, the appellant challenges the order dated February 17, 1969 of the Patna High Court dismissing summarily C.W.J.C. No. 153 of 1969 filed under article 226 of the Constitution.
The appellant was appointed by the order dated March 21, 1968, by the State of Bihar temporarily to act as Director of Public Instruction, Bihar.
On the date of the said appointment the appellant was the Director of State Institute of Science.
In the endorsement in this order, ' it was stated that the appellant 's appointment as Director of Public Instruction has been made by promotion on a temporary basis for a period not exceeding six months in anticipation of the concurrence of the Public Service Commission.
By order dated November 18, 1968, the State Government passed an order posting the appellant as Director of State Institute of Education.
It is stated in the said order that the appellant had been officiating in the post of Director of Public Instruction by virtue of the order dated March 21, 1968.
The appellant filed C.WJ.C. No. 153 of 1969 before the High Court challenging this order of November 18, 1968 on various grounds.
He had also alleged mala fides in the passing of the said order.
In the view that we take that the order of the High Court granting the certificate has to be remitted for fresh consideration, we do not propose to refer to the various grounds of attack made by the appellant in his writ petition before the High Court.
The High Court by its order dated February 17 1969 has taken the view that as the appellant 's appointment as Director of Public Instruction was on a temporary basis for a period not exceeding six months in anticipation of the concurrence of the Public Service Commission, the Public Service Commission, which was subsequently consulted did not give its concurrence to the appointment of the appellant as Director of Public Instruction and therefore, the government passed the impugned order dated November 18, 1968 posting the appellant as Director.
State Institute of Education.
As the appellant was appointed purely on a temporary basis, he has no right to claim the post.
The High Court has further expressed the view that it is not satisfied prima facie that there was any mala fides on the part of the Public Service Commission in not giving its concurrence to the appointment of the appellant or on the part of the government in not appointing the appellant as Director of Public Instruction.
A further contention taken on behalf of the appellant 728 that the impugned order was not in conformity with the decision of the Council of Ministers, was rejected by the High Court.
On this reasoning the High Court held "as no prima facie case has been made out for interference with the order of the Government, as contained in Annexure 1, this application is summarily rejected".
Annexure 1, in the above quotation was the impugned order dated November 18, 1968.
It may be noted that the writ petition was dismissed without issuing notice to the State and other respondents therein.
On behalf of the appellant Mr. section T, Desai, learned counsel, attempted to argue on merits by urging that the High Court, in view of the allegations made by the appellant in the writ petition, was not justified in rejecting the petition summarily.
The learned counsel also attempted to argue that even on the basis of the materials placed before the court, the order is unsustainable.
On behalf of the first respondent, State of Bihar, C.M.P. No. 4498 of 1969 has been filed for revoking the certificate granted by the High Court under article 133(1)(b) of the Constitution.
Dr. L. M. Singhvi, learned counsel for the State, therefore, raised preliminary objection that the certificate granted by the High Court is not valid and as such it should be revoked.
If the certificate is revoked, as prayed for by the State, the counsel urged, then there will be no need to go into the merits of the appeal, sought to be canvassed by Mr. section T. Desai, learned counsel for the appellant.
As the preliminary objection has to be first dealt with it is now necessary to refer to the order of the High Court granting the certificate.
After dismissal of the writ petition by the High Court, the appellant filed an application (Supreme Court Appeal No. 42 of 1969) for grant of certificate of fitness to appeal to this Court.
That application, no doubt, was opposed by the present respon dents.
The High Court by its order dated March 13, 1969 granted the certificate to the effect "that the requirement of valuation to enable the petitioner to get a certificate is fulfilled under Article 133(1) of the Constitution." From the order of the High Court it is seen that the, application for the grant of certificate was made under articles 132(1) and 133(1) of the Constitution.
So far as article 133(1) was concerned, the request for certificate was made under clauses (a) and (c) and not under clause (b).
But, however, during the course of arguments, the appellant 's counsel relied on clause (b) of article 133(1) and that was permitted by the High Court.
Therefore, ultimately the certificate was prayed for under article 132(1) and article 133(1) clauses (a) to (c).
After 'discussing the case of the appellant, the High Court held that in a case of this nature the 7 29 salary or allowances attached to the office of the appellant cannot be considered to be the subject matter of dispute within the meaning 1 of clause (a) of article 133(1) of the Constitution.
According to the High Court, the subject matter of the dispute is the right to continue in office and not the right to get the salary if he is allowed to continue in office.
In this view the High Court held that the appellant cannot be granted a certificate under clause (a) of article 133(1).
The High Court then considered the question of granting a certificate under clause (b) of article 133(1) of the Constitution.
The High Court was of the view that it is perhaps possible to hold that the emoluments attached to the office can be taken into consideration for the purpose of valuation under clause (b).
The High Court has expressed the view that the future emoluments which an incumbent of an office will be, getting, if he succeeds in getting the office, will be the property respecting which some claim or question will be directly involved in the judgment sought to be appealed against provided it is a property.
But, however, the High Court entertained a doubt whether the emoluments which became payable to an incumbent of the office in future, if an incumbent does not lose The office, due to any other reason, other than the subject matter of the dispute in the case, can be said to be property within the meaning of clause (b).
But inspite of all these doubts, the High Court held that certificates have been granted by the High Court of Patna in several cases and then finally concluded ". but for the purpose of determination of the question of valuation it is legitimate to assume in his favour that he claims a right to the office of the Director of Public Instruction which could have brought him the emoluments for a period of 3 years 3 months, if he succeeds.
" Ultimately the High Court certified that the requirements of valuation to enable the appellant to get a certificate is fulfilled under article 1 3 3 ( 1 ) of the Constitution.
Dr. L. M. Singhvi 's contention is that the certificate granted by the High Court is not valid.
His argument ran as follows The High Court has not granted the certificate under article 1 3 3 ( 1) (c); the High Court has categorically held that the appellant cannot be granted a certificate under article 133 (1) (a).
Though the concluding part of the order granting the certificate states that it has been granted under article 133(1), in the circumstances mentioned above, it is clear that the certificate has been granted only under article ' 1 3 3 (1 ) (b).
This is on the ground that the appellant claimed his right to the office of the Director, Public 730 Instruction, which would have brought him the emoluments re ferred to by him for a period of 3 years and three months, if the impugned order had not been passed.
This method of valuation for the purpose of clause (b) is not correct.
We are to state that the appellant had claimed that on the date of the impugned notification, he was getting a monthly salary of Rs. 1950/ .
The post of Director of Public Instruction was in the scale of Rs. 1850 100 2250.
He was entitled to get an annual increment of Rs. 100/ .
But for the impugned order the appellant claimed that he would have continued in service for a period of 3 years and 3 months before attaining the age of superannuation, and as such during this period he would have earned a salary of Rs. 83,000/ .
Mr. section T. Desai, learned counsel for the appellant urged that the grant of a certificate under clause (b) of article 33(1) is correct.
In the alternative he contended that as the claim made by the appellant for grant of a certificate under article 132(1) and under article 13 3 (1 ) (e) has not been at all discussed or decided by the High Court and, if it is held that the certificate as now 'granted is not valid, the High Court may be required to consider the grant of a certificate under articles 132(1) and 133(1)(c).
Mr. Desai also urged that as very serious allegations of mala fides in the passing of the impugned order have been made by the appellant, the High Court was not justified in rejecting the writ petition summarily without issuing notice to the respondents.
He contended that all the material records bearing on the matters arising for consideration are available in this Court and in view of this circumstance, he requested that the hearing of the appeal may be proceeded with by this Court.
We are not inclined to agree with Mr. Desai that if the certificate granted by the High Court is not valid, this Court can proceed to hear the appeal on merits.
Mr. Desai relied on the decision of this Court reported in Century Spinning and Manufacturing Company Ltd. and another vs The Ulhasnagar Municipal Council and another(1) in support of his contention that the High Court was not justified in dismissing the writ petition summarily.
It is no doubt true that in the above decision it has been held that though the High Court has a discretion to decline to exercise its extra ordinary jurisdiction under article 226, nevertheless, the discretion is to be judicially exercised and if the petitioner makes a claim which is frivolous, vexatious or prima facie unjust, the High Court may decline to entertain the petition.
But if a party claims to be aggrieved by the unlawful, arbitrary (1) [1970] 1 S.C.C. 582. 731 or unjust order of a public body or authority, he is entitled to a hearing of his petition on merits and the High Court will not be justified in dismissing such a petition in limine.
Following the above decision in M/s Exen Industries vs The Chief Controller of Imports and Exports and others(1), Mitter J., speaking for the Court set aside the order of the High Court dismissing the writ petition in limine with the following observations : "However the High Court though competent to decline to exercise its extraordinary jurisdiction under article 226 of the Constitution when it finds that the petition is frivolous or without substance should not throw it out in limine if a prima facie cage for investigation is made out.
The High Court can reject a petition in limine if it takes the view that the authorities whose acts were called in question had not acted improperly or if it felt that the petition raised complicated questions of fact for determination which could not be properly adjudicated upon in a proceeding under article 226 of the Constitution." Similarly in Gyan Chand and others vs State of Haryana and others (2 ) where allegations of mala fides have been made and a writ petition was dismissed in limine by the High Court, this Court set aside the order and remanded the matter for a fresh consideration after calling upon the authorities concerned to file a return.
The above decisions are of no assistance to the appellant as the orders of remand were passed in those appeals which came to this Court either on a proper certificate issued by the High Court or on special leave granted by this Court.
In all those cases there was a proper appeal pending before this Court in which merits of the points raised for decision in the appeal were gone into and suitable directions were given therein.
If the certificate granted by the High Court, as contended by Dr. Singhvi, is invalid, then the appeal before us is an incompetent appeal and no direction on merits can be given by this Court on such an incompetent appeal.
There can be no controversy that if the certificate is not valid, the only course open to this Court will be to dismiss the appeal.
Dr. Singhvi urged that the grant of ' certificate under article ' 133 (1) (b) in this case is not justified because the method of valuation adopted by the High (1) C.A. No. 971 of 1967 decided on 22 1 1971.
(2) C.A. No. 64 of 1970 decided on 21 8 1970.
73 2 Court is not correct.
In this context Dr. Singhvi relied on the decisions of this Court in Chhitarmal vs M/s Shah Pannalal Chandulal(1) and Satyanarain Prasad vs State of Bihar(1) regarding the test to be applied for the purpose of granting a certificate under clause (a) or (b) of article 133(1).
Dr. Singhvi also relied on the first of the above references, in support of his contention that in the absence of a valid certificate, the appeal is incompetent and it has to be dismissed.
Mr. section T. Desai, learned counsel for the appellant, urged that the High Court has not properly considered the claim made by the appellant for a certificate under articles 132 (1) and 133 (1) (b) and (c).
Article 132(1) has not been considered at all nor has the High Court considered clause (c) of article 133 (1) (c).
Even with regard to clause (b), the High Court has given a very halting finding.
Therefore, the counsel urged that the High Court may be required to consider the application for grant of a certificate afresh.
It is not necessary at this stage to consider whether correct principles have been applied by the High Court in granting the certificate under article 13 3 (1 ) (b).
As we have pointed out earlier, it has expressed doubts here an& there and it has granted the certificate under that clause on the ground that the Patna High Court has granted certificates under similar circumstances.
As the High Court is being required to consider this matter afresh, we do not think it necessary to express any opinion on this aspect.
Admittedly the High Court has not considered the question whether the appellant wig be entitled to a certificate under article 132 ( 1 ) or article 13 3 ( 1 ) (c).
It was pointed out to us on behalf of the respondent that the High Court did not consider the grant of a ,certificate under clause (c) of article 133(1) as no argument was advanced by the appellant that the case involves a substantial question of law as to the interpretation of the Constitution.
No ,doubt there is such a passing remark in the order of the High ,Court, but as the matter has to be reconsidered by the High Court, it is desirable that the claim of the appellant under this clause is also considered by the High Court.
We have already referred to the fact that even clause (b) has been considered only in a very halting manner by the High Court.
Therefore, the position is that the certificate as granted by the High Court is not a valid certificate and as such the appeal must be held to be incompetent.
But the matter does no rest there.
In cases where the claim for certificate made on other clauses or under other Articles have not been considered at all, this Court has directed the High Court to consider the question whether a case has been made out for issue ,of a certificate under such other provisions.
(Vide Satyanarain (1) [1965]2 S.C.R. 751.
(2) 733 Prasad vs State of Bihar(1)and M/s Shree Krishna Gyanodaya Sugar Ltd. vs The State of Bihar and others(1).
As the High Court has not properly considered the applica tion filed by the appellant, that is, Supreme Court Appeal No. 42 of 1969, before the High Court for grant of the certificate, that application will be taken up by the High Court afresh.
The High Court will consider whether the appellant is able to satisfy the court that he is eligible to got a certificate under article 132(1) or under article 13 3 ( 1 ) (b) or (c) of the Constitution.
It is not necessary for the High Court to consider whether the certificate is to be granted under clause (a) of article 13 3 ( 1 ) as that question is already concluded against the appellant in its order dated March 13,1969.
The High Court in the fresh order to be passed must clearly indicate under what particular Article or clauses of the Article, the certificate is granted.
We are constrained to make this remark because in the present order the High Court has merely stated that the certificate is issued under article 133(1).
As already a long time has elapsed, the High Court is required to dispose of the said application as expeditiously as possible within a period not exceeding two months from the date of receipt of this order by the High Court.
Subject to the observations contained above, the appeal is dismissed.
There will be no order as to costs in this appeal.
V.P.S. Appeal dismissed.
(1) (2) A.I.R. 1970 S.C. 2041.
| The appellant, who was acting as Director of Public Instruction, challenged an order posting him as Director of State Institute of Education by a writ petition in the High Court, on various grounds.
It was dismissed.
He applied for grant of certificate to appeal to this Court under articles 132(1) and 133(1)(a) to (c) of the Constitution.
The High Court held that article 133(1)(a) did not apply, did not consider whether articles 133 (1) (c) and 132 were applicable, doubted whether article 133 (1) (b) would apply, but ultimately granted a certificate under Art, 133(1).
On the question whether the certificate was properly granted.
HELD : As the High Court has not properly considered the application for grant of certificate,under articles 132(1) and 133(1)(b) and (c), it will have to be remanded to be considered by the High Court afresh.
The High Court, in the fresh order to be passed, must clearly indicate ,under what particular Article or clause of the Article the certificate is granted [733 A C] Saya Narain Prasad vs State of Bihar ; and M/s Krishna Gyanodaya Sugar Ltd. vs The State of Bihar and Ors.
A.I. R. , followed.
|
Appeal No. 97 of 1966.
Appeal from the judgment and decree dated January 11, 1962 of the Madhya Pradesh High Court in First Appeal No. I 1 5 of 1958.
M. section Gupta, for the appellants.
I. N. Shroff for respondent No.1 .
The Judgment of the Court was delivered by P. Jaganmohan Reddy, J.
This appeal is by certificate granted by the High Court of Madhya Pradesh under Article 133 (i) (a) of the Constitution of India against its judgment and decree by which it reversed the judgment and decree of the Addl.
209 District Judge, Ambikapur.
The High Court held that the claim of the appellant on the promisory note executed by the Maharaja of Surguja an erstwhile Ruler whose state was merged in Madhya Pradesh, could not be enforced against the Ist Respondent the State of Madhya Pradesh because after the cession of the erstwhile State, the new State had not expressly or impliedly undertaken to meet that liability.
In other words, the plea of 'an act of 'State ' raised by the 1st respondent was accepted.
The circumstances in which the suit was filed by the appellants and the array of parties may now be stated.
Appellants 1, 2, 3 and deceased Hira Lal were brothers and members of a Joint Hindu family.
Appellant 4 is the wife of Hira Lal, appellants 5 to 7 are his sons and appellant 8 is the grand son.
All these appellants along with appellants I to 3 constitute a Joint Hindu family which was carrying on business of construction of buildings under the name and style of Hira Lal & Bros. at Ambikapur in the erstwhile State of Surguja.
The allegations in the suit filed by the appellant against the respondent State was that they had constructed buildings of the District Court and the Secretariat at Ambikapur in 1936.
The work was completed but in so far as payment was concerned, there was a difference of opinion about the measurements etc.
but ultimately it was decided to pay to the appellants Rs. 80,000 on account of the said construction and accordingly the Maharaja of Surguja 2nd respondent executed a promisory note in favour of the appellants on 27 9 1947 for Rs. 80,000 with interest @ Rs. 3 per annum.
Thereafter the Madhya Pradesh Government took over the administration of the State of Surguja on 1 1 48 after the merger of the Chattisgarh State and consequently the Court building as well as Secretariat building.were taken possession of by the Government.
When the appellants claimed the money from the State of Madhya Pradesh, it neither accepted the claim nor paid them.
The appellants after giving a notice u/s 80 of the Code of Civil Procedure filed a suit.
On the pleadings, the Trial Court had framed several issues but it is unnecessary to notice them in any great detail except to say that the claim of Rs. 80,000 was held to be valid, that this amount was payable on account of the construction of the build, , things known as Court, and Secretariat buildings, that the promote was not without consideration, that the first defendant was the successor in interest of Surguja State and is liable to pay the claim with interest and that the amount was not due to the plaintiffs on account of the personal obligation and liability of the 2nd respondent.
The Court also found against the first respondent on the issue relating to jurisdiction and negatived the defence that it is not liable because of an act of State.
In so far as the defendant the Maharaja of Surguja was concerned, it held that the suit was 210 not maintainable against him without the consent of the Central Govt.
as required under section 86 of the Civil Procedure Code and that the liability was not a personal obligation of the Maharaja but an obligation" incurred on account of his State.
In the result as we said earlier the Court awarded a decree for Rs. 87,200 with full cost against the first defendant and discharged the second defendant.
In appeal the High Court noticing that it is the admitted case of the parties that the District Court and the Secretariat building were public property and were in the possession of the first defendant as such and that that the liability in respect thereof was incurred by the Maharaja was not merely his personal liability but was a liability incurred on behalf of the State of Surguja, however, reversed the judgment of the Trial Court by holding "the the liability of the State of Surguja under the pronote was at best a contractual liability and this liability could only be enforced against the State of Madhya Pradesh if after the cession of the erstwhile State of Surguja, the new State had expressly or impliedly, undertaken to meet that liability" which it had not done.
When this appeal came up on an earlier occasion, a Civil Miscellaneous Petition 429 of 1969 was filed by the appellant; that inasmuch as the petitioners had been advised to approach the State Govt.
again for making proper representation and to canvass their claim before the appropriate authority on the basis of the concurrent findings of the Courts below and or any other appropriate orders, permission may be accorded to them to pursue this course.
The Respondents advocate did not oppose this petition and accordingly the matter was adjourned.
But it would appear that no concrete results could be achieved.
In this appeal what we have to consider is whether the plea of an act of State is sustainable having regard to the concurrent findings of the Court namely that the Court and Secretariat buildings were constructed by the appellants, that the erstwhile Maharaja the second respondent had admitted the claim and executed a. promisory note, that the liability was incurred in respect of public buildings for which the State of Surguja was liable.
The fact that appellants were asked to supply details of their claim and the first respondent was prepared to consider it has been urged as being tantamount to the acceptance of the liability.
In our view no such inference can be drawn.
It is open to the State to examine and to satisfy itself whether it is going to honour the liability or not, but that is not to say that it had waived its defence of an act of State if such a defence was open to it.
What constitutes an act of State has been considered and the principles enunciated in numerous cases both of the Privy Council and of this Court have been stated.
Many of these, decisions were examined and discussed by the High Court in its judgment and it is unnecessary for (1) 211 us to re examine them in any great detail.
These decisions lay down clearly that when a territory is acquired by a sovereign state for the first time that is an act of State.
As pointed out in Raja Rajender Chand vs Sukhi & other( ') that it matters not how the acquisition has been brought about.
It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognised ruler.
In all cases the result is the same.
Any inhabitant of the territory can make good in the Municipal Courts established by the new sovereign only such rights as that sovereign has, through his officers, recognised.
The principle upon which the liability of an erstwhile ruler is contested by the plea of an act of State "is an exercise of sovereign power against an alien and neither intended nor purporting to be legally founded.
A defence of this kind does not seek to justify the action with reference to the law but questions the very jurisdiction of the Courts to pronounce upon the legality or justice of the Action 's vide State of Saurashtra vs Memon Haji Ismail( ').
In Vaje Singh Ji Joravar Singh and others vs Secretary of State for India in Council( '), it was observed : "After a sovereign State has Acquired territory, either by conquest, or by cession under treaty, or by the occupation of territory theretofore unoccupied by a recognized ruler, or otherwise, an inhabitant of the territory can enforce in the Municipal Courts only such proprietary rights as the sovereign has conferred or recognized.
Even if a treaty of cession stipulates that certain, inhabitants shall enjoy certain rights that gives them no right which they can so enforce.
The meaning of a general statement in a proclamation that existing rights will be recognized is that the Government will recognize such rights as upon investigation it finds existed.
The Government does not thereby renounce its right to recognize only such titles as it considers should be recognized, nor confer upon the Municipal Courts any power to adjudicate in the matter".
"It is the acceptance of the claim which would have bound the new sovereign State and the act of State would then have come to an end.
But short of an acceptance, either express or implied, the time for the exercise of the Sovereign right to reject a claim was still open", 212 It appears to us that an act of State is an exercise of sovereign power over a territory which was not earlier subject to its sway.
When such an event takes place, and the territory is merged, although sovereign might allow the inhabitants to retain their old laws and customs or undertake to honour the liabilities etc., it could not be itself bound by them until it purported to act within the laws by bringing to an end the defence of 'act of State '.
The learned advocate for the appellant was unable to refer us to any authority which will justify any variation of this rule, in the case of liability incurred in respect of a public property of the erstwhile State which the successor State has taken over and retains as part ,of its public property.
The judgment of the High Court is in accord with the well recognized principles of law declared from time to time by this Court.
In our view the defence of 'Act of State ' however unreasonable and unjust it may appear to be can be successfully pleaded and sustained by Ist respondent to non suit the appellants.
The appeal is dismissed accordingly but without costs.
R.K.P.S. Appeal dismissed.
| The appellants constructed certain public buildings in a princely state and the Maharaja admitted the claim of the appellants and executed a promissory note for the amount claimed.
The princely State was merged with State of Madhya Pradesh and the State Government (respondent) took over the possession of the public buildings.
On the question of the liability of the respondent to pay the amount of the promissory note, HELD: (1) The fact that the appellants were asked by the respondent to supply details of their claim did not amount to an acceptance of the liability.
It was open to the respondent to examine and satisfy itself whether it should honour the liability or not and it could not be said that the State had waived its defence.
of Act of State.
(2) An Act of State is an exercise of sovereign power over a territory which was not earlier subject to its sway.
When such an event takes place and territory is merged, although the sovereign might allow the inhabitants to retain their old laws and customs or undertake to honour the liabilities, it could not be itself bound by them until it purported to act within the laws by bringing to an end the defence of Act of State. 'he rule applies even in case of a public property of the erstwhile State which the successor State takes over and retains as part of its public property.
[212 A] Raja Rajender Chand vs Sukhi & Ors.
State of Saurashtra vs Memon Haji Ismali, A. I.R. and Vaje Singh ji Joravar Singh & Ors.
vs Secretary of State for India, 51 I.A. 357, referred to.
|
iminal Appeal No. 16 of 1959.
Appeal from the judgment and order dated November 18, 1958, of the Allahabad High Court in Criminal Reference No. 452 of 1956.
B. V. section Mani, for the appellants.
G. C. Mathur and C. P. Lal, for the respondent.
January 20.
The Judgment of the Court was delivered by AYYANGAR, J.
Having heard the learned Counsel for the appellants in full we did not consider it necessary to call on the respondent since, we were clearly 565 of the opinion that the contentions raised in the appeal possessed no merit.
The legality of a prosecution for contravention of the notification fixing the maximum prices at which certain categories of iron & steel could be sold is the subject matter of this appeal.
The appellants are two in number, related to each other as husband and wife.
The second appellant Sushila Devi is " a Registered Stockholder " and is stated to be the proprietor of the firm " Balwanta Devi Sushila Devi " situated in Sultanpur in Uttar Pradesh and the first appellant Bhagwati Saran, her husband, the manager of the said firm.
There has been some previous history before the present prosecution was initiated but it is sufficient for the purposes of this appeal to start with the report to the Judicial Magistrate, Amathi, by the officer incharge of the Police station, Sultanpur, dated August 20,1955.
It was headed " Offence Section II B Iron &Steel Control Order, 1941" and set out the following facts: " Bhagwati Saran used to work as a Karinda in the firm of Balwanta Devi Sushila Devi and had all along been doing sales and purchases at the shop, and also issued receipts under his signatures.
Shrimati Sushila Devi is the wife of accused Bhagwati Saran and she was the proprietor.
Balwanta Devi has died.
Hence she alone is the proprietor.
In the course of investigation it was also revealed that Bhagwati Saran had from time to time sold some iron bark; on behalf of this firm after receiving price more than the control rate, which he had all along been getting printed, and ' had been getting some other receipts checked fictitiously under the Control Act from the office of the Supply Officer.
An information relating to it was given to Shri P. N. Kapoor, the then D. M., Sultanpur by his munim Kalapnath and on it a case was registered at this police station and the investigation was made. . . .
On the report of the P.P. the S.P. ordered another charge sheet to be submitted under section 8 of Essential Commodities Ordinance of 1955.
Hence this charge sheet under section 11 B 566 (III) Iron and Steel Control of Production and Distribution Order, 1941, read with s ' 8 of Essential Commodities Ordinance of 1955 is sent against both the accused.
The accused persons after being arrested were released on bail.
It is, therefore, prayed.
that the accused persons after being summoned may be punished.
" The report further stated that 4 volumes of cash memos, and 5 volumes of register of Permits were deposited in the Malkhana and would be produced in evidence and followed it with a list of 13 prosecution witnesses.
The Judicial Magistrate registered the case and issued summons to the accused on September 16, 1955, the case being directed to be called on September 30, 1955.
The accused were thereafter examined before the Magistrate under section 364 of the Criminal Procedure Code on March 23, 1956, and on the next day the Magistrate framed a charge against them which read as follows: " That you between 10th January 1952 and 27th February 1952 in Sultanpur sold 11 Cwt.
12 lb.
iron bars on 11th January 1952 %ad 3 Cwt.
iron bars on 18 2 52 and Cwt.
iron bars on 26th February 1952 at the rate of Rs. 21 13 9 per Cwt.
though the controlled rate as notified in Government of India Gazette dated 1st July 1952 for the commodity was Rs. 21 2 4 per Cwt.
and thus you charged Rs. 1 15 0, Rs. 2 2 3 and Rs. 4 4 6 respectively excess and more than the controlled price and thereby committed an offence punishable under section 7 E. section Temp.
P. Act 1946 read with section 1 1 B (iii) of Iron and Steel Control of Production and Distribution Order of 1941 and I hereby direct that you be tried by the said Court on the said charge.
" The two appellants thereupon moved the.
Court of the Sessions Judge, Sultanpur, to revise the order of the Magistrate dated March 24, 1956, framing charges against them under section 7 of the Essential Supplies (Temporary Powers) Act, 1946 Act XXIV of 1946 (referred to hereafter as the Act).
The points urged at that stage were mainly two: (1) That the notification by the Controller under 567 cl.
11 B(1) fixing the maximum prices which were stated to have been contravened not having been filed before the Court, the Magistrate erred in framing a charge, and (2) that the report of the police was not in conformity with the provisions of section 11 of the Act.
The learned Sessions Judge upheld the second of the above contentions which was, that the report made by the police officer did not set out " the facts constituting the offence" as required by section II of the Act.
He rejected the other point put forward by the appel lants but in view of his conclusion that there was a defect in the report which went to the root of the jurisdiction of the Magistrate to take cognizance of the case, he made a reference to the High Court with a recommendation that the charge framed against the appellants be quashed.
This reference was heard by a Single Judge of the High Court, who disagreed with the learned Sessions Judge in his view that the report did not satisfy the requirements of section 11 of the Act.
Before the learned Judge, however, a further point was urged, that section 11 B of the Iron & Steel Control of Production and Distribution Order, 1941 (which will be referred to hereafter as the Control Order) was itself ultra vires.
This further objection was referred to a Division Bench for decision.
The point urged before the learned Judges of the Division Bench was that the power to fix prices vested in the Steel Controller by cl. 11 B of the Control Order was unconstitutional, as violative of the right to carry on business guaranteed by article 19(1) (g) of the Constitution.
The learned Judges answered this point against the appellants and the case thereafter came back before the learned Single Judge for final disposal of the reference by the Sessions Judge.
The learned Counsel for the appellants once again made a submission to the learned Judge regarding the report of the police officer dated August 20, 1955, not satisfying the requirements of section 11 of the Act and pressed before him the view which found favour with the learned Sessions Judge.
In a more detailed judgment, the learned Judge again rejected this contention and dismissed the reference and directed the prosecution to continue.
It is this 73 568 order of the High Court.
of Allahabad that is the subject matter of appeal now before us.
on a certificate granted by that Court.
It would be seen that the only two points in controversy before the High Court were: (1) whether the report of the police officer dated August 20, 1955, contained " the facts constituting the offence " with which the appellants were charged, as to satisfy the requirements of section 11 of the Act, and (2) whether el. 11 B of the Control Order, violated the fundamental right to carry on business guaranteed by article 19(1)(g).
In the grounds of appeal to this Court and in the statement of case, however, the appellants have raised various other grounds and have also filed a petition for leave to urge these additional grounds, We desire to make it clear that grounds additional to those urged before the High Court would not be permitted to be raised before this Court as a matter of course and that petitions for such purpose would not be granted save in exceptional cases.
It has to be noticed that in hearing and dealing with such additional grounds the Court is handicapped in not having the advantage of the opinions of the High Court on the points urged.
It is the correctness of the decisions of High Courts that are sought to be challenged in appeals and it is but proper that the correctness of these judgments should, save in exceptional cases like for instance subsequent legislation or questions of fundamental and general importance etc., be assailed only on grounds urged before such Courts.
Besides, when among the grounds thus urged as in this case is includ ed a violation of article 14, the handicap is accentuated, since the material facts on which the classification might rest could not be properly, investigated or evaluated on the basis of the affidavits filed in this Court without a careful sifting of the facts which a consideration by the High Court would afford.
If in the appeal now before us, we have departed from this rule, and permitted the appellants to urge the additional grounds it was because of the circumstance that the prosecution was pending and learned Counsel submitted that he would seek to sustain his contention 569 regarding the violation of fundamental rights on the materials already on record.
The ground regarding the constitutionality of el.
11 B of the Control Order has been the subject of elaborate consideration by this Court in Union of India vs Messrs. Bhana Mal Oulzari Mal (1) and is, therefore, no longer open to argument.
Learned Counsel for the appellant therefore did not challenge the correctness of the judgment of the High Court upon this point.
Besides the ground based on a non compliance with section 11 of the Act which we shall consider later, learned Counsel urged before us two points with reference to the notification issued by the Steel Controller fixing the maximum prices at which the several categories of iron and steel could be sold by producers and stockholders.
These were: (1) that the notification of the Controller dated July 1, 1952, for the contravention of which the appellants were being prosecuted, was ultra vires the rule making power conferred upon him by el. 11 B(1) of the Control Order, (2) if, however, the notification was held to be within his power, the same was unconstitutional in that it was discriminatory and violated article 14 of the Constitution.
As we have indicated earlier, these grounds of challenge to the validity of the notification were not made in any of the Courts below including the High Court, but for the reasons indicated we permitted learned Counsel to argue them before us.
In order to appreciate the contention presented in the two forms, it is necessary to set out the terms of el. 11 B(1) which conferred power upon the Controller to fix the maximum base prices at which the several varieties of iron and steel could be sold.
Clause 11 B(1) runs: " 11 B. Power to fix prices. (1) The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold (a) by a Producer, (b) by stockholder including a Controlled Stockholder and (c) by any other person or class of persons.
Such price or prices may differ for iron and steel obtainable from (1) ; 570 different sources and may include allowances for contribution to and payment from any equalization fund established by the Controller for equalising freight, the concession rates payable to each producer or class of producers under agreements entered into by the Controller with the producers from time to time, and any other disadvantages.
" Clause (2) of the Control Order defines " producer as " a person carrying on the business of manufacturing iron or steel ", and " registered producer " as " a producer who is registered as such by the Controller ".
The same clause defines " stockholder " as " a person holding stocks of iron or steel for sale who is registered as a stockholder by Controller " and " Controlled stockholder " as " a stockholder appointed by the Con.
troller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time ".
The notification of the Controller dated July 1, 1952, impugned in these proceedings runs in these terms, quoting only the material words: " Under Ministry of Commerce and Industry Notification. . the prices of all items of steel under columns 1, 11 and III in the schedule of Base Prices of the attached price circular No. 1 of 1951 have been increased by Rs. 50/ per ton with effect from 1st July, 1952, except item 19(b), i.e., Billets which has been increased by Rs. 45/ per ton. .
The other General and Special Conditions of sale mentioned in the attached Price circular remain the 571 The price circular dated July 1, 1951, referred to here consisted of eight columns which ran thus: (Price in rupees per ton) Maximum Base Prices at Calcutta, Bombay and Madras Base Materials Column I Column II Column III Price Item For sales by For sales by For sales by Registered controlled all persons No. Producers.
stockholders.
other than Registered Producers and controlled stockholders.
Untested Untested Untested Untested Untested Te sted Rs. Rs. Rs. Rs. Rs. Rs. A Bars, Structural and plates etc.
Bars and Rods 303 333 328 363 348 383 (Rounds and squares below 3" and flats up to and including 5" wide) 2 to 42. . . . . . .
This was followed by General Conditions and Special Conditions which inter alia made provision for the purpose of rounding off inequalities in freight caused by places being situated at varying distances from the place of production etc.
It was the operation of some of these conditions that was urged as giving rise to the discrimination complained of, but it will, however, be convenient to deal with them later, after disposing of the argument regarding the notification not being within the powers of the Controller under cl. 11 B (1).
The 'ground urged in support of the contention that the notification by the Controller was not in conformity 572 with cl. 1 1 B (1) was this: Whereas under cl. 1 1 B (1) the Controller was directed to fix the maximum prices which could be charged by three different classes, viz., (a) Producers, (b) Stockholders including Controlled stockholders, and (c) Other persons, the impugned ,notification departed from this scheme in two respects: (1) The clause contemplated that the notification should apply to all " producers " whereas " producers " other than " Registered producers " were wholly left out by the Controller with the result that no limitation was placed upon the price they could charge, (2) Whereas the clause directed the Controller to include both the types of stockholders" Registered " as well as " Controlled " within the same class and make the same limit of prices applicable to both, the notification had included only " Controlled stockholders " as the second category of dealers and " registered stockholders " had not been specified eo nomine by him.
This meant either that "Registered stockholders " were wholly outside the class of dealers governed by the notification or that they were intended to be included in the residuary class in column III.
On these premises learned Counsel urged that if " registered stockholders " like the second appellant were not within the notification, the prosecution must fail because the maximum prices chargeable by her had not been fixed.
If on the other hand such dealers had been separated from " Controlled stockholders " and included in the residual category, such a classification was not countenanced by cl.
11 B(1) and was therefore ultra vires.
We consider that these submissions are wholly without any substance.
Before the argument that " producers " other than " registered producers " had not been included in the notification can be accepted, it has to be established that there is any such producer.
There is a list of " registered producers " appended to the notification and learned Counsel admitted that he could not say that there were any besides these, who were "Producers" of iron and steel within the meaning of the Control Order.
If therefore, every " producer " was registered, there is no scope for the argument that 573 any persons had been left out and permitted to sell at prices of their choice.
The other part of learned Counsel 's argument that registered stockholders " were not governed by the notification because they were not included in column II thereof and that dealings by them were not subjected to the maxima of prices fixed by it, has only to be stated to be rejected.
The heading of the last column shows that all categories of dealers other than "registered producers.," and " controlled stockholders " were included in the residuary category.
The related contention that the Controller acted outside his powers in differentiating between " controlled stockholders " and " registered stockholders " and in fixing different maxima of prices that could be charged by the two categories of dealers, does not deserve serious consideration either.
If we understand the classification aright, it is like one between wholesale dealers and retailers and it is on this basis that the maximum price that could be charged by the " Registered Stockholders " who fall under column III is fixed at Rs. 20/ per ton above that permissible to " Controlled Stockholders " in respect of the category of steel which we have extracted earlier.
The classification which gives persons in the category of the appellants this advantage is certainly not one regarding which a complaint could be made.
Even when this advantage conferred on registered stock holders by the classification by the Controller was pointed out to learned Counsel for the appellant he persisted in his argument that "registered stock.
holders".
should have been put in column II along with " controlled stockholders " and should have been permitted to sell only at the same maximum prices.
This is sufficient to show that the argument regarding the classification was frivolous and could not have been urged with any seriousness.
This apart, we consider that even on the terms of cl. 11 B (1), the Controller is not prevented from drawing a distinction within the three classes which are specified in it.
The purpose and policy of the enactment is to ensure that an essential commodity like iron and steel is made available, to 574 the consumer at reasonable prices and in the achievement of this objective classification of producers or of other stockholders based upon rational grounds would obviously be within the power of the Controller.
Taking for instance the last class (c) " any other person or class of persons," it cannot be that this group could not be sub classified, if there was any reason or necessity to do so.
If head (c) is susceptible of this interpretation, as it obviously must, we see no reason why head (b) should not be similarly construed.
We have therefore no hesitation in rejecting the contention of learned Counsel, that the notification of the Controller fixing maximum prices is beyond his power, as not warranted by the terms of el.
11 B (1) of the Control Order.
The argument next advanced in challenge of the validity of the notification was, that some of the General Conditions appended to the notification were discriminatory of the class of "registered stockholders" as compared with the " controlled stockholders " invoking for this purpose article 14 of the Constitution.
Learned Counsel did not challenge the legality of the creation of the equalisation fund by the allowances for what is termed as " place extra ".
Learned Counsel, however, urged two matters wherein facilities had been afforded or price increases permitted, to " controlled stockholders" which were denied to " registered stockholders " and that these had been done without any rational basis.
These were: (1) The 3rd of the special conditions for sale by " controlled stockholders " read: "The question of credit facilities will be a matter for negotiation between the customers and the controlled stockholders. " (2) Similarly, Condition 5 also relating to " controlled stockholders" read: ,The base prices are.
for sizes and length available in Size.
Customers requiring material cut to length or size not available in stock will be required to pay cutting and wastage charges agreed between the customers and the stockholders. " Coming now to the special conditions for sale " by persons other than producers and controlled stock holders, " i.e., the conditions which governed sales like those by the second appellant, special condition 1 575 read: " The base rates given in column III above are ex site and apply to sales by all persons other than Producers and Controlled Stockholders. . and are not subject to additional charges for cutting or for credit facilities.
" Neither of these points cutting charges or credit facilities could be held to be discriminatory without a full investigation of the facts and circumstances which led to the imposition of these special conditions.
Differentiation could never per se be discrimination, nor is there any presumption that the adoption of different rules for groups differently situated is unequal treatment violative of article 14.
On the other hand, the presumption is the other way and the party that alleges unjustifiable discrimination should establish it to the satisfaction of the Court.
We consider that there is no material on the basis of which an argument could be sustained that the special conditions to which learned Counsel adverted contained any element of unfair or irrational discrimination to attract article 14.
There was a slight and subsidiary point raised in regard to the allowance of credit facilities and cutting charges.
It was said that these charges were indeterminate and that the Controller having been directed by cl. 11 B (1) to fix definite maximum prices had departed therefrom by permitting increases of undefined amounts.
This argument again has no substance.
The base price for the commodity having been fixed, there are incidentals which by their very nature were incapable of definite quantification, since they were dependent on each individual case.
This contention also we therefore reject.
In passing, we might observe that the matter before this Court in Union of India vs Messrs. Bhana Mal Gulzari Mal (1) related to a prosecution for a contravention of a notification of an earlier date, but in terms identical with the present, except as to the prices, wherein the dealers in the commodity were classified in the same manner as has been done in the notification now before us and with the same general and special conditions.
The respondent then before this Court was " a registered (1) ; 74 576 stockholder " who was being prosecuted for effecting sales in excess of the maximum prices fixed.
The fact that on that occasion no contention was urged challenging the validity of the notification as beyond the powers of the Controller, on the grounds now put forward clearly indicates, that the matters now urged never appeared then, as a possible source of grievance to a party situated similarly as the second appellant.
We hold that the notification fixing the prices together with the conditions appended thereto are valid and enforceable.
The last point that remains to be dealt with, is the contention that the initiation of the prosecution against the appellants was invalid for non compliance with the requirements of section 11 of the Act.
This Section runs : " 11.
Cognizance of offences.
No Court shall take cognizance of any offence punishable under this Act except on report in writing of the facts constituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code (XLV of 1860).
" Learned Counsel for the appellants urged that though two of the conditions specified by the statute, viz., (1) a report in writing, (2) by a public servant were satisfied, the third requisite, viz., that the report should set out the " facts constituting such offence " was lacking and that by reason of this defect the Magistrate could not lawfully take cognizance of the case against the appellants.
In elaboration of this point learned Counsel pointed out that the report did not specify: (a) the date when the alleged sales took place, (b) the quantity sold, (c) the person in question who was the buyer and who paid the excess over the controlled price, (d) the class or category of iron and steel which was the subject of the sale by the appellants, (e) the precise maximum price which had been fixed for such variety, (f) the amount which the appellants were alleged to have received in excess.
The learned Judge of the High Court rejected this contention and, in our opinion, correctly.
In the report which we have already extracted the provision 577 of the law which the appellants were stated to have contravened was set out, and it was there stated that being " registered stockholders " they had sold the goods above the price notified and that they had further, in order to conceal their crime, fabricated evidence.
It is to be noticed that the report is required to contain only " a statement of facts constituting the offence " and its function is not to serve as a chargesheet against the accused.
The function or purpose of the second of the above three requirements of section 11 is to eliminate private individuals such as rival traders or the general public from initiating a prosecution and for this purpose before cognizance is taken the complaint is required to emanate from " a public servant ".
The two further requirements, viz., that the report should be in writing and regarding the contents of the report, are to ensure that there shall be a record that the public servant is satisfied that a contravention of the law has taken place.
If the contravention in question is sufficiently designated in the report, and in the present case that cannot be disputed, since besides a reference to the notification stated to have been contravened, the report states that the accused had effected sales above the maximum prices specified in the notification, the requirements of the section are satisfied.
The details which would be necessary to be proved to bring home the guilt to the accused and which comprised the several matters enumerated by learned Counsel which we have set out, will be details which would emerge at a later stage, when after notice to the accused a charge is framed against them, and of course at the stage of the trial.
They would all be matters of evidence and section 11 does not require the report to be or to contain either the charge sheet or the evidence in support of the charge, its function being merely to afford a basis for enabling the magistrate to take cognizance of the case.
In support of his submission regarding the construction of section 11 reliance was placed on two decisions: Dr. N. G. Chatterji vs Emperor (1) and Rachpal Singh vs (1) 578 Rex (1).
Both these were cited before the learned Judge and we agree with the manner in which he has dealt with and distinguished them.
No doubt, in both these cases it was held that the requirement of r. 130 (1) of the Defence of India Rules (whose language was similar to is.
11 of the Act) as to the Statement of " facts constituting the contravention " was not complied with, but the " reports " dealt with in them, bear no resemblance to the report in the case before us.
In the first of these decisions, the recital in the report was that the accused was guilty of a " prejudicial act to the interest of the public " and " had prejudiced the success of financial measures with a view to the efficient prosecution of the war ".
These words were held to be absolutely vague, even the particular rule or provision of law which was said to have been contravened, not even being mentioned in the report.
The other decision in 50 Criminal Law Journal does not bear any analogy to the present case either.
The report there in question ran: "On the statement of the informant an offence under section 81(2), Defence of India Rules, has been committed for which the charge sheet is being submitted." On this it was held that the facts alleged to constitute the contravention were not set out in the report and that the Magistrate had therefore no jurisdiction to take cognizance of the case.
Obviously this case could not assist the learned Counsel to sustain a contention that the report in the present case was defective.
We consider that the report on which the prosecution was launched satisfied the requirements of section 11 of the Act.
In the result the appeal fails and is dismissed.
Appeal dismissed.
| A police officer made a report under section 11 of the Essential Supplies (Temporary Powers) Act, 1946, regarding a contravention of cl. 11 B(III), Iron and Steel (Control of Production and Distribution) Order, 1941, read with section 8 of the Essential Commodities Ordinance, 1955, to the Magistrate against the appellants who were registered stockholders that they had sold iron bars at prices higher than the controlled rate.
After enquiry the Magistrate framed a charge against the appellant under section 7, Essential Supplies (Temporary Powers) Act, 1946, read with cl. 11 B(III) of the Control Order.
The appellants contended that the charge ought to be quashed on the grounds, (i) that the notification of the Controller fixing the maximum sale price of the several categories of iron and steel was ultra vires the rule making power in cl.
11 B(i) of the Control Order, (ii) that the notification was discriminatory and violated article 14, and (iii) that the complaint could not be taken cognisance of by the Magistrate because the report of the police officer did not set out the facts constituting the offence as required by section II of the Act.
The first two grounds were raised for the first time before the Supreme Court.
Held, that the notification fixing the rates was intra vires cl.
11 B(i) of the Control Order.
The notification did not omit any class mentioned in cl.
11 B(1) from its purview; it included 564 "registered producers" and it was not shown that there were any "producers " other than " registered producers " enumerated in the notification.
The notification governed " registered stockholders " also as they were included in the residuary category of persons other than " registered producers " and " controlled stockholders ".
The notification was not discriminatory and did not offend article 14 of the Constitution.
The notification no doubt permitted the grant of credit facilities and the right to charge for cutting and wastage in sales to " controlled stockholders " but not to " registered stockholders " in regard to sales by them.
Differentiation was not per se discrimination.
There was no material to show that there was any unfair or irrational discrimination which could attract article 14.
Held, further, that the police report on which the prosecu tion was launched satisfied the requirements of section II of the Act.
The purpose of section II was to eliminate private persons from initiating prosecutions and to confine it to public servants.
The requirement of the section that the report should be in writing and should set out the facts constituting the offence was to ensure that there was a record that the public servant was satisfied that a contravention of the law had taken place.
If the contravention was sufficiently designated in the report the requirements of the section were satisfied.
Section II did not require the mention in the report of details which would be necessary to be proved to bring home the guilt to the accused.
Dr. N. G. Chatterji vs Emperor and Rachpal Singh vs Rex , not applicable.
Additional grounds, other than those urged before the High Court, would not be permitted to be raised before the Supreme Court as a matter of course, but only, in exceptional circumstances like cases of subsequent legislation or where questions of fundamental and general importance were raised.
|
ivil Appeals Nos.
1357 58 of 1975.
(Appeals by special leave from the judgment and order dated 4 2 1974 of the Orissa High Court in O.J.C. No. 410/1971).
M.K. Ramamurthi and B. Parthasarathi, for the appellants.
Gobind Das, N.V. Rama Das and G. Narayana Rao, for respondents 1 8 in CA 1357/75.
There was a private college known by the name of Khallikote College.
This is an institution which grew out of a school established 775 in 1856.
The management had to meet with financial crisis in the past and obtained financial help in the shape of liberal endowment under a trust deed from the then zamindar of Khallikote.
The institution, it is stated, became one of the premier colleges in the town of Behram pur, Ganjam District, Orissa.
The College was at first affiliated to the Andhra University at Waltair and thereafter to the Utkal University, and since 1967 it has been affiliated to the Behrampur University.
The Government of Orissa took over the management of the College on and from March 9, 1971, and a formal agreement was executed between the managing committee of the College and the Governor of the State.
The College was taken over by the Government in pursuance of the unanimous resolution of the managing committee of February 18, 1970, and the transfer to the Government was of all the assets of the College but without any liability.
The managing committee continued to be liable for the outstanding liabilities, if any, of the College for which Government was not liable.
The College after the take over was administered as a Government College.
The eight writ petitioners in the High Court (Respond ents herein) were working as Readers in different faculties in the said College on the date of the aforesaid transfer in the scale of pay Rs.510 860/ whereas the Government scale for Readers was Rs.600 1000/ .
On the date of take over, namely, March 9, 1971, each of the respondents was drawing a salary somewhere less than Rs.600/ ; three of them less by only Rs.30/ .
The material particulars of the ten Readers of the College who were all earlier in private employment, includ ing the eight Respondents, are as follows (Annexure I, Volume 1I of the Paper Book): Sl.
Name Date of Date of Date of Confirmed Pay as on No. Birth 1st promo as 9 3 1971 appoint tion (date of ment take over) 1.Sri N.N.Swamy 8 3 34 21 7 58 1 12 68 Reader Rs.570 2.Sri N.Satapathy 6 9 33 July '59 27 1 70 Reader Rs.540 3.Sri P.Haridas 10 3 36 25 10 61 25 10 69 Lecturer Rs.540 4.
Sri J.J. Rao 16 3 36 7 7 59 1 7 68 Reader Rs.540 5.
Sri K.C. Samantra 5 7 70 Lecturer All the posts are permanent 6.
Sri G.J. Chineswar Rao 30 9 31 3 9 57 1 10 67 Reader Rs.570 7.
Sri Ch.
Chandra Sekhar Patro .
1 7 35 1 8 58 1 1 57 Reader Rs.570 8.
Sri Narayana Behera 1 10 37 2 8 62 13 9 70 Lecturer Rs.510 9.
Sri T.K.Satyan murty 14 9 27 1 7 49 4 5 59 Reader Rs.660 10.Sri V.S.R. Gupta 28 12 30 1 7 52 4 9 69 Lecturer Rs.600 776 It will appear that five Respondents out of eight were confirmed as Readers prior to the take over.
Three Respond ents were confirmed as Lecturers but were promoted as Read ers prior to the transfer of the College.
The last two Readers in the list who. were lucky to draw salary of the amount of Rs.660/ and Rs.600/ respectively as on the date of take over, were treated differently by the Government from the eight Respondents on the sole ground that they were drawing as Reader salary of more than Rs.600/ .
It is rather poignant that the tenth Reader in the list was only a confirmed Lecturer whereas, as already shown, five of the Respondents were confirmed Readers although drawing salary less than Rs.600/ On July 30, 1970, the Government prescribed qualifica tions for appointment as a Reader by a Circular of that date addressed to the Director of Public Instructions (Higher Education) Orissa, which appears to supersede the earlier circulars on the subject.
It was stated in that circular that the "Government have been pleased to order that follow ing principles shall hence forward be followed in the ap pointment Readers, namely, (a) no officer who has not had at least 8 years of teaching experience as a Lecturer would be eligible for consideration; and (b) the post of Reader shall originally be filled up by promotion subject to the satisfactory performance and conduct of the officer as a lecturer".
On March 23, 1971, the Government issued a circular con taining conditions governing taking over the services of the teaching staff of the College.
Paras 4 and 5 of that circu lar, which are material for our purpose, may be quoted: "4.
The State Government shall offer ad hoc appointment to all staff inposition on the date of take over subject to para 5, and sub para (d) of this paragraph for a period not exceeding six months in each case, treat ing all such staff as fresh entrants to Gov ernment service.
The final absorption of such staff in Government service shall be subject to the following conditions: x x x x x (b) That after termination of services of surplus personnel, the cases of staff re tained in Class I and Class II shall be referred to the Orissa Public Service Commis sion for determination of their suitability to hold posts in Class I or II as the case may be.
The services of those who are not found suitable by the P.S.C. (Public Service Commis sion) shall also, be terminated by giving one month 's notice in each ' case.
Those found suitable by the Commission shall be finally absorbed in respective Trade of the O.E.S. (Orissa Education Service) for which they are found 777 suitable.
It is hereby clarified that at the time of reference to the P.S.C. for determina tion of suitability for appointment as Read ers, cases of Lecturers of Government College, eligible for appointment as Readers shall also be simultaneously referred to the P.S.C. for consideration against those posts.
X X X X (c) While making reference to the P.S.C . . cases of those ad hoc Readers who would have been normally, entitled to pay of less than Rs.600/ per month on 9 3 71 by application of the formula "minimum of the scale of pay of Readers in force in the Col leges on the date of their appointment as such by the Ex Managing Committee plus one.
incre ment in that scale for every completed year of service upto 9 3 71" would be referred for determination of their suitability for absorp tion as Lecturers only.
X X X X 5.
Ad hoc appointment shall be issued to all Professors and such of the Readers in position, who on the date of take over were in receipt of pay of Rs.600/ per month or more, in the scale of pay Rs.600 1000/ against posts of Readers.
Readers who on the date of take over were in receipt of pay of less than Rs.600/ per month and all lectur ers in position on that date shall be given ad hoc appointment against the post of lectur ers in the scale of Rs.260 780/ with effect from the date of take over".
X X X X Basing on the aforesaid provisions of the above circular the Director of Public Instructions sent on April 20, 1971, to each of the Respondents appointment letters whereby they were appointed as Lecturers in Class II temporarily on ad hoc basis for a period of six months with effect from the forenoon of March 9, 1971, or till the appointment is made in consultation with the Orissa Public Service ' Commission, whichever is earlier; subject to verification of character and antecedents and production of medical fitness certificate.
Appointments were, thus, offered to.
the Respondents under the terms and conditions of take over which have been already extracted.
The grievance of the Respondents is that although they had all the requisite qualifications for the appointment as Reader and they were all holding the posts of Reader before the take over and five of them were even confirmed Readers but since under the aforesaid terms of the take over they were drawing a salary of less than Rs.600/ on the date of take over.
their names were not referred to the Public 778 Service Commission for consideration of their ' suitability for appointment as Readers in the Government College.
It is not disputed that they are otherwise educationally and by experience qualified for the post of Reader.
The High Court found that the requirement of eight years of teaching experience, as mentioned above, which is needed for appoint ment as a Reader is more than amply fulfilled by each of the Respondents.
The High Court accepted the Writ Petitions and held that the Respondents were entitled to consideration by the Public Service Commission for appointment as Read ers ' and hence these appeals by the State which are con fined only to the above question.
It is submitted by Mr. Ramamurthi on behalf of the appellants that the High Court erred in directing the Gov ernment to take into account, as experience, the service of the Respondents while they were in the private college since, according to him, the necessary qualification is eight years experience in Class II, Orissa Education Serv ice (O.E.S.).
This submission is based on the Orissa Educa tion Service Class I (Recruitment to the College Branch) Rules, 1971, issued on July 19, 1971, produced for the first time in this Court.
It is submitted that since the Respond ents have not completed eight years of service in the O.E.S. Class II (Lecturer 's grade) in Government service, they are not entitled to be considered by the Public Service Commission for appointment as Readers.
We are unable to accept this submission based on these Rules.
These Rules of July 19, 1971, were not produced in the High Court and the reason is obvious that these were not relied upon by the State in connection with the appointment of the Respondents as Readers after the College had been taken over by the Government on March 9, 1971.
The argument has, therefore, to be supported on the intrinsic strength of the circular of March 23, 1971.
Apart from this, there is a stronger reason not to.
entertain this submission at this stage.
Even in the Special Leave Petition filed by the State on July 15, 1974, there was no mention whatsoever about the aforesaid Rules and necessarily no ground was taken in the Petition on the basis of these Rules.
Being conscious of this position Mr. Ramamurthi filed a Civil Miscellaneous Petition No. 4069 of 1976 before this Court on April 30, 1976, to urge this additional ground.
After hearing Mr. Ramamurthi we rejected this prayer for urging the additional ground by such a belated application when the High Court had no oppor tunity to consider the question.
The only question, therefore, which requires decision in these appeals is _whether the Respondents were denied equal opportunity under Article 16 of the Constitution in the matter of appointment as Readers under the Government in the manner laid down in the circular of March 23, 1971.
The following facts are admitted: The Respondents and two others, namely, T.K. Satyan murty (No. 9) and V.S.R. Gupta (No. 10) in the list (Annex ure I) were all Readers in the private College, each.
having put in more than eight 779 years of service there as a Lecturer.
T. K. Satyanmurty was promoted as Reader on 4 5 1969 and was drawing Rs.660/ on the date of taking over.
V.S.R. Gupta was promoted as Reader on 4 9 1969 and was drawing Rs.600/ , the minimum according to the aforesaid Government circular, on the date of taking over.
He was not even confirmed as a Reader but was only confirmed as a Lecturer.
Amongst the Respond ents, N.N. Swamy (No. 1), N. Satapathy (No. 2), J.J. Rao (No. 4), G.J. Chineswar Rao (No. o) and Ch.
Chandra Sekhar Patro (No. 7) m the list (Annexure 1) were confirmed as Readers and four of them were promoted even earlier than No. 9 and No. 10.
It is thus clear that the condition of draw ing of Rs.600/ or more on the date of taking over, which has been laid down in the said circular as a particular qualification for eligibility for appointment as Reader and later for consideration of their suitability by the Public Service Commission for appointment as Reader, is arbitrary and discriminatory.
This condition has no nexus, whatev er, with the object underlying the qualification test in an educational institution having regard to the most essential condition of intrinsic quality and efficiency of the teachers.
It is not unknown that private institutions generally have great handicaps in the matter of finance and oftener the teaching staff in a private college has not the same scales of pay and sometimes even has much lower scales than that of the Government colleges.
It is one thing to lay down appropriate educational and intelligibly relevant qualifications for certain posts in a college and also teaching experience of a specified duration but com plete ignoration, without valid reason, of the teaching experience of a lecturer in a private college, otherwise qualified, on the sole ground of drawing a particular amount of salary on a particular date cannot be countenanced.
T.K. Satyanmurty (No. 9) was promoted as a Reader while in the private college much later than the four of the Respond ents (Nos. 1, 4, 6 and 7 in Annexure I).
He happened to; draw Rs.660/ on the date of take over, while the Respond ents were drawing a little lower pay.
The former was pre ferred and given the ad hoc appointment of a Reader and was held as eligible for consideration by the Public Service Commission for appointment as Reader and the claims of the Respondents were ignored.
Thus even amongst the Readers in the private college, similarly situated, the only ground for ignoring the claims of the said Respondents was drawing of a lesser pay; even though it may be less by Rs.30/ , on March 9, 1971.
This ground for a most unreasonable differ entiation in picking and choosing from amongst the employees similarly situated on an absolutely artificial and irrele vant consideration results in denial of equal opportunity to the Respondents in the matter of employment under the Government under Article 16 of the Constitution.
It is well settled that under Article 16(1) of the Con stitution matters relating to employment not only mean the initial appointment but also include all matters relating to employment, whether prior or subsequent to the employment and also include promotion, (See The General Manager, South ern Railway vs Rangachari(1).
(1) ; 2 206SCI/77 780 Our attention was drawn to a decision of tiffs Court in Smt.
Juthika Bhattacharya vs The State of Madhya Pradesh and Others(1) on behalf of the appellants, wherefrom it was pointed out that Government could validly impose compara tively stringent qualifications for posts in schools taken over from private management, since persons there may be appointed without the requisite experience as needed in Government schools.
That case is entirely different from the present case.
There may be no difficulty in accepting the position that Government can screen the teachers at the time of fresh appointment in Government service after taking over any institution from private management.
The educa tional qualifications and teaching experience which may be insisted upon may be appropriately stringent having regard to the quality of education which Government intends to.
impart in the college after taking over the same from the private management.
If the quondam private employees in the College did not fulfil the qualifications, experience and other requisite conditions, they may not be eligible for appointment since Government may not undertake to take over all the employees by maintaining the billabong of a status quo ante.
Such a position, if taken by the Government, is consistent with implementation of a correct educational policy and will not incur the frown of Article 16 of the Constitution.
The question is entirely different when, as in the present case, the Respondents answering the test of educational qualifications, as well as, experience of teach ing in a recognised private college are discriminated amongst the very category of Readers on an irrational and illusory consideration.
Denial of an opportunity to.
these Respondents even for being considered for the post of Reader is clearly violative of Article 16 of the Constitution.
When a fairly well recognised institution, as in this case, run for more than a century, is completely taken over by the Government for management, it is not merely taking over the land and buildings, tables and chairs.
It has to tackle, at the same time, a human problem, that is to say, the fate of the teachers and the staff serving that institu tion.
The institution, with which we are concerned, was taken over, by consent, as a going educational concern and it goes without saying that it must be administered on sound lines having regard 'to quality, efficiency and progress in all respects.
It is understandable that the employees had to join the new service under the Government, for the first time, and so could be, in that sense, fresh entrants.
But to say that the teaching experience of the Readers in the private institution is completely effaced to the extent that they will not be even eligible, on the plea of absence of teaching experience in Government service, for consideration for appointment as Readers is a seriously grim issue.
We feel assured that such an argument had not been canvassed by the State in the High Court on the basis of the Rules of July 19, 1971, since these Rules came into force after the take over for which a separate circular had al ready been issued to take care of the special exigency.
Action under the Government circular of March 23, 1971, alone, was in controversy in the High Court.
The said circular took recognition of the service in the private college in the case of two (1) ; 781 Readers (Nos. 9 and 10 in Annexure 1).
The only differentia was, therefore, the salary drawn by the Readers on the date of take over.
That action based on the salary aspect under the said circular had to.
stand the test of Article 16 in the High Court, as well as, before us.
the argument in favour of complete erasion of the past teaching expe rience in the private college, first time presented before us, fails to take note of the distinction between eligibili ty and suitability.
Eight years ' teaching experience in a college and the fulfilment of other ' requisite qualifica tions make a person eligible for appointment .as a Reader, but whether he is suitable for selection for the post is an entirely different matter.
We are, therefore, clearly of opinion that all the Respond ents are eligible to be referred to.
the Public Service Commission for the post of Reader.
Their names shall be referred to the Commission, accordingly.
Whether they will be suitable for appointment us Readers will be a matter entirely for due and proper consideration of the Public Service Commission whose recommendations will be considered by the Government in the matter of final absorption.
The High Court was right in allowing the .above claim in the writ applications.
The appeals fail and are dismissed with costs.
M.R. Appeals dismissed.
| No question of infringement of any fundamental right under article 21 arises where the detention complained of is by a private person and not by, a State or under the authority or orders of a State, and the Supreme Court will not, therefore, entertain an application for a writ of have a corpus, under article 32 of the Constitution.
Consequently a petition under article 32 of the Constitution for a writ of habeas corpus founded on article 21 and directed against a father for alleged detention of his daughter does not lie.
A. K. Gopalan vs The State of Madras ([1950] S.C.R. 88) and P. D Shamdasani vs Central Bank of India ([1952] S.C.R. 391), relied on.
|
Civil Appeal No. 504 Of 1985 From the Judgment and Order of the High Court of Bombay, Panaji Bench (Goa) dated the 26th June, 1984, in writ Petition No, 8 of 1984.
B. Zaiwala, Anil B. Divan, Usgaonkar, Ravinder Narain, and Aditia Narayan, for the Appellant.
S.C. Desai, M.M Abdul Khader, Naunit Lal, Kailash Vasdev, Mrs. Vinod Arya, and Miss A Subhashini for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This appeal filed by M/s Fomento Resorts and Hotels Limited raises the short question as to whether compliance with rule 4 of the Land Acquisition (Companies) Rules, 1963 (hereinafter called the Rules) is necessary before issuing notifications under section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as the Act).
It appears that the land in question was purchased by Gustavo Ranato da Cruz Pinto hereinafter referred to as the land owner and the original respondent No. 1 on 10th of March, 1978.
The original respondent No. 2 and the appellant herein on the 15th November, 1978 made an application under Chapter 7 of the Act for the acquisition of the said properties.
The government issued on the 29th October, 1980 notification in respect of the land in question under section 4 of the Act which was published in the Government Gazette dated 30th October, 1980.
The land owner being respondent No. 1 to this appeal objected to the said notification under section 4.
Subsequently government held enquiry under section 5A of the Act and the Deputy Collector submitted the report to the Government in March, 1981.
On or about 10th April, 1981 the Deputy Collector issued notice to respondent No. 1 that enquiry under rule 4 of the Rules would be held on 15th April, 1981.
The respondent No. I filed his objections on merit by the letter dated 4th May, 1981.
On 26th October, 1983, agreement was executed between the government and the acquiring company that the land in question was needed for the purpose of development of tourism.
the government issued notification under section 6 of the Act which was published in the government Gazette dated 27th October, 1983.
941 The petition under Article 226 out of which this appeal arises was filed in the Bombay High Court by respondent No. I challenging the said notifications under sections a and 6 of the Act.
The High Court of Bombay (Goa Bench) quashed the said notification under sections 4 and 6 of the Act only on the ground that enquiry under rule 4 of the Rules was not held prior to the notification under section 4 of the Act.
The propriety 1 and validity of the said decision of the High Court are under challenge in this appeal.
The High Court, however, noted that the impugned notification had been challenged on several other grounds but in the view it had taken on the first ground namely that the notifications under sections 4 and 6 of the Act being bad for prior non compliance with rule 4 of the Rules, the High Court felt that it was not necessary to deal with other grounds.
The petition succeeded before the High Court and the notifications under sections 4 and 6 of the Act were quashed.
This appeal is filed against the judgment of the High Court.
Under the scheme of the Act, it is necessary for the purpose of acquisition of land first to issue a notification under section 4 of the Act, whenever it appears to the appropriate government that land in any locality is needed or likely to be needed for any public purpose.
The purpose and object of the notification under section 4 of the Act have been explained by this Court in the case of Babu Barkya Thakur vs State of ,Bombay (now Maharastra) and others thus: "The purpose of the notification under section 4 is to carry on a preliminary investigation with a view to finding out after necessary survey and taking of levels, and, if necessary, digging or boring into the sub soil whether the land was adapted for the purpose for which it was sought to be acquired.
It is only under section 6 that a firm declaration has to be made by Government that land with proper description and area so as to be identifiable is needed for a public purpose or for a Company.
What was a mere proposal under section 4 becomes the subject matter of a definite proceedings for acquisition under the Act.
Hence, it is not correct to say that any defect in the notification under section 4 (1) ; at 1208.
942 is fatal to the validity of the proceedings, particularly when the acquisition is for a Company and the purpose has to be investigated under section 5A or section 40 necessarily after the notification under S.4 of the Act." This Court emphasised that when the acquisition is for a Company the purpose has to be investigated under section .
A or section 40 necessarily after the notification under section 4 of the Act.
The land acquisition proceedings begin with the publication of the preliminary notification.
Section 5A enjoins hearing of the objections and disposal of objections.
Sections 6 of the Act provides that if the government is satisfied after considering the report, if any, made under section 5A, that any particular land was needed for public purpose, or for a Company, a declaration shall be made to that effect subject to certain conditions mentioned in the various sub sections of section 6 of the Act.
After declaration under section 6, section 7 enjoins the Collector to take order for acquisition of land.
Various steps for the actual acquisition are enumerated in subsequent section of the Act which need not be set out in detail.
Section 16 empowers taking of the possession after an award is made under section 11 and thereafter the land shall vest in the government free from all encumbrances.
It is important to note that section 23 of the Act deals with the matters to be considered in determining compensation for acquisition of land and ht enjoins that the market value should be determined as on the date of the publication of the notification under section 4.
In other words section 23 pegs the market value of the land as on the date of the notification under section 4 as one of the factors to be taken into consideration in determining the compensation to be paid.
Part VII of the Act deals with acquisition of land for companies.
Section 41 of the Act provides that if the appropriate government is satisfied after considering the report, if any, of the Collector under section 5A, or on the report of the officer making an enquiry under section 40 of certain matters, the details of which are not necessary for the purpose of appeal to be set out, it shall require the Company to enter into an agreement with the appropriate government providing for the satisfaction of the appropriate government for certain matters enumerated in different sub sections of section 40 The said provisions need not be set out in detail.
Essentially the satisfaction and agreement with the company arc to ensure that the 943 land in question will be put to such use which will be useful to the A public.
Rule 3 of the Rules provides for the constitution of the Land Acquisition Committee.
Rule 4 is headed "Appropriate Government to be satisfied with regard to certain matters before initiating proceedings" and sub rule (l) of rule 4 lays down certain matters about which the appropriate government has to be satisfied when the acquisition is for the Company.
Sub rule (4) of rule 4 of the Rules provides that no declaration shall be made by the appropriate government under section 6 of the Act unless (i) the appropriate government had consulted the committee and had considered the report submitted under the said rule and the report, if any, submitted under section SA of the Act and (ii) further any agreement under section 41 of the Act executed by the Company.
Rule S of Rules deals with the matters which are to be provided for in the agreement under section 41 of the Act.
Rule 6 similarly deals with the additional matters which might be provided in the agreement under section 41 of the Act.
Rule 7 provides for submission of periodical reports.
Rule 8 of the Rules deals with the conditions under which sanction is to be given for transfer of land.
Rule g deals with special provisions in relation to certain Companies.
It is not necessary to discuss these rules in detail for the present purpose.
A conspectus of the provisions of the Act as well as the Rules indicate that there are two purposes of acquisition of land one being for the public purpose and the other for the purpose of a Company.
In case of acquisition for Company, the appropriate government has to satisfy itself that such acquisition is needed and would be useful also for public need.
Rule 4 of the Rules provides for satisfaction of the appropriate government with regard to various matters before acquisition.
The learned judges of the Bombay High Court were of the view that the enquiry under rule 4 was necessary for the initiation of the acquisition proceedings to be satisfied that acquisition was necessary for the Company.
We are unable to accept this conclusion for the following reasons: (i) To complete the acquisition proceedings, notification under 944 section 6 of the Act is required.
Section 6 of the Act enjoins that the government has to be satisfied that the land is needed for public purpose or for a Company and after declaration is made the acquisition is complete after the award is made and possession of the land is taken the land vests under section 16 in the government free from encumbrances.
Section 4 does not require as such this satisfaction of the government.
The government might initiate acquisition proceedings "if it appears" to the government that land is needed either for public purpose or for a Company.
That might appear to the government by enquiry aliunde or on a petition or application made by any Company.
Whether the need is proper or genuine that can be found by the government subsequently after notice under section 4 of the Act.
An enquiry under rule 4 might be made before issuance of the notification under section 4 of the Act but it is not a sine qua non for the issuance of the notification under section 4 to have an enquiry under rule 4 of the Rules.
The scheme and the language of the Act and the Rules do not indicate that.
As noted before, section 4 does not require government to be satisfied, it is sufficient if it appears to the government that land is needed either for public purpose or for a Company.
It may so appear to the government either by independent enquiry or from reports and information received by the government or even from an application by the company concerned.
Section 6 undoubtedly requires satisfaction of the government and enquiry contemplated under rule 4 must precede publication of the notification under section 6 of the Act.
So also there must be before section 6 notification an enquiry under section 5A.
The p significant pointer to the scheme is provided in sub rule (4) 'of rule 4, the material portion of which reads as follows: "(4) No declaration shall be made by the appropriate Government under section 6 of the Act unless (i) the appropriate Government has consulted the Committee and has considered the report submitted under this rule and the report, if any, submitted under section 5A of the Act; and (ii) the agreement under section 41 of the Act has been executed by the Company.
" 945 The said sub rule significantly does not prohibit or forbid A issuance of notification under section 4 of the Act unless rule 4 (l) has been complied with.
If it is now insisted that there should be no issuance of notification under section 4 of the Act before enquiry under rule 4 then this sub rule has to be re written by stating that no notification under section 4 and no declaration under section 6 issued or made as the case may be unless the requirements mentioned in clauses (i) and (ii) of sub rule (4) of lure 4 have been complied with.
We find no warrant to do that.
On the contrary, it will be contrary to the scheme and purpose of the acquisition proceedings because the compensation for the acquisition has to be fixed under section 23 of the Act keeping the market rate as on the date of the issuance of the notification under section 4 in view.
If it be that the enquiry as contemplated by rule 4 should also precede issuance of notice under section 4 of the Act then that may upset the fixation of the market value and escalation of price with the passage of time between publication of the notifications under sections 4 and 6 would make acquisition difficult.
An argument was sought to be built on the basis of the heading of rule 4 which stipulates that "Appropriate Government to be satisfied with regard to certain matters before initiating acquisition proceedings".
It is true that before the initiation of the acquisition proceedings, government had to be satisfied of certain matters mentioned in the various sub rules of rule 4 as well as various provisions of the Act.
Though preliminary steps for initiation of acquisition proceedings are necessary and those can only be taken by the authority of the notification under section 4 as mentioned in the decision of Babu Barkya Thakur vs State of Bombay (now Maharashtra) and Others, (supra) the initiation of the acquisition proceedings for all practical purposes begins after section 6 notification Satisfaction is necessary for proceeding for acquisition under section 6 of the Act but section 4 unlike section 6 does not require for the issuance of the notice to be satisfied but it might act only "when it appears" to it that the land is needed or is likely to be needed for any public purpose.
Reading the Act and the Rules and keeping in view the scheme of the Act, it is apparent, in our opinion, that before the issuance of section 4 notification, there is no requirement as such of compliance with the procedure contemplated by rule 4 of the Rules.
We are therefore unable to subscribe to the view that 946 enquiry by rule 4 must precede the issuance of notification under section 4 (1) of the Act.
Furthermore as indicated before certain matters which are required to be done under rule 4 can not be done because the officer or the person authorised by him would have no authority unless notification under section 4 is issued.
Reliance was placed before the Bombay High Court and before us in support of the judgment of the High Court on a decision of this Court in the case of Abdul Husein Tayabali and Ors.
vs State of Gujarat and Ors.
There the contention before the Court was that Master was only a Special Land Acquisition Officer and not the Collector within the meaning of rule 4.
Furthermore, it was urged, in any event, the notification in question did not 'specially ' appoint him but was a general notification authorising all the Special Land Acquisition Officers in the State appointed not only before the date of section 4 notification but also those who would be appointed in future It was further contended that notification did not "appoint" but simply authorised him to perform the functions of the Collector, the State Government had not given any directions to him to make a report as required by rule 4; therefore the enquiry held by him under that rule and the report made by him was invalid and consequently no notification either under section 4 or section 6 could be validly issued.
It was urged, therefore, the section 6 notification was issued without complying with Part VII of the Act and without the valid consent of the State Government as required under section 39(iii), that the acquisition was made malafide and without application of mind to the relevant facts and the acquisition did not involve any public purpose and the State government was bound to give an opportunity Of being heard to the appellants before taking a decision under section 5A particularly when the report made by Master was against the acquisition.
In this connection our attention was drawn to section 39 of the Act which provides that provisions of sections 6 to 37 (both inclusive) shall not be put into force in order to acquire land for any Company unless with the previous consent of the appropriate Government nor unless the Company shall have executed the agreement therein after mentioned.
This section, in our opinion, has no relevance for determining whether to be a proper acquisition, enquiry contemplat (1) ; 947 ed under rule 4 must precede issuance of the notification under section 4 of the Act.
In the decision of this Court referred to hereinbefore, this question did not really fall for consideration because there was compliance with rule 4 before issuance of the notification and the infirmities of the enquiry under rule 4 urged on behalf of the appellants were not established.
It was urged before this Court that the enquiry under rule 4 was a quasi judicial enquiry and therefore it was incumbent on Master to give an opportunity to the appellants to be heard.
This Court was of the view that the rule provide that an officer conducting the enquiry has to hear the Company before making his report.
Whether he was also to hear the owners of the land or not did not fall for decision in those appeals as the officer had in fact given such an Opportunity to the appellants by serving them with notices and recorded the statement of such of them who cared to appear before him.
It was then contended that the enquiry under rule 4 had to beheld after the notification under section 4 was issued and not before and therefore the enquiry held by Master was not valid.
This Court observed at page 604 of the report "We do not find anything in rule or in any other rule to warrant such a proposition.
The enquiry, the report to be made consequent upon such enquiry, obtaining the opinion of the Land Acquisition Committee, all these intended to enable the Government to come to a tentative conclusion that the lands in question were or were likely to be needed for a public purpose and to issue thereafter section 4 notification In our opinion no objection to the appointment of Master to perform the functions of the Collector under section 3(c) or to his competence to make the enquiry and the report under rule 4 or their legality can be validly made.
" In our opinion when this Court observed that the report of the enquiry under rule 4 was a factor to be taken into consideration and "to issue thereafter section 4 notification" was by general observation.
It is undoubtedly true that a notification under section 4 can be issued after enquiry under rule 4.
But under the scheme of the Act, the converse is not correct i.e. the enquiry under rule 4 must always precede notification under section 4 of the Act.
In that decision this Court analysed the importance of section SA and it is after considering the report under rule 4 and report under section SA that notification under section 6 will be issued.
It is undoubtedly true that 948 enquiry under rule 4(1) must precede action under section but we do not find reading the said decision of this Court in the context of the facts and circumstances and the contentions urged in that case that this Court laid down any proposition that enquiry under rule 4(1) must precede issuance of notification under section 4.
Indeed as we have mentioned before, notification under section 4 would facilitate the matters to be inquired under rule 4(1).
Reliance was also placed on certain observations in the case of General Govt.
Servants Co operative Housing Society Ltd" Agra vs Wahab Uddin & Ors.
Etc. 1 There the scheme of the Act was analysed and what were matters to be required under rule 4 of the Rules were mentioned.
This Court observed at pages 53 54 of the report as follows: "No declaration shall be made by the appropriate Government under section 6 of the Act unless the Committee has been consulted by the Government and has considered the report submitted by the Collector under section SA of the Act.
In addition, under clause (ii) of sub rule (4) of rule , the Company has to execute an agreement under section 41 of the Act.
The above consideration shows that rule 4 is mandatory; its compliance is no idle formality, unless the directions enjoined by rule 4 are complied with the notifications under section 6 will be invalid.
A consideration of rule 4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act.
" It may be borne in mind in that decision the notification under section 6 was quashed but notification under Section 4 was not quashed though observations were made about the purpose and the role of compliance with rule 4.
Reliance was placed on the following observations at page 54 of the report: "A consideration of rule 4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act.
" It appears to us that the reference to rule 4 in the context in which it was made was inadvertent.
What perhaps the Court want (1) ; 949 ed to convey was the need of compliance of entering into agreement A under section 41 before the issuance of notification under section 6 of the Act.
Otherwise it appears that there was no enquiry under rule 4 of the Rules before issuance of the notification under section 4 yet the notification under section 4 was not quashed.
The observation then in any event is obiter.
On the scheme of the Act, we are of the opinion that on a correct interpretation, it is not necessary that enquiry under rule 4 must in all cases precede issuance of the notification under section 4 of the Act.
In an appropriate case if it is possible, enquiry under rule 4(1) may be held before the issuance of the notification under section 4.
But it is not a mandatory requirement that it must precede before the issuance of the notification under section 4.
Our attention was drawn to a Bench decision of the Allahabad High Court in the case of Raja Ram Jaiswal vs Collector, Allahabad & Another (1), where it was held that it would not be right to say that a case where a company makes an application for acquisition of land to the Collector it was obligatory that the provisions of rule 4(1) must be complied with before the Collector could issue a notification under section x(1) of the Act.
With this conclusion we are in agreement, though factually the case was slightly different in the sense that there the Collector was authorised to make a notification under section 4(1) of the Act and not the State Government as in this case.
Therefore, though there may be in certain cases compliance with rule 4(1) of the Rules it was not mandatory that before issuance of notification under section 4(1) of the Act there should be an enquiry in compliance with rule 4(1).
In the premises in so far as the Bombay High Court held that non compliance with rule 4 before the issuance of notification under section 4(1) of the Act is bad is set aside.
As mentioned hereinbefore, since the issuance of the notifications was challenged on several other grounds and the High Court had not decided those grounds, we remit the matter back to the High Court to decide those grounds We request the High Court to dispose of those grounds as early as possible.
(1) [1980] 2 ILR Allahabad 269.
950 In a matter of this nature there several contentions factual and legal are urged and when there is scope of an appeal from the decision of the Court, it is desirable as was observed by the Privy Council long time ago to avoid delay and protraction of litigation that the court should, when dealing with any matter dispose of all the points and not merely rest its decision on one single point.
In the facts and circumstances of the case, as the matter is being remitted back to the High Court, costs of this appeal will abide by the result of the High Court decision.
| The appellant made an application on the 15th November, 1978 under chapter VII of the Land Acquisition Act, 1894 for the acquisition of the lands earlier purchased by Respondent No. 1 herein.
The Government issued on the 29th October, 1980 a notification for acquisition of the said land under section 4 of the Act which was published in the Government Gazette dated 30th October, 1980.
Respondent No. 1 objected to the said notification.
Subsequently the Government bled an enquiry under section SA of the Act and, after submitting a report in March 1981, on or about 10th April 1981, the Deputy Collector issued notice to Respondent No. I that enquiry under rule 4 of the Land Acquisition (Companies) Rules 1963 would be held on the 15th April, 1981 to which the latter filed his objections on merit by his letter dated 4th May, 1981.
On 26th October, 1983, agreement was executed between the government and the acquiring company.
A notification under section 6 that the land in question was needed for the purpose of development of tourism, was published in the Government Gazette dated 27th October 1983.
Respondent No. 1, thereupon, filed a petition under Article 226 of the Constitution challenging the said notifications under sections 4 and 6 of the Land Acquisition Act.
The High Court of Bombay (Goa Bench) quashed the said notifications on the first ground alone namely, the notifications were bad for prior non compliance with Rule 4 of the Land Acquisition (Companies) Rules 1963, and noted that it was not necessary to deal with other grounds of challenge.
Hence the appeal by special leave 938 Allowing the appeal and remitting the case back, the Court ^ HELD: 1.
ON a correct interpretation of the scheme of the Land Acquisition Act, it is not necessary that enquiry under rule 4 of the Land Acquisition (Companies) Rules, 1963 must in all cases precede issuance of the notification under section 4 of the Act.
In an appropriate cash if it is possible, enquiry under rule 4(1) may be held before the issuance of the notification under section 4.
But it is not a mandatory requirement that it must precede the issuance of the notification under the Act.
[949B C] RAJA Ram Jaiswal vs Collector, Allahabad & Another, (1980) 2 ILR Allahabad 269; conclusion approved.
Babu Barkya Thakur vs State of Bombay (now Maharashtra), ; at 1206, followed.
Abdul Husein Tayabali & Ors.
vs State of Gujrat l Ors.
, [1968] I SCR 597.
explained and distinguished.
A consepectus of the provisions of the Land Acquisition Act as well as Land Acquisition (Companies) Rules 1963 indicate that there are two purposes of acquisition of land one being for the public purpose and other for the purpose of a company, In case of acquisition for company, the appropriate Government has to satisfy itself that such acquisition is needed and would be useful also for public need.
[943E F] 2.2 Land Acquisition proceedings begin with the publication of the preliminary notification under section 4 of the Land Acquisition Act, 1894.
When the acquisition is for a company the Purpose has to be investigated under section SA (by hearing objections and disposing them) or under section 40 necessarily after the notification under section 4 of the Act.
Under section 6 if the Government is satisfied after considering the report, if any, made under section 5A that any particular land was needed for public purposes or for a company a declaration shall be made to that effect subject to certain conditions stipulated therein.
Sub rule 4 of Rule 4 of the Land Acquisition (Companies) Rules 1963 provides that no declaration shall be made by the Appropriate Government under section 6 of the Act unless (i) the appropriate government had consulted the committee and had considered the report submitted under the said rule and the report if any, submitted under section SA of the Act and (ii) further any agreement under section 41 of the Act executed by the Company.
To complete the acquisition proceedings notification under section 6 of the Act is required.
Section 6 of the Act enjoins that the government has to be satisfied that the land is needed for public purpose or for a company and after declaration is made the acquisition is complete after the award is made and possession of the land is taken when the land vests under section 16 in the government free from encumbrances.
Section 4 939 does not require as such this satisfaction of the government.
The government might initiate acquisition proceedings "if it appears" to the government that land is needed either for public purpose or for a company.
That might appear to the government by enquiry aliunde or on a petition or application made by any company.
Whether the need is proper or genuine that can be found by the government subsequently after notice under section 4 of the Act.
An enquiry under rule 4 might be made before issuance of the notification under section 4 of the Act but it is not a sine qua non for the issuance of the notification under section 4 to have an enquiry under rule 4 of the Rules.
The scheme and the language of the Act and the Rules do not indicate that.
Therefore, section 4 as such does not require government to be satisfied, it is sufficient if it appears to the government that land is needed either for public purpose or for a complain.
It may so appear to the Government either by independent inquiry or from reports and information received by the government or even from an application by the company concerned.
[943H; 944A F] 2.3 It is undoubtedly true that a notification under section 4 can be issued after enquiry under rule 4.
But under the scheme of the Act, the converse is not correct, i.e., the enquiry under rule 4 must always precede notification under section 4 of the Act, though enquiry under rule 4(1) must precede action under section 6 of the Act.
Further certain matters which are required to be done under rule 4 cannot be done before because the officer or the person authorised by him would have no authority, unless notification under section 4 is issued.
[945G H; 946A] Rule 4(4) does not prohibit or forbid issuance of notification under section 4 of the Act unless rule 4(1) has been compiled with.
If it is now insisted that there should be no issuance of notification under section 4 of the Act before enquiry under rule 4 then this sub rule has to be re written by stating that no notification under section 4 and no declaration under section 6 issued or made as the case may be unless the requirements mentioned in clauses (i) and (ii) of sub rule (4) of rule 4 have been complied with.
On the contrary, it will be contrary to the scheme and purpose of the acquisition proceedings because the compensation for the acquisition has to be fixed under section 23 of the Act keeping the market rate as or the date of F the issuance of the notification under section 4 in view.
If it be that the enquiry as contemplated by rule 4 should also precede issuance of notice under section 4 of the Act then that may upset the fixation of the market value and escalation of price with the passage of time between publication of the notification under sections 4 and 6 would make acquisition difficult.
[945A.D] 3.
In a matter of this nature where several Contentions factual and legal are urged and when there is scope of an appeal from the decisions Of the Court, it is desirable as was observed by the Privy Council long time ago to avoid delay and protraction of litigation that the court should, when dealing with any matter dispose of all the points and not merely rest its decision on one single point.
[950A B] 940
|
minal Appeal No. 667 of 1980.
From the Judgment and Order dated 31.7.1980 of the Allahabad High Court in Crl.
Appln.
No. 5296 of 1979.
M.V. Goswami for the Appellants.
Vishnu Mathur, A.S. Pundir and R.C. Verma for the Respondents.
The Judgment of the Court was delivered by SAWANT, J.
The admitted facts in the present case are as follows.
The suit property consists of house No. 336 of village Khonda, District Mathura.
The dispute with regard to the possession of the property arose between the appellants and the respondent Ramshri.
She filed an application under Section 145 of Criminal Procedure Code [Code] before the Sub Divisional Magistrate, Sadabad in which she claimed ownership of the suit property.
On 31st May, 1976, the learned Magistrate passed a preliminary order under Section 145 of the Code and thereafter on 22nd April, 1977 made an order of attachment under Section 146 directing that the attachment would continue till the competent civil court determined the rights of the parties with regard to the said property.
Against this order, a Revision being Cr.
Revision No. 27/1977 was filed by the appellants before the Sessions Judge who by his interim order dated 23rd April, 1977 stayed operation of the learned Magistrate 's order.
However, before the interim stay order could be communicated, the attachment had already been effected.
The learned Sessions Judge, therefore, again, by another interim dated 26th April, 1977 directed the police to restore the possession the property to the appellants from whom allegedly the possession of the property was taken.
The possession was restored to the appellants on 28th April, 1977.
The said Revision application was dismissed on 18th August, 1977.
Though, on account of the dismissal of the Revision, the order of attachment passed by the Magistrate revived, the learned Magistrate passed a fresh order dated 31st January, 1978 under Section 146 attaching the property in dispute.
Against the said order, once more a revision being Cr.
19/1978 was preferred by the appellants to the 5 Sessions Judge who on 2nd February, 1978 passed an order staying the fresh order of attachment passed by the Magistrate.
Thereafter, the appellants filed a suit for permanent injunction against the 1st Respondent and her husband, and in that claimed an interim injunction against them.
The trial court dismissed the application for interim injunction.
Against the order of dismissal, the appellant filed an appeal to the District Court, and the appellate court by its order dated 18th May, 1978, allowed the appeal and issued an interim injunction against 1st respondent and her husband.
Thereafter Cr.
Revision No. 19/1978 preferred by the appellant before the Sessions Judge was dismissed on 15th June, 1978 also on the ground that the civil suit was preferred by the Appellant.
Again, although the order of attachment stood revived and the order of interim injunction by the Civil Court still continued, the Magistrate on 25th July, 1978 passed another order attaching the property.
Against this third order of attachment passed by the Magistrate, a revision was filed by the Appellants before the Sessions Judge and the Sessions Judge by his order dated 26th July, 1978 stayed the order of attachment issued on 25th July, 1978, upto 10th August, 1978.
On 26th July, 1978, the appellant filed an application before the Magistrate for withdrawal of attachment on the ground that there was no apprehension of a breach of the peace.
On this application, on 17th October 1978, the Magistrate ordered withdrawal of attachment.
Against this order, the 1st Respondent filed revision being Cr.
180/78 before the Sessions Judge who dismissed the same on 14th May, 1979.
Respondent No. 1 thereafter, preferred an application under Section 482 of the Code before the High Court for quashing the order withdrawing the attachment and directing the attachment to continue.
The High Court by the impugned order took the view that it was not open to the learned Magistrate to withdraw the attachment till the competent Court had decided the matter finally and restored the attachment.
On these facts, two questions arise in this appeal viz. whether the High Court could entertain the second revision application in exercise of its inherent powers under Section 482 of the Code and whether the interpretation placed by the High Court on the provisions of Sections 145 and 146 of the Code is correct.
There is no doubt that the learned Magistrate had committed an error in passing the subsequent orders of attachment when the first attachment was never finally vacated and had revived the moment the revision application filed against it was dismissed by the learned Sessions Judge.
It appears that none of the parties including the Sessions Judge realised this error on the part of the Magistrate.
The learned Sessions Judge had also committed a patent mistake in entertaining revision application against the fresh orders of attachment and granting interim stays when he had dismissed revision application against the order of attachment earlier.
Let that be as it is.
The question that falls for our consideration now is whether the High Court could have utilised the powers under Section 482 of the Code and entertained a second revision application at the instance of the 1st respondent.
Admittedly the 1st respondent had preferred a Criminal Application being Cr.
180/78 to the Sessions Court against the order passed by the Magistrate on 17th October, 1978 withdrawing the attachment.
The Sessions Judge had dismissed the said application on 14th May, 1979.
Section 397 (3) bars a second revision application by the same party.
It is now well settled that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code.
Hence the High Court had clearly erred in entertaining the second revision at the instance of 1st respondent.
On this short ground itself, the impugned order of the High Court can be set aside.
However, since the High Court has also proceeded to interpret the provisions of Sections 145 and 146 of the Code, it has become necessary to set things right on that score as well.
We are afraid that the High Court has erred in holding that the order passed by the Sub Divisional Magistrate on 17th October, 1978 [17.9.78 (sic.)] withdrawing attachment, was without jurisdiction.
The provisions of Section 146 of the Code are clear in this respect.
The Section reads as follows: "146.
Power to attach subject of dispute and to appoint receiver.
(1) If the Magistrate at any time after making the order under sub section (1) of Section 145 considers the case to be one of emergency, or if he decides that none of the parties was then in such possession as is referred to in Section 145, or if he is unable to satisfy himself as to which of them was then in such 7 possession of the subject of dispute, he may attach the subject of dispute until a competent Court has determined the rights of the parties thereto with regard to the person entitled to the possession thereof: Provided that such Magistrate may withdraw the attachment at any time if he is satisfied that there is no longer any likelihood of breach of the peace with regard to the subject of dispute.
(2) When the Magistrate attaches the subject of dispute, he may, if no receiver in relation to such subject of dispute has been appointed by any Civil Court, make such arrangements as he considers proper for looking after the property or if he thinks fit, appoint a receiver thereof, who shall have, subject to the control of the Magistrate, all the powers of a receiver appointed under the Code of Civil Procedure, 1908 (5 of 1908): Provided that in the event of a receiver being subsequently appointed in relation to the subject of dispute by any Civil Court, the Magistrate [a] shall order the receiver appointed by him to hand over the possession of the subject of dispute to the receiver appointed by the Civil Court and shall thereafter discharge the receiver appointed by him: [b] may make such other incidental or consequential orders as may be just.
" It is obvious from sub section (1) of Section 146, that the Magistrate is given power to attach the subject of dispute "until the competent Court has determined the rights of the parties thereto with regard to the person entitled to the possession there or.
The determination by a competent Court of the rights of the parties spoken of there has not necessarily to be a final determination.
The determination may be even tentative at the interim stage when the competent Court passes an order of interim injunction or appoints a receiver in respect of the subject matter of the dispute pending the final decision in the suit.
The moment the competent Court does so, even at the interim stage, the order of attachment passed by the Magistrate has to come to an end.
Otherwise, there will be inconsistency 8 between the order passed by the civil court and the order of attachment passed by the Magistrate.
The proviso to sub section (1) of Section 146 itself takes cognizance of such a situation when it states that "Magistrate may withdraw the attachment at any time if he is satisfied that there is no longer any likelihood of any breach of peace with regard to the subject of dispute '.
When a civil Court passes an order of injunction or receiver, it is the civil Court which is seized of the matter and any breach of its order can be punished by it according to law.
Hence on the passing of the interlocutory order by the civil Court, it can legitimately be said that there is no longer any likelihood of the breach of the peace with regard to the subject of dispute.
The fact that the Magistrate can withdraw the order of attachment passed by him even during the pendency of the dispute in the civil Court is made further clear by the provisions of sub section (2) of Section 146.
When the civil Court appoints a receiver, the order of attachment passed by the Magistrate necessarily gives way to the order of the Civil Court appointing the receiver.
It is only when the civil Court does not appoint the receiver that the Magistrate may make arrangements for looking after the property or even appoint a receiver himself However, even when such a receiver is appointed and the civil Court subsequently appoints a receiver of its own, the Magistrate has to order the receiver appointed by him to hand over the possession of the subject in dispute to the receiver appointed by the civil Court and discharge the receiver appointed by him.
He has also to pass such other incidental or consequential orders as he thinks just.
Such order may include an order of withdrawal of the attachment in view of the seizure of the matter by the civil Court and the consequent want of apprehension of breach of the peace.
It is, therefore, not correct to say as held by the High Court that the property continues to remain under attachment of the Magisterial order till the rights of the parties are decided finally by the competent Court of law.
That appears to be the purport of the High Court 's order since in the present case the appellate civil Court has already passed an order of injunction against the 1st Respondent and her husband by virtue of which the possession continues to be with the appellants.
In this view of the matter, the Magistrate had not erred in withdrawing the attachment by his order dated 17th October, 1978.
For both these reasons, the appeal is allowed and the impugned order of the High Court is set aside.
It is necessary to add that the suit as filed by the Appellants is only for a permanent injunction.
The appellants must amend the plaint for claiming also the declaration of their title to the property in question.
N.P.V. Apppeal allowed.
| There was a dispute between the appellants and the first respondent, regarding the possession of a house.
On an application filed by the respondent under Section 145 of Criminal Procedure Code, 1973, before the Sub Divisional Magistrate, claiming ownership of the suit property, the Magistrate passed a preliminary order under Section 145 of the Code, and thereafter, made an order of attachment under Section 146 directing that the attachment would continue till the competent civil court determined the rights of the parties.
On a revision riled by the appellants, the Sessions Judge granted an interim stay of Magistrate 's order.
Subsequently, the Revision application was dismissed.
Ile Magistrate passed a fresh attachment order under Section 146.
Once more in revision the Sessions Judge passed an order staying the fresh order of attachment.
Thereafter, the appellants riled a suit for permanent injuction and also an interim injunction.
The trial court dismissed the application for interim injunction.
On appeal, the District Court issued an interim injunction against 1st respondent and her husband.
Subsequently, the 2 Criminal Revision preferred by the appellant was dismissed by the Sessions Judge also on the ground that the civil suit was preferred by the appellant.
Once again, the Magistrate passed another order attaching the property but this third order of attachment was stayed by the Sessions Judge for a period of 15 days.
Thereafter, on an application by the appellants for withdrawal of attachment on the ground that there was no apprehension of a breach of the peace, the Magistrate order withdrawal of attachment.
The Revision filed by the 1st respondent against the Magistrate 's order was dismissed by the Sessions Judge.
On an application under Section 482 of the Code filed by Respondent No.1 for quashing the order withdrawing the attachment and for directing the attachment to continue, the High Court held that it was not open to the Magistrate to withdraw the attachment till the competent court had decided the matter finally and restored the attachment.
Hence the appeal.
Allowing the appeal, this Court HELD : 1.1.
The determination by a competent court of the rights of the parties spoken in Section 146(1) of the Criminal Procedure Code, 1973, has not necessarily to be a final determination.
The determination may be even tentative at the interim stage when the competent court passes an order of interim injunction or appoints a receiver in respect of the subject matter of the dispute pending the final decision in the suit.
The moment the competent court does so, even at the interim stage, the order of attachment passed by the Magistrate has to come to an end.
Otherwise, there will be inconsistency between the order passed by the civil court and the order of attachment passed by the Magistrate.
The proviso to sub section (1) of Section 146 itself takes cognizance of such a situation.
When a civil court passes an order of injunction of receiver, it is the civil court which is seized of the matter and any breach of its order can be punished by it according to law.
Hence, on the passing of the interlocutory order by the civil court, there is no longer any likelihood of the breach of the peace with regard to the subject of dispute.
Under Section 146(2) the Magistrate can withdraw the order of attachment passed by him even during the pendency of the dispute in the civil court.
When the civil court appoints a receiver, the order of attachment passed by the Magistrate, necessarily 3 gives way to the order of the civil court appointing the receiver.
It is only when the civil court does not appoint the receiver that the Magistrate may make arrangements for looking after the property or even appoint a receiver himself However, even when such a receiver is appointed and the civil court subsequently appoints a receiver of its own, the Magistrate has to order the receiver appointed by him to hand over the possession of the subject in dispute to the receiver appointed by the civil court and discharge the receiver appointed by him.
He has also to pass such other incidental or consequential orders as he thinks just.
Such order may include an order of withdrawal of the attachment, in view of the seizure of the matter by the civil court and the consequent want of apprehension of breach of the peace.
It is, therefore, not correct to say that the property continues to remain under attachment of the Magisterial order till the rights of the parties are decided finally by the competent court of law.
[7G H, 8A C, D F] 1,2.
In tic present case, the Appellate Civil Court has already passed an order of injunction against the 1st respondent and her husband by virtue of which the possession continues to be with the appellants.
Therefore, the Magistrate had not erred in withdrawing the attachment.
The High Court has erred in holding that the order passed by the Sub Divisional Magistrate withdrawing attachment was without jurisdiction.
[8G H, 6E] 2.1.
Section 397 (3) bars a second revision application by the same party.
It is now well settled that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code.
[6D] 2.2.
In the instant case, admittedly, the 1st respondent had preferred a Criminal Application to the Sessions Court against the order passed by the Magistrate, withdrawing the attachment.
The Sessions Judge had dismissed the said application.
Hence, the High Court had clearly erred in entertaining the second revision at the instance of 1st respondent.
[6C,E] 3.
The Magistrate had committed an error in passing the subsequent orders of attachment when the first attachment was never finally vacated and had revived the moment the revision application flied against It was dismissed by the Sessions Judge.
None of the parties, including the Sessions Judge, realised this error on the part of the Magistrate.
The Sessions Judge had also committed a patent mistake in entertaining 4 revision application against the fresh orders of attachment and granting interim stays when he had dismissed revision application against the order of attachment earlier.
[6A B]
|
Civil Appeal No. 212 of 1959.
Appeal from the judgment and decree dated March 1, 1957, of the calcutta High Court in appeal from original Decree No. 71 of 1954.
G. section Pathak and Naunit Lal, for the appellants.
A. V. Viswanatha Sastri, section N. Andley, Rameshwar Nath and P. L. Vohra, for the respondent.
October 13.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This appeal by a certificate granted by the Calcutta High Court arises out of a suit filed by the three appellants against the respondent to recover Rs. 83,640/ .
The three appellants are respectively the Firm Radhakrishan Shivdutt Rai which carries on business at Banaras and RamKumar Lal for himself and as karta of his joint family as well as Madan Gopal for himself and as karta of his joint family, the latter two being 83 the partners in the first mentioned Firm Radhakrishna Sivadutta Rai; for convenience we will refer to the partnership firm hereafter as the appellant.
The respondent Tayeballi Dawoodbhai is a partnership firm which carries on business at Calcutta.
The appellant 's case was that the appellant and the respondent had entered into a contract in the first instance on December 18, 1980, through brokers named T. N. Mehrotra & co.
,Calcutta.
This contract was later confirmed by two letters written respectively on January 3 and 15, 1951, by the appellant to the respondent and replied to by the. respondent.
By this contract the respondent agreed to sell 1000 bales of Banaras Hemp particulars of which were set out in the plaint.
According to the appellant, by a letter written on March 14, 1951, the appellant in part performance of the said contract accepted delivery of 110 bales of Banaras Hemp No. 1 and 50 bales of Banaras Hemp No. 2; this delivery was Made by the respondent to L. N. Poddar & Co., who acted as the agent of the appellant and Paid the price of the said 160 bales.
In they transaction the respondent realised Rs. 3,840 from the said I,.
N. Poddar &; Co. in excess of the actual price of the goods delivered to the said company.
Inspite of the repeated demands made by the appellant the respondent failed to deliver the balance of the goods contracted for and thus committed breach of the contract.
That is how the appellant claimed Rs.(9,80(j as difference between the market rate on March 31, 1951, and the contract rate of the balance deliverable under the contract in suit.
This amount was claimed as damages for the breach of contract.
In addition an amount of Rs. 3,840 was claimed as having been paid in excess of tho value of 160 bales delivered to L. N. Poddar & Co., on behalf of the appellant.
This claim was resisted by the respondent on several grounds.
The principal contention urged by the respondent, however, was that in relation to 84 the contract in suit the appellant had acted as agent for its disclosed principal Messrs Khaitan and Sons Ltd., and as such it was not entitled to bring the present suit.
The respondent further alleged that the said disclosed principal Messrs. Khaitan and J. Sons had settled all their rights and loams under the suit contract with their agent and so the present claim for damages was not maintainable.
In regard to the claim for Rs. 3,840 tho respondent pleaded that the appellant 's case was untrue.
Several other pleas were also raised but with the said pleas we are not concerned in the present appeal.
Mr. Justice Bose who tried the suit framed twelve issues.
On the principal point in controversy between the parties the learned judge found that the appellant had entered into the contract with the respondent on its own account and not on account of the disclosed principal as alleged by the respondent.
According to the learned judge the reference to Messrs. Khaitan and Sons Ltd., made in the bought and sold notes on which the respondent 's plea was based had been inserted by the brokers "by mistake or due to some misconception.
" The learned judge also found that the respondent had committed a breach of the contract as alleged by the appellant.
The appellant 's case with regard to the excess payment of Rs. 3,840 made by L. N. Poddar & co. was, however, held not to have been proved.
In the result a decree was passed in favour of the appellant for Rs. 79,800 along with interest as stipulated in the decree.
Against this decree the respondent preferred an appeal; and the main point which was urged on its behalf was directed against the finding of the trial judge that the contract had been entered into by the appellant for itself and not on account of the disclosed principal.
This contention was based in the Court of Appeal, as in the trial court, on the bought and sold notes; and it was urged that 85 the bought and sold notes clearly showed that the appellant had entered into the contract on account of the disclosed principal Messrs. Khaitan and Sons Ltd.
Before the Appellate Court the respondent 's case was that the said bought and sold notes constituted the terms.
Of the contract and no other evidence was relevant and admissible in order to determine the said terms.
Das Gupta, J., upheld this.
In his opinion the bought and sold notes issued by the brokers Constituted the sole basis for the terms.
Of the contract and the two letters subsequently written on January 3 and 15, 1951, were inadmissible and irrelevant for the purpose of determining the said terms of the contract.
Tho learned judge, however, considered tho matter also on the alternative basis.
that the said letters could be considered for ascertaining the terms.
Of the contract and came to the conclusion that can reading the said letters and the bought and sold notes together the result was the same, namely, that the contract had been entered into by the appellant on behalf of the disclosed principal.
Bachawat, J., differed from Das Gupta, J., on the question about the relevance and admissibility of the two subsequent letters.
According to him the two bought and sold notes.
and the two letters between them constituted the terms of the contract.
He was inclined to take the view that the letters could not be regarded as inadmissible or irrelevant.
Reading the four documents together the learned judge.
however, agreed with the conclusion alternatively recorded by Das Gupta, J., and held that the four documents supported the respondent 's plea that the appellant had entered into the contract on behalf of the disclosed principal.
Both the learned judges agreed in holding that there was no evidence to support the appellants plea that the reference to the principal made in the bought and sold notes was a result of any mistake.
On these findings the decree passed by the trial court was reversed and the appellant 's suit Was ordered to be dismissed.
86 In regard to the costs, however, the Appellante Could took the view that the point raised before the Appellate Court about the effect of the bought and field notes had not been specifically mooted before the trial court and that several other pleas raised by the respondent were found by the trial court to be false and so the proper older as to costs would be that each party should bear its costs throughout.
After this judgement was delivered the appellant applied for and obtained a certificate from the High Court and it is with the said certificate that the present appeal has been brought before this Court.
On its behalf Mr. Pathak has strenuously contended that the Appellate Court was in error in coming to the conclusion that the contracts in suit had been entered into by the appellant on behalf of the disclosed principal Messrs. Khaitan & Sons Ltd., Banaras.
For the purpose of deciding this point we propose to assume in favour of the appellant that the terms of the contract may be gathered from the two bought and sold notes on which the respondent relies as well as the two subsequent letters on which the appellant relies.
It would be convenient at this stage to set out the said documents.
We will first refer to the brokers ' notes and the confirmation slips in respect thereon.
This is how the brokers ' notes read: "T. N. Mehrotra and Co. No. 377 Hemp, Oil and Oil Seedh Pollock House Brokers.
(3rd Floor) 28 A, Pollock Street.
Any dispute in connection with this deal is subject to Arbitration by Bengal Chamber of Commerce.
Calcutta, 18 12 1950.
87 Radhakrishna Sivadutta Rai, A/c Khetan and Sons Ltd., Shewpur, Banaras.
Dear Sirs, We confirm having purchased on your account and risk under noted goods from Messrs. Tayeballi Dawoodbhai, 20, Zakaria Street, Calcutta.
Commodity: 500 (five hundred) bales of Banaras No. 1 only with Agmark Jan/March '51 at K. P. Docks @ Rs. 165 per bale of 400 lbs.
each on receipt of the goods.
Yours faithfully, For T. N. Mehrotra and Company, Sd.
T. N. Mehrotra.
Sales Tax number should be furnished by the Buyers otherwise to be charged." "T. N. Mehrotra and Co. No. 378 Hemp, oil and oil Seeds Pollock House Brokers (3rd Floor) Bank 4718 29 A Pollock street Tel: B.K. 1914 Calcutta, 18 12 50.
Any dispute in connection with this deal is subject to arbitration by Bengal Chamber of Commerce.
To: M/s. Tayeballi Dawoodbhai, 20, Zakaria Street, Calcutta.
Dear Sirs, We confirm having sold on your account and risk, the under noted goods, to M/s. Radakrishan Shiv Dutt Rai with A. G. Mark.
A/c Khetan and Sons Ltd., Shewpur, Banaras.
Commodity: (500) Five hundred Bales of Banaras No. 1 only with A. G. Mark.
88 Delivery: Jan./March 1951 at K. P. Dock.
Price: @ Rs. 165 per bale of 400 Ibs.
Terms of Payment on receipt of goods.
Brokerage 0 8 O per bale.
Sales Tax number should be finished by the buyer otherwise to be charged.
Yours faithfully, For T. N. Mehrotra & Co., Sd.
T. N. Mehrotra "To M/s. T. N. Mehrotra & Co., Calcutta.
We acknowledge receipt of your purchase confirmation memo No. 377 dated 18 12 50.
Signature: Gopal Lal Gupta For Radhakrishna Shivadutta Rai." "To M/s. T. N. Mehrotra & Co., Calcutta.
We acknowledge receipt of your purchase confirmation memo.
No. 378 dated 18 12 50.
Signature: Gopal Lal Gupta For Radhakrishna Sivadutt Rai".
The said confirmation slips were signed by Gopal Lal Gupta for the firm of Radhakrishna Shivdutt Rai.
" After the said notes were sent by the brokers to the respective parties Gopal Lal Gupta on behalf of the appellant wrote a letter to the respondent on January 3, 1951, and on January 15.
1951 the respondent wrote a letter to the appellant.
These letters read at follows: "Messrs. Tayeballi Dawoodbhai, 3 1 51. 20, Zakaria Street, Calcutta.
Dear sirs, We have boughS from you one thousand bales of Banaras Hemp through Messrs. T. N. Mehrotra & Co., 28 A, Pollock Street, Calcutta, on the following terms: 89 1. 500 (Five hundred) bales Banaras No. 1 with agmark @ Rs. 166 (one hundred and sixtyfive) per bale of about 400 lbs.
delivery K. P. Docks during January/March 1951.
2. 500 (Five hundred) bales Banaras No. II with agmark @ Rs. 145 (one hundred and fortyfive) per bale of about 400 lbs.
delivery E. P. Docks during January/March 1951.
Please note and confirm.
Yours faithfully, for Radhakrishna Shivdutt Rai Sd.
Gopal Lal Gupta." "Tayoballi Dawoodbhai 20, Zakaria Street, Registered.
Calcutta 1.
Calcutta, 15th January, 1951.
Messrs. Radhakrishna Shivadutt Rai, Banaras.
Dear Sirs, We confirm having sold to you through Messrs. T. N. Mehrotra & Co., Calcutta, 1000 (one thousand) bales of Banaras Hemp as follows: (i) 500 (Five hundred) bales Banaras Hemp No. I with Agmark at Rs. 165 per bale of about 400 Ibs.
delivery K. P. Docks during January/March 1951.
(ii) 500 (Five hundred) bales Banaras Hemp No. II with Agmark at Rs. 145 per bale of about 400 lbs.
K. P. Docks delivery during January/March 1951.
This confirms your letter of 3rd instant.
Yours faithfully, for Tayeballi Dawoodbhai.
x x Partner.
Copy to Messrs. T. N. Mehrotra & Co., Calcutta, and to Gopinath Mehrotra, Banaras." Mr. Pathak contends that in construing the effect of the relevant documents we should not 90 attach any importance to the reference to Khaitan & Sons made in the bought and sold notes for the simple reason that the said reference is the result of a mistake or misconception on the part of the brokers.
In that connection he contended that the J. finding recorded by the trial court on the issue of mistake should be accepted by us and not the finding made by the/ Appellate court.
We are not impressed by this argument.
In regard to these notes we have the evidence of Trilokinath and Gopinath on behalf of the brokers which negatives the theory of mistake or misconception.
Trilokinath has stated on oath that when he got the offer from the respondent he telephoned to his brother Gopinath who is a broker in respect of hemp of the firm of Sewnath Gopinath and he told him about the offer.
Gopinath then informed Trilokinath that the offer was closed either on the 16th or on the morning of the 17th.
This information was received by Trilokinath from Gopinath on the telephone.
Trilokinath was then asked about the information that his brother gave him, and he stated that his brother told him that the offer which he had communicated to him in respect of 1000 bales at Rs. 165 and.
Rs. 145 had been sold by him to Khaitan Sons & Co., Fibre Ltd. He also added that he received another message from his brother either on the 18th or on the night of the 17th to prepare a contract so that it will be Khaitan & Sons through the appellant; Thus, it is clear that the evidence of Trilokinath, if believed, clearly shows that there could be no mistake or misappreciation on the part of the brokers, when the notes referred to Khaitan & Sons as principal in respect of the transaction.
Gopinath substantially corroborated the evidence given by Trilokinath.
He stated that when he got the offer from his brother Trilokinath he went to Deokinandan who was working for Khaitan & Sons and it was after discussion with Deokinandan thatthe souda was closed as one on behalf of Khaitan & Sons.
Having thus closed this 91 contract with Deokinandan, who represented the principal Khaitan & Sons, Gopinath told Trilokinath to close the offer and asked him to prepare the note showing that the appellant was acting as agent for the disclosed principal Khaitan & Sons.
Reading the evidence of the two brothers who worked as brokers in respect of the transaction in suit it is clear that any possibility of a mistake or misappreciation is wholly excluded.
On behalf of the appellant Gopal Lal Gupta has given evidence.
He attempted to explain away the fact that he did not protest against, or object to, the insertion of the name of Khaitan & Sons in the notes by suggesting that when he signed the confirmation slips after receiving the notes he had not noticed the reference to Khaitan & Sons.
His case was that the purchase had been made by the appellant for itself and not for any other firm, and the suggestion he made was that if he had noticed that the notes had made reference to Khaitan & Sons he would either have insisted upon the said name being delete(l or would not have concluded the contract; but when his statement that he did not notice the reference to Khaitan & Sons was tested in cross examination Gopal Lal was shaken, and he had to admit that when he signed the confirmation slip he may have noticed the reference to Khaitan & Sons but he did not read the document attentively.
He was, however, forced to concede that he had gone through the note before he signed the confirmation slip.
It was under stress of cross examination that Gopal Lal incidentally mentioned that the reference to Khaitan & Sons may have been made by mistake.
It is obvious that Gopal Lal 's evidence which otherwiee suffers from the infirmity that it is full of contradictions cannot be accepted on the question of mistake because his explanation about his conduct in signing the confirmation slips considered by itself is wholly unsatisfactory.
Therefore, in our opinion, the Appellate Court was fully justified in 92 reversing the finding of the trial court on this point and in coming to the conclusion that the reference to Khaitan & Sons which the notes made was no the result of any mistake or misconception In this connection it may be relevant to refer to the attitude adopted by the appellant when the dispute arising between the parties in the present contract had gone before the Bengal Chamber of Commerce for adjudication.
In those proceedings the respondent had raised the same plea that it has raised in the present suit.
It was urged on its behalf that the appellant was not entitled to make ally claim on the contract because it had entered into the contract on behalf of a disclosed principal and on its account.
Apparently that plea appears to have been accepted and the arbitration proceedings therefore ended as being without jurisdiction.
In meeting the plea raised by the respondent it is significant that the appellant thought it fit to urge that the respondent 's allegation that the appellant was the agent of one Khaitan & Co. was not correct and that there is no firm or company known as Khaitan & Co. Or Khaitan & Sons, Ltd., or Khaitan & Sons in Shewpur, Banaras.
The appellant therefore pleaded that the jurisdiction of the Chamber to entertain the case could not be disputed on that score.
The appellant also alleged that the reference to Khaitan &; Sons was superfluous and no importance should be attached to the said words.
In the suit itself a faint attempt was no doubt made to challenge the identity of the firm Khaitan Sc Sons, but Mr. Pathak has very fairly not attempted to raise that point before us.
It would thus be noticed that the principal point made by the appellant in the arbitration proceedings before the Chamber in respect of the reference to Khaitan & Sons in the notes was entirely frivolous; no case of mistake appears to have been set out at that state.
Besides, as we have already pointed out, there is no evidence on which a finding of mistake can be reasonably made in favour of the appellant.
Therefore, we 93 must proceed to consider the question about the construction of the relevant documents on the basis that the reference to Khaitan & Sons which the notes make is not the result of any mistake and has been made in the ordinary course of businesss by the brokers.
Let us then consider what the effect of the bought and sold notes is according to the established custom in the mercantile world.
Mr. Viswanatha Sastri, for the respondent, contends that, according to the established commercial usage, if there is no variation or disparity in the bought and sold notes, the bought and sold notes issued by the brokers constitute the terms of the contract between the parties for whom the brokers act.
We are inclined to accept this contention.
The effect of such notes issued by the brokers has been frequently considered by judicial decisions.
As early as 1846 the Privy council had occasion to deal with this question in Cowie vs Remfry (1).
In that case a. C & Co and H.& Co; were merchants at Calcutta.
The latter sold to the former a large quantity of indigo through the medium of a broker who drew up a sold note addressed to H.& Co. and submitted.
it to H. for his approval.
H. Objected to a particular word appearing in the note whereupon the broker took the sold note to C. and informed him of His objection.
C. then struck his pen through the word objected to by H. placed his initials over the erasure and returned the note to the broker.
The broker then delivered it in that altered form to H. & Co. Next day the broker delivered to C. & Co. a bought note which differed in certain material terms from the sold note.
In an action brought by H. & Co. against C. & Co. for the breach of the contract as contained in the sold note the Supreme Court at Calcutta was of the opinion that the sold note alone formed the contract and so it decreed the plaintiff 's suit.
On appeal by the defendant the Privy Council reversed (1) (1846) 3 M.I.A.448 94 the finding of the Supreme Court and held that the transaction was one of bought and sold notes and Rai held that the circumstances attending C. 's alteration of the sold note and affixing his initials were not sufficient to make that note alone a binding contract.
According to the Privy Council, there being a material variation in the terms of the bought with the sold note they together did not constitute a binding contract.
It would thus be seen that the Judicial Committee was dealing with a case where the bought and sold notes did not tally and so the decision was that where the bought and sold notes do not tally the sold note alone cannot constitute the terms of the contract.
In dealing with this question, however, their Lordships referred to the mercantile custom in regard to the bought and sold notes and observed that "the established usage of dealing in the mercantile world should be held in high respect; the very existence of such usage shows that in practice it has been found useful and beneficial; the presumption is in its favour, and no departure from it is to be inferred from doubtful circumstances".
That is why the Privy Council reached the conclusion that "this must be considered as a transaction in the contemplation of the parties by bought and sold notes, and that, the contract is contained in both of the notes, and not in one;" inevitably there being a material variation between the two notes "the consequence follows, from all legal principles, that no binding contract has been effected".
This decision shows that the mercantile usage of entering into contracts evidenced by the bought and sold notes issued by the brokers was treated by the Privy Council as well recognised.
The next decision to which reference may be usefully made is the case of Sievewright vs Archibald(l).
In that case again there was a variation in the bought and sold notes and the variation was material, and so it was held that there was no (1) ; , 1228, 1229.
95 sufficient memorandum of a contract to satisfy the Statute of Frauds.
In dealing with the question raised for the decision of the Court Lord Campbell, C. J., has made certain general observations which throw considerable light on the genesis of the bought and sold notes and the effect which is ually attributed to the said notes by commercial usage.
"If the bought note case be considered a memorandum of the parol agreement", observed Lord Campbell, C. J., "so may the sold note; and which of them is to prevail ? It seems to me, therefore, that we get back to the same point at which we were when the variance was first objected, and the declaration was amended.
I by no means say that where there are bought and sold notes they must necessarily be the only evidence of the contract; circumstances may be imagined in which they might be used as a memorandum of a parol agreement.
Where there has been an entry of the contract by the broker in his book signed by him, I should hold without hesitation, notwithstanding some dicta, and a supposed ruling of Lord Tenterden in Thornton vs Meux (M. & M. 43), to the contrary, that this entry is the binding contract between tho parties and that a mistake made by him, when sending them a copy of it in the shape of a bought or sold note, would not affect its validity.
Being authorised by the one to sel], and the other to buy, in the terms of the contract, when he has reduced it into writing and signed it as their common agent, it binds them both, according to the Statute of Frauds, as if both had signed it with their own hands; the duty of the broker requires him to do so; and till recent times, this duty was scrupulously performed by every broker.
What are called the bought and sold notes were sent by him to his principals by way of information that he had acted upon their instructions, but not as the actual contract which was to be binding upon them.
This; clearly appears from the practice still followed of sending the bought note to the buyer, and the sold 96 note to the seller; whereas, if these notes had been meant to constitute the contract, the bought note would be put into the hands of the seller, and the sold note into the hands of the buyer, that each might have the engagement of the other party J, and not his own.
But the broker, to save himself trouble, now omits to enter and sign any contract in his book, and still sends the bought and sold notes as before.
If these agree, they are held the constitute a binding contrat; if there be any material variance between them, they are both nullities, and there is no binding contract.
This last proposition, though combated by the plaintiff 's counsel, has been laid down and acted upon in such a long series of oases that I could not venture to contravene it, if I did not assent to it; but, where there is no evidence of the contract unless by the bought and sold notes sent by the broker to the parties, I do not see how there can be a binding contract unless they substantially agree; for contracting parties must consent to the same terms; and where the terms in the two notes differ there can be no reason why faith should be given to the one more than the other".
These observations seem to establish two propositions, first that if the bought and sold notes show a material variation neither of them nor both of them taken together can be re.
lied upon for the purpose of proving the terms of the contract, and second if the bought and sold notes agree they are held to constitute a binding contract.
To the same effect is the observation made by the Privy Council in Ah Shain Shoke vs Moothia Chetty,(l) when Sir Richard Couch observed that "Moothia Chetty, one of the respondents, said in his evidence he did not consider the contract as concluded until bought and sold notes were signed.
He was right in this.
They were the only evidence of the contract.
" It is in the light of this legal position that we must consider the effect of the bought and sold (1) (1899) L. R. 27 I.A. 30 97 notes in the present case.
The notes referred to the appellant and added "A/C Khaitan & Sons Ltd." There is no disparity in the notes at all; and so the two notes can be safely taken to evidence the terms of the contract.
When along with the name of the appellant the notes specifically refer to a "Khaitan & Sons Ltd." with the preceding words "A/c ' ', there can be no doubt that the appellant is shown by the notes to be acting on account of the disclosed principal.
The appellant realised that the effect of the reference to Khaitan & Sons in the notes would inevitably be to support the plea of the respondent that it was not entitled to bring the present action and so it pleaded that the said reference was the result of a mistake.
Therefore, there can be no doubt that if the material question had to be considered in the light of the bought and sold notes alone the appellant was acting on behalf of the disclosed principal and, on the contract thus entered into, it had no right to sue end can claim no cause of action in its favour.
In Gadd vs Houghton (1), James, L. J. Observed "when a man says that he is making a contract 'on account of ' some one else, it seems to me that he uses the very strongest terms the English language affords to show that he is not binding himself, but is binding his principal".
In that case fruit brokers in Liverpool gave a fruit merchant a sold note which read thus: "We have this day sold to you on account of James Morand &; Co., Valentia, 2000 cases Valentia, oranges, of the brand James Morand & Co., at 12s.
per case free on board", and the brokers signed the note without any addition.
The purchaser brought an action against the broker for non delivery of the oranges.
It was held that the words "on account of James Morand & Co." showed the intention to make the foreign principals and not the brokers liable and that the brokers were not liable upon the contract.
It would be noticed that (1)(1876) 98 in dealing with the question about the brokers liability two points fell to be Gonsidered.
The first point in support of fixing the liability with the brokers was that the brokers had signed this note without describing themselves as acting for the disclosed principals; and the argument was that "when a man signs a contract in his name he is prima facie a contracting party and liable and there must be something very strong on the face of the instrument to show that the liability does not attach to him".
This principle was accepted by the learned judge who decided the case; but it was pointed out that there was another fact which had an overriding effect and that was that the note showed that the brokers were acting for the diclosed principal, and that fact clearly repelled the brokers ' liability in regard to the contract.
In dealing with the argument about the effect of the signature Mellish, L. J. Observed "when the signature comes at the end you apply it to everything which occurs throughout the contract.
If all that appears is that the agent has been making a contract on behalf of some other person, it seems to me to follow of necessity that that other person is the person liable.
This is one of the simplest possible case.
How can the words 'on account of Morand & Co. '. be inserted merely as a description ? The words mean that Morand & Co. are the people who have sold.
It follows that the persons who have signed are merely the brokers and are not liable".
We have referred to there observations made by Mellish, L. J., because as we will presently point out they would be of material assistance in deciding the point which Mr. Pathak has raised on the strength of the two subsequent letters.
Thus, the bought and sold notes in this case unambiguously indicate that the appellant was acting for a disclosed principal and the contracting party was the disclosed principal and no other.
It is, however, urged by Mr. Pathak that before determining the terms of the contract and the 99 parties to it we must read the notes in question along with the two letters.
We have already seen the sequence of the documents.
First, the notes were delivered by the brokers to the appellant and the respondent.
Then the respective parties filed confirmation slips and then followed the two letters exchanged between them.
Mr. Pathak contends that in its letter addressed to the respondent the apellant has definitely stated that 'they ' had bought from the respondent 1000 bales in question.
Mr. Pathak places considerable emphasis on the use of the word "we" without reference to the principal; and he also relies on the fact that the letter is signed by the appellant without describing itself as acting on behalf of the principal already disclosed.
Similarly he relies on the statement of the respondent 's letter to the appellant that the respondent had sold to the appellant "to you" the bales in question.
According to Mr. Pathak the significance of these letters should not be underestimated in determining the parties to the contrat.
There is no doubt, and indeed it is a matter of common ground before us, that the letters do not constitute all the terms of the contract, and all that is urged by Mr. Pathak is that they should be consider along with the notes.
The notes refer to the fact that if any dispute arises in the deal it is subject to the arbitration by the Bengal Chamber of Commerce.
They also refer to the sales tax number which is to be furnished by the buyers, otherwise they would be charged.
These terms undoubtedly constitute terms of the contract; but the argument is that in the correspondence which took place between the parties there is no reference to the principal and indeed the correspondence proceeds on the basis that the appellant acts for itself and not for a disclosed principal, and that Should be borne in mind in deciding whether the appellant was acting for tho disclosed principal or not.
100 In support of his argument that the signature of the appellant to its letter of January 3, 1951, and the use of the word "we" in the first paragraph of he letter indicate that the appellant was acting for hi itself.
Mr. Pathak relies on a decision of the King 'section Bench Division in H. O. Brandt & Co. vs H.N. Morris o. Ltd. (1).
In that case the plaintiffs who carried on business in Manchester gave to the defendants a bought note dated September 3, 1914.
This note was addressed to the defendants and was headed From Messrs. H.O. Brandt & Co., 63 Granby Row Manchester, For and on behalf of Messrs. Sayles Bleacheries, Salesville, Rhode, Island, U. section A.".
The note stated "we have this day bought from you 60 tone pure an line oil" and it was signed "H. O. Brandt & Co.".
The plaintiffs sued for non delivery of the oil.
Their claim was resisted on the ground that they had entered into the contract on behalf of a disclosed principal and therefore were not entitled to be sued.
It was held by Viscount Reading, C. J., and Scranton, L. J., Neville, J., dissenting, that the plaintiffs were the contracting parties and were entitled to sue upon the contract.
The majority decision was based on three grounds.
The first ground was that the plaintiffs had signed the note without describing themselves as acting on behalf of the principal and so it was held following the language used by Mellish, L. J., in the case of Gadd (2) that prima facie when a man signs a document in his own name and states therein "I have this day bought from you" he is the person liable on the contract.
The second consideration was that the reference to the foreign principal was made in the note in order to declare the destination of the goods.
There wax evidence adduced in the case to show that during wartime the destination of goods intended for export had to be made known.
Therefore the reference to the foreign principal was treated as having been made for the purpose of meeting the said (1) (2) (1876)1 exhibit D. 357.
101 requirement; and the third circumstance was that the plaintiff 's statement at the head of the note that they were acting for and on behalf of a foreign principal could not get rid of the prima facie presumption that a person signing a contract in his own name is personally liable on it.
It would thus be seen that the rule of construction which prescribes that if a person signs a contract prima facie he is the contracting party prevailed in that case because the reference to the disclosed principal was otherwise explained as serving another purpose altogether.
The said rule of construction prevailed also for the additional reason that the plaintiffs were acting for a foreign principal.
It would be remembered that 8. 230 of the Indian Contract Act provides that in the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.
There are, however, three cases specified in the section where such a contract would be presumed to exist; one of these cases is where a contract is made by an agent for sale or purchase of goods for a merchant resident abroad.
In other words, under section 230 if an agent enters into a contract for a disclosed foreign principal the main provision of section 230 will not apply because there would be a presumption that there is a contract to the contrary under which the agent would be personally bound by the contract notwithstanding the fact that he has entered into it on behalf of a foreign principal.
Therefore, we are not prepared to hold that the decision in the case of H. C. Brandt & Co. (1) lays down an unqualified rule of construction on which the appellant can rely.
In fact, it may be pointed out that Neville, J., who dissented from the majority view, has significantly observed that "I rather gaudier that I should not have found myself in isolation on this point were it not for the fact that during the war there is an obligation to disclose the destination (1) [1917] 2 K.B.784.
102 of the goods".
this observation shows that reference to the disclosed principal was not given its full effect in considering the question about the liability of the agent because it was held by the majority decision that the said reference was primarily, if not exclusively, made for the purposes of disclosing the destination of the goods.
In support of his argument that the relevant recitals in the two letters show that the contract had been entered into by the appellant on its own behalf Mr. Pathak has also referred us to the statement of the law made by Bowstead on "Agency".
"The question whether the agent is to be deemed to have contracted personally," it is observed, "in the ease of contract in writing other than a bill of exchange, promissory note, or cheque, depends upon the intention of the parties, as appearing from the terms of the written agreement as a whole, the construction whereof is a matter of a law for the Court (a) if the contract be signed by the agent in his own name without qualification, he is deemed to have contracted personally, unless a contrary intention plainly appear from other portions of the document, (b) if the agent add words to his signature, indicating that he signs as an agent, or for or on behalf of a principal, he is deemed not to have contracted personally, unless it plainly appears from other portions of the document, that, notwithstanding such qualified signature, he intended to bind himself.
" In conclusion it is added that "effect should be given to every word used and none should be rejected unless it is apparent that they have been introduce per incuriam" (P. 266, article 116).
These observations do not carry the appellant 's case very for because all that they show is that in determining the question as to whether the agent has entered into the contract on behalf of the principal or not the way he has signed the document has to be considered along with the other recitals made in the relevant documents.
103 What then would be the effect of the relevant recitals in the letter on which Mr. Pathak relies? In this connection it is necessary to recall that we are reading these letters along with the bought and sold notes, and that the bought and sold notes have unequivocally and clearly indicated that the appellant was acting on behalf and on account of the disclosed principal Khaitan & Sons.
If we read the letters in the light of the bought and sold notes it would be clear that the signature of the appellant will not have much significance, nor would the use of the word "we" by the appellant or "you" by the respondent make any difference.
Parties knew that the appellant was acting on behalf of the disclosed principal.
It is not suggested that in such a case every time the agent has to sign expressly stating that he is acting on behalf of the disclosed principal.
Therefore, if the appellant was acting for the disclosed principal the fact that he did not add the relevant description to his signature, or used the word "we" in the operative portion of the letter would not materially alter the fact spoken to by the notes that the appellant was acting on behalf of the disclosed principal.
It cannot be suggested that these letters intended to alter the position disclosed by the notes.
The letters, like the confirmation slips, are and must be, presumed to be consistent with the notes; and so it would be unreasonable to attach undue importance to the signature and to the use of the relevant words "we" and "you" on which reliance has been placed.
In our opinion, therefore, the appellate Court was right in holding that even if the bought and sold notes are read along with the confirmation slips and the two letters of January 3, 1961, and January 15, 1951, the conclusion is inescapable that the appellant entered into the contract on behalf of the disclosed principal Khaitan & Sons Ltd. If that be so, it follows as a matter of law that the appellant is not entitled to bring the present suit.
104 Mr. Pathak faintly attempted to argue in the alternative that even if the appellant was acting on behalf of the disclosed principal it would be entitled to sue because from the subsequent conduct of the parties a contract to the contrary could be reasonably inferred.
We have, however, not allowed Mr. Pathak to argue this point.
It was conceded by the appellant before the Appellate Court that if it was held that the plaintiff firm was acting as agent for Khaitan & Sons Ltd., the suit was not maintainable.
This concession was made in view of the provisions of section 236 of the Contract Act.
Besides, the alternative plea which Mr. Pathak wanted to raise does not appear to have been expressly pleaded or considered in the trial court.
In the result the appeal fails and is dismmissed.
In the circumstances of this case we direct that the parties should bear their own costs in this Court.
| Permanency of tenure does not necessarily imply both fixity of rent and fixity of occupation and the fact of enhancement of rent does not necessarily militate against the tenancy being a permanent one.
When, therefore, in a previous suit the only question was whether the jama could be increased and the jama was increased: Held, that this decision did not operate as res judicata on the question of permanency of the tenure in a subsequent suit for ejectment.
Shankar Rao vs Sambhu Wallad ; Jogendra Krishna Banerji vs Subashini Dassi , Probhas Chandra Mallick vs Debendra Nath Das (1939) 43 C.W.N.828, relied on.
Mere possession for generations at a uniform rent, or construction of permanent structures by itself may not be conclusive proof of a permanent right but the cumulative affect of such facts coupled with other facts may lead to the inference of a permanent 931 tenancy Where it was not known how the earliest known tenant acquired the tenancy or what the nature of the tenancy was, the tenancy bad passed from one person to another by inheritance or by will or by transfer inter vivos, in the deeds of transfer the transferee was given the right to enjoy from generation to generation for ever, pucka structures and tanks had been constructed, and though there was an enhancement of rent in 1860, the rent bad not been increased since then: Held, that all these circumstances put together irresistibly led to the conclusion of a permanency of the tenure.
Probhas Chandra Mallik vs Debendra Nath Das (1939) 43 O.W.N. 828 referred to.
|
vil APPEAL No. 198 of 1956.
Appeal from the judgment and decree dated August 24, 1950, of the Allahabad High Court in Execution First Appeal No. 399 of 1947.
Gopi Nath Kunzru and Ganpat Rai, for the appellants G. section Pathak and G. C. Mathur, for the respondent.
October l 2.
The Judgment of the Court was delivered by SHAH, J.
The Banaras Bank Ltd. a public limited company having its registered office at Banaras (hereinafter referred to as the Bank) was ordered on March l, 1 940 to be compulsorliy wound up by the High Court of Judicature at Allahabad, and the Official Liquidator was appointed to conduct the proceedings in winding up.
On September 12, 1942, an order was made by the High Court under section 187 of the Indian Companies Act, 1913 (VII of 1913) for payment of unpaid calls and the appellants Jyoti Bhushan Gupta.
and Gokul Chand, whose names had been placed on the list of contributors, were directed to pay with interest Rs. 95,178/5/9 to the official Liquidator of the Bank.
This order was, by virtue of section 199 of the Act, enforceable in the manner in which the decree of the High Court made in any suit pending therein may be enforced.
On September 12, 1946, the order was transferred to the District Judge, Allahabad for execution.
On September 23, 1946, the official Liquidator applied to the District Court, Allahabad for execution of the order dated September 12, 1942, and prayed that certain amounts due to the appellants be attached in satisfaction of the claim.
The execution proceedings were transferred by the District Judge 75 to the Civil Judge, Allahabad.
The appellants contended Inter alia that as the application for execution was not preferred within 3 years of the order for payment as prescribed by article 182 of the First Schedule of the Limitation Act it was barred by the law of limitation.
The official Liquidator contended that the application was governed by article 183 of the Act and that, in any event, certain part payments having been made towards the claim by the appellants, the period of limitation was extended thereby.
At the hearing, the alternative plea of part payment was abandoned by the Official Liquidator.
The Civi1 Judge held that the application for execution was barred limitation as it was not preferred within 3 years from the order of the High Court.
In appeal to the High Court of Allahabad, the order passed by the Civil Judge was reversed and the proceedings were remitted to the Civil Judge with a direction to restore the execution application to its original number and to proceed with it according to law.
Against that order with certificate of fitness granted by the High Court under article 133 of the Constitution, this appeal is preferred.
Counsel for the Company contended that the order passed by the High Court not being a final order the appeal on certificate granted by this High Court is not maintainable.
We have not thought it necessary, having regard to the importance of the question raised by the appellants and the fact that this Court may in a proper case regularise the proceeding in this Court by granting special leave, even if certificate under article 133 of the Constitution could not be issued by the High Court, to hear the parties on the question as to the maintainability of the appeal OD the certificate and have heard the appeal on the merits.
We are of the view that the appeal must fail on the merits.
76 article 182 of the Indian Limitation Act provides a period of 3 years for an application for execution of a decreer an order of any Civil Court not provided by article 183 or section 48 of the Code of Civil Procedure, 1908 (V of l908).
By article 183 a period of l2 years for enforcing a judgment, decree or order of any Court established by Royal Charter in the exercise of its ordinary original civil jurisdiction is prescribed and the period commences to run from the date on which a present right to enforce the judgment, decree or order accrues to some person capable of.
releasing the right.
The order sought to be executed was not passed by the High Court in the trial of a suit: it was passed in exercise of the jurisdiction conferred upon the High Court by section 187 of the Indian Companies s Act, 1913.
Section 3 of the Indian Companies Act by sub s.(1) enacts that the Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate.
By the proviso, the Central Government may by notification in the official Gazette empower any District Court to exercise all or any of the jurisdiction conferred upon the High Court.
But it is common ground that no notification conferring jurisdiction and empowering the District Court at Banaras where the registered office of the company is situate to pass orders under B. 187 has been issued.
The High Court was therefore the only Court competent to direct under B. 187 of the Indian Companies Act payment of the amount due from the appellants.
Counsel for the appellants contends that the authority exercised by the High Court in directing payment under section 187 of the Indian Companies Act, 1913, is neither ordinary, nor original civil.
He submits that by section 187 a special power is vested in the High Court by the Indian Companies Act, 1913, which is exercisable in its extraordinary jurisdiction.
To appreciate this argument it is necessary to refer to the statute authorising the establish 77 ment of the High Court, and the Letters Patent constituting the same.
The High Court for the North Western Province, of which the Allahabad High Court is the successor, was constituted by the Letters Patent issued on March 17, 1866, in exercise of the powers conferred by cl. 16 of the Charter Act of 1861 (24.25 Vict. C. 104).
By that clause, Her Majesty the Queen was authorised to establish a High Court and to invest the High Court with such jurisdiction, powers and authority as under the Charter Act may by cl. 9 be conferred upon the High Court to be established in any of the presidencies, i. e., calcutta, Bombay and Madras.
The High Courts of Calcutta, Bombay and Madras, which were popularly known as the Presidency High Courts were by cl. 12 of their respective Letters Patent invested with ordinary original civil jurisdiction to entertain and try suits of every description subject to the restriction as to territorial limitations contained in cl. 11 thereof.
But by its Letters Patent, the High Court for the North Western Province was not invested with jurisdiction to entertain civil suits in exercise of its ordinary original civil jurisdiction.
Counsel for the appellants submits that Art.183 applies only to decrees and orders passed by the High Courts established by the Royal Charter, which by their constitution are authorised to entertain, hear and try civil suits in exercise of their ordinary civil jurisdiction, and as no such power was conferred upon the Allahabad High Court, the order sought to be executed was not passed in exercise of the ordinary original civil jurisdiction.
It is true that when the Letters Patent were issued the High Court had no jurisdiction under a law relating to companies of the nature exercised by the High Court, the character whereof falls to be determined in this appeal.
But by cl. 16 of the Charter Act and cl. 35 of the Letters Patent of the Allahabad High Court jurisdiction 78 which Was not initially conferred upon the High Court could the conferred by legislation within the competence of the Governor General in Council and the Governor in Council.
By the Companies Act of 1913, the High Court was invested with jurisdiction to order payment of the amounts due by debtors of companies ordered to be wound up.
This jurisdiction may be invoked as of right against all persons whose names are placed on the list of contributors.
The jurisdiction is ordinary: it does not depend on any extraordinary action on the part of the High Court.
The jurisdiction is also original in character because the petition for exercise of the jurisdiction is entertainable by the High Court as a court of first instance and not in exercise of its appellate jurisdiction.
Again by section 187 no special jurisdiction is conferred.
The High Court adjudicates upon the liability of the debtor to pay debts due by him to the Company: the jurisdiction is therefore civil.
Normally, a creditor has to file a suit to enforce liability for payment of a debt due to him from him debtor.
The Legislature has by section 187 of the Companies Act empowered the High Court in a summary proceeding to determine the liability and to pass an order for payment, but on that account the real character of the jurisdiction exercised by the High Court is not altered.
Nor is there any substance in the contention that the authority to order payment of a debt under section 187 is merely a power of the High Court and not its jurisdiction.
By section 3 read with section 187 of the Companies Act the High Court has jurisdiction to direct payment of the amount due by a contributory: and an order passed for payment manifestly is an order passed in exercise of the jurisdiction vested in the High Court by section 3 read with 8. 187 of the Companies Act.
The Judicial Committee of the Privy Council was called upon In the matter of Candas Narondas Navivahu and C. A. Turner(1) to determine the true (1) I. L. R. (1889) 13, Eom.
79 nature of the jurisdiction exercised by the High Court of judicature at Bombay in respect of insolvent debtors.
The Privy Council held that article 180 of Schedule II of the Indian Limitation Act XV of 1877 (which was similar to article 183 of the Indian Limitation Act, l908) applies to a judgment of a Court for the relief of insolvent ebtors entered up in the High Court, in accordance with section 86 of the Statute 11 and 12 Vic., c. 21.
It was held in that case that although a Court exercising insolvency jurisdiction determines the substance of the question relating to an insolvent 's estate, the, proceedings in execution and the judgment are the High Court 'section The judgment is entered up in the ordinary course of the duty cast upon the High Court by the law, not by way of special or extra ordinary action, but in the exercise of its ordinary original civil jurisdiction.
Lord Hobhouse delivering the judgment of the judicial committee observed: "But it was strongly contended at the bar that this jurisdiction though civil and original, was not ordinary: and Mr. Rugby argued that the passages of the Charter which have just been epitomised divide the jurisdiction into four classes ordinary original, extraordinary original, appellate, and those special matters which are tho subject of special and separate provisions.
But their Lordships are of the opinion that the expression "ordinary jurisdiction" embraces all such as is exercised in the ordinary course of law and without any special step being necessary to assume it and that it is opposed to extraordinary jurisdiction, which the Court may assume at its discretion upon special occasions and by special orders.
They are confirmed in this view by observing that, in the next group of clauses which indicated the law to be applied by the Court to the various clauses of cases, there is not a four fold division of jurisdiction, but a three fold one, into ordinary, extraordinary, 80 and appellate.
The judgment of 1868 was entered up by the High Court, not by way of special or discretionary action, but in the ordinary course of the duty cast upon it by law, according to which every other case of the same kind would be dealt with.
It was, therefore, entered up in exercise of the ordineary original civil jurisdiction of the High Court.
" Council for the appellants contended that by cl. 18 of the letters Patent the High Court of Bombay was invested with insolvency jurisdiction whereas the High Court of Allahabad is not invested by the Letters Patent with any jurisdiction in the matter of companies and therefore the principle of "In re Candas Narondas" does not apply.
But under cl. 18 of the Letters Patent a Judge or Judges of the High Court are to sit as a Court for relief of insolvent debtors and powers and authorities with respect to original and appellate jurisdiction are to be deter mined by reference to the law relating to insolvent debtors.
The jurisdiction to deal with the claims of companies ordered to be wound up is conferred by the Indian Companies Act and to that extent the Letters Patent are modified.
There is, however, no difference in the character of the original civil jurisdiction which is conferred upon the High Court by Letters Patent and the jurisdiction conferred by special Acts.
When in exercise of its authority conferred by a special statute the High court in an application presented to it as a court of first instance declares liability to pay a debt, the jurisdiction exercised is original and civil and if the exercise of that jurisdiction does not depend upon any preliminary step invoking exercise of discretion of the High Court, the jurisdiction is ordinary.
In P. T. Munia Servai v The Hanuman Bank Ltd, Tanjore (1), a Division Bench of the Madras (I) 1.
L. R. 81 High Court by the Banking Companies Act, ]949 (X of 1949) is part of its ordinary civil jurisdiction within the meaning of article 183 of the Limitation Act and an order passed in exercise of its ordinary original Civil Jurisdiction is governed by article 183 and not by article 182 of the Limitation Act.
In that case on an application preferred by the Official Liquidator of the Hanuman Bank Ltd., a direction for payment by the High Court of certain sums of money by the appellant Munia on or before a certain date was made.
To an application for enforcement of that liability article 183 of the Limitation Act was held applicable.
In our view, the High Court was right ill holding that the application for execution filed by the official Liquidator was within limitation.
The appeal, therefore, fails and is dismissed with costs.
Appeal dismissed.
| The appellant took lease of an open land for construction of buildings suitable for residential, business, industrial or office purposes.
The appellant brought suits in the City Civil court, Bombay, for the recovery of arrears of rent in respect of premises built on the said open land, all within the city of Bombay thus in the area specified in Schedule I of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The appellant stated in the Plaint itself that the Bombay Rent Control Act, 1947, did not apply to the dcmiscd premises.
The defendants pleaded that the Rent Act applied and the City Civil Court had no jurisdiction to try the suit.
The trial judge held that part II of the Rent Act applied to the premises and consequently only the special courts specified in section 28 of the Rent Act had jurisdiction to entertain the suit and ordered the plaints in the suits to be returned to the plaintiff, for presentation to the proper court.
The Bombay High Court summarily dismissed the appeals from the said orders.
The point at issue for decision was whether "when a lessee takes lease of open land for the purpose of constructing on it buildings intended to be used for residence or for business, this amounts to "Letting for residence" or "letting for business".
The appellants ' contention was that as open land not intended to be used, as it is, for residence or business but for construction of buildings for residence or business was taken on lease the land was not being let for residence or business.
Held, that the words "let for residence, education, business or storage" in s.6 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, are wide enough to include a letting for the achievment of these purposes by construction of buildings as also without construction of buildings.
Held, further, that on the facts of the present case, in each of these cages, the lease was taken with a view to construct, buildings thereon for residential, business, industrial or office purposes and the land let was therefore 'premises ' to 929 which under section 6(1) of the Bombay Rent Act, the provisions of Part II of the Act applied.
Vinayak Gopal v Laxman Kashinath I. L. R. , approved.
|
ivil Appeal No. 350 of 1977.
From the Judgment and Order dated 19.10.1976 of the Madhya Pradesh High Court in Second Appeal No. 385 of 1974.
S.N. Kacker and Shri Narain for the Appellants.
Harish N. Salve, Mrs. P.S. Shroff, S.S. Shroff and S.A. Shroff for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
This appeal by special leave arises out of a suit filed by the respondent for setting aside the decree in an earlier suit being Suit No. 61 A of 1955 instituted by Dammu Lal, husband of the respondent No. 1 and father of respondent No. 2 to 12, for eviction of the appellants from a building in Raipur which is in their occupation as tenants.
Dammu Lal also prayed for a decree for arrears of rent and damages.
The prayer for eviction was allowed along with a money decree for Rs.260 as arrears of rent and Rs.137 as damages the tenants filed an appeal which was numbered as Civil Appeal No 7 A of 1965.
During the pendency of the appeal Dammu Lal died and his legal representatives were substituted as respondents.
Some of his children were minor who were placed under the guardianship of their mother Smt.
Sugandhibai, respondent No. l.
An application purporting to be a compromise petition on behalf of all the parties was filed before the court which was recorded and the suit was disposed of in its terms by the appellate court on 23.4.1966.
According to the compromise the entire decree was set aside and the suit was dismissed, with the parties bearing their own costs.
The respondents have challenged the compromise decree by the present suit.
The trial court dismissed the suit.
On appeal the first appellate court reversed the decision, set aside the compromise decree and directed the Civil Appel No. 7 A of 1965 to be disposed of afresh1 in accordance with law.
By PG NO 198 the impugned judgment the High Court dismissed the second appeal preferred by the appellants.
Mr. Kacker, the learned counsel appearing in support of the appeal, placed the facts relevant to the several questions raised by the parties and decided by the courts below and contended that the decision of the High Court is illegal on several grounds.
We do not consider it necessary to go into all the questions disposed of by the courts below as the respondents are, in our view, entitled to succeed in the suit on one of the several points urged on their behalf which is discussed below.
As has been stated earlier, some of the party respondents in Civil Appeal No. 7 A of 1965 including Kamal Kumar, one of the sons of Dammu Lal, were minor and were represented by Mr. Makasdar, Advocate.
In view of the provisions of Order XXXII, Rule 7 of the Code of Civil Procedure, it was essential for the court to have granted permission to the guardian to enter into the compromise only after considering all the relevant circumstances.
From the records of the case it appears that the court before recording the compromise sanctioned leave in the following words: "As the appellant is prepared to forego the entire cost of the proceedings, it is in the interest of the minors and benefit of the minors that this appeal be compromised.
The minor respondents are represented by senior counsel and his opinion is that it will be in the interest of the minor to compromise the appeal.
In view of this, I have no reason to disagree with him.
I am satisfied that the compromise is in the interest of the minors, hence, I allow the application and grant the necessary permission under Order 32 Rule 7 C.P.C. to the learned counsel of the minor respondents to compromise the appeal.
" On the face of it, the compromise was one sided whereby the minors were giving up their right under the trial court 's decree both in respect to eviction as well as arrears of rent and damages.
It is said that as a consideration for the compromise the appellants were giving up their right to claim costs which might have been decreed by the appellate court in case of their success c.n merits.
According to the respondents ' case which has been accepted by the two courts below the guardian of the minors was guilty of gross negligence in entering into the com promise by failing to take into account the interest of the minors.
On behalf of the appellants it has been contended PG NO 199 that during the pendency of Civil Appeal No. 7 A of 1965 the M.P. Accommodation Control Act was passed and the decree of the trial court was likely to be set aside.
In that view, it is urged, the minor 's guardian through Mr. Makasdar acted rightly in settling the dispute and thus saving a decree for costs which could have been passed against them.
According to the further case of the respondents the relevant circumstances and the terms of the compromise were never explained to the respondent No. 1 and Mr. Mokasdar asked for the court 's permission to enter into the compromise on behalf of the minor without any instruction from their guardian in this regard.
It is also urged that the language of the order whereby the court granted its permission indicates that the court did not apply its mind independently.
However, we do not consider it necessary to decide these points as also several others raised by the parties as in our view the compromise decree must be set aside on the ground of gross negligence.
It has not been suggested on behalf of the appellants in the present case that there was any ground available to them to successfully challenge the money decree passed in the earlier suit.
Mr. Kacker also has not suggested any possible ground against that part of the decree.
He, however, said that the decree was not for a substantial amount as it was for less than Rs.400, and should therefore be ignored for the purposes of this case.
The question as to whether the amount was substantial or not has to be judged in the light of the circumstances in the case.
Here the building in question was a small one fetching a small amount of rent and a sum of Rs.400 could not be ignored as inconsequential or unsubstantial.
It has also to be remembered that even the cost in such a suit which was the sole consideration for the compromise could not be a large sum.
Besides, neither the minors advocate nor the court appears to have really considered the impact of the rent Act on the fate of the appeal which came in force during the pendency of the litigation.
We, therefore, hold that the compromise decree is fit to be set aside, and the decision of the court below does not call for any interference.
Accordingly Civil Appeal No. 7 A of 1965 is restored to its file before the II Additional District Judge, Raipur and will now be disposed of in accordance with law.
The appeal is dismissed with costs payable to respondents No. I to 12.
P. S .
Appeal dismissed .
| The appellant who was a Sub Inspector of Police was dismissed by the Superintendent of Police by an order dated 29th January, 1973, exercising powes under clause (b) of the second proviso to Article 311(2) of the Constitution of India.
The appellant preferred an appeal to the Inspector General of Police, and the said appeal Having been dismissed, he challenged the order of dismissal as well as the appellate order in an application under Article 226 of the Constitution in the High Court.
A Division Bench, however, dismissed the application.
In the appeal by special leave to this Court, it was contended on behalf of the appellant that: (1) the appellant having been appointed as Sub Inspector of Police by the Inspector General of Police, the order of his dismissal by the Superintendent of Police was illegal being in contravention of Article 311(1) of the Constitution, and (2) the provisions of clause (b) of the second proviso to Article 311(2) of the Constitution were not attracted to the facts of the case and consequently the order of dismissal was illegal having been passed without compliance with the requirements of Article 311(2).
Dismissing the Appeal, the Court, HELD: 1.
The Superintendent of Police and Principal, Police Training College, Assam are authorities having coordinate jurisdiction to appoint Sub Inspectors under Rule PG NO 324 11(X) and Schedule Column II of the Assam Police Manual, Part III.
[329E; 328H] In the instant case, the appellant having been appointed by the Principal Police Training College Darrang, Assam, and having been dismissed by the Superintendent of Police, Darrang, District Tejpur who was a coordinate authority, the submission that the order of dismissal was illegal as having been passed by an authority subordinate to that by which he was appointed has no substance.
[329E F] 2.
While construing the words "it is not reasonably practicable to hold such enquiry" used in clause (b) of the second proviso to Article 311(2) it was held in Union of India vs Tulsi Ram Patel and Others, [1985] Supplement 2 SCR 131, that whether it was practicable to hold the inquiry or not must be judged in the context of whether it was reasonably practicable to do so.
It is not a total or absolute impracticability which is required.
What is requisite is that the holding of the inquiry is not practicable in the opinion of a reasonable man taking a reasonable view of the prevailing situation.
One of the illustrations justifying clause (b) of the second proviso to Article 311(2) being invoked, is the non availability of the witnesses on account of fear of the officer concerned.
[330G H; 331A B, 332A] In the instant case, it is apparent from the order of dismissal that this was the main ground for invoking the said clause (b).
The Superintendent of Police who passed the order of dismissal was the best authority on the spot to assess the situation in the circumstances prevailing at the relevant time and this Court does not find any good ground to interfere with the view taken by the Superintendent of Police in this behalf.
In such matters the Court will not sit in judgment over the relevancy of the reasons given by the disciplinary authority for invoking clause (b) like a Court of appeal.
Even in those cases where two views are possible, the Court will decline to interfere.
[332A B. C]
|
Civil Appeal Nos.
1806 1808 of 1969.
From the Judgment and Order dated 30 5 1969 of the Punjab and Haryana High Court in Executive Second Appeals Nos.
1131 1133 of 1968.
H.K. Puri and V.K. Bahl for the Appellant.
Janardhan Sharma and Jitendra Sharma for the Respondent The Judgment of the Court was delivered by DESAI, J.
These appeals by certificate under Article 133(1) (c) of the Constitution granted by the High Court of Punjab & Haryana arise from three Execution Petitions filed by the present appellants for executing three decrees obtained by one Neki (since deceased) in three 224 suits bearing Nos. 313, 360 and 369 of 1961 filed by him for pre emption, to recover physical possession of the lands involved in the suits.
The decrees in favour of Neki were confirmed finally by this Court in Civil Appeals Nos.
1148, 1656 and 2341 of 1966 decided on 25th January 1968.
The Judgment of this Court is reported in Hazari & Ors.
vs Neki & Ors.(1) The facts which ultimately resulted in decrees for pre emption in favour of Neki are fully set out at pages 834 835 of the reported judgment and repeating the same would merely add to the length of this judgment.
Suffice to state that there is no dispute that decrees for pre emption were passed in favour of Neki against the original vendor Dhara Singh and his vendees Hazari and others and the satisfaction of the condition in the decrees of pre emption for payment or deposit of the amounts as directed by the Court within the stipulated time is not questioned in the present proceedings.
It appears that the trial court decreed the suits for pre emption in favour of Neki on 7th November 1962 simultaneously imposing the condition to deposit certain amounts in the three suits by or before 3rd December 1962.
The various amounts were duly deposited in the three decrees by Neki, the decree holder, on 3rd December 1962.
Soon thereafter, on 5th December 1962 Neki sold the lands in respect of which he got the decrees to Zila Singh and others, the present appellants.
The present appellants are subsequent vendees but they will be referred to as the appellants in this judgment.
The former vendees would be referred to as 'first vendees ', the sale in whose favour gave rise to the cause of action for pre emption in favour of Neki against the original vendor Dhara Singh.
After the sale in favour of the present appellants, they applied to be joined as parties to the appeals preferred by the first vendees against the decrees for pre emption which were then pending in the High Court and the Court directed by its order dated 13th July, 1963 that the present appellants be joined as parties to the appeals subject to just legal exceptions.
The appellants then filed Execution Applications Nos. 295, 296, 297/64 seeking to execute the decrees to recover actual possession of the lands purchased by them from Neki.
Original Vendor Dhara Singh and the first vendees filed their objections challenging the right of the present vendees to execute the decrees.
Principal contention raised was that the sale deed of lands in favour of the appellants did not envisage assignment of the decrees and that the right of pre emption being a personal right, the decrees could not be assigned and, therefore, the present appellants who were subsequent vendees from pre emptor Neki, were not entitled and had no locus standi to execute 225 the decrees granted in favour of Neki.
The executing court after examining the relevant provisions contained in section 47 and Order XXI, Rule 16, of the Code of Civil Procedure rejected the objections raised by the first vendees and held that the present appellants were entitled to execute the decrees and directed warrant for possession to be issued.
The first vendees preferred three appeals being Nos.
25/14, 26/14 and 27/14 of 1968 to the District Court at Rohtak.
The learned Additional District Judge who heard these appeals, by a common order rejected the appeals and confirmed the order of the trial Court observing that the pre emptor having deposited the purchase price as directed by the Court, in accordance with the terms of the decrees, his title to the lands was perfected from the date of deposit as provided in Order XX, Rule 14 (1)(b), C.P.C., the appellants as purchasers of lands from the pre emptor in whose favour the decrees for pre emption including the one for possession had become final, were entitled to recover possession under section 146 C.P.C. Hazari, Amar Singh and Bhan Singh the first vendees preferred three Execution Second Appeals Nos.
1131,1132 and 1133/68 to the High Court of Punjab & Haryana.
When these appeals came up before a learned single Judge of the High Court it was contended that in view of the decision in Ram Singh & Ors.
vs Gainda Ram & Ors, The assignee of a holder of a decree for pre emption cannot seek the assistance of the Court for executing the decree for pre emption because the decree is a personal one and, therefore, non assignable.
On behalf of the present appellants who were respondents before the High Court, reliance was placed on the decision in Satyanarayana vs Arun Naik and Ravi Parkash and Anr.
vs Chunilal & Ors.
The learned single Judge had certain reservations about the correctness of the decision in Ram Singh 's case and, therefore, he considered it prudent to refer the matter to a Division Bench.
The matter ultimately had to be referred to a Full Bench because there was another decision in Mehrkhan and Shah Din vs Ghulam Rasul, which also required reconsideration.
That is how the matter came before a Full Bench.
The Full Bench formulated the question for its consideration as under: "Whether the purchaser of land from a pre emptor of which the pre emptor has become the owner in pursuance of a pre emption decree after complying with the 226 provisions of Order XX, Rule 14 Civil Procedure Code could execute the decree in order to obtain possession of the land purchased by him.
" All the three Judges of the Full Bench wrote separate opinions.
D. K. Mahajan, J. was of the opinion that assuming that a decree of pre emption is a personal decree, the transferees of the land from the pre emptor whose title was perfected by deposit as envisaged in O. XX, Rule 14 (1) (b) were entitled to execute the decree granted by the Court in favour of the pre emptor and can seek assistance of the Court for recovering actual possession from the first vendees who had no right to continue in possession, apart from O. XX, Rule 16 under section 146 C.P.C. P. C. Pandit, J. and H. R. Sodhi, J., the other two members of the Full Bench were of the opinion that the right of pre emption being a personal right, a decree for pre emption will be a personal decree and is not assignable and even if title to the land passed to the vendees who purchased the land from the pre emptor after the pre emptor complied with the provisions contained in Order XX, Rule 14 yet they would not be entitled to execute the decree for possession because decree is not assigned and section 146 would not help the present appellants.
In accordance with this majority opinion, the appeals preferred by the first vendees were allowed and the applications for execution filed by the present appellants were dismissed.
The High Court granted a certificate under Article 133 (1) (c) of the Constitution because in its opinion the question involved in the appeals was of considerable importance and was likely to arise frequently and that it deserved to be decided finally by the Supreme Court.
Mr. Janardan Sharma, learned counsel for the respondents urged that looking to the scheme of sections 4, 6 and 15 of the Punjab Pre emption Act, 1930, it is incontrovertible that foundation of the right of pre emption being close personal relationship, it is a personal right and can be exercised only by the person in whom it vests under the law and if in exercise of such right such a qualified person seeks to pre empt a sale by instituting an action in a Court of law, the resultant decree would be a personal decree.
Urged Mr. Sharma further that if the decree is a personal one, obviously it cannot be assigned and the assignee gets no interest in a decree so as to enable him to execute the decree.
The question whether the right of pre emption conferred by the provisions of Punjab Pre emption Act, 1913, is a personal right or it creates an interest in the property is 227 no more res integra and is concluded by a decision of this Court between the very parties who are parties to the present appeals, in an earlier round of litigation wherein the first vendees, the present respondents had challenged the right of Neki deceased pre emptor to obtain a decree for pre emption.
Apart from the fact that the point is concluded by a decision of a Bench of three Judges of the Court, it is inter partes and, therefore, binding on the respondents whom Mr. Janardan Sharma represents and at the instance of the respondents it cannot be re opened or re examined.
As the matter calls for no examination at the hands of the Court it would suffice to quote what has been held in Hazari & Ors.
vs Neki & Ors.
Ramaswami, J. speaking for the Court, observed as under: "In support of these appeals, learned counsel put forward the argument that the right of pre emption claimed by Neki deceased plaintiff was a personal right which died with him upon his death and the legal representatives of Neki were not entitled to be granted a decree for pre emption.
The argument was that the statutory right of pre emption under the Punjab Act was not a heritable right and no decree for pre emption should have been passed by the lower court in favour of the legal representatives as representing the estate of Neki.
We are unable to accept the argument put forward by the appellants.
It is not correct to say that the right of pre emption is a personal right on the part of the pre emptor to get the re transfer of the property from the vendee who has already become the owner of the same.
It is true that the right of pre emption becomes enforceable only when there is a sale but the right exists antecedently to the sale, the foundation of the right being the avoidance of the inconveniences and disturbances which would arise from the introduction of a stranger into the land.
The correct legal position is that the statutory law of pre emption imposes a limitation or disability upon the ownership of a property to the extent that it restricts the owner 's right of sale and compels him to sell the property to the person entitled to pre emption under the statute.
In other words, the statutory right of pre emption though not amounting to an interest in the land is a right which attaches to the land and which can be enforced against a purchaser by the person entitled to pre empt." Mr. Janardan Sharma, however, sought to distinguish the position under a voluntary inter vivos transfer and an involuntary 228 transfer such as by way of inheritance and urged that in this case Neki having sold the lands to the present appellants by sale inter vivos they cannot enjoy the fruits of the decree.
This distinction is immaterial as far as the present case is concerned because the question in terms disposed of by the Court is that Neki having complied with Order XX, Rule 14, had become the owner of the lands and his legal representatives on his death were rightly substituted in the proceedings.
The contention, therefore, that decree in a suit for pre emption is a personal decree and creates no interest in land, the subject matter of pre emption, must accordingly fail.
The next contention is that the deed evidencing the sale of lands Ext.
D 1 dated 15th February, 1963 merely transferred the lands but does not purport to assign the decree, then in the absence of such an assignment the purported assignee cannot execute the decree in view of the provision contained in Order XXI, Rule 16, and therefore, the execution applications at the instance of the present appellants are not maintainable.
The Additional District Judge did not decide the contention whether the Execution Applications at the instance of the present appellants, namely, subsequent transferees were maintainable under O. XXI, Rule 16, because in his opinion the present appellants were entitled to execute the decree under section 146 of the Code of Civil Procedure.
The majority view of the High Court is that the subsequent transferees, the present appellants, were not entitled to execute the decree under O. XXI, Rule 16 because the decree for pre emption being a personal one cannot be assigned and alternatively if it could be assigned, as a matter of fact, it has not been assigned and therefore the applications for execution at their instance are not maintainable.
They were further of the view that section 146 would not assist the appellants as provisions contained in O. XXI, Rule 16 being a specific contrary provisions, section 146 cannot be invoked.
Order XXI, Rule 16 permits an execution of a decree at the instance of an assignee by transfer of a decree, the assignment may be in writing or by operation of law and if such an application is made, the court to which an application is made shall issue a notice to the transferor of the decree and the judgment debtor and the decree cannot be executed until the Court heard their objections, if any, to its execution.
Section 47 C.P.C. provides that all questions arising between the parties to the suit in which the decree was passed, or their representatives, relating to the execution, discharge or satisfaction of the decree shall be determined by the court executing the decree and not by a separate suit.
Explanation appended to 229 section 47 provides that for the purposes of that section amongst others a purchaser at a sale in execution of the decree is deemed to be a party to the suit.
It would have been interesting to examine the question whether the purchaser of land from a pre emptor in whose favour a decree for pre emption has been passed and who subsequent to the decree complied with the requirement of Order XX, Rule 14 and thereby perfected his title would be, on the analogy of a purchaser at a sale in execution of a decree, a party to the suit or at any rate the representative of the decree holder or a successor in interest of the decree holder, but as we are of the opinion that the applications for execution filed by the present appellants are maintainable under section 146 C.P.C. the larger question need not be decided in these appeals.
Section 146 reads as under: "Save as otherwise provided by this Code or by any law for the time being in force, where any proceeding may be taken or application made by or against any person, then the proceeding may be taken or the application may be made by or against any person claiming under him." Shorn of unessentials the section provides that where some proceeding could be taken or application could be made by a person under the Code of Civil Procedure any other person claiming under him is entitled to make and maintain such an application.
The limitation on the exercise of this right is to be found in the expression, 'save as otherwise provided by this Code '.
It would mean that if the Code permits a proceeding to be taken or an application to be made by a party, then in the absence of a provision to the contrary, section 146 would enable any one claiming under such person as well to make the same application.
The object behind the section appears to be to facilitate the exercise of right by a person claiming under the person whose right to maintain an application is beyond dispute.
Section 146 came in for consideration in Jugal kishore Saraf vs Raw Cotton Co. Ltd. In that case the facts were that the plaintiffs in a pending suit for recovery of debt transferred to another person all book and other debts due to them including the debt involved in the suit.
The transferees did not apply to be joined as parties in the pending suit and the suit continued in the name of the original plaintiffs and ended in a decree.
Subsequently the 230 transferees as decree holders applied for execution of the decree against the judgment debtor and upon a notice being issued, a contention was raised that the application was not maintainable under Order XXI, Rule 16.
One submission was that even if the application for execution was not maintainable under O. XXI, Rule 16, it would certainly be maintainable at the instance of the transferees of the original debt under section 146.
Accepting this contention Das, J. observed that a person may conceivably become entitled to the benefits of a decree without being a transferee of the decree by assignment in writing or by operation of law.
In that situation the person so becoming the owner of the decree may well be regarded as a person claiming under the decree holder.
It was further held in that case that the transferees of the debt derived their title to the debt by transfer from the transferors and when the decree was passed in relation to decree they must also be regarded as persons claiming under the transferors and accordingly they would be entitled to make an application for execution under section 146 of the Code of Civil Procedure.
Bhagwati, J. in a separate and concurring judgment on this point observed that the only meaning that can be assigned to the expression 'save as otherwise provided by this Code ' in sec.
146 is that if a transferee of the decree can avail himself of the provision contained under Order XXI, Rule 16 by establishing that he is such a transferee he must only avail himself of that provision.
But if he fails to establish his title as a transferee by assignment in writing or by operation of law within the meaning of O. XXI, Rule 16 there is nothing in that provision which prohibits him from availing himself of section 146 if the provision of that section can be availed of by him.
It would thus appear that if the sale deed in respect of land on its proper construction would show that the decree itself was assigned obviously the application for execution would be maintainable under O. XXI, Rule 16.
But if the appellants do not fall within the four corners of O. XXI, Rule 16 and they appear not to fall within the four corners of it, because though the land, the subject matter of the decree is sold to appellants, the decree itself is not assigned, they would nonetheless be able to maintain application for execution under section 146 as persons claiming under the decree holder.
The respondents cannot have both the ways.
If the deed evidenced transfer of decree by assignment then O. XXI, Rule 16 would be attracted but if, as it appears, there is no transfer of decree by assignment, the lands having been sold by the decree holder after perfecting his title and purchased by the present appellants they would be persons claiming under the original pre emptor decree holder Neki and if Neki could have made an application for 231 execution of the decree as decree holder, the present appellants, as purchasers of land from Neki would certainly be claiming under Neki and, therefore, their application for execution would certainly be maintainable under section 146.
In this connection it would be advantageous to refer to Smt.
Saila Bala Dassi vs Smt.
Nirmala Sundari Dassi and Another(1) wherein it has been in terms held that section 146 was introduced for the first time in Civil Procedure Code 1908 with the object of facilitating the exercise of rights by persons in whom they came to be vested by devolution or assignment and being a beneficent provision should be construed liberally so as to advance justice and not in a restricted or technical sense.
Viewed from this angle the present appellants must succeed because they purchased land from pre emptor Neki and the validity of sale being now beyond dispute, they are persons claiming under Neki whose right to execute the decree was never disputed and, therefore, appellants claiming under the vendor Neki would be able to maintain an application for execution under section 146 of the Code of Civil Procedure.
Appellants are thus entitled to execute the decree for possession.
Accordingly these three appeals are allowed and the decision of the High Court dated 30th May, 1969 in Execution Appeals Nos. 1131, 1132 and 1133 of 1968 is set aside and the decision of the Additional District Judge dated 15th July, 1968 is restored, but in the circumstances of the case there would be no order as to costs.
N.V.K Appeals allowed.
| The respondent, who originally belonged to the Madras Ministerial Service, was allotted to the State of Kerala as a lower division clerk on the reorganisation of States.
On the ground that he belonged to a community which was educationally backward the State Government of Madras appointed him as a lower division clerk relaxing the requirements of r. 29 of the Special Rules for Madras Ministerial Service which prescribed minimum general educational qualification for appointment to service under the State Government.
In 1957 the State Government of Kerala issued an order providing that, until common service rules were framed, every officer in the service of the new State of Kerala would be bound by the service rules of Travancore Cochin or Madras, to which he belonged prior to November 1, 1956.
Thereafter in supersession of all earlier rules the Kerala State and Subordinate Service Rules, 1958 were framed.
Rule 1 of the General Rules in Part II stated that the rules in that part shall apply to all State and Subordinate Services and the holders of all posts appointed before or after the date on which those rules came into force.
The Special Rules contemplated by r. 2(16) of Part I had however, not been framed.
Rule 28(b) (ii) of Part II provided that all promotions or appointments by transfer [other than those mentioned in cl.
(i) of this rule] shall be made in accordance with the seniority, subject to the person 's fitness for appointment.
In 1961, persons who did not possess the general minimum educational qualifications but were appointed as lower division clerks, were allowed to sit for a qualifying test for promotion to upper division clerks.
In the gradation list of officiating lower division clerks prepared, the respondent was shown at No. 1 place.
Even so, when two vacancies of upper division clerks occurred, two persons junior to him in the gradation list were promoted ignoring the respondent.
In his writ petition under article 226 of the Constitution the respondent contended that the exemption granted to him removing the bar of educational qualification enured to him for all purposes, and therefore, promotions of two juniors, ignoring r. 28(b)(ii) under which seniority was the basis for promotion, amounted to denial of equal treatment guaranteed under articles 14 and 16 of the Constitution.
243 A single Judge of the High Court dismissed the petition on the ground that the exemption granted was for the limited purpose of enabling the respondent to be appointed and continued in the post of lower division clerk but that it did not remove the bar of minimum qualification for promotion.
On appeal the division bench reversed the order of the single Judge, and directed the Government to promote him and determine his rank in the cadre of upper division clerks.
On appeal to this Court it was contended on behalf of the appellant that (1) the Special Rules contemplated by r. 2 of Part I read with the State Government 's order of 1957, were the Special Rules contained in the Madras Ministerial Service Rules; (2) even if r. 28(b)(ii) was applicable it was well within the power of the State Government to prescribe a test to judge the fitness of persons who were exempted from the minimum educational qualifications when appointed as lower division clerks and (3) there was a reasonable basis for classifying those persons who did not possess the minimum educational qualification as a category apart from those who possessed such a qualification.
Dismissing the appeal, ^ HELD: 1 (a) The Special Rules, for the purposes of Kerala Rules of 1958, would be as defined in r. 2(16) of Part I.
That definition contemplated that Special Rules would be framed by the Governor but no such rules had been framed.
[248 H] (b) In the matter of promotion as on upper division clerk the respondent was governed by r. 28(b)(ii) in Part II.
[249 A] 2.
It cannot be said that the impugned notification merely "supplemented" or filled up a gap in the statutory rules.
It tended to superimpose or super add by an executive flat on the statutory rules something inconsistent with the same.
If the statutory rules framed by the Governor or any law enacted under article 309 is silent on any particular point, the government can fill up that gap and supplement the rule by issuing administrative instructions not inconstant with the statutory provisions already framed or enacted.
[253 D; 250 C] In the instant case, however, it could not be said that there was a gap in the statutory provisions in the matter of promotion from the cadre of lower division clerks to that of upper division clerks.
3(a) The classification made by the impugned government order was not only unfair and irrational but also, virtually amounted to abandonment of the test of seniority cum fitness provided in r. 28(b)(ii).
[252 G H] (h) By virtue of section 3 of the Kerala Public Services Act, 1968, the 1958 Rules were deemed to have been made under the Act and were continued until superseded by rules made under that Act.
No Special Rules relating to upper division clerks having been made the General Rules in Part II would be applicable to upper division clerks, also.
[250 E] (c) The 1958 Rules superseded all earlier rules.
The General Rules did not provide any minimum general educational qualification for promotion to 244 the cadre of upper division clerks.
There is nothing in r. 28(b)(ii) or elsewhere, which provides that a lower division clerk would be presumed to be unfit for promotion to upper division unless he possessed the minimum general educational qualification or passed the qualifying test.
[250 G H] There is nothing to show that the respondent was considered for promotion but was found unfit.
[251 B] (d)(i) The impugned notification prescribed the qualifying test for promotion, not for all, but only for one category of persons with reference to the manner in which they initially entered service.
The respondent and others like him, appointed as lower division clerks after granting them exemption, had been singled out for this discriminatory treatment.
[251 F] (d)(ii) There is nothing on record to show that the duties discharged by the clerks of the upper division were substantially different from those in the lower division.
[251 G H] (iii) The statutory rule did not warrant the classification made by the impugned order.
It impinged upon the statutory rule inasmuch as it laid down that even if a lower division clerk who entered service as a result of exemption from possessing minimum educational qualification satisfied the criterion of seniority cum fitness prescribed by this rule, he shall not be considered for promotion unless he qualified in the test.
The relevant rule did not provide any minimum general educational qualification for promotion to upper division.
[252 A B] Roshan Lal Tandon vs Union of India, ; ; followed.
State of Jammu & Kashmir vs Triloki Nath Khosa & Ors. ; ; held inapplicable.
Though ordinarily the court would not issue a direction requiring the government to promote an aggrieved employee and thereafter determine his rank in the cadre, in the peculiar facts of this case the respondent satisfied the two fold criterion for promotion laid down in r. 28(b)(ii) and since the existence of both the criteria for promotion were not in dispute the High Court was justified in issuing the direction, it did.
[253 A B; E]
|
Appeal No. 357 of 1958.
Appeal from the judgment and order dated April 24, 1957, of the Patna High Court in Misc.
Judicial Case No. 57 of 1955.
A. V. Viswanatha Sastri and I. N. Shroff, for the appellant.
K. N. Rajagopal Sastri and R. H. Dhebar, for the respondent.
October 25.
The Judgment of the Court was delivered by SHAH J.
The appellant executed a deed of trust settling certain lands described in schedule " A " and the rents of lands described in schedule " C " for the maintenance of certain temples and Thakoorbaries.
The material terms of the deed of trust are: cl.
6: " And whereas the declarant feels that a Declaration of Trust should be made whereby the income of a part of the Raj properties may be earmarked and specially devoted to the maintenance of the aforesaid institutions as also the Declarant may as hitherto treat himself and be treated by others as a legal Trustee of the said institutions and the properties out of the income of which the said maintenance is being and will be provided for." cl.
7: " The declarant declares that henceforth he holds and will hold the properties detailed at the foot thereof in Schedule " A " in trust for religious purposes of maintaining the religious institutions more fully described in Schedule " B " annexed here to. " cl. 8 : "The declarant further declares that in all lands now held by him in the aforesaid properties as Bakast or proprietor 's private lands as in the schedule " C " which are in direct khas cultivation of the Declarant shall henceforth be or continue to be his tenancy lands for which the Declarant shall pay the rental as noted against such lands, annually to the " trustee for the use and benefit of the aforesaid institutions and the rights of the Declarant in them 76 shall be those of a rayat under the Bihar Tenancy Act.
" The net income of all the lands set out in Schedule A '. ' after providing for the expenses of management and the taxes payable thereon was estimated at Rs. 1,81,717 and the net rental of the properties described in Schedule " C " was estimated at Rs. 10,208 and from the aggregate of these two amounts after deducting 15% as trustee 's remuneration, the balance of the income estimated at Rs. 1,63,136 4 0 was to be utilised for the objects of the trust.
In the assessee 's income determined by the Income Tax Officer for the assessment year 1950 51, Rs. 6,000 were included as income from non agricultural properties of the trust.
In the view of the Income tax Officer, the trust was not a, public religious trust and the income derived from properties not used for agriculture was not exempt from liability to pay tax in the hands of the appellant.
In appeal against the order of assessment, the Appellate Assistant Commissioner held that the income coming to the hands of the appellant from the trust properties was not taxable as private income of the appellant, but in his view, the remuneration amounting to Rs. 21,274 computed at the rate of 15% on the net income of the trust properties in the year in question not being agricultural income in the appellant 's hands was liable to be taxed.
In appeal to the Income tax Appellate Tribunal, Patna Bench, Patna, the order passed by the Appellate Assistant Commissioner in so far as it related to remuneration received by the appellant was affirmed.
The High Court of Judicature at Patna thereafter at the instance of the appellant directed the Income tax Appellate Tribunal to submit a statement of the case on five questions set out in the order.
The fifth question (which is the only question material in this appeal) was as follows: " Whether, in the facts and the circumstances of the case, the amount of Rs. 21,274 being the amount paid to the assessee in his character of a Shebait of the Trust properties should have been held to be exempted from taxation on the ground that it is agricultural income ?" 77 The High Court agreed with the Tribunal that the remuneration was received by the appellant under a contract, and it was not agricultural income, merely because the source of the money was agricultural income.
The High Court accordingly answered the fifth question " against the assessee".
This appeal is filed by the appellant with leave under section 66A(2) of the Indian Income tax Act granted by the High Court limited to the question whether the amount received by the appellant from the trust property in his character as a shebait was exempt from liability to pay The material part of the definition of " Agricultural income " in section 2(1) is as follows: " Agricultural income " means (a) any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such.
(b). . . . . . . . . . .
Agricultural income falling under cl. (a) ought manifestly to be received as rent or revenue derived from land used for agricultural purposes.
The income received from agricultural properties of the trust by the appellant as trustee was indisputably agricultural income in his hands and it was by virtue of section 4(3)(viii) exempt from liability to pay tax.
The appellant claims that the remuneration which by the convenant contained in the deed of trust he has received is also exempt under section 4(3)(viii) because, when he appropriated a fraction of the rent or revenue of agricultural lands towards his remuneration, the original character of the income was not altered.
The appellant has no beneficial interest in the lands which are the subject matter of the trust : nor is he given under the trust a right to receive and appropriate to himself the income of the properties or a part thereof in lieu of any beneficial interest in that income.
The source of the right in which a fraction of the net income of the trust is to be appropriated by the appellant as his remuneration is not in the right 78 to receive rent or revenue of agricultural lands, but rests in the covenant in the deed to receive remuneration for management of the trust.
The income of the trust appropriated by the appellant as remuneration is not received by him as rent or revenue of land; the 'Character of the income appropriated as remuneration due is again not the same as the character in which it was received by the appellant as trustee.
Both the source and character of the income are therefore altered when a part of the income of the trust is appropriated by the appellant as his remuneration, and that is so, notwithstanding that computation of remuneration is made as a percentage of the income, a substantial part whereof is derived from lands used for agricultural purposes.
The remuneration not being received as rent or revenue of agricultural lands under a title, legal or beneficial in the property from which the income is received, it ' is not income exempt under section 4(3) (viii).
We may briefly refer to the authorities which illustrate the meaning of " agricultural income " in section 2(1) of the Income tax Act.
In Nawab Habibulla.
vs Commissioner of Income Tax, Bengal(1), the Privy Council held that the remuneration received by a mutwalli of a wakf estate, not depending on the nature of the properties or assets which constitute the wakf nor on the amount of income derived from the wakf estate, is not agricultural income within the meaning of section 2(1) of the Indian Income tax Act even though the income derived by the wakf estate is from properties used for agricultural purposes.
In Premier Construction Co., Ltd. vs Commissioner of Income Tax, Bombay City (2), it was held by the Privy Council that income received by an assessee not itself of a character to fall within the definition of agricultural income does not assume the character of agricultural income by reason of the source from which it is derived, or the method by which it is calculated.
But if the income received falls within (1) (1943) L.R. 70 I.A. 14.
(2) (1948) L.R. 75 I.A. 246.
79 the definition of agricultural income, it earns exemption, in whatever character the assessee receives it.
In that case, the remuneration payable to a managing agent of a company in consideration of services to be rendered was a minimum annual salary of Rs. 10,000 payable irrespective of whether the company made.
any profit; but if 10% of the profits made by the company exceeded Rs. 10,000 the agent was to get an additional remuneration calculated as a percentage upon the profits of the company without regard to the source from which those profits were derived.
One of the sources of income of the company was agricultural income.
It was held by the Privy Council that the assessee received no agricultural income as defined by the Act: he received remuneration under a contract for personal service calculated on the amount of profits earned by the employer.
In Commissioner of Income Tax, Bihar and Orissa vs Kameshwar Singh(1), income received by a mortgagee who went into possession of properties mortgaged to him was held to be agricultural income; but that was because under the deed of mortgage, the mortgagee was to be in possession of the properties and in his relation to the cultivators of the soil, he stood in the position of landlord dealing directly with them and collecting the rents.
The mortgagee had to pay Government revenue, cesses and taxes and his name was registered in the Land Registration Department.
He alone was able to sue for rent whether current or arrears, to sue for enhancement or for ejectment and was able to settle lands with raiyats and tenants in all the properties, in fact, he was in a position to take all proceedings which the mortgagor would have been able to take in the ordinary course if the lands leased and mortgaged had remained in the mortgagor 's possession.
The mortgagee received the income, because of the legal ownership vested in him and even though under the covenant of the mortgage deed, he was required to appropriate the income towards his dues, the income in his hands did not cease to be agricultural income.
In Kameshwar Singh 's case (1), the court was called upon to consider (1) (1935) L.R. 62 I.A. 215.
80 the nature of the primary receipt by the mortgagee and not of the appropriation made under the coven.
ant of the deed of mortgage.
In K. B. Syed Mohammad Isa and another vs Commissioner of Income Tax, Central and United Provinces (1), the assessee was a mutwalli appointed under two deeds.
Under both the deeds, he was to receive agricultural and non agricultural income and to utilise the same for purposes of the trust.
Under one of.
the two deeds of trust, the balance was to be retained by the mutwalli for his personal expenses and in the other in lieu of his services.
It was held by the Allahabad High Court that the residue of the amounts retained by the mutwalli under both the deeds of trust was, as agricultural income, exempt from liability to pay tax.
In the view of the court, though the language used in the two deeds of trust was different, the intention of the settler was the same: the mutwalli was required to perform the functions of his office and so long as he did so, he was entitled in consideration of this service to appropriate the residue of the profits.
But in each case, the mutwalli was a beneficiary with an obligation attached to his enjoyment of the benefit, and had therefore two capacities, one as mutwalli and the other as beneficiary.
The court on those facts held that the balance of the income from the zamindari went" through the mutwalli " to the beneficiary by virtue of an obligation imposed under the terms of the trust deed itself upon the income of the property '.
The mutwalli was the channel through which the beneficiary received the money and the beneficiary was to all intents and purposes the direct recipient of the income, and there was no change of source and no alteration in the character of the income.
It remained agricultural income after it had passed into the hands of the beneficiary.
In the present case, the appellant has no beneficial interest in the trust property.
The appellant so far as his remuneration is concerned is again not the direct recipient of the income of the (1) I,L.R. [1942] All. 425. 81 both altered when agricultural income is appropriated under the covenant in the deed of trust as remuneration for services rendered.
In this view, the appeal fails and is dismissed with costs.
Appeal dismissed.
| The appellant was the holder of a personal inam which he had purchased from the original inamdar to whom a Sanad had been issued under Bombay Act No. VII of 1863.
He was paying Rs. 7 as salami and Rs. 6 3 0 as quit rent, the full assessment of the land being Rs. 56 8 0.
The land which formed part of the inam was originally in a village but subsequently became a part of the suburbs of the city of Surat and as the land was being used for non agricultural purpose and a large bungalow had been erected on it, the Collector decided that it was liable to non agricultural assessment under section 52 Of the Bombay Land Revenue Code, 1879, with effect from August 1, 1955, in view of proviso (b) to section 4 Of the Bombay Personal Inams Abolition Act, 1952.
The appellant challenged the constitutionality of the Bombay Personal Inams Abolition Act, 1952, on the grounds, inter alia, (i) that the Act was not protected by article 31 A of the Constitution of India as the property which bad been dealt with under the Act was not an estate and no compensation had been.
provided in the Act for taking away the property of the appellant, and (2) that in view of the fact that the holder of the inam was, given a Sanad when his inam was recognised, it was not open to the State of Bombay to enact a law which would in any way vary the terms of the Sanad.
The appellant also contended that, in any case, the Collector 's order to the effect that the land should be assessed under section 52 Of the Bombay Land Revenue Code, 1879, as non agricultural was incorrect because (1) section 7 Of the Act created an exception to sections 4 and 5 with respect to lands of inamdars used for building or for other non agricultural purposes and therefore the appellant 's inam land which was used entirely for non agricultural purposes could not be assessed under section 5 of the Act, (2) that section 52 Of the Code which gave power to the Collector to make assessments of lands not wholly exempt from the payment of land revenue did not apply to this case because here the assessment had been fixed under the provisions of Ch.
VIII A of the Code and section 52 only applied when no assessment had been fixed under Ch.
VIII A. 952 Held: (i) that the Bombay Personal Inams Abolition Act, 1952, was valid and was protected by article 31 A of the Constitution of India.
Gangadharrao Narayanrao Majumdar vs State of Bombay, ; , Thakur jagannath Baksh Singh vs United Provinces, [1946] F.C.R. III and Maharaj Umeg Singh vs The 'State of Bombay; , , followed.
(2) that the exception made in section 7 Of the Act only saved such inam lands as were used for building or other non agricultural purposes by the inamdar from vesting in the Government, but they remained subject to the provisions Of sections 4 and 5 of the Act.
(3) that section 52 of the Bombay Land Revenue Code, 1879, when it said that the section would not apply where assessment had been fixed under Ch.
VIII A of the Code, referred to actual assessment under the Chapter and not to what was deemed to be an assessment under that Chapter by virtue of section 117 R, and that as the land in the present case was not wholly exempt from revenue and as in fact no assessment had been fixed on the land under Ch.
VIII A, section 52 would apply and the Collector would have power to make an assessment in the manner provided by that section.
|
iminal Appeal No. 29 of 1956.
Appeal from the judgment and order dated August 24, 1955, of the Calcutta High Court, in Criminal Appeal No. 196 of 1954, arising out of the judgment and order dated June 7, 1954, of the Court of the Judge, Special Court, Burdwan, in Special Court case No. 10 of 1952.
section C. Issacs and section N. Mukherjee, for the appellant.
B. Sen and P. K. Bose, for the respondent.
September 11.
The Judgment of the Court was delivered by KAPUR J.
This is an appeal by leave of the High Court of Calcutta against the judgment and order of that Court dismissing the appellant 's appeal against the order of conviction by the Special Court of Burdwan for an offence under section 165 A, Indian Penal Code and six months ' rigorous imprisonment.
The facts leading to this appeal are that one Istipada Ghosh and his son were being tried in the court of an Assistant Sessions Judge, Burdwan, with a jury of five.
During the course of the trial the appellant approached one of the jurors Baidya Nath Mukherjee and offered him illegal gratification as an inducement for giving a verdict favourable to Ghoslies.
On the morning of September 6, 1952, the juror narrated these facts to the police and thereupon the officer in charge sent a Sub Inspector to arrest the appellant if he offered the bribe.
After a little while the appellant came to the appointed place and offered Rs. 40 in four 10 rupee notes to the juror and while he was trying to pass those notes to the juror the Police Officer arrested the appellant.
The First Information Report for an offence under sections 161/116, Indian Penal Code was made soon after.
And after investigation a report 1278 was made by the police officer in charge Burdwan police station which resulted in the case being sent to the Special Judge, Burdwan.
On November 27, 1952, the Government issued the following notification No. 6603J under section 4(2) of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 (W. B. XXI of 1949): " In exercise of the power conferred by sub section (2) of section 4 of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 (West Bengal Act XXI of 1949), the Governor is pleased to distribute to the Burdwan Special Court constituted by notification No. 4632J, dated the 22nd August, 1952, under section 2 of the said Act the following cases involving offences specified in the Schedule to the said Act to be tried by the said Special Court: (4) The State versus Bhajhari Mondal, son of Bhuson Chandra Mondal of Katwa Station Bazar Police Station Katwa, district Burdwan tinder sections 161/116 of the Indian Penal Code.
This notification shows that the offence charged against the appellant was one under sections 161/116 of the Indian Penal Code.
The order sheet of the Special Court shows that the records of the case State vs B. C. Mondal under sections 161/116 Indian Penal Code were received by the Special Judge on December 23, 1952, and the Special Court took cognizance of the case, the appellant was summoned for appearance on January 22, 1953, and he did appear on that day.
On December 21, 1953, after several adjournments the hearing of the case was fixed for January 29, 1954, on which date the examination of witnesses commenced.
On February 10, 1954, a charge under section 165A, Indian Penal Code was framed by the Special Judge.
The trial ended on June 7, 1954, and the appellant was convicted under section 165A of the Indian Penal Code and sentenced to six months ' rigorous imprisonment.
Against this order of conviction the appellant took an appeal to the High Court of Calcutta which was dismissed.
It held that the appel 1279 lant had rightly been convicted under section 165,A and that the Special Court had jurisdiction to try the offence under that section from July 28, 1952, to May 9, 1953, under section 7 of the Central Act (XLVI of 1952) and from May 9, 1953, under the West Bengal Act (W. B. XV of 1953).
It also held that any defect in the taking of cognizance was curable under section 529 (e) of the Criminal Procedure Code and that as a matter of fact the Special Judge took cognizance under section 165A and not under sections 161/116, Indian Penal Code.
On December 16, 1955, the High Court granted leave to appeal to this Court.
Counsel for the appellant has not contested the appeal on any question of fact but has confined his arguments to the question of jurisdiction.
He contended that the Special Judge had no jurisdiction to try the case as (1) at the time he took cognizance of the case, section 165A, Indian Penal Code, was not an offence specified in the Schedule of West Bengal Act XXI of 1949; (2) the case distributed to him was one under sections 161/116 an offence which no longer existed in the Indian Penal Code; (3) the Special Judge was exercising jurisdiction under the West Bengal Act (W. B. XXI of 1949) and not under the Central Act (XLVI of 1952) as no Special Judges were appointed by the State Government under that Act; (4) the appellant could not be tried under the West Bengal Act XV of 1953 because there was no distribution of a case against him under section 165A, Indian Penal Code.
In order to decide these matters it is necessary to set out the dates on which the various statutes came into force and to See what provisions were made therein.
On March 11, 1947, Prevention of Corruption Act (Act 11 of 1947) was enacted by the Central Legislature.
The West Bengal Legislature enacted the West Bengal Criminal Law Amendment Act of 1949 (W. B. XXI of 1949) which received the assent of the Governor General on June 23, 1949.
Its preamble shows the objects of the Act to be more speedy trial and more effective punishment of certain offences.
By section 2 of this Act, Special Courts were set up in West Bengal which under section 3 were to be presided over by Special 1280 Judges.
Section 4 provided for allotment of cases for trial to the various Special Judges and also authorised the Provincial Government to transfer any case from one Special Judge to another and to make modifications in the description of cases (whether in the name of the accused or in the charges preferred or in any other manner) as may be considered necessary.
The Special Judge bad jurisdiction to try the cases for the time being allotted to him under section 4 (1) in respect of such of the charges for the offences specified in the Schedule as may be preferred against the accused.
All cases pending before any court or before any other Special Judge were deemed to be transferred to the Special Judge to whom they were allotted.
The Special Judge when trying a case allotted to him could also try any offence whether specified in the Schedule or not with which an accused could be charged at the same trial.
By section 5 the Special Judge could take cognizance of a case without the case being committed and was to follow the procedure of warrant cases and the court of the Special Judge was deemed to be a court of Session trying without a jury.
By section 8 rules of evidence were amended in certain particulars.
Sec tion 9 provided for enhanced punishment.
By section the provisions of the Prevention of Corruption Act were made applicable.
The schedule to the Act enumerates the offences triable by a Special Judge, the relevant items of which were: (1) " An offence punishable under sections 161, 162, 163 or section 165 of the Indian Penal Code. . . . . . . . . . (8) Any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in items 1 to 7 ".
On July 28, 1952, the Central Legislature enacted the Criminal Law Amendment Act (Act XLVI of 1952) by section 3 of which an offence of abetment, section 165A with an enhanced punishment was inserted.
section 165A. " Whoever abets any offence punishable under section 161 or section 165, whether or not that 1281 offence is committed in consequence of the abetment, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine or with both ".
By section 6 the State Government were authorised by notification to appoint Special Judges for various areas to try the following offences: (a) " an offence punishable under section 161, section 165 or section 165A of the Indian Penal Code (Act XLV of 1860) or subsection (2) of section 5 of the Prevention of Corruption Act (II of 1947); (b) any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in clause (a). . . " By section 7 exclusive jurisdiction was conferred on Special Judges.
The effect of this enactment was the insertion in the Penal Code of an offence 165A and the creation of Special Judges to be appointed by the State.
On August 12, 1952, the Central Legislature passed another Act, the Prevention of Corruption (Second Amendment) Act (59 of 1952), section 3 of which changes the rules of evidence in regard to presumption and onus by adding sub section 2 to section 4 of the principal Act by which it was provided: Where in any trial of an offence punishable under section 165A of the Indian Penal Code (Act XLV of 1860) it is proved that any gratification (other than legal remuneration) or any valuable thing has been given or offered to be given or attempted to be given by an accused person, it shall be presumed unless the contrary is proved that he gave or offered to give or attempted to give that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in section 161 of the Indian Penal Code or, as the case may be, without consideration or for a consideration which he knows to be inadequate ".
On July 30, 1952, an Act, to amend the West Bengal Act XXI of 1949, the West Bengal Criminal Law Amendment (Special Court Amending Act) (W. B. XII of 1952) received the assent of the President and came into force.
Section 3 of this Act substituted a new section 2 in place of section 2 of the West Bengal Act (W. B. XXI 1282 of 1949).
This substituted section authorised the State Government to constitute Special Courts and to appoint Special Judges to preside over such courts which had jurisdiction throughout West Bengal.
By section 5, the following was substituted in place of section 4 of the West Bengal Act XXI of 1949: " (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) or in any other law, the offences specified in the Schedule shall be triable by Special Courts only: Provided that when trying any case, a Special Court may also try any offence other than an offence ,specified in the Schedule, with which the accused may under the Code of Criminal Procedure, 1898, be charged at the same trial.
(2) The distribution amongst Special Courts of cases involving offences specified in the Schedule, to be tried by them shall be made by the State Government ".
The Schedule under the West Bengal Act (W.B. XXI of 1949) was also amended by the insertion of section 164 Indian Penal Code only.
The West Bengal Act XXI of 1949 was further amended by the West Bengal Criminal Law Amendment (Special Courts) Amending Act, 1953 (Act XV of 1953).
It received the assent of the President and came into force on May 9, 1953.
This Act added section 165A, Indian Penal Code in item No. 1 of the Schedule of the 1949 West Bengal Act.
The result of these various enactments, Central as well as State was the creation of Special Courts to try offences which were specified in the case of West Bengal (W. B. XXI of 1949) in the Schedule and in the case of Central Act in the body of the Act itself The West Bengal Act (W. B. XXI of 1949) created Special Judges to try cases involving offences specified in the Schedule and allotted to them by the State Government alone.
Under the Central Act (XLVI of 1952) also the State Government was authorised to appoint Special Judges and the offences specified in the Act were triable by such Judges as stated in section 7(2) of the Act.
The procedure to be followed by the 1283 Special Judges was that prescribed for the trial of warrant cases.
Therefore the jurisdiction of Special Judges appointed under this State enactment to try cases relating to offences specified in the Schedule arose only when they were allotted to them.
By the West Bengal Amending Act of 1952 (W. B. XII of 1952) in place of " Special Judges " the words "Special Courts " were substituted and two conditions necessary for conferring jurisdiction on such Courts were: (1) cases to be tried related to offences specified in the Schedule and (2) the State Government had to make the distribution of such cases to the various Special Courts.
Therefore no Special Court had jurisdiction to try a case unless it was for offences specified in the Schedule and the State Government distributed it to the Special Court.
The notification in the present case specified the name of the accused, the offence for which he was to be tried as one under section 161/116, Indian Penal Code, and the case was distributed to the Special Court, Burdwan for trial.
On the date of the notification section 161 and abetment of section 161 were offences specified in the Schedule but as a result of the amendment by the Criminal law Amendment Act 1952 (XLVL of 1952) section 165A had been inserted in the Code providing for punishment for abetment of offences mentioned in sections 161 or 165.
Section 165A created a distinct and separate offence and therefore abetment of an offence under section 161 was no longer an offence under section 161/ 116 of the Code.
Section 165A was not included in the Schedule to the West Bengal Act (W. B. XXI of 1949).
Counsel for the State contended that this section although not specifically mentioned was all the time specified in and must be deemed to have been specified in the Schedule to the West Bengal Act (W. B. XXI of 1949) because item 8 specifically mentioned abetment of offences in items I to 7 and that section 165A only prescribes punishment for abetment of offences under sections 161 or 165 and cannot be called a new or a different offence.
Section 165A is not merely a restatement of the offence of abetment under section 116 of the Code.
It 163 1284 also comprises abetment under section 109 of the Code and provides an enhanced penalty of three years imprisonment instead of 1/4th of three years imposeable under section 116.
It further attracts the application of section 4 (2) of the Prevention of Corruption Act (11 of 1947) as subsequently amended.
It cannot be, said therefore that merely because the abetment of an offence under section 161 was specified in the Schedule of the West Bengal Act of 1949, section 165A which did not then exist in the Penal Code, must be deemed to have been specified therein.
It is significant that the West Bengal Act was further amended on May 9, 1953, by Act XV of 1953 in order to include section 165A in the Schedule.
It appears therefore that under the notification the case distributed to the Special Court for the appellant 's trial was for a non existing offence because when the Special Judge took cognizance of the case there was no such offence as sections 161/116 of the Indian Penal Code.
The notification did not mention section 165A of the Code and at the time when the Special Judge purported to take cognizance he had no jurisdiction to do so and to try the case as the offence under section 165A was not in the Schedule of the West Bengal Act, 1949, as amended in 1952.
The crucial date for the purpose of determining the jurisdiction of the Court would be the date when the Court received the record and took cognizance of the case and took any step in aid of the progress of the case and not when the evidence of the witnesses began to be recorded.
Under section 4 of West Bengal Act (W.B. XXI of 1949) as amended by the Act of 1952 the jurisdiction of the Court arises when the notification is issued distributing the case to a particular Special Court giving the name of the accused and mentioning the charge or charges against him which must be under one of the offences specified in the Schedule.
In the absence of any of these elements the Special Court would have no Jurisdiction.
The High Court held.
" that the offence under section 165A was always triable by a Special Judge only from 28th July, 1952, to 9th May, 1953, under section 7 of the Central Act 1285 and from 9th May, 1953, under the W. B. Act XV of 1953 ".
As already stated the case which was distributed to the Special Judge was one under section 161/116, Indian Penal Code an offence not then existing in the Code and as section 165A was not in the Schedule as an offence triable by a Special Judge it could not be held that the Special Judge was trying the appellant for an offence under section 165A.
There is nothing to indicate that the appellant was being tried upto May 9, 1953, under section 7 of the Central Act.
No notification of the State Government appointing any Special Judge under section 6 of the Central Act (Act XLVI of 1952) was brought to our notice.
It was on the other hand stated by counsel for the State that there was no such notification.
Nor is there anything to show that the Special Judge of Burdwan was trying the appellants ' case under section 7 of that Act.
We are of the opinion that the trial was not under the Central Act, 1952.
Nor could the trial be under the provisions of West Bengal Act XV of 1953 because no distribution of the appellants ' case was made to the Special Judge by a notification mentioning the charge against him to be one under section 165A, Indian Penal Code.
The High Court also said: " It is true that if the offence under section 165A be regarded as a distinct offence, the Special Judge appointed under the W. B. Act had no jurisdiction in December 1952 to take cognizance of the offence and cognizance could be taken only by a Special Judge appointed under the provisions of the Central Act.
But since in such case the Special Judge must be deemed to have acted erroneously in good faith, the provisions of section 529(e) of the Criminal Procedure Code would apply and the proceedings would not be vitiated. .
It is trial without jurisdiction that vitiates a proceeding (section 530 Cr. P. C.) and not taking of cognizance in good faith without jurisdiction".
But that with respect, is an erroneous application of section 529 of the Code of Criminal Procedure which provides: 1286 " If any Magistrate not empowered by law to do any of the following things, namely: (e) to take cognizance of an offence under section 190,sub section (1), clause (a) or clause (b); erroneously in good faith does that thing, his proceedings shall not be set aside merely on ground of his not being so empowered.
" This section applies to Magistrates and would not apply to a Special Judge whose jurisdiction arises not on his taking cognizance under section 190 of the Code of Criminal Procedure, but on the case for an offence specified in the Schedule being distributed to him by the State Government by notification.
The defect of jurisdiction therefore cannot be cured by section 529(e) of the Code of Criminal Procedure.
The Special Judge war, consequently not a Court of competent jurisdiction and the proceedings before him were null and ineffectual.
We are of the opinion, therefore, that when the case was distributed to the Special Court which is the basis of the jurisdiction of that Court, section 165A was not one of the offences specified in the Schedule and consequently the appellant could not be tried for and convicted of that offence.
The conviction is therefore by a Court which had no jurisdiction to try the case against the appellant and the whole proceedings in this case are null and void.
We would accordingly allow the appeal and set aside the conviction of the appellant under section 165A, I. P. C., and the sentence imposed thereunder.
Appeal allowed.
| On September 6, 1952, the appellant, who was being tried by an Assistant Sessions Judge and a jury, was caught while giving a bribe to one of the jurors.
By a notification dated November 27, 1952, the Government of West Bengal, acting under section 4(2) Of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949, entrusted the case against the appellant under section 161/116 Indian Penal Code to the Special judge, Burdwan, for trial.
Before this date as a result of the introduction of section 165A in the Indian Penal Code by the Criminal Law Amendment Act, 1952, providing for punishment for abetment of offences under sections 161 and 165, abetment of section 161 had ceased to be an offence under section 161/116 though it was an offence specified in the Schedule to the West Bengal Act.
The records were received by the Special judge on December 23, 1952, and he took cognizance of the case.
On February 10, 1954, a charge under section 165 A Indian Penal Code was framed by the Special judge and on July 7, 1954, the appellant was convicted under section 165 A and sentenced to rigorous imprisonment for six months.
An appeal to the High Court of Calcutta was dismissed.
The appellant obtained special leave and appealed.
Held, that the special judge had no jurisdiction to try and convict the appellant for the offence under section 165A Indian Penal Code as when the case was distributed to the Special judge section 165A was not one of the offences specified in the Schedule of the West Bengal Act.
The case which was distributed to the Special judge was one under section 161/116 Indian Penal Code, an offence which was non existent at that time.
Section 165A cannot be deemed to have been specified in the Schedule merely because abetment of the offences under sections 161, 162 163 and 165 Indian Penal Code was specifically mentioned in the Schedule.
The offence under section 165A is a distinct offence.
It is not merely a restatement of the offence of abetment under section 116 ; it comprises also abetment under section 109 and provides for in enhanced penalty.
This defect of jurisdiction could not be cured by section 529(e) of the Code of Criminal Procedure.
Section 529(e) applied to 1277 Magistrates and would not apply to Special judges whose jurisdiction arose not on their taking cognizance under section 190 of the Code but on the case for offences specified in the Schedule being distributed to them by the State Government by a proper notification.
|
No. 120 of 1959.
Writ Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights.
Bhagirath Das and, B. P. Maheshwari, for the petitioner.
N. section Bindra and D. Gupta, for the respondent.
April 7.
The Judgment of the Court was delivered by 824 SARKAR, J.
The petitioner is a dealer registered under the Punjab General Sales Tax Act.
He filed returns of his sale turnovers for the four quarters of the financial year ending on March 31, 1955, and likewise, for the four quarters of the financial year ending on March 31, 1956.
In respect of each year the Sales Tax Assessing Officer served three successive notices on him on March 7, 1958, April 4, 1958, and August 18, 1959, requiring him to attend with the documents and other evidence in support of his returns.
In the last of the notices mentioned above it was stated that on failure to produce the documents and other evidence mentioned, the case would be decided "on best judgment assessment basis".
The petitioner did not comply with any of the notices, but after the receipt of the last notice he presented this petition under article 32 of the Constitution challenging the right of the authorities to make a best judgment assessment.
The question raised by the petitioner turns on section 11 of the Punjab General Sales Tax Act, relevant provisions of which are set out below.
section 11.
(1) If the Assessing Authority is satisfied without requiring the presence of registered dealer or the production by him of any evidence that the returns furnished in respect of any period are correct and complete, he shall assess the amount of tax due from the dealer on the basis of such returns.
(2)If the Assessing Authority is not satisfied without requiring the presence of a registered dealer who furnished the returns or production of evidence that the returns furnished in respect of any period are correct and complete, he shall serve on such dealer a notice in the prescribed manner requiring him, on a date and at a place specified therein, either to attend in person or to produce or to cause to be produced any evidence on which such dealer may rely in support of such returns.
. . . . . . . . . . . . . . . (4) If a registered dealer, having furnished returns in respect of a period, fails to comply with the terms of a notice issued under sub section (2), the 825 Assessing Authority shall within three years after the expiry of such period, proceed to assess to the best of his judgment the amount of the tax due from the dealer.
The contention of the petitioner is that at the date of the notice last mentioned the Sales Tax authorities had no right to proceed to make any beat judgment assessment as the three years within which only such assessment could be made had expired before then.
It seems to us that the contention of the petitioner is well founded.
The learned counsel for the respondent, the assessing authority, also frankly conceded that he 'found it difficult to contend to the contrary.
Sub section (4) of section 11 deals with the case of a dealer who has furnished returns in respect of a period and has thereafter been asked to produce evidence to support the returns but has failed to do so.
The subsection provides that in such a case the assessing authority may proceed to make an assessment which to the best of his.
judgment should be made irrespective of the returns.
The reason for this provision is that the correctness of the returns having been doubted by the assessing authority, the dealer has not availed himself of the opportunity afforded to him to remove these doubts.
The sub section however provides that the power can be exercised within the three years mentioned in it.
Quite plainly, the power cannot be exercised after these three years have gone by.
The question is, how to compute the three years? The sub section 'says "within three years after the expiry of such period".
So the three years have to be counted from the expiry of the period mentioned.
What then is that period? The words are "such period".
The period referred therefore is the period mentioned earlier.
in the sub section, and that is the period in respect of which returns had been furnished by the dealer.
This is also made clear by sub section
(1) of section 11.
That deals with a case where the returns are accepted.
Both sub sections
(1) and (4) deal with returns for the same period.
Now section 10(3) provides that 104 826 every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed" "Prescribed" means prescribed by rules framed under the Act.
Under r. 20 of these rules, a registered dealer like the petitioner, had to furnish returns quarrerly.
The rules define "return period" as "the period for which returns are prescribed to be furnished by a dealer".
It would therefore appear that when sub sec.
(4) of section 11 talks of "returns in respect of a period", that refers in the case of the petitioner to the quarters in respect of which he submitted the returns.
We when come to this that the three years within which the authority could proceed to make the best judgment assessment had to be counted from the end of each quarter in respect of which returns had been filed.
Now the last of the quarters in respect of which the petitioner filed his returns ended on March 31, 1956.
So the assessing authority could not proceed to make a best judgment assessment in respect of this quarter after March 31, 1959.
In the case of the earlier quarters, of course, the three years had expired even prior to this date.
It is not in dispute that the assessing officer had not proceeded to make any assessment on the petitioner at the date of any of the notices.
In the present case therefore the notices given on August 18, 1959, that best judgment assessments would be made in respect of the quarters constituting the financial years 1955 and 1956, the last of which expired on March 31, 1956, were futile.
No such assessments could be made in respect of any of these quarters after March 31, 1959.
The petition must, therefore, be allowed.
A writ will issue restraining the respondent from making any best judgment assessment on the petitioner for sales tax for any quarter of the financial years 1955 and 1956.
The petitioner will get the costs of this petition.
Petition allowed.
| On the expiry of the appellant 's tenancy for the occupation of the premises indispute, the respondent who was the landlord filed a suit for possession of the premises.
Meanwhile under section 6 of the Bombay Rents, Hotel and Lodging House Rates Control , a notification was issued applying Part 11 of the Act to the area where the property was situated.
The appellants claimed protection of section 12, Part 11 of the Act, which deprived the landlord of the right of possession under certain circum stances.
The Court of first instance decided the suit against the appellant and the High Court ruled that section 12 was prospective in character and did not apply to pending suits or proceedings.
On appeal by special leave Held, that the point of time when sub section
(1) of section 12 operates is when the decree for recovery of possession has to be passed.
The language of the sub section which provides that the landlord is not entitled to recover possession if the tenant pays or shows his willingness to pay the standard rent and to observe the other conditions of the tenancy is such that it applies equally to suits pending when Part It comes into force and those to be filed subsequently and is not limited only to suits filed after the Act comes into force in a particular area.
A section may be prospective in one part and retrospective in another part.
Sub sections (2) and (3) of section 12 were clearly prospective but the words of the first sub section showed retrospective operation.
Nilkanth Ram Chandra vs Rasiklal, and Chandra Singh Manibhai vs Surjitlal Sudhamal Chhabda, ; , distinguished.
Rhonda Urban Council vs Taff Vale Railway, , Mullins vs Treasury of Surrey, and Fitzgerald vs Champneys, ; , referred to.
|
Civil Appeals Nos.
1653 to 1691 of 1980 Appeals by Special leave from the Judgment and order dated the 28th & 29 July, 1980 of the Bombay High Court in Writ Petition Nos.
1906, 1772, 1799, 1838, 1885, 1923, 1925, 1926,1928, 1996 1998, 2005, 2060 65, 2076, 2099 2102, 2110, 2127, 1909, 1864, 1965, 1889, 1890, 1924, 1927, 2003, 2044, 2098, 2176, 2176, 2177 and 2179 of 1980 R, P. Bhati, Soli J. Sorabjee, Ravi Kulkarni, Ravinder Narain, A. N. Hasker, D. N. Misra and Mrs. A. K. Verma for the Appellants.
section section Khanduja and Satya Prakash for the Respondents.
Dr. N. M. Ghatate for Respondent in CA.
1658/80.
P. H. Parekh and Miss Nisha Shrivastava for Respondents in CA.
1659 and 1684 of 1980.
V. N. Ganpule and Mrs. V. D. Khanna, for Respondent in CA.
1685 of 1980.
The Judgment of the Court was delivered by BALAKRISHNA ERADI, J.
It is common experience that whenever the results of Public examinations conducted by School Boards and Universities or by other bodies like the Public Service Commission a e announced, amidst the rejoicings of successful candidates who have secured the grade of marks anticipated by them, it also inevitably brings with it a long trail of disappointments and frustrations as the direct outcome of the non fructuation of hopes and expectations harboured in the minds of the examinees based on the candidates own assessment of their performance and merit.
Labouring under a feeling that there has not been a proper evaluation of their perfor 36 mance in the examination, they would naturally like to have a revaluation of the answer books and even a personal inspection and verification of the answer books for finding out whether there has been a proper evaluation of the answers to all questions, whether the totalling of marks has been correctly done and whether there has been any tampering with the seat numbers written on the answer books and the supplementary sheets.
The question canvassed before us in these appeals is whether, under law a candidate has a right to demand such an inspection, verification and revaluation of answer books and whether the statutory regulations framed by the Maharashtra State Board of Secondary and Higher Secondary education governing the subject insofar as they categorically state that there shall be no such right can be said to be ultra vires, unreasonable and void.
A number of such disappointed candidates who had appeared for the Higher Secondary Certificate and Secondary School Certificate public examinations conducted by the Divisional Boards functioning under the supervision and control of the Maharashtra State Board of Secondary and Higher Secondary Education hereinafter called 'the Board ' filed a batch of 39 Writ Petitions in the High Court of Bombay challenging the validity of Regulation 104 (3) of the Maharashtra Secondary and Higher Secondary Education Boards Regulations 1977 and seeking the issuance of writs directing the Board appellant herein to allow to the petitioners disclosure and inspection of their answer books in the Public examination, the results whereof had already been published and to conduct a revaluation of such of the answer papers as the petitioners may demand after the inspection.
The High Court divided the Writ Petitions into two groups, the first group consisting of cases where the right of inspection alone was claimed and the second group comprising of cases where the petitioners had claimed also the further right to demand a revaluation of the answer papers.
Though all the Writ Petitions were heard together by a Division Bench consisting of V. section Deshpande and V. A. Mohta, JJ, the two groups were disposed of by separate judgments delivered on behalf of the Bench on the same day 28th July 1980.
The first group of Writ Petitions was disposed of by a judgment delivered by Deshpande, J speaking on behalf of the Division Bench.
There in it was held that clause (3) of Regulation 104 which lays down that no candidate shall be entitled to disclosure or inspection of the answer books or other documents as these are to be treated as most confidential is ultra vires on the 37 ground of its being in excess of the regulation making power of the Board In the opinion of the Division Bench, the said provision cannot be said to serve any purpose of the Act, but is, on the contrary, "defeasive" of the same.
It was further held that the impugned clause (3) of Regulation 104 to the extent to which it prohibits disclosure and inspection of the answer books and other connected documents on the ground of confidentiality is unreasonable and liable to be struck down on that ground also.
Accordingly, the High Court declared clause (3) of Regulation 14 to be void and allowed the first group of Writ Petitions by directing the Board to allow inspection of the answer books asked for by the petitioners and to take consequential action under clauses (4) to (6) of Regulation 104 when found necessary.
The main judgment in the second group of Writ Petitions was delivered by Mohta, J, holding that the provision contained in clause (1) of Regulation 104 that no revaluation of the answer books or supplement shall be done is ultra vires the regulation making power conferred by Section 36 and is also illegal and void on the ground of its being manifestly unreasonable.
In the view of the learned Judge, inspection and disclosure will serve no purpose in case the further right of revaluation was denied and inasmuch as the right to disclosure and inspection had been recognised by the judgment just then delivered in the first group of Writ Petitions, the conclusion had necessarily to follow that the Board was obliged to permit revaluation as well.
On this reasoning, Regulation 104 (i) insofar as it prohibits revaluation was declared void and a direction was issued to the Board that in the case of those examinees who had applied for revaluation, such facility should also be allowed.
By a separate judgment, Deshpande, J. expressed serious doubts and reservations as to whether a further right of revaluation could be spelt out from the regulations, but family agreed with the conclusion expressed by his colleague stating thus: "rather than allow my doubts to prevail and dissent, I prefer to agree with him in the above circumstances".
Aggrieved by these judgments rendered in the two groups of cases, the Board has preferred these appeals before this Court after obtaining special leave.
The Maharashtra Secondary and Higher Secondary Boards Act, 1965 (for short, "the Act") has been passed to provide for the establishment of a State Board and Divisional Boards to regulate certain matters pertaining to secondary and higher secondary education in the State.
Section 3 (1) provides that the State Govern 38 ment shall, by notification in the official gazette, establish a Board for the whole State by the name 'Maharashtra State Board of Secondary and Higher Secondary Education '.
By sub section (2) of the same Section, it is further provided that the State Government shall, likewise, establish a Board for each of the three divisions under such name as may be specified in the notification.
The appellant Board is the State Board constituted under sub section (1) of Section 3.
The powers and duties of the State Board have been enumerated in clauses (a) to (r) of Section 18 of the Act.
Clause (a) states that it shall be the duty of the Board to advise the State Government on matters of policy relating to Secondary or Higher Secondary education in general.
Thus under the scheme of the Act, the Board is to discharge an important role in formulating policies on all matters relating to Secondary and Higher Secondary education.
Clause (f) empowers the Board to prescribe the general conditions governing admission of regular and private candidates to the final examination and to specify the conditions regarding the attendance and character on the fulfillment of which a candidate shall have a right to be admitted to and to appear at any such examination.
Section 19 deals with the powers and duties of a Divisional Board.
Under clause (f) it is the duty of the Divisional Board to conduct in the area of its jurisdiction the final examination on behalf of the State Board.
Clause (g) empowers the Divisional Board to appoint paper setters, translators, examiners, moderators, supervisors and other necessary personnel for conducting the final examination in the area of its jurisdiction, for evaluation of candidates ' performance and for compiling and release of the results in accordance with such instructions as the State Board may from time to time issue.
Under clause (h) it is within the power of the Divisional Board to admit candidates for the final examination according to the regulations made by the State Board in this behalf.
Clause (m) vests the Divisional Board with power to generally evaluate the performance of students in all examinations in secondary schools and junior colleges including the final examination and make necessary recommendations to the State Board in that behalf.
Section 36 (1) of the Act empowers the State Board to make 'regulations ' for the purpose of carrying into effect the provisions of the Act.
Sub section (2) states that, without prejudice to generality of the foregoing power, such regulations may provide for any of the 39 matters enumerated in clauses (a) to (n) thereof.
Clauses (c), (d), (f) and (g) which alone are relevant for our present purpose are reproduced below: "(c) the general conditions governing, admission of regular and private candidates for the final examinations, and any particular conditions regarding attendance and character, on the fulfillment of which a candidate shall have a right to be admitted to and to appear at any such examination;" "(d) the marks required for passing in any subject and the final examination as a whole, and for exemption, credit and distinction in any subject;" "(f) the arrangements for the conduct of final examinations by the Divisional Boards and publication of results;" "(g) the appointment of examiners, their powers and duties in relation to the final examinations and their remuneration;" Sub section (3) lays down that no regulation made under this section shall have effect until the same has been sanctioned by the State Government.
Section 38 has conferred on the State Board a distinct power to make 'bye laws ' consistent with the Act and the regulations made thereunder.
Such bye laws are to provide for the procedure to be followed at the meetings of the Board and the Divisional Boards and the Committee appointed by any of them and the numbers of members required to form a quorum at such meetings and any other matters solely concerning the Boards and their Committees not provided for by the Act and the regulations made thereunder.
Three Divisional Boards have been set up in Maharashtra by the State Government in exercise of the power conferred by Section 3 and these Boards are in charge of the Poona Division, Aurangabad Division and Vidharbha Division respectively.
These three Divisional Boards conduct two public examinations, namely, the Higher Secondary Certificate examination "H.S.C. examination" which is conducted at the end of the higher secondary education course and 40 the Secondary School Certificate examination "S.S.C. examination" conducted at the end of the secondary school education course.
In exercise of the powers conferred by Section 36 of the Act, the State Board has framed the Maharashtra Secondary and Higher Secondary Education Boards Regulations 1977.
These regulations were sanctioned by the State Government under sub section (3) of Section 36 and were published on the 11th July, 1977.
They are to be deemed to have come into force on 15th June 1977.
These regulations were applied to the Secondary School Certificate examination and Higher Secondary Certificate examination held in October, 1977 and thereafter.
The regulations consist of 3 parts.
Part I contains the provisions common to Secondary School Certificate (S.S.C.) and Higher Secondary Certificate (H.S.C.) examinations; Part II contains regulations pertaining to S.S.C. examination only and Part III those pertaining exclusively to the Higher Secondary Certificate examinations Regulation 104 with which we are concerned occurs in Part III and clauses (1) to (3) thereof which alone are relevant for the purposes of this case require to be reproduced here: "104.
VERIFICATION OF MARKS OBTAINED BY A CANDIDATE IN A SUBJECT.
(1) Any candidate who has appeared at the Higher Secondary Certificate examination may apply to the Divisional Secretary for verification of marks in any particular subject.
The verification will be restricted to checking whether all the answers have been examined and that there has been no mistake in the totalling of marks for each question in that subject and transferring marks correctly on the first cover page of the answer book and whether the supplements attached to the answer book mentioned by the candidate are in tact.
No revaluation of the answer book or supplements shall be done.
(2) Such an application must be made by the candidate through the head of the junior college which presented him for the examination, within two weeks of the declaration of the examination results 41 and must be accompanied by a fee of Rs. 10/ for each subject.
(3) No candidate shall claim, or be entitled to revaluation of his answers or disclosure or inspection of the answer books or other documents as these are treated by the Divisional Board as most confidential." Before the High Court, the Writ Petitioners had based their challenge against the validity of clauses (1) and (3) of Regulation 104 on three main grounds.
The first ground of attack was that the impugned clauses were violative of the principles of natural justice.
Secondly, it was urged that both clauses (1) and (3) were ultra vires and void on the ground of their being in excess of the regulation making powers conferred on the Board by Section 36 of the Act.
The third ground of challenge was that the impugned provisions contained in clauses (l) and (3) were highly unreasonable and since the regulations framed by the Board are in the nature of bye laws, they are liable to be struck down on the ground of unreasonableness.
Though the main plank of the arguments advanced on behalf of the petitioners before the High Court appears to have been the plea of violation of principle of natural justice, the said contention did not find favour with the learned Judges of the Division Bench.
The High Court rejected the contention advanced on behalf of the petitioners that non disclosure or disallowance of the right or inspection of the answer books as well as denial of the right to ask for a revaluation to examinees who are dissatisfied with the results visits them with adverse civil consequences.
The further argument that every adverse "verification" involves a condemnation of the examinees behind their back and hence constitutes a clear violation of principles of natural justice was also not accepted by the High Court.
In our opinion, the High Court was perfectly right in taking this view and in holding that (the "process of evaluation of answer papers or of subsequent verification of marks" under clause (3) of Regulation 104 does not attract the principles of natural justice since no decision making process which brings about adverse civil consequences to the examinees in involved.
The principles of natural justice cannot be extended beyond reasonable and rational limits and cannot be carried to such absurd lengths as to make it necessary that candidates who have taken a public examination should be allowed to participate in the process of evaluation of their performances or 42 to verify the correctness of the evaluation made by the examiners by themselves conducting an inspection of the answer books and determining whether there has been a proper and fair valuation of the answers by the examiners As succinctly put by Mathew, J in his judgment in the Union of India vs M.L. Kapur, "it is not expedient to extend the horizon of natural justice involved in the Audi alteram partem rule to the twilight zone of mere expectations, however great they might be".
The challenge levelled against the validity of clause (3) of Regulation 104 based on the plea of violation of natural justice was, therefore, rightly rejected by the High Court.
The High Court in its judgment in the first group of cases then went on to consider the next two grounds of challenge put forward by the petitioners.
namely, that clause (3) is ultra vires on the ground of its being in excess of the regulation making powers of the Board and that in any event it is void on the ground of unreasonableness Board these grounds of challenge were upheld by the High Court and, in consequence thereof, clause (3) of Regulation 104 has been struck down by the learned Judges as illegal, ultra vires and void.
After giving our careful consideration to the arguments advanced by the learned counsel appearing on both sides, we have unhesitatingly come to the conclusion that the view so taken by the High Court is wholly erroneous and unsustainable.
We shall first take up for consideration the contention that clause (3) of Regulation 104 is ultra vires the regulation making powers of the Board.
The point urged by the petitioners before the High Court was that the prohibition against the inspection or disclosure of the answer papers and other documents and the declaration made in the impugned clause that they are "treated by the Divisional Board as confidential documents" do not serve any of the purposes of the Act and hence these provisions are ultra vires.
The High Court was of the view that the said contention of the petitioners had to be examined against the back drop of the fact disclosed by some of the records produced before it that in the past there had been a few instances where some students possessing inferior merits had succeeded in passing off the answer papers of other brilliant students as their own by tampering with seat numbers or otherwise and the verification process contemplated under Regulation 104 had failed to detect the mischief.
In our opinion, this 43 approach made by the High Court was not correct or proper because the question whether a particular piece of delegated legislation whether a rule or regulation or other type of statutory instrument is in excess of the power of subordinate legislation conferred on the delegate has to be determined with reference only to the specific provisions contained in the relevant statute conferring the power to make the rule, regulation, etc.
and also the object and purpose of the Act as can be gathered from the various provisions of the enactment.
It would be wholly wrong for the court to substitute its own opinion for that of the legislature or its delegate as to what principle or policy would best serve the objects and purposes of the Act and to sit in judgment over the wisdom and effectiveness or otherwise of the policy laid down by the regulation making body and declare a regulation to be ultra vires merely on the ground that, in the view of the Court, the impugned provisions will not help to serve the object and purpose of the Act.
So long as the body entrusted with the task of framing the rules or regulations acts within the scope of the authority conferred on it, in the sense that the rules or regulations made by it have a rational acts within the object and purpose of the Statute, the court should not concern itself with the wisdom or efficaciousness of such rules or regulations.
It is exclusively within the province of the legislature and its delegate to determine, as a matter of policy, how the provisions of the Statute can best be implemented and what measures, substantive as well as procedural would have to be incorporated in the rules or regulations for the efficacious achievement of the objects and purposes of the Act.
It is not for the Court to examine the merits or demerits of such a policy because its scrutiny has to be limited to the question as to whether the impugned regulations fall within the scope of the regulation making power conferred on the delegated by the Statute.
Though this legal position is well established by a long series of decisions of this Court, we have considered it necessary to reiterate it in view of the manifestly erroneous approach made by the High Court to the consideration of the question as to whether the impugned clause (3) of Regulation 104 is ultra vires.
In the light of the aforesaid principles, we shall now proceed to consider the challenge levelled against the validity of the Regulation 104 (3).
As already noticed, the power to make regulations is conferred on the Board by Section 36 of the Act.
Sub section (1) of the said Section lays down that the Board may make regulations for the purpose of carrying into effect the provisions of the Act.
Sub 44 section (2) enumerates, in clause (a) to (n) the various matters for which the provisions may be made by such regulations, the said enumeration being without prejudice to the generality of the power conferred by sub section (1).
We have already extracted clauses (c), (d), (f) and (g) which deal with the conditions governing admission of candidates for the final examinations, the arrangement for the conduct of final examinations by the Divisional Boards and for publication of results, and the appointment of examiners, their powers and duties in relation to the final examinations, etc.
These topics are comprehensive enough to cover the prescription of the procedure for finalizing the results of the examination based on the evaluation of the answers of the candidates who have appeared for the examinations, as well as the laying down of the restrictive provisions relating to verification of marks, prohibition against disclosure and inspection of answer books and denial of any right or claim for evaluation.
We fail to see how it can be said that these are not matters pertaining to the conduct of the final examination and the publication of the results of such examination.
Further, Section 19 of the Act which sets out the powers and duties of a Divisional Board lays down in clauses (f) and (g) that the Board shall have the power and is under a duty to conduct in the area of its jurisdiction the final examination on behalf of the State Board and to appoint paper setters, examiners, etc, for conducting the final examination in the area of its jurisdiction, for evaluation of candidates, performances and for compiling and release of results in accordance with such instructions as the State Board may from time to time issue.
It is thus clear that the conduct of the final examination and the evaluation of the candidates ' performance and the compiling and release of results are all to be carried out by the divisional Board in accordance with the instructions to be issued by the State Board from time to time.
It is, therefore, manifest that a duty is cast on the State Board to formulate its policy as to how the examinations are to be conducted, how the evaluation of the performances of the candidates is to be made and by what procedure the results are to be finalised, compiled and released.
In our opinion, it was perfectly within the competence of the Board, rather it was its plain duty, to apply its mind and decide as a matter of policy relating to the conduct of the examination as to whether disclosure and inspection of the answer books should be allowed to the candidates, whether and to what extent verification of the result I should be permitted after the results have already been announced and whether any right to claim revaluation of the answer books 45 should be recognised or provided for.
All these are undoubtedly matters which have an intimate nexus with the objects and purposes of the enactment and are, therefore, within the ambit of the general power to make regulations conferred under Sub section (1) of Section 36.
In addition.
these matters fall also within the scope of clause (c), (f) and (g) of sub section (2) of the said Section.
We do not, therefore, find it possible to accept as correct the view expressed by the High Court that clause (3) of Regulation 104 is ultra vires on the ground of its being in excess of the regulation making power conferred on the Board Instead of confining itself to a consideration whether the impugned regulations fall within the four corners of the Statute and particularly of Section 36 thereof which confers the power to make regulations, the High Court embarked upon an investigation as to whether the prohibition against disclosure and inspection of answer books and other documents imposed by the impugned clause (3) of Regulation 104 would, in practice, effectively serve the purpose of the Act ensuring fair play to the examinees) The High Court was of the opinion that in deciding the question as to whether the impugned clause was ultra vires, the Court had to bear in mind "the glaring deficiencies" found to exist in the working of the system inspite of all the elaborate precautionary measures taken for preventing such lapses which were detailed in the affidavit in reply and "the far reaching implications of the said deficiencies on the future of the examinees" and it went on to observe that "the nexus or absence thereof between the purposes of the Act or the purpose of the examination and the prohibition against inspection in the impugned clause can be discovered only by reference to these factors .
When the High Court proceeded to make following further observations: "The examinee is the person affected by miscalculation of totals, omissions to examine any answer, misplacement of the supplementaries of the answer books and misplacement or tampering with the said record in any manner, if any.
Adverse result creates suspicion in his mind about the possible errors in the system and his claim to inspection against this background must be held to be reasonable and calculated to observe the purposes of the examination as also the over all purposes of the Act.
This enables him to verify if his suspicions are ill or well founded.
Existence of some over riding factors alone can justify denial of his claim." 46 The High Court concluded the discussion by stating : "Such confidentiality cannot be found to be serving any purpose of the Act merely because it was acquiesced in the past or accepted without challenge.
According to Mr. Setalvad, authority to treat these documents confidential is implicit in the very power to hold the examination itself, it being necessary to secure effective achievement of the process.
This is too broad a statement to admit of any scrutiny.
No such power can, however, be implied unless its indispensibility of treating the question papers and names of the question setters and examiners confidential, up to a certain stage can easily be appreciated.
Their premature disclosure or exposure may defeat the purpose of examinations and make a mockery of its very conception.
It is, however difficult to see any purpose of continuing to keep them confidential at any rate after the declaration of the results." In our opinion, the aforesaid approach made by the High Court is wholly incorrect and fallacious.
The Court cannot sit in judgment over the wisdom of the policy evolved by the legislature and the subordinate regulation making body.
It may be a wise policy which will fully effectuate the purpose of the enactment or it may be lacking in effectiveness and hence calling for revision and improvement.
But any drawbacks in the policy incorporated in a rule or regulation will not render it ultra vires and the Court cannot strike it down on the ground that, in its opinion, it is not a wise or prudent policy, but is even a foolish one, and that it will not really serve to effectuate the purposes of the Act.
The legislature and its delegate are the sole repositories of the power to decide what policy should be pursued in relation to matters covered by the Act and there is no scope for interference by the Court unless the particular provision impugned before it can be said to suffer from any legal infirmity, in the sense of its being wholly beyond the scope of the regulation making power or its being inconsistent with any of the provisions of the parent enactment or in violation of any of the limitations imposed by the Constitution.
None of these vitiating factors are shown to exist in the present case and hence there was no scope at all for the High Court to invalidate the provision contained in clause (3) of Regulation 104 as ultra vires on the grounds of its being in excess of the regulation making power conferred on the Board.
Equally untenable, in our opinion, is the next and last ground by the High Court for striking down clause (3) of Regulation 104 as unreasonable, namely, that it is in the nature of a bye law and is ultra vires on the ground of its being an 47 unreasonable provision.
It is clear from the scheme of the Act and more particularly, Section 18, 19 and 34 that the legislature has laid down in broad terms its policy to provide for the establishment of a State Board and Divisional Boards to regulate matters pertaining to secondary and higher secondary education and it has authorised the State Government in the first instance and subsequently the Board to enunciate the details for carrying into effect the purposes of the Act by framing regulations.
It is a common legislative practice that the legislature may choose to lay down only the general policy and leave to its delegate to make detailed provisions for carrying into effect the said policy and effectuate the purposes of the Statute by framing rules/regulations which are in the nature of subordinate legislation.
Sec. 3(39) of the Bombay General Clauses Act, 1904, which defines the 'rule ' states: Rule shall mean a rule made in exercise of the power under any enactment and shall include any regulation made under a rule or under any enactment.
" It is important to notice that a distinct power of making bye laws has been conferred by the Act on the State Board under Section 38.
The legislature has thus maintained in the Statute in question a clear distinction between 'bye laws ' and 'regulations '.
The bye laws to be framed under Section 38 are to relate only to procedural matters concerning the holding of meetings of State Board, Divisional Boards and the Committee, the quorum required, etc More important matters affecting the rights of parties and laying down the manner in which the provisions of the Act are to be carried into effect have been reserved to be provided for by regulations made under Section 36.
The legislature, while enacting Sections 36 and 38, must be assumed to have been fully aware of the niceties of the legal position governing the distinction between rules/regulations properly so called and bye laws.
When the statute contains a clear indication that the distinct regulation making power conferred under Section 36 was not intended as a power merely to frame bye laws, it is not open to the Court to ignore the same and treat the regulations made under Section 36 as mere bye laws in order to bring them within the scope of justiciability by applying the test of reasonableness.
It is also relevant to notice in this context the nature and composition of the body on which the regulation making power has been conferred by the Act.
The composition of the State Board is set out in Section 5.
It will be seen therefrom that the Board is to have as ex officio members the Director of Education of the 48 State Government, the Director of Higher Education of the State Government, the Chairmen of the Divisional Boards, the director of Technical Education of the State, the Director of Agriculture, the Director of the State Institute of Education.
Then there is a class of elected members consisting of one representative from each University in the State elected by the Academic Council of the University, two members elected by the Maharashtra Legislative Assembly from amongst its members and one member elected by the Maharashtra Legislative Council from amongst its members.
Next comes the category of nominated members belonging to five different categories described in clauses (i) to (v) under class (C) in the Section, aggregating 21 in all.
It will be seen from these clauses that these nominated members are to be drawn from amongst Principals, Headmasters, Headmistresses, teachers of Junior Colleges and Secondary Schools, representatives of managing bodies of secondary schools and junior colleges, persons having special knowledge or practical experience in matters connected with primary, secondary or higher secondary education.
The State Board is thus comprised of members who can be reasonably expected to possess intimate knowledge, practical know how, expertise and experience in all matters pertaining to the field of education school and collegiate and it is to such a highly responsible body of professional men that the legislature has entrusted the task of framing regulations laving down the details of policy of working out the provisions of the Act are to be carried into effect.
Section 37(i) lays down that the first regulations shall be made by the State Government and they shall continue to be in force until the new regulations are made by the Board under section 36.
There is also the further safeguard provided in sub section (3) of Section 36 that no regulation made under that Section shall have the effect until the same has been sanctioned by the State Government.
Even more significant is the provision contained in sub section (2) of Section 37 conferring a concurrent power on the State Government to make any new regulations in respect of any of the matters referred to in Section 36 and thereby modify or repeal either wholly or in part the regulations made by the State Board.
The said sub section is in the following terms : "37.
(2) If it shall at any time appear to the State Government that it is expedient to make any new regulations in respect of any of the matters referred to in Section 36 or that any regulations referred to in sub section (i) or made by the State Board under section 36 need to be modi 49 fied or repealed, either wholly or in part, the State Government may after consultation with the State Board and by notification in the official Gazette, make such regulations, or modify or repeal any such regulations, either wholly or in part.
The regulations so made, modified or repealed shall take effect from such date as the State Government may in such notification specify or if no such date is specified, from the date of publication of the said notification in the Official Gazette, except as respects anything done or omitted to be done before such date.
" In our opinion, there cannot be a clearer indication of the intention of the legislature regarding the true character of the regulations which are to be made either under Section 36 or under the provisions of either sub section (1) or sub section (2) of the Section 37, namely, that they are in the nature of subordinate legislation having the force of rule framed under a Statute amplifying and supplementing its provisions by laying down how the legislative policy is to be carried into effect with respect to different situations that may arise in the implementation of the object and purposes of Statute.
Viewed in this setting, we are unhesitatingly of the opinion that the regulations made by the Board under Section 36 are in the nature of statutory rules and they have the full vigour and force of subordinate legislation made by a delegate duly empowered in that behalf by the legislature.
In support of its conclusion that the Regulations framed under Section 36 are only in the nature of byelaws, the Division Bench of the High Court has strongly relied on an earlier ruling of the same court in Sophy Kelly vs The State,(1) where another Division Bench has expressed the view that the earlier set of regulations framed under Section 36 of the Act are only in the nature of bye laws.
In arriving at the said conclusion, the Court is not seen to have adverted to most of the crucial aspects pointed out by us in the preceding paragraphs.
We are unable to accept the said decision as laying down correct law.
In the light of what we have stated above, the constitutionality of the impugned regulations has to be adjudged only by a threefold test, namely, (1) whether the provisions of such regulations fall within the scope and ambit of the power conferred by the statute on the delegate; (2) whether the rules/regulations framed by the 50 delegate are to any extent inconsistent with the provisions of the parents enactment and lastly (3) whether they infringe any of the fundamental rights or other restrictions or limitations imposed by the Constitution.
We have already held that the High Court was in error in holding that the provisions of clause (3) of Regulation 104 do not serve the purpose of carrying into effect the provisions of the Act and are ultra vires on the ground of their being in excess of the regulation making power conferred by Section 36.
The Writ Petitioners had no case before the High Court that the impugned clauses of the regulations were liable to be invalidated on the application of second and third tests.
Besides the contention that the impugned regulations were ultra vires the power conferred under Section 36(1), the only other point urged was that they were in the nature of bye laws and were liable to be struck down on the ground of unreasonableness.
In view of the conclusion expressed by us that the regulations cannot be regarded as mere bye laws, the contention raised on alleged unreasonableness does not really call for consideration.
However, since the High Court has discussed the said aspect at great length in its two judgments and fairly elaborate arguments were also advanced before us by the learned advocates appearing on both sides, we think it is only fair and proper that we should briefly express our views on the merits of the question concerning the reasonableness of impugned regulation.
The reason which weighed with the High Court for declaring that clause (3) of Regulation 104, which states that no candidate should be entitled to claim disclosure and inspection of the answer books and other connected documents and that they are to be treated as confidential suffers from the vice of unreasonableness is that denial of the right of disclosure and inspection is 'defeasive ' of the right of verification conferred on the examinees under sub clause (1) of the same clause as well as the right flowing from sub clause (2) of Regulation 102 whereby the Divisional Board is invested with the power to amend the result of any candidate in an examination where it is found that the result has been affected by error, malpractice, fraud, etc.
Dealing with this aspect, the High Court has observed as follows in paras 46 and 47 of its judgment: "We, however, do not think that mere absence of any positive provision for inspection can be decisive of examinees ' claim thereto.
The Board itself is conscious of the falliability of its system, and the possibility of inadvertent 51 or deliberate errors and malpractices.
It has, therefore, provided correctives against such errors in Regulations 102 and 104.
Right of verification and power of correction of the results, conferred under these regulations must be assumed to have been intended to be effective.
Experience of a few years however, has revealed several deficiencies in the functioning of the system and demonstrated how the said system of verification and powers of correction can become ineffective.
Entire reliance on the Board 's administration even for the ministerial part of these functions may reduce these provisions to a dead letter.
These rights and powers can be better effectuated by enabling the examinee, to have himself inspection of the papers.
Such a right indeed is implicit in the right of verification.
The power to correct the errors and amend result contemplated under Regulations 104 and 102 also imply an obligation to facilitate tracing of such errors and malpractices and provide effective machinery for their detection.
This includes an implied obligation to give inspection of the answer papers to the interested person such as the examinee.
The malpractices involved in passing off papers written by one as that of others and manipulations and tampering and the frauds involved therein, cannot be effectively detected and remedied unless, among others, the examinee himself is enabled to inspect the answer papers.
This is indispensible even for verifying the claim as to the presence or absence of any examinee.
The right of inspection thus is the integral part of right of verification and obligation to trace and correct the errors as implied in Regulations 102 and 104.
Doctrine of implied power and obligation and right and duties make up for the absence of positive provisions.
It is true that such right of inspection does not seem to have been recognised under any system of examination in India and its recognition is bound to unsettle the age old practice followed and notions entertained.
The decision is bound to have effects on examination in several other fields, apart from the one contemplated by the Board or Universities.
Consequences on administration also are bound to be far reaching, necessitating setting up some additional machinery, and may prove to be time consuming and expensive.
We, however, find that such right of inspection has now become indispensible for effectuating the 52 underlying purpose of examination.
None of these considerations appear to us to be, therefore, relevant.
" We consider that the above approach made by the High Court is totally fallacious and is vitiated by its failure to follow the well established doctrine of interpretation that the provisions contained in a statutory enactment or in rules/regulations framed there under have to be so construed as to be in harmony with each other and that where under a specific section or rule a particular subject has received special treatment, such special provision will exclude the applicability of any general provision which might otherwise cover the said topic.
Regulation 102 (2), if properly construed in the setting in which it occurs, only confers a suo motu power on the Divisional Board to amend the result of the examination in respect of any candidate or candidates on its being found that such result has been affected by error, malpractice, fraud, improper conduct, etc.
The 'error ' referred to in the said provision has, in the context, to be understood as being limited to an error arising in consequence of malpractice, fraud, improper conduct or other similar matter of whatsoever nature.
We are unable to understand this provision as conferring any right on an examinee to demand a disclosure, inspection or verification of his answer books or other related documents.
All scope for doubt or speculation in relation to this matter has, however, been eliminated by the provision contained in Regulation 104 which specifically deals with the subject of verification of marks obtained by a candidate.
Clause (1) of the said regulation states that any candidate who has appeared at the H.S.C. examination may apply to Divisional Secretary for verification of marks, particularly in any subject, but such verification will be restricted to check whether all the answers have been examined and whether any mistake has been committed in totalling of marks in that subject or in transferring marks correctly on the Ist cover page of the answer book as well as whether the supplements attached to the answer books as mentioned by the candidates are in tact.
Clause (3) of the said Regulation imposes the further limitation that no candidate shall claim or be entitled to revaluation of his answer book or disclosure or inspection of the answer book or further documents as these are to be treated by the Divisional Boards as most confidential.
It is obvious that clauses (1) and (3) have to be read together and not in isolation from each other as has apparently been done by the High Court.
The right of verification conferred by clause (1) is subject to the limitation contained in the same clause that no revaluation of the 53 answer books or supplements shall be done and the further restriction imposed by clause (3), prohibiting disclosure or inspection of the answer books.
The High Court seems to have construed the last portion of clause (3) as implying that the confidentiality of the answer book is to be declared by some order of the Divisional Board and it has proceeded to hold that since no such order was brought to the notice of the Court there was no basis for treating the answer books as confidential.
In our opinion, this interpretation of the concluding words of clause (3) is incorrect.
What is laid down therein is that the answer books and other documents are to be treated by the Divisional Boards as most confidential.
In other words this clause of the regulation contains a mandate to the Divisional Boards to treat the answer book and documents as confidential and lays down that no candidate shall be entitled to claim disclosure or inspection of the said confidential books and documents.
We are also of the opinion that the High Court was in error in invoking the 'doctrine of implied power and obligation ' for the purpose of holding that because the right of verification has been conferred by clause (1) of Regulation 104, there is an implied power in the examinees to demand disclosure and inspection and a corresponding implied obligation on the part of the Board to accede to such a demand.
There is no scope at all for invoking any such implied power or imputing to the regulation making authority an intention to confer such power by implication when there is an express provision contained in the very same regulation clause (3) which clearly manifests the contrary intention and states in categorical terms that there shall be no claim or entitlement for discolor or inspection of the answer books.
The legal position is now well established that even a bye law cannot be struck down by the Court on the ground of unreasonableness merely because the Court thinks that it goes further than "is necessary" or that it does not incorporate certain provisions which, in the opinion of the court, would have been fair and wholesome.
The Court cannot say that a bye law is unreasonable merely because the judges do not approve of it.
Unless it can be said that a bye law is manifestly unjust, capricious, inequitable, or partial in its operation, it cannot be invalidated by the Court on the ground of unreasonableness.
The responsible representative body entrusted with the power to make by laws must ordinarily be presumed to know what is necessary, reasonable, just and fair.
In this connection we may usefully extract the following off quoted observations of Lord 54 Russell of Killowen in Kruse vs John son,(1) "When the Court is called upon to consider the byelaws of public representative bodies clothed with the ample authority which I have described, accompanied by the checks and safeguards which I have mentioned, I think the consideration of such bye laws ought to be approached from a different standpoint.
They ought to be supported if possible.
They ought to be, as has been said, 'benevolently interpreted ' and credit ought to be given to those who have to administer them that they will be reasonable administered." "The learned Chief Justice said further that there may be 'cases in which it would be the duty of the court to condemn by laws made under such authority as these were made (by a county council) as invalid be cause unreasonable.
But unreasonable in what sense ? If for instance, they were found to be partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad faith; if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men, the court might well say, 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires. ' But it is in this and this sense only, as I conceive, that the question of reasonableness can unreasonableness can properly be regarded.
A bye law is not unreasonable merely because particular judges may think that it goes further than is prudent or necessary or convenient or because it is not accompanied by an exception which some judges may think ought to be there '.
" We may also refer with advantage to the well known decision of the Privy Council in Slattery vs Naylor (2) where it has been laid down that when considering whether a bye law is reasonable or not, the Court would need a strong case to be made against it and would decline to determine whether it would have been wiser 55 or more prudent to make the bye law less absolute or will it hold the bye law to be unreasonable because considerations which the court would itself have regarded in framing such a bye law have been over looked or reflected by its framers.
The principles laid down as aforesaid in Kruse vs Johnson and Stattery vs Naylor have been cited with approval and applied by this Court in Trustees of the Port of Madras vs Aminchand Pyarelal & Ors.,(1) As already noticed, one of the principal factors which appears to have weighed with the High Court is that in certain stray instances (specific instances referred to in the Judgment are only about three in number), errors or irregularities had gone unnoticed in the past even after verification of the concerned answer books had been conducted according to the existing procedure and it was only after further scrutiny made either on orders of court or in the wake of contentions raised in petitions filed before a court that such errors or irregularities were ultimately discovered.
In this connection we consider it necessary to recall the observations made by Krishna Iyer, J in R. section Joshi vs Ajit Mills that "a law has to be adjudged for its constitutionality by the generality of cases it covers, not by the freaks and exceptions it martyrs".
It is seen from the affidavits that form part of the record of this case that the three Divisional Boards conduct the H. S.C. examinations twice every year, i.e. in March and October every year.
The number of candidates who appeared for the H.S.C. examination in March 1980 was 1, 15, 364.
Likewise, the S.S.C. Public examination is also conducted by the Divisional Boards twice during the year, and the number of candidates appearing in the said examination is very much larger than the number appearing in the H.S.C examination.
From the figures furnished by the Board, it is seen that there is a progressive increase from year to year in the number of candidates appearing in both these public examinations.
In March 1980, a total number of 2, 99, 267 had appeared in the S.S.C. examination.
Considering the enormity of the task of evaluation discharged by the Board through the examiners appointed by it, it is really a matter for satisfaction that proved instances of errors and irregularities have been so few as to be counted on one 's fingers.
Instead of viewing the matter from this correct perspective, we regret to find the fact that the High Court laid undue and exaggerated stress on some stray instance and made it a basis for reaching the conclusion that reasonable fair play to the candidates can be assured only if 56 the right of disclosure and personal inspection is allowed to the candidates as part of the process of verification.
This approach does not appeal to us as legally correct or soud.
We do not find it possible to uphold the view expressed by the High Court that clause (3) of Regulation 104 which disentitles the examinees to claim disclosure and inspection of the answer books and declares those documents to be confidential is "defeasive of the corrective powers of the Board under Regulations 102 and 104 and the right of verification under Regulation 104 (1) as also destructive of the confidence of public in the efficacy of the system.
The reasons which prompted the High Court to reach the aforementioned conclusion are to be found in the following observations occurring in para 33 of the Judgment of Deshpande, J: "33.
On the other hand, access of the student to the answer books would enable him to verify (1) if the papers are his own.
and (2) supplementary answer papers are duly tagged, and (3) all answers are evaluated and (4) totals are correct, and (5) marks of his practicals or internal assessments are included therein and (6) and his adverse results are not due to any error or manipulations.
This will at once not only make the verification process under Regulation 104 (1) effective and real, but facilitate Board 's exercising its powers to trace errors and malpractices and amend the result preventing frustration of the students.
The purpose of the Act can be served thus better by permitting inspection than by preventing it.
In other words, the confidentiality, rather than serve any purpose of the Act goes to defeat it firstly by making the functioning of the system dependent entirely on the staff, and, secondly by making process under Regulations 102 (3), (4) and (104) (1) ineffective for want of assistance of the examine himself." In making the above observations, the High Court has ignored the cardinal principle that it is not within the legitimate domain of the Court to determine whether the purpose of a statute can be served better by adopting any policy different from what has been laid down by the legislature or its delegate and to strike down as unreasonable a bye law (assuming for the purpose of discussion that the impugned regulation is a bye law) merely on the ground that the policy enunciate therein does not meet with the approval of 57 the court in regard to its efficaciousness for implementation of the object and purposes of the Act.
In the light of foregoing discussion, we hold that the conclusion recorded by the Court that clause (3) of Regulation 104 is liable to be struck down on the ground of unreasonableness is totally incorrect and unsustainable.
That takes us to the question concerning the validity of the provision contained in clauses (1) and (3) of Regulation 104, which provides that no revaluation of the answer books or supplements shall be done and that no candidate shall claim or be entitled to claim a revaluation of his answer books.
This aspect has been dealt with in the separate judgment of the Division Bench delivered by Mohta, J. On perusal of the judgment, it will be seen that the entire reasoning therein is based on the conclusion recorded in the judgment of Deshpande, J delivered in the first group of cases, that the provision contained in clauses (1) and (3) of Regulation 104 prohibiting the disclosure and inspection of answer books is liable to be struck down on the ground of unreasonableness as well as on the ground of its being ultra vires the scope of the rule making power conferred by Section 36 (1) of the Act.
Making this as the starting point of his reasoning, Mohta, J has proceeded to observe that the "logical end of permitting inspection and disclosure of answer books and other documents is to permit revaluation" and that "no useful purpose will be served by having inspection and disclosure in case further right of revaluation is denied".
Based on such an approach, the learned Judge has proceeded to state that there was "no justification whatsoever to restrict the obligation of correcting of mistake only to verification and exclude revaluation from the operation of Regulation 102.
" Accordingly, it was held that clauses (1) and (3) of Regulation 104 insofar as they prohibit revaluation, are also void on the ground of unreasonableness.
As already noticed, the other learned Judge (Deshpande, J) has written a separate short judgment in this group of cases expressing his doubts and reservations concerning the correctness of the conclusion reached by his colleague but he has finally wound up his judgment stating that even though we was diffident of spelling out a right of revaluation from any of the provisions contained in the regulations he would prefer to agree with the judgment prepared by Mohta, J "rather than allow my views to prevail and dissent".
Having regard to the substantial nature and general importance of 58 the question and the repercussions that would inevitably be produced by the recognition of the right to demand revaluation in public examinations of every kind conducted by Universities, School Education Boards and even bodies like the Union and State Public Service Commission, it would have been much more appropriate if the learned Judge (Deshpande.
J) had independently discussed the question in all its aspects in accordance with his own light or referred the matter to a larger Bench or to a third Judge as the case may be if he felt that the view propounded in the judgment prepared by his colleague was of doubtful correctness.
However that may be, we have already held that the reasons stated by the Division Bench in its Judgment in the first group of cases for holding that clause (3) of Regulation 104 insofar as it prohibits disclosure and inspection of answer books and treating them as confidential documents is ultra vires on the ground of its being in excess of the regulation making power of the Board and is also void on the ground of unreasonableness are all incorrect and unsustainable.
The validity of the prohibition against disclosure and inspection having been thus upheld by us, the entirety of the reasoning contained in the judgment of Mehta.
J in support of his conclusion invalidating prohibition against revaluation contained in clauses (1) and (3) of Regulation loses its foundation.
The view expressed by the learned Judge that Regulation 102 (2) which confers on the Board a suo moto power of amending the results where it is found that such a result has been affected by any error, malpractice, fraud, improper conduct, etc., Will be rendered nugatory and ineffective by the prohibition on revaluation is fallacious and unsound.
While discussing the scope of the said regulation, we have pointed out that its purpose and effect is only to confer a suo moto power on the Board to correct errors in cases where irregularities like malpractices, misconduct, fraud, etc.
are found out and it does not confer any right on the examinees to demand any correction of the results.
In the scheme of the regulations after the publication of the results, the only right which the examinees have in relation to this matter is to ask for a verification of the results under clause (1) of Regulation 104 and the scope of such verification is subject to the limitations imposed in the said clause as well as in clause (3) of the very same regulation.
We are unable to agree with the further reason stated by the High Court that since "every student has a right to receive fair play in examination and get appropriate marks matching his performance" it will be a denial of the right to such fair play if there is to be a 59 prohibition on the right to demand revaluation and unless a right to revaluation is recognised and permitted there is an infringement of rules of fair play.
What constitutes fair play depends upon the facts and circumstances relating to each particular given situation.
If it is found that every possible precaution has been taken and all necessary safeguards provided to ensure that the answer books inclusive of supplements are kept in safe custody so as to eliminate the danger of their being tampered with and that the evaluation is done by the examiners applying uniform standards with checks and cross checks at different stages and that measures for detection of malpractice, etc. have also been effectively adopted, in such cases it will not be correct on the part of the Courts to strike down the provision prohibiting revaluation on the ground that it violates the rules of fair play.
It is unfortunate that the High Court has not set out in detail in either of its two judgments the elaborate procedure laid down and followed by the Board and the Divisional Boards relating to the conduct of the examinations, the evaluation of the answer books and the compilation and announcement of the results.
From the affidavit filed on behalf of the Board in the High Court, it is seen that from the initial stage of the issuance of the hall tickets to the intending candidates right upto the announcement of the results, a well organised system of verification, checks and counter checks has been evolved by the Board and every step has been taken to eliminate the possibility of human error on the part of the examiners and malpractices on the part of examinees as well as the examiners in an effective fashion.
The examination centres of the Board are spread all over the length and breadth of each Division and arrangements are made for vigilant supervision under the overall supervision of a Deputy Chief Conductor in charge of every sub centre and at the conclusion of the time set for examination in each paper including the main answer book all the answer books and the supplements have to be tied up by the candidate securely and returned to the Supervisor.
But before they are returned to the Supervisor, each candidate has to write out the title page of main answer books in the cages provided for the said particulars, the number of supplements attached to the main answer book.
The, Supervisor is enjoined to verify whether the number so written tallies with the actual number of supplements, handed over by the candidate together with his main answer book.
After the return of all the answer books to the Deputy Chief Conductor, a tally is taken of the answer looks including supplements used by the candidates by the Stationery Supervisor who is posted by the Board at 60 each sub centre.
This enables the supervisory staff at a sub centre to verify and ensure that all answer books and supplements issued to the candidates have been turned in and received by the supervisory staff.
At this stage of checking and double checking, if any seat number has been duplicated on the answer books by mistake or by way of deliberate malpractice it can be easily detected and corrective measures taken by the Deputy Chief Conductor or the Chief Conductor.
The answer books are then sent by the Deputy Chief Conductor to the Chief Conductor in charge of the main centre.
He sorts out the answer books according to the instructions issued by the Board and sends them to the examiners whose names had been furnished in advance except in the case of the science subjects, namely, "mathematics and statistics, physics, chemistry and biology".
The answer books in the science subjects are forwarded by the Chief Conductor under proper guard to camps in Pune already notified to the Chief Conductors.
The further procedure followed in relation to the valuation of the answer books has been explained in paragraphs 22 to 26 of the counter affidavit dated 10th July 1980 filed in the High Court by the Joint Secretary to the Pune Divisional Board of Secondary Education.
We do not consider it necessary to burden this judgment with a recapitulation of all the details furnished in those paragraphs, and it would suffice to state that the procedure evolved by the Board for ensuring fairness and accuracy in evaluation of the answer books has made the system as fool proof as can be possible and it meets with our entire satisfaction and approval.
Viewed against this background, we do not find it possible to agree with the views expressed by the High Court that the denial of the right to demand a revaluation constitutes a denial of fair play and is unreasonable.
The Board is a very responsible body.
The candidates have taken the examination with full awareness of the provisions contained in the Regulations and in the declaration made in the form of application for admission to the examination they have solemnly stated that they fully agree to abide by the regulations issued by the Board.
In the circumstances, when we find that all safeguards against errors and malpractices have been provided for, there cannot be said to be any denial of fair play to the examinees by reason of the prohibition against asking for revaluation.
The High Court has relied upon the fact that the University of Bombay and some other Universities have recently made provisions permitting candidates to demand revaluation.
In our opinion, this 61 has little relevance for the purpose of deciding about the legal validity of the impugned regulations framed by the Board.
We do not know under what circumstances, the University of Bombay has decided to recognise a right in the examinees to demand a revaluation.
As far as the Board is concerned it has set out in the counter affidavit the enormity of the task with which it is already faced, namely, of completing twice during each year the process of evaluation and release of results of some 3 lakhs of candidates appearing for the S.S.C and H.S.C. examinations to be held in an interval of only a few months from one another.
If the candidates are at all to be given inspection of their answer books or the revaluation of the answer papers is to be done in the presence of the candidates, the process is bound to be extremely time consuming and if such a request is made by even about ten per cent of the candidates who will be 30,000 in number, it would involve several thousands of man hours and is bound to throw the entire system out of gear.
Further, it is in the public interest that the results Public examinations when published should have some finality attached to them.
If inspection, verification in the presence of the candidates and revaluation are to be allowed as of right, it may lead to gross and indefinite uncertainty, particularly in regard to the relative ranking, etc of the candidates, besides leading to utter confusion on account of the enormity of the labour and time involved in the process.
As pointed out by a Constitution Bench of this Court in Fatehchand Himmatlal and Ors.
vs State of Maharashtra, etc.
"the test of reasonableness is not applied in vacuum but in the contest of life 's realities"; , If the principle laid down by the High Court is to be regarded as correct, its applicability cannot be restricted to examinations conducted by School Educational Boards alone but would extend even to all competitive examinations conducted by the Union and State Public Service Commissions.
The resultant legal position emerging from the High Court Judgment is that every candidate who has appeared for any such examination and who is dissatisfied with his results would, as an inherent part of his right to 'fair play ' be entitled to demand a disclosure and personal inspection of his answer scripts and would have a further right to ask for revaluation of his answer papers.
The inevitable consequence would be that there will be no certainty at all regarding the results of the competitive examination for an indefinite period of time until all such requests have been compiled with and the results of the verification and revaluation have been brought into account, 62 Far from advancing public interest and fair play to the other candidates in general, any such interpretation of the legal position would be wholly defeasive of the same.
As has been repeatedly pointed out by this court, the Court should be extremely reluctant to substitute its own views as to what is wise, prudent and proper in relation to academic matters in preference to those formulated by professional men possessing technical expertise and rich experience of actual day to day working of educational institutions and the departments controlling them.
It will be wholly wrong for the court to make a pedantic and purely idealistic approach to the problems of this nature, isolated from the actual realities and grass root problems involved in the working of the system and unmindful of the consequences which would emanate if a purely idealistic view as opposed to a pragmatic one were to be propounded.
It is equally important that the Court should also, as far as possible, avoid any decision or interpretation of a statutory provision, rule or bye law which would bring about the result of rendering the system unworkable in practice.
It is unfortunate that this principle has not been adequately kept in mind by the High Court while deciding the instant case.
In the light of the foregoing discussion, we hold that the High Court was in error in striking down clauses (1) and (3) of Regulation 104 as illegal, unreasonable and void.
We uphold the validity of these provisions.
In the result, both the Judgments of the High Court are set aside and the two groups of Writ Petitions which were allowed under those judgments will now stand dismissed.
These appeals are accordingly allowed.
The appellant will get its costs from the respondents.
S.R. Appeals allowed.
| The respondent was elected to a State Assembly Constituency.
The appellant who had contested the election pleaded four items of corrupt practice in his Election Petition filed against the respondent.
The Legislative Assembly to which the respondent was elected has been dissolved and a fresh election has been held.
Notwithstanding, the fresh election the appellant pursued his election petition in order to prove corrupt practice on the part of the respondent.
In his election petition, the appellant pleaded that the respondent committed a corrupt practice falling under section 123 (5) of the Representation of the People Act, 1951 by procuring and using a jeep for the free conveyance of voters to the polling station on the date of poll.
The respondent denied the charge and contended that the appellant had not complied with the mandatory provisions of sections 81, 82 and 83 of the Act read with Order VI, Rule 15 of the Code of Civil Procedure and section 117 of the Act and the election petition was therefore liable to be dismissed.
The Judge who tried the petition, followed this Court 's ruling in Rahim Khan vs Khurshid Ahmed that Proceedings arising out of 12 election petitions are quasi criminal in nature and that evidence relating to corrupt practices should be scrutinized with scrupulous care and merciless severity; considered the evidence adduced by the parties, and found that the jeep bearing No. USJ 5226 while carrying five ladies including P.Ws. 10, 11, 42 who were voters, free of cost, for casting votes on behalf of the respondent was seized by the District Magistrate and the Superintendent of Police about 1.5 miles from the polling booth and that at the time of the seizure, the jeep was driven by a close friend of the respondent and that this friend had worked for the respondent in the election and was present in the booth on the date of the polling and that the respondent 's polling agent stood surety for the release of the jeep.
The Judge held that these facts were not sufficient to hold that the respondent procured the jeep, and that since the jeep with the voters was caught not at the polling station but at some distance way from it, it was only a case of an attempt at corrupt practice and not corrupt practice itself under section 123 (5) of the Act, and dismissed the election petition.
Allowing the appeal, this Court, ^ HELD: 1.
The requirement of the law in regard to corrupt practice under section 123 (5) of the Representation of the People Act 1951 is that in addition to proving the hiring or procuring of any vehicle or vessel for the carriage of voters to and from any polling station it should also be proved that the electors used the vehicle or vessel free of cost to themselves.
[17A B] 2.
Section 123 (5) requires three things, (1) hiring or procuring of a vehicle; (2) by a candidate or his agent etc.
and (3) for the free conveyance of an elector.
[16H] Joshibhai Chunibhai Patel vs Anwar Beg Mirza, ; , Razik Ram vs Jaswant Singh Chouhan, at 775 and Dadasahib Dattatraya Pawar vs Pandurang Raoji Jagtap, ; at 528, refereed to.
The appellant has proved satisfactorily all the three requirements of clause (5) of section 123 of the Act.
The respondent has therefore to be held guilty of corrupt practice falling under this clause which is ordinarily difficult to prove.
[27F] In the instant case, the evidence of P.Ws. 6, 16 and 43 reveal that the respondent had procured the jeep USJ 5226 from his close friend, Kabir Ahmed for the free conveyance of his electors and that the jeep was, thereafter, used for that purpose on the day of poll, and seized by the officials, P. W 69 District Magistrate, P.W. 73 Superintendent of Police and P.W. 81 Station House Officer where it was being used for the conveyance of the electors P.Ws. 10, 11, 42 and others including P.W. 67 free of cost to themselves.
The appellant s case that the respondent committed corrupt practice is clearly established.
[27D E] 13 4.
Corrupt practice such as in the instant case is very largely resorted to in the elections and could be avoided by either locating polling booths within walking distance of the electors or by having mobile polling stations.
|
Appeal No. 204 of 1958.
Appeal from the judgment and decree dated January 6, 1956, of the Calcutta High Court in Income tax Reference No. 74 of 1953.
K. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellant.
Radha Binod Pal, Panchanan Pal and D. N. Mukherjee, for the respondents.
March 26.
The Judgment of the Court was delivered by SINHA, J.
The question for determination in this appeal on a certificate of fitness granted by the High Court of Calcutta, is whether the respondent 's admitted income tinder certain heads, is chargeable to income tax under the provisions of section 10(6) of the Indian Income tax Act, 1922 (XI of 1922) (hereinafter referred to as the Act).
The Calcutta High Court, by its judgment dated January 6, 1956, answered the question in the negative, disagreeing with the determination of the Income tax Appellate Tribunal by its order dated April 23, 1949.
The facts of this case, upon which the decision of the appeal depends, may shortly be stated as follows: The respondent is a limited liability company incorporated on June 7, 1933, with a view to taking over the assets and liabilities of an unincorporated association called " The Calcutta Stock Exchange Association 461 and to carrying on the affairs of the Stock Exchange which had been founded by that Association.
The principal object of the Respondent Company is to facilitate the transaction of business on the Calcutta Stock Exchange.
In view of that objective, the Company had to make rules and by laws, regulating the mode and the conditions in, and subject to, which the business of the Stock Exchange had to be transacted.
The Company is composed of " members " who may be either individuals or firms, who, except in the case of parties who had been members of the unincorporated Association have to be elected as such, and upon such elections, have to acquire a share of the Company and pay an entrance fee.
The members have to pay a monthly subscription according to the by laws of the Company.
Under the by laws of the Respondent Company, members with a certain standing, are allowed to have "Authorized Assistants ", upto a maximum of six in number.
Such Authorized Assistants are permitted the use of the premises of the Association and to transact business therein in the names and on behalf of the members employing them.
The members have to pay an admission fee for such Authorized Assistants according to the following scale : (a) for the first two Assistants Rs.1,000 (b) for the third Assistant Rs.2,000 (c) for the fourth Assistant Rs.3,000 (d) for the fifth Assistant Rs.4,000 (e) for the sixth Assistant Rs.5,000 (f) for replacement Rs.1,000 The last item of replacement fee of Rs. 1,000/ is meant to cover the fee for substituting one Assistant by another.
Before these by laws were amended with effect from July 10, 1944, a member could have more than six such Assistants, but the number was limited to six by the new amendment which also provided that " Members who have more than six Assistants, at present, shall not be allowed any replacement unless the number of Assistants in their firms has come down to six (maximum fixed).
" Rule (5), as amended, is in these terms: 462 "Every candidate applying for admission as Assistant to a member must serve at least for one year as a probationer in the firm of that member.
A probationer must apply to the Committee (through the member in whose office he will serve as probationer) in such form as may be prescribed by the Committee by paying Rs. 100/ as probationer fee which will not be refunded in any circumstances ".
It would, thus, appear that the rules relating to the admission of members ' Assistants, confer the benefit upon those members only either individuals or firms who are qualified according to the by laws to have such Assistants, and who have paid admission fees and pay a monthly subscription in respect of each of them, besides their own dues, to the Company.
The number of such Assistants has been sought by the by laws to be limited upto a maximum of six, by imposing a progressively enhanced admission fee, apparently, with a view to discouraging the employment of a large crowd of such " Authorized Assistants".
The by laws also provide that "an authorized assistant shall not enter into any contracts on his own behalf and all contracts made by him shall be made in the name of the member employing him and such member shall be absolutely responsible for the due fulfilment of all such contracts and for all transactions entered into by the authorized assistant on his behalf" It is also contemplated by the by laws that tickets have to be issued to the Authorized Assistants, besides the members ' tickets.
The bylaws also contemplate that a member shall give to the prescribed Authority of the Company an immediate notice in writing, of the termination of the employment by him of any Authorized Assistant, and on such termination, the right of the Assistant to use the rooms of the Association, shall cease, and he shall not be at liberty to transact business in the name and on behalf of his employer.
The by laws also make provision for the supervision of the work of the Authorized Assistants to see that they function within the limits of their powers, and do not transact 463 business on behalf of persons or firms other than those employing them.
During the accounting year 1944 45 assessment year 1945 46), the Respondent Company received from its members the sum of Rs. 60,750/ as entrance fees, and the sum of Rs. 15,687/ as subscription in ' respect of the Authorized Assistants.
The Company also received during the aforesaid year, a sum of Rs. 16,000/ as fees for putting the names of companies on the Quotations List.
Unless a particular company 's name is placed on the Quotations List, no dealings in respect of the shares of that company are permitted on the Stock Exchange.
An application has to be made by a member to place on the Quotations List any company not already included in that List, and on approval by the prescribed Authority of the Company, the name of the company thus proposed, is included in the List upon payment of a certain fee.
The companies themselves cannot apply to the Association for such enlistment.
The application has to be made by a member, and has to be accompanied by a fee of Rs. 1,000/ , and it is only after the necessary scrutiny and investigation into the affairs of the proposed company have been made, that the enlistment applied for is granted.
That is another source of income to the Respondent Company.
It is no more necessary to refer to another item of income, which was admitted, during the course of the assessment proceedings in their appellate stage, to be liable to the payment of tax.
We are, thus, concerned in the present controversy with the aforesaid sums of Rs. 60,750/ , Rs. 15,687/ and Rs. 16,000/ which were held by the Income tax Officer, by his order dated March 27, 1946, to be liable to income tax.
The Income tax Officer rejected the contention raised on behalf of the assessee Company that the Authorized Assistants aforesaid were themselves members of the Company, and that therefore, the moneys received from them were exempt from taxation.
He also held that though the Respondent Company was a mutual Association, each one of the three items of income, referred to above, was remuneration definitely related 464 to specific services performed, and was thus, chargeable to tax within the meaning of section 10(6) of the Act.
On appeal, the Appellate Assistant Commissioner, by his order dated June 30, 1947, considered the points at great length, and came to the conclusion that the authorized Assistants were not members or substitute members.
He held that the Authorized Assistants were no more than representatives of the members who employ them, and they transact business on their behalf, and that the Association had framed rules and by laws, regulating the admission, supervision and discontinuance of such Authorized Assistants.
For coming to this conclusion, he relied upon the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax(1).
The case was then taken up in appeal to the Income tax Appellate Tribunal, which dismissed the appeal.
The Tribunal agreed with the finding of the taxing authorities that the Authorized Assistants were not members of the Company within the meaning of the Articles of Association of the Company, and that their position was analogous to that of the " authorised clerks in Native Share and Stock Brokers ' Association at Bombay ".
In the course of its order, the Tribunal observed as follows: " The provision made in the regulations of the company, by which a member can take advantage of sending his authorised assistants to the company for transacting the business in the member name is nothing but giving extra facilities to the members.
By controlling the institution of authorised assistants the company renders specific services to the members and in particular to the member whose assistants work for him.
The amounts received by the company from these sources are clearly covered by the provisions of section 10(6) ".
At the instance of the assessee, the Tribunal stated a case and referred the following questions of law to the High Court for its decision under section 66(1) of the Act: " (1) Whether on the facts of this case the Incometax Appellate Tribunal was right in holding that, (1) 465 Authorised Assistants were not members of the company and as such the amounts of Rs. 15,687/ and 60,750/ received from them as subscriptions and entrance fees respectively should be included in the assessable income.
(2) Were these amounts received for specific services performed by the Association or its members within the meaning of sub section (6) of section 10 of the Indian Income tax Act ? (3)Whether the sums of Rs. 16,000/ and Rs. 600/ were remuneration definitely related to specific services performed by the Association for its members within the meaning of subsection (6) of section 10 ".
The reference was heard by a Division Bench consisting of Sir Trevor Harries, C. J., and Banerjee, J., of the Calcutta High Court.
Before that Bench, certain concessions were made.
It was conceded by Dr. Pal, who also appeared before that Bench, that the Authorised Assistants were not members of the Company.
It was also agreed at the bar, on behalf of both the parties, that the two sums of Rs. 60,750 and 15,687 were not received from the Authorized Assistants, as suggested in the question formulated, and that it was common ground that they were received from members of the Association in respect of their Authorized Assistants.
Therefore, the High Court took the view that the questions framed by the Tribunal did not arise, and that the Tribunal bad proceeded on a wrong basis of facts.
The High Court, therefore, re cast the questions in these terms: " Whether in the facts and circumstances of this case the Income tax Appellate Tribunal was right in holding that (a)the amounts of Rs. 15,687/ and Rs. 60,750/ received from the members of the Association as subscriptions and entrance fees in respect of Authorized Assistants, and (b) the amounts of Rs. 16,000/ and Rs. 600/ received as fees for enlisting names of newly floated companies and for recognition of changes in the styles of firms respectively should be included in the assess.
able income of the assessees 59 466 The Tribunal was asked to re state a case upon the questions as re cast, extracted above.
Accordingly, the Tribunal drew up a fresh statement of the case and re submitted it to the High Court.
On this re statement of the case, the matter was heard by a Bench consisting of Chakravarti, C. J., and Sarkar, J.
The High Court considered the terms of section 10(6) of the Act, and came to the conclusion that the case had not been brought within those terms.
The High Court, in the course of its opinion, observed that though the assessee is undoubtedly a trade association, it did not perform any specific services for its members for remuneration.
It then examined in detail the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax (1), relied upon by the Department, and observed that the differences pointed out between the case in hand and the case decided by the Bombay High Court, were " not vital, though they are not immaterial ", but it was not prepared to take the same view of the facts of this case as had been taken by the Bombay High Court in the case referred to above, or by the Travancore Cochin High Court in the case of Commissioner of Income tax vs Chamber of Commerce, Alleppey (2).
The High Court, accepted the argument of Dr. Pal, which is also addressed to us, that the words " performing specific services for " were far stronger and more definite than the words " render service to ", and that those words meant the actual doing of definite acts in the nature of services.
The Court further observed that those words meant " execute certain definite tasks in the interests and for the benefit of the latter (that is to say, the members) under an arrangement of a direct character ".
It further observed that the words " for remuneration" and " definitely related to those services " meant that " certain specific tasks must be performed or functions of a specific character must be discharged for payment and such payment is to be made to the association as wages for its labour in respect of those tasks or functions ".
In this connection, (1) (2) 467 it may be added that the High Court also made the following observations bearing on the construction of the crucial words of section 10(6): " When section 10(6) speaks of a trade, professional or other similar association performing specific services for its members for remuneration, it contemplates, I think, services in regard to matters outside the mutual dealings for which the Association was formed and for the transaction of which it exists as a mutual association.
If performance of functions even in regard to matters within the objects of the association as a mutual association be performance of specific service within the meaning of the sub section, dis charge of no function can be outside it and everything done would be specific service performed.
That, I do not think, is what the sub section means and intends ".
It is manifest that unless the assessee is brought within the terms of sub section (6) of section 10, the three items of income coming into the hands of the Association, would not be chargeable to income tax.
That subsection is in these terms: " (6) A trade, professional or similar association performing specific services for its members for remu neration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services ' and the profits and gains therefrom shall be liable to tax accordingly ".
It has to be observed at the outset that the performing of the services of the description mentioned in that sub section, may not, but for the words of that section, have amounted to carrying on business in respect of those services.
The use of the word " deemed " shows that the legislature was deliberately using the fiction of treating something as business which otherwise it may not have been.
It is also noteworthy that the sub section is couched in rather emphatic terms.
We have, therefore, to examine the terms of the sub section to see whether the three sums of money in question, or any of them, are or is within the ambit of those terms.
The words " performing specific services ", in our opinion, mean, in the context, " conferring particular benefits " on the members.
The word 468 " services " is a term of a very wide import, but in the context of section 10 of the Act, its use excludes its theolo gical or artistic usage.
With reference to a trade, pro fessional or similar association, the performing of specific services must mean conferring on its members some tangible benefit which otherwise would Dot be available to them as such, except for payment received by the association in respect of those services.
The word " remuneration ", though it includes " wages ", may mean payment, which, strictly speaking, may not be called wages ".
It is a term of much wider import including recompense ", " reward ", " payment ", etc.
It, therefore, appears to us that the learned Chief Justice was not entirely correct in equating " remuneration " with " wages ".
The sub section further requires that the remuneration should be " definitely related " to the specific services.
In other words, it should be shown that those services would not be available to the members or such of them as wish to avail themselves of those services, but for specific payments charged by the association as a fee for performing those services.
After these observations bearing on the interpretation of the crucial words, we shall now examine each of the three items of income, separately, to determine the question whether they answer, or any of them answers, the description of " services " contemplated by the sub section.
Firstly, the sum of Rs. 60,750 has been realised from such members as applied for and obtained permission of the Association to have the use of Authorized Assistants within the precincts of the Stock Exchange.
There cannot be the least doubt that unless those members paid the prescribed entrance fees for one or more Authorized Assistants upto a maximum of six, they could not have the benefit thus conferred upon such members.
Ordinarily, a member has to transact business in the precincts of the Association by himself or by his business partner if there is a firm ; but if that member is a very busy person, and wishes to avail of the services of Authorized Assistants, he has to pay the the prescribed fee.
A member of the Association, with the advantage of mutuality, so long as he transacts 469 business within the precincts of the Association, by himself or by his partner in the case of a firm, is not required to pay any such entrance fee but only the fee payable by every member as such.
The entrance fee, thus, is clearly chargeable only from such of the members as avail themselves of the benefit conferred by the rules of the Association in that behalf.
The entrance fee is, thus, a price paid for the services of the Association in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent.
The entrance fee in question, therefore, cannot but be ascribed to the specific services rendered by the Association in respect of Authorized Assistants who thus become competent to transact business on behalf of their principal.
Coming next to the sum of Rs. 15,687 which was realised from the members by way of subscription in respect of their Authorized Assistants, it is clear that this sum consists of the contributions severally made by the members periodically, so as to continue to have the benefit conferred by the Association of having the use of their representative or agent even during their absence.
There cannot be the least doubt that this is a very substantial benefit to those members who found it worth their while to engage the services of Authorized Assistants.
A member is not obliged, as indicated above, to have such an Assistant, but the fact that he chooses to have such an Assistant on payment of the prescribed fee or subscription, itself, is proof positive that a businessman, who ordinarily thinks in terms of money, has found it worth while to have the services of an Assistant by making an additional payment to the Association by way of recompense for the benefit, thus conferred upon him.
Lastly, the sum of Rs. 16,000 represents fees received from members for allowing their application for enlisting the names of companies not already on the Quotations List, so that the shares and stocks of these companies, may be placed on the Stock Market.
As already indicated, it is not the company concerned which has directly to pay this fee, but the fee has to 470 be paid by the member who initiates the proposal and, apparently, finds it worth his while to pay that prescribed fee to the Association.
He would not make the payment unless he found it worth his while to do so Apparently, such a member is interested in placing the stocks of that company on the market.
It cannot, therefore, be denied that that sum of money is definitely related to the specific services performed by the Association, namely, to permit transactions in respect of the shares of the company concerned, which services would not otherwise be available to the members as a body or to the individual member or members interested in that company.
In our opinion, therefore, each one of the three sources of income to the Association, accrues to it on account of its performing those specific services in accordance with its rules and by laws.
Each one of the three distinct sources of revenue to the Association, is specifically attributable to the distinct services performed by the Association for its members or such of them as avail themselves of those benefits.
And each one of those services is separately charged for, according to the rate or schedule laid down by the rules and by laws of the Association.
In our opinion, therefore, the requirements of sub section
(6) of section 10, have been fulfilled in the present case.
But we have yet to deal with the last argument accepted by the High Court, with reference to the terms of sub section
(6) of section 10, namely, that the services contemplated therein, have reference to " matters outside the mutual dealings for which the Association was formed ".
In the first place, there is no warrant for limiting the application of the words used by the legislature, in the way suggested.
Secondly, the mutuality of the Association extends only to such benefits as accrue to every member on the payment made by him to the Association, but even if additional items of payment have to be made for additional services to be performed by the Association only for such of the members as avail themselves of those benefits, it cannot be said that the mutuality extends to those additional benefits also.
It is, in our opinion, 471 equally wrong to suggest that the services in question should have been outside the objects of the Association.
If the Association renders services to such of its members as avail themselves of such services as are not within the scope of the business activities of the Association, those benefits, if any, would not be ' conferred by the Association as such, because the Association has to function within the scope of its objects of incorporation.
Hence, on a true construction of the provisions of the sub section in question, we have come to the conclusion that the facts and circumstances of the present case, bring the three items of income of the Association within the taxing statute.
In our opinion, the decision of the Bench of the Bombay High Court, consisting of Stone, C. J., and Kania, J., (as he then was), in the case of Native Share and Stock Brokers ' Association vs Commissioner of Income tax is correct, and the facts of that case run very parallel to those of the case in band, though there may be minor differences in the rules and by laws of the Association then before the Bombay High Court.
In that case, as in the present one, the rules of the Stock Brokers ' Association (the Bombay Stock Exchange) contemplated a definite scheme for allowing members to employ authorized clerks and for the admission, conduct, control and supervision of those clerks, for the benefit primarily of the members who employed them.
It was held by the High Court that the income received by the Association by way of fees in respect of those authorized clerks, was within the taxing statute and liable to income tax.
After examining in detail the provisions of the rules and the by laws of the Association, Stone, C. J., made the following observations which are equally applicable to the rules and by laws of the Association in the present case : " In my judgment these rules lay down a definite scheme and provide an organised arrangement, controlled and supervised by the Association for the benefit of its members.
In my opinion the carrying (1) 472 of their scheme into effect is performing services for its members by the Association.
No doubt the benefit of the scheme would redound to the benefit of all members since all would have the advantage of disciplined supervision exercised over the authorised clerks and remisiers of the others.
I do not think that because the payment for the carrying of the scheme is provided for only by members who avail themselves of the use of the authorised clerks it makes any difference.
" Kania, J., (as he then was), in a separate but concurring judgment, made the following very pertinent observations: " A perusal of the rules referred to in the judgment of the learned Chief Justice shows that the institution of authorised clerks exists for the benefits only of those who pay remuneration of Rs. 100 instead of going to the market and carrying on their business themselves.
Individual members are permitted to work through an agent.
For that the charge is made.
The rules provide for the application and grant for such permission, registration of the authoris ed clerks on the individuals being recognised as clerks of particular members, supervision over the work of such clerks and particularly to prevent them from registering contracts either in their own name or in the name of another member; and a general supervision over their good behaviour is contemplated. . ".
A question was raised as to whether these are specific services to be performed for particular members or whether the rules amount to performance of duties towards members in general.
It is true that several of the services to be rendered may be helpful to the other members for their business.
Taken as a whole I consider that as a performance of services by the Association for, the benefit of members who pay the remuneration.
" We have made these copious quotations from the judgment of the Bombay High Court, because, in our 473 opinion, they truly apply the provisions of sub section
(6) of section 10 to associations like the one before us.
The other case to which our attention was drawn, is Commissioner of Income tax vs Chamber of Commerce, Alleppey (1).
The facts of that case are not similar to those of the case before us, but the ratio decidendi of that case are relevant.
That case referred to the Alleppey Chamber of Commerce.
The Chamber inaugurated a produce section with the object of promoting the interests of merchants in general, and of those engaged in the produce trade, in particular, of acting as arbitrators and collecting and publishing information relating to the produce trade.
Members were admitted to the produce section on payment of admission fees, monthly fees and contributions at certain prescribed rates.
The question which was referred to the High Court, was whether the receipts by way of fees and contributions, could be chargeable under section 10(6) of the Act, and it was answered in the affirmative.
Though cases in England, by way of precedent for the decision of the case in hand, have not been cited at the Bar, apparently because the scheme of the Income tax law in England is different and the words of the statute are not in parti material yet there are some cases which throw some light on the controversy before us.
For example, the case of The Carlisle and Silloth Golf Club vs Smith (Surveyor of Taxes) (2 ) related to a golf club which was not incorporated.
It was admittedly a bonafide members ' club, but under one of the terms of its lease, it had to admit non members to play on its course on payment of " green fees " at certain prescribed rates.
Those fees were paid by non members.
Receipts from those fees were entered in the general accounts of the Club, thus, showing an annual excess of receipts over expenditure of the Club as a whole.
It was held by Hamilton, J., (as he then was), that the Club carried on a concern or business in respect of which it received remuneration which was assessable to 'income tax.
He pointed out that the (1) (2) 60 474 receipts from non members went to augment the funds of the Club, and the revenue thus received was applied for the purposes of the Club towards its general expenditure.
The case was taken up to the Court of Appeal, and the decision of that Court is reported in the same Volume at p. 198.
The Court of appeal affirmed the decision and dismissed the appeal.
The Judgment of the King 's Bench Division in The Liverpool Corn Trade Association, Limited vs Monks (H. M. Inspector of Taxes) (1) was based on facts which are similar to the facts of the present case.
In that case, the Liverpool Corn Trade Association, Limited, was an incorporated body under the Companies Act, with the object, inter alia, of protecting the interests of the corn trade, and of providing a clearing house, a market, an exchange, and arbitration and other facilities to the trade.
Membership of the Association was confined to persons engaged in the corn trade.
Each member was required to have one share in the company, and had to pay an entrance fee and an annual subscription.
Non members could also become subscribers.
Payments were made to the Association by members and others for services rendered through the clearing house, etc.
The assessee was taxed on the excess of its receipts over expenditure.
On appeal to the Special Commissioners, they upheld the assessment.
One of the points raised before the Special Commissioners, was that transactions with its members were mutual ones, and that any surplus arising from such transactions, was not a profit assessable to income tax.
On appeal, the High Court agreed with the determination of the Special Commissioners, and held that any profit arising from the Association 's transactions with members, was assessable to income tax as part of the profits of its business, and that the entrance fees and subscriptions received from members must be included in the computation of such profits.
It was suggested that the service in this case, if any, was extremely trivial and the remuneration which was large was for that reason not definitely related to the (1) 475 service.
It was held by Upjohn, J., in Bradbury (H. M. Inspector of Taxes) vs Arnold (1) that the extent of the services was of no materiality.
There, the question was being dealt with under Case VI of Schedule D of the Income tax Act, 1918.
The learned Judge observed : " There is no doubt that a contract for services may, and clearly does, form a matter for assessment under Case VI of Schedule D, and not the less so that the services to be rendered are trivial or that they are to be rendered once and for all so that the remuneration may be regarded as a casual profit arising, out of a single and isolated transaction".
The same view was expressed by Harman, J., in Housden (Inspector of Taxes) vs Marshall (2).
In that case, a well known jockey 'contracted with a newspaper company to make available to its nominee " reminiscences of his life and experiences on the turf for the purpose of writing a series of four articles ", and to provide photographs, press cuttings, etc.
He was paid pound 750.
The question was whether this amounted to sale of property, or was a payment for services rendered.
It was held that it was the latter, and that it did not matter if the service rendered was trivial.
In view of what we have said above as to the nature of the service which the Association performed in respect of the Assistants, the payment of the fee was definitely related to that service.
It is, therefore, plain that the case fell within section 10(6) of the Act.
It must, therefore, be held that the question referred to the High Court should have been answered in the affirmative, and that the High Court was in error in giving its opinion to the contrary.
The appeal must, accordingly, be allowed with costs here and below.
(1) , 669.
Appeal allowed.
| The appellant and his wife went to sleep in the back varandah of their house on the fateful night of 25th/26th July, 1976 while the appellant 's brother alongwith his wife and children went to sleep separately in their bed room in the same house.
The Police Control Room was informed over the telephone by a neighbour Sulekh Chand Jain at 4.55 A.M. that an incident had taken place in the house and on receiving the telephone message, the S.I. made a record of it in the daily diary and passed on the information to the duty officer at the police station, who deputed an A.S.I. to proceed to the spot for investigation.
After reaching the spot, the A.S.I. informed the police station on telephone that a murder had taken place.
The information was recorded and the SHO immediately left for the spot alongwith S.I.
The police party arrived at the spot at about 5.35 a.m. and took charge of the investigation.
The appellant was present near the dead body and on interrogation, the appellant informed the police party that his brother and family had retired for the night in their bed room at about 10.00 P.M. and he alongwith his wife had slept in the back verandah, and that when he got up at 3.45 A.M. he noticed that his wife had been murdered by somebody by strangulation while committing the theft of the gold chain, eartops and golden bangles that she was wearing.
The crime team as well as the dog squad were summoned.
Both the 227 dogs of the dog squad were first let loose and after picking up the smell from the lock lying in the corner of the back courtyard and from the spot, went to the room where the appellant was sitting and each of the dogs pointed towards him by turn.
That raised a suspicion against the appellant.
The SHO then asked the appellant to remove his shirt and found that the appellant had injuries in the nature of bruises etc.
on the front part of his, body, on the chest, as well as on his back, The appellant was thereafter taken for further interrogation to the police station, and in the presence of the Sub Inspector, PWI and PW2 he made a disclosure statement to the effect that he had concealed the golden chain and the bangles in his bathroom and in pursuance of the disclosure statement, the appellant led the police party to the bathroom of his house and after removing the cover from the drain hole, took out the golden chain and the bangles and handed them over to SHO.
The appellant was placed under arrest.
After the disclosure statement was made the case which was originally registered under Section 460 IPC was converted into one under Section 302 read with section 203 IPC.
After completion of the investigation, the challan was filed against the appellant and he was tried for offences under Section 302/203 IPC in the Court of the Additional Sessions Judge.
The prosecution sought to establish the case against the appellant on the basis of circumstantial evidence, there being no eye witness of the occurrence.
The circumstances set up by the prosecution were : (i) information to the police at 4.55 A.M given by a neighbour and not the appellant; (ii) that information that a murder had taken place was not given but intimating the happening of an incident; (iii) The accused having slept at night in the verandah with tile deceased after having locked the collapsable door of the verandah from inside; (iv) The deceased and accused were last seen together; (v) The dogs of the dog squad having pointed out to the accused after picking up scent from the lock; (vi) The ornaments which were on the person of the deceased while she was sleeping, and found missing when she was discovered dead, were recovered from the drain hole of the bath room attached to the bed room of the accused in consequence of and in pur suance to the disclosure statement made by the accused; (vii) injuries found on the person of the accused in the nature of abrasions, contusions, and (viii) the accused having given false information to the police by means of his statement Ext.
228 The Sessions Judge after carefully analysing the aforesaid circumstances held that the prosecution has entirely failed to prove any of the circumstances set up against the accused, much less to establish the chain of circumstances, so as to bring out a nexus between the crime and the accused, and acquitted the appellant for the offences under Section 302/203 IPC.
The State appealed to the High Court and a Division Bench reveresed the order of acquittal of the appellant.
The High Court held that the circumstances formed a chain and the sequences were so complete by themselves that one was left in no manner of doubt that the appellant alone had committed the crime.
The appeal was allowed, the order of acquittal was set aside, and the appellant was sentenced to undergo rigorous imprisonment for life under Section 302 IPC, and also to undergo rigorous imprisonment for a period of one year under Section 203 IPC.
In the appeal to this Court it was contended on behalf of the appellant that the approach of the High Court was totally erroneous and that a well considered and well reasoned judgment of the Trial Court was upset by the High Court by drawing inferences which were not available from the record and by ignoring material discrepancies and infirmities in the prosecution evidence, which not only did not establish various circumstances but which also showed that the chain of circumstantial evidence was wholly incomplete.
It was further contended that the appellant had been roped in on the basis of misguided suspicion and that the circumstances relied upon by the prosecution were not exclude the hypothesis, other than that of the guilt of the appellant.
The appeal was contested by the State submitting that some of the circumstances like the pointing out of the appellant by the dogs of the Dog Squad, the disclosure statement and the recovery of ornaments as a consequence thereof.
and the presence of injuries on the person of appellant, were of such a conclusive and clinching nature that they left no doubt that the appellant had committed the crime, and this was fortified when the appellant had made the attempt to mislead the investigating officer by giving a false version with a view to screen himself.
Allowing the appeal, and setting aside the judgment of the High Court convicting the appellant, this Court, HELD : 1.
The High Court did not properly appreciate the prosecu 229 tion evidence while reversing the well considered judgment of the Sessions Judge.
On independent appraisal of the evidence, the prosecution evidence relating to the disclosure statement and the recovery of ornaments is not only discrepent and contradictory but also suffers from glaring infirmities and improbabilities rendering it unsafe to rely upon the same.
[244H, 245B] 2.
The Sessions Judge was perfectly justified in acquitting the appellant of all the charges and the reasoning given and the findings recorded are sound, cogent and reasonable.
The High Court was not justified to set aside those findings on surmises and conjectures.
The finding of guilt recorded against the appellant by the High Court is not sustainable in law and the prosecution has not established the case against the appellant beyond a reasonable doubt.
[249B] 3(a).
In a case based on circumstantial evidence, motive assumes pertinent significance as existence of the motive is an enlightening factor in a process of presumptive reasoning in such a case.
The absence of motive, however, puts the court on its guard to scrutinise the circumstances more carefully to ensure that suspicion and conjecture do not take place of legal proof.
In a case based on circumstantial evidence, the settled law is that the circumstances from which the conclusion of guilt is drawn should be fully proved and those circumstances must be conclusive in nature.
Moreover, the established facts should be consistent only with the hypothesis of the guilt of the accused alone and totally inconsistent with his innocence.
[238E F] 4.
No motive has been established by the prosecution for the appellant to commit the murder of his wife and the evidence of Tara Chand father of the deceased as well as the sister of the deceased and the tenants living in the same house disclose that the relations between the husband and wife were cordial.
[238E] 5.
The circumstance (of the disclosure statement and the consequent recovery pursuant thereto of the ornaments belonging to the deceased is of such an incriminating nature that if found established by reliable and trustworthy evidence, it would go a long way to furnish proof of the guilt of the appellant and connect him with the crime and if the evidence in 230 support of that circumstance is found to be not reliable, the entire chain of circumstantial evidence will snap so badly as to affect the credibility of the prosecution case as a whole.
[238G H) 6.
According to the prosecution after the appellant had been taken to the police station by the investigating officer he was interrogated after being placed under arrest.
He voluntarily made a disclosure statement exhibit
The disclosure statement was recorded by the SHO and has been attested by Kuldip Kaul PWI, SI Dalip singh PW6 and Harnaik Singh PW2.
Pursuant to the disclosure statement, the appellant is alleged to have led the police party to the recovery of the ornaments from a drain hole in his bathroom.
The recovery memo EX.PF was prepared at the spot and was attested by PW6.
PWl and PW2 besides the Investigating Officer.
[239A B] 7.
According to the appellant, however, he had made no disclosure statement nor led the police party to the recovery of the ornaments as alleged, and according to the defence version, the missing ornaments had in fact been recovered by the police party around 11 A.M. during search from the service lane, from underneath a slab, near the boundary wall and at that time the appellant and Jagminder Dass Jain were also present.
This defence version is supported by the evidence of DW2, Tara Chand, father of the deceased.
[242D E] 8.
The Sessions Judge carefully considered the evidence led by the prosecution with regard to the disclosure statement and the recovery of ornaments.
It was found that the evidence of Harnaik Singh PW2, who according to DW11 Sunder Lal constable of police station Defence Colony, had been earlier also cited as a witness for the prosecution in a case investigated by Harmit Singh the then Sub Inspector of police and the present Investigation Officer was not reliable and that the Investigating Officer had not told the truth when he had deposed that he did not know Harnaik Singh earlier.
The Sessions Judge also found the evidence of PW1 Kuldip Kaul as not reliable or trustworthy and disbelieved his testimony by giving cogent reasons after properly appreciating the evidence led by the prosecution.
The defence version with regard to the recovery found as more probable and it was opined that the investigating officer had created false cluses and fabricated false evidence.
[243H, 244A B D] 9.
The High Court on the other hand did not deal with the various discrepancies and contradictions appearing in the prosecution evidence 231 relating to the making of the disclosure statement and the recovery of the ornaments, but place reliance on the testimony of Kuldip Kaul PWl and Harnaik Singh PW2 to hold that the disclosure statement and the recovery had been made in the manner suggested by the prosecution.
[244G] 10.
There is contradiction between the evidence of Kuldip Kaul PWl and the I.O. as to the place where Kuldip Kaul signed the recovery memo.
According to the I.O. it was signed at the spot while according to Kuldip Kaul PW1, he had returned to the police station and there signed the recovery memo.
After carefully analysing the evidence, it is found that Kuldip Kaul PWl was a convenient witness and his evidence does not appear to be trustworthy.
[245B C] 11.
As regards the recovery of ornaments also, there is a very serious infirmity which emerges from the testimony of Harnaik Singh PW2.
Contrary to what the I.O. and the other witnesses stated, Harnaik Singh PW2 deposed that the ornaments were taken out by the Sardarji I.O. from the drain hole and not by the appellant.
This probabilises the defence version that the ornaments had been recovered during the search and were with the I.O. when the ritual of the recovery under Section 27 of the Evidence Act was performed.
The contradictions in the evidence of the I.O. and S.I. Dalip Singh PW6 as to who had weight the ornaments after their alleged recovery also casts doubt on the correctness of the prosecution story and the bonafides of the investigation.
[245G H] 12.
Having regard to the serious discrepancies, contradictions and the attempt of the Investigating Officer to create false clues and fabricate false evidence, the Sessions Judge was perfectly justified in rejecting the prosecution evidence relating to the disclosure statement exhibit PC and the consequent recovery of the ornaments.
[247C] 13.
The prosecution has failed to establish that the appellant did make the disclosure statement as alleged by the prosecution or led to the recovery of the ornaments belonging to the deceased in the manner suggested by the prosecution.
This piece of circumstantial evidence, therefore, has not at all been established, much less conclusively.
[247D] 14.
Though with the ruling out of the circumstance relating to the recovery of the ornaments as not having been established conclusively, the chain of the circumstantial evidence snaps badly, there are some other 232 circumstances also in the prosecution case which militate against its correctness.
Admittedly, the nail clippings of the nails of the deceased had been taken by the police.
Were was also recovery of the hair from near the cot where the dead body was lying and the removal of the hair from the scalp of the appellant by the I.O. for the purpose of their comparison.
The report of the chemical examiner has not connected the hair recovered from the cot with those of the appellant.
There is no material on the record either to show that the nail clipping had any blood, which could have tallied with the blood group of the appellant.
Thus, both the nail clippings and the hair have failed to connect the appellant with the crime.
[247F H] 15.
The possibility that the entire case was built up on suspicion after the dogs of the dog squad pointed towards the appellant connot be ruled out.
Since, the appellant had slept in the verandah near the cot where the dead body of his wife was found; had locked the collapsable door with the recovered lock before going to sleep and had himself been close to the dead body before the police came, the picking up of the smell by the dogs and pointing towards the accused could not be said to be a circumstance which could exclude the possibility of guilt of any person other than that of the appellant or be compatible only with hypothesis of guilt of the appellant.
The pointing out by the dogs could as well lead to a misguided suspicion that the appellant had committed the crime.
[248E F] 16.
The explanation of the appellant regarding the injuries on his person as having been caused by the police is also quite plausible because according to the father of the deceased, the sister of the deceased, the tenants of the house and other neighbours who had reached the spot, the appellant was wearing only a vest and the pyjama and no shirt and there were no marks of injuries on his body before he was taken to the police station.
The prosecution case regarding the presence of injuries on the person of the deceased also therefore, is quite doubtful.
[248G H]
|
Civil Appeal No. 297 of 1983.
From the Judgment and order dated 11 1.1983 of the Delhi High Court in C.W No 1858 of 1981 Soli J. Sorabjee, A.N. Haksar, Ravinder Narain P.K. Ram.
703 D.N. Mishra and Appellant in person (in C.A. No. 2658 of 1983) for the Appellants K. Parasaran, Attorney General, A K. Ganguli, K. Swamy and C.V.S. Rao for the Respondents The Judgment of the Court was delivered by DUTT, J.
This appeal is directed against the judgment of the Delhi High Court allowing in part only the petition of the appellants under Article 226 of the Constitution of India The appellant No. 1, J.K. Cotton Spinning & Weaving Mills Limited, has a composite mill wherein it manufactures fabrics of different types.
In order to manufacture the said fabrics, yarn is obtained at an intermediate stage.
The yarn so obtained is further processed in an integrated process in the said composite mill of the appellant No. 1 for weaving the same into fabrics.
The appellants do not dispute that the different kinds of fabrics which are manufactured in the mill are liable to payment of excise duty on their removal from the factory.
They also do not dispute their liability in respect of yarn which is also removed from the factory.
It is the contention of the appellants that no duty of excise can be levied and collected in respect of yarn which is obtained at an intermediate stage and, thereafter, subjected to an integrated process for the manufacture of different fabrics.
Indeed, on a writ petition of the appellants, the Delhi High Court by its judgment dated October 16, 1980 held that yarn obtained and further processed within the factory for the manufacture of fabrics could not be subjected to duty of excise.
It is the case of the appellants that in spite of the said decision of the Delhi High Court, the Central Board of Excise has wrongly issued a circular dated September 24, 1980 purporting to interpret rules 9 and 49 of the Central Excise Rules, 1944 (hereinafter referred to as 'the Rules ') and directing the subordinate excise authorities to levy and collect duty of excise in accordance therewith.
In the said circular, the Board has directed the subordinate excise authorities that "use of goods in manufacture of another commodity even within the place/premises that have been specified in this behalf by the Central Excise officers in terms of the powers conferred under rule 9 of the Rules, will attract duty".
As the said circular was being implemented to the prejudice of the appellants, they filed a writ petition before the Delhi High Court, inter alia, challenging the validity of the circular.
During the pendency of the writ petition in the Delhi High 704 Court, the Central Government by a Notification No . 20/82 C. dated 20.2.1982 amended rules 9 and 49 of the Rules.
Section 51 of the Finance Act, 1982 provides that the amendments in rules 9 and 49 of the Rules shall be deemed to have, and to have always had the effect on and from the date on which the Rules came into force i.e. February 28, 1944.
After the said amendments of the Rules with retrospective effect, the appellants amended the writ petition and challenged the constitutional validity of section 5 1 of the Finance Act, 1982 and of the amendments to rules 9 and 49 of the Rules.
The High Court came to the conclusion that section S I and rules 9 and 49 of the Rules, as amended, were valid.
It has, however, been held that the retrospective effect given by section S I will be subject to the provisions of sections 11A and 11B of the (hereinafter referred to as 'the Act ') Further, it has been held that the yarn which is produced at an intermediate stage in the mill of the appellants and subjected to the integrated process of weaving the same into fabrics, will be liable to payment of excise duty in view of the amended provisions of rules 9 and 49 of the Rules.
But the sized yarn which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose, does not change the nature of the commodity as yarn.
The writ petition was, accordingly, allowed in part.
Hence this appeal by the appellants upon a certificate granted by the High Court.
F At this stage, we may refer to rules 9 and 49 before and after amendment of the same.
The relevant portion of rule 9 before the same was amended is as follows: "Rule 9.
Time and manner of payment of duty. (1) No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf whether for consumption, export, or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the Collector may require, and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form: " [The remaining provisions of rule 9 which are not relevant for our purpose are omitted. ] 705 By a Notification No. 20/82 C.B. dated 20.2.1982 of the Central Government, rule 9 was amended by the addition of the following A Explanation thereto: "Explanation.
For the purposes of this rule excisable goods produced, cured or manufactured in any place and consumed or utilised (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, whether in a continuous process or otherwise, in such place or any premises appurtenant thereto, specified by the Collector under sub rule (1), shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation." Rule 49 before its amendment was as follows: "Rule 49.
Duty chargeable only on removal of goods from the factory premises or from an approved place of storage. (1) Payment of duty shall not be required in respect of excisable goods made in a factory until they are about to be issued out of the place or premises specified under rule 9 or are about to be removed from a store room or other place of storage approved by the Collector under rule 47:" [The remaining provisions of rule 49 which are not relevant for our purpose are omitted . ] By the said Notification rule 49 was amended by the addition of an Explanation thereto as follows: "Explanation.
For the purposes of this rule, excisable goods made in a factory and consumed or utilised (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, whether in a continuous process or otherwise, in such factory or place or premises specified under rule 9 or store 706 room or other place of storage approved by the Collector under rule 47, shall be deemed to have been issued out of, or removed from such factory, place, premises, store room or other place of storage, as the case may be, immediately before such consumption or utilisation.
" It has been already noticed that by section 5 1 of the Finance Act, 1982, amendments made to rules 9 and 49 have been given retrospective effect from the date on which the Rules came into force, that is to say, from February 28, 1944 It is not disputed before us that under section 3(1) of the Act, the taxing event is the production or manufacture of the goods in question.
Indeed, section 3 provides that there shall be levied and collected in such manner as may be prescribed, duties of excise on all excisable goods other than salt which are produced or manufactured in India and at the rates set forth in the First Schedule.
It is, therefore, clear that as soon as the goods in question are produced or manufactured, they will be liable to payment of excise duty.
While section 3 lays down the taxable event, rules 9 and 49 provide for the collection of duty.
There is a distinction between levy and collection of duty.
In The Province of Madras vs Boddu Paidanna & Sons, A.I.R. 1942 FC 33 it has been observed by the Federal Court as follows: "There is in theory nothing to prevent the Central Legislature from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to it afterwards, whether it be sold, consumed, destroyed or given away.
A taxing authority will not ordinarily impose such a duty, because it is much more convenient administratively to collect the duty (as in the case of most of the Excise Acts) when the commodity leaves the factory for the first time, and also because the duty is intended to be an indirect duty which the manufacturer or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example, been destroyed in the factory itself.
It is the fact of manufacture which attracts the duty, even though it may be collected later.
" Relying upon the aforesaid observation of the Federal Court, it has been urged by Mr. Soli Sorabjee, learned Counsel appearing on behalf of the appellants, that although it is true that as soon as the commodity is manufactured or produced it is liable to the payment of 707 excise duty, the duty will not, however, be collected unless the commodity leaves the factory.
It is submitted by him that the commodity must be removed from one place to another either for the purpose of consumption in the factory or for sale outside it before excise duty an be claimed.
Counsel submits that rules 9 and 49, as they stood before they were amended, and even the main part of these two rules after amendment, indicate in clear terms that so long as the goods which are manufactured in the factory are not removed, there is no question of payment of excise duty on the goods.
Several decisions have been cited on behalf of the appellants to show that some High Courts also have taken the view that removal is the main criterion for the collection of excise duty on the commodity produced or manufactured inside the factory or the place of manufacture.
We shall presently refer to these decisions.
It may, however, be noticed that the decisions are not also uniform on the interpretation of rules 9 and 49, as they stood before amendment.
We are, however, really concerned with the interpretation of these two rules after amendment, but as much submissions have been made by the parties in the light of the decisions of the High Courts on the interpretation of these two rules, we would like to refer to the same.
In Caltex oil Refining (India) Ltd. vs Union of India and others, it has been held by the Delhi High Court that there can be removal only if the product goes out of one stream of production into another stream of production or if the product is issued out of or taken out or consumed if no further processing of that product is to be done.
Further, it has been observed that there can be no removal of a product within the plant itself so long as the product is in the process of manufacture.
According to this decision, if the product, which is obtained at an intermediate stage of an integrated and uninterrupted process of manufacture, there is no removal of such product.
But, if the intermediary product is transferred from one plant to another for the manufacture of another commodity, there will be removal for the purpose of collection of duty.
In an earlier decision in Delhi Cloth & General Mills Co. Ltd. vs Joint Secretary, Government of India, the Delhi High Court had taken a different view.
In that case calcium carbide manufactured in the factory in one plant was used to generate acetylene gas by the transfer of the article from one plant to another in the same factory.
The question that came up for consideration of the High Court was whether there was removal of calcium carbide for the 708 purpose of levy and collection of excise duty.
The High Court relied upon the definition of 'factory ' under section 2(e) of the Act and took the view that the definition was not restricted to only the part in which the excisable goods were manufactured.
It was, accordingly, held that it could not, therefore, be said that calcium carbide made by the petitioner Company was removed from the factory in which it was produced.
This decision lays down that so long as a commodity is not removed from the factory premises, there is no removal within the meaning of rules 9 and 49.
A similar view has been taken by the Delhi High Court in a later decision in Modi Carpets Ltd. vs Union of India, where the High Court has expressed the view that o excise duty can be levied and recovered on 'sliver ' obtained by the petitioners, if it is consumed within the very premises in which it is manufactured because in such cases there is no removal of sliver from the place of manufacture as envisaged by rules 9 and 49 More or less a similar view has been taken by the Delhi High Court in another decision in Synthetics and Chemicals Ltd., Bombay vs Government of India, [19801 E.L.T. 675.
In that case, the petitioner manufactured Bentol, a mixture of Benzene and Toluene, in the factory, which was again used for the manufacture or rubber The High Court took the view that it was not a case of removal under rules 9 and 49 and, as such, no excise duty was payable on Bentol.
We may notice another decision of the Delhi High Court in Devi Dayal Electronics and Wires Ltd. vs Union of India, [ In that case it has been held that since the impugned resins (polyester or phenolic resins) are not removed from the place of manufacture but are used for the manufacture of end product (Varnish) within the plant itself, there is no removal of goods within the meaning of rule 9 read with rule 49 of the Rules.
Thus it appears that there is a conflict of opinion in the decisions of the Delhi High Court as to what is meant by the word 'removal ' for the purpose of payment of excise duty.
Two views have been expressed by the Delhi High Court.
One view is that so long as any product manufactured in the factory is not actually removed from the factory premises, there is no removal and, accordingly, no excise duty is payable on the product, even if the product is used for the manufacture of another commodity inside the factory.
The other view is that if at one stage a commodity known to the market is produced and is transferred, within the factory for the manufacture of another commodity, there is removal within the meaning of rules 9 and 49.
709 Apart from the above two views, there is a third view which has A also been expressed by the Delhi High Court, namely, that if an intermediate product is obtained in an integrated process of manufacture of a commodity, there is no removal and, therefore, such intermediate product although known to the market and comes under a particular tariff item yet, as there is no removal, there will be no question of payment of excise duty on such intermediate product.
The Nagpur Bench of the Bombay High Court in Oudh Sugar Mills Ltd. vs Union of India, [ has adopted the second and third views.
It has been held that if the purpose of removal of excisable goods is consumption in the same place where the excisable goods are manufactured or cured or if such excisable goods are used in the manufacture of any other goods in the same place, this cannot be done without payment of excise duty at the place and in the manner prescribed.
Further, it has been held that where the plant of production is treated as a composite plant and where the process of manufacture is an integrated, continuous and uninterrupted process, a transfer of a produce which is a component of the final produce from one part of the plant to another, does not amount to removal as contemplated by rule 9.
According to this decision, a process of onward movement of a component for being converted into a final product is not covered by the concept of removal contemplated by the provision of rule 9 of the Rules.
In Oudh Sugar Mills Ltd. vs Union of India, the Allahabad High Court has taken more or less the same view as that of the Bombay High Court.
It has been observed that an intermediate product which by itself is goods known to the market and is used in captive consumption for bringing out altogether a new goods not by an integrated process, but by a distinct and separate process, is liable to excise duty before its removal.
So far as captive consumption is concerned, the Gujarat High Court has taken the same view as that of the Allahabad High Court in Maneklal Harilal Spg. & Mfg. Co. Ltd. vs Union of India, where it has been held by the Allahabad High Court that excise duty is payable when yarn is removed from the spinning department to the weaving department for the manufacture of fabrics All the above decisions relate to rules 9 and 49 before they were amended.
Leaving aside the question of specification for the time being.
rule 9 before its amendment prohibits the removal of excisable goods 710 whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid.
It is manifestly clear from rule 9 that it contemplates not only removal from the place where the excisable goods are produced, cured or manufactured or any premises appurtenant thereto, but also removal within such place or premises for captive consumption or 'home consumption ', as it is called.
Thus if a commodity which is manufactured in such place or premises and is used for the manufacture of another commodity, then it will be a case of removal for the purpose of payment of excise duty.
This view which we take clearly follows from the expression "whether for consumption, export or manufacture of any other commodity in or outside such place".
Thus consumption of excisable goods may be within such place or outside such place.
The decisions which have taken the view that if a commodity manufactured within the factory in one plant is transferred to another plant for the purpose of production of another commodity will be removal for the purpose of payment of excise duty are, in our opinion, correct.
It is not easily understandable why the definition of expression 'factory ' under section 2(e) of the Act has been taken resort to in some of the decisions for the purpose of interpretation of rule 9.
There can be no doubt that if a commodity is taken outside the factory it will be removal, but rule 9 does not, in any manner, indicate that it is only when the goods are removed from the factory premises it will be removal and when the excisable goods manufactured within the factory is removed from one plant to another it will not be a case of removal.
On the contrary, as noticed already, rule 9 clearly embraces within it captive consumtion of excisable goods, that is to say, when excisable goods manufactured in the factory are used for production of another commodity.
Now the question is whether rule 9 before it was amended also envisaged a case of an intermediate product obtained in an integrated and continuous process of manufacture of another commodity, that is, the end product.
It must be admitted that prima facie rule 9 does not show that it also covers a case of integrated, continuous and uninterrupted process of manufacture producing a commodity at an intermediate stage which again is utilised in such continuous process for the manufacture of the end product The learned Attorney General, appearing on behalf of the Union of India, submits that rule 9 and rule 49 also envisaged such a case of integrated process of manufacture of the end product using a product produced at an intermediate stage In support of his contention he has placed reliance on an unreported decision of the Bombay High Court in Misc.
491 of 1964, dated April, 711 30, 1970 (Nirlon Synthethic Fibres & Chemicals Ltd. vs Shri R.K. Audim, Assistant Collector & Ors.) The learned Single Judge of the Bombay High Court took the view that a continuous or integrated process of manufacture was not initially contemplated by rule 9 or rule 49, but after the addition of a new set of rules being rules 173A to 173K to the Rules by the Notification dated May 11, 1968 a continuous and integrated process of manufacture came to be contemplated by the scheme of the Act and the Rules.
Reliance has been placed by the learned Judge on the Explanation to rule 173A as added by the said Notification dated May 11, 1968.
The Explanation is as follows: "Explanation The expression 'home use ' means the consumption of such goods within India for any purpose and includes use of such goods in the place of production or manufacture or any other place or premises (whether by continuous process or not), for manufacture of any commodity.
Reliance has also been placed on rule 173G which provides for the procedure to be followed by an assessee who is a manufacturer of matches or cigarettes or cheroots.
The relevant portion of rule 173G is a proviso thereto which is as follows: "Provided that the duty due on the goods consumed within the factory in a continuous process may be so paid at the end of the factory day.
" From the above provisions of the Explanation to rule 173A and the proviso to rule 173G, the learned Judge has taken the view that a continuous or integrated process of manufacture has come to be contemplated by the scheme of the Act and the Rules framed thereunder for the first time only in May, 1968, the scheme having been brought into force with effect from June 1, 1968 and prior thereto such a continuous or integrated manufacturing process was never contemplated by the Act or the Rules.
learned Attorney General gets inspiration from the said unreported case of the Bombay High Court and submits that atleast since after May, 1968, rule 9 and rule 49 envisage the case of an integrated and continuous process of manufacture involving the use or utilisation of a commodity produced at an intermediate stage of such process for the manufacture of an end product or commodity.
It is submitted by him that if the interpretation as given by the learned 712 Single Judge of the Bombay High Court in the above unreported decision is accepted, in that case, it will not be necessary to consider the effect of amended rule 9 or rule 49, that is to say, the Explanations that have been added to these two rules.
It may be that the concept of continuous or integrated process of manufacture has been recognised in the Explanation to sub rule (2) of rule 173A and in the proviso to rule 173G but we do not think that rule 9 or rule 49 should be interpreted in the light of provisions of the Explanation to sub rule (2) of rule 173A or the proviso to rule 173G Moreover, we are not concerned with the interpretation of rule 9 and rule 49, as they stood before the amendment.
In the instant case, the appellants have challenged rule 9 and rule 49 as amended by the Notification dated February 20, 1982 We are, therefore, concerned with the interpretation of these rules as amended, particularly the question of validity of these rules.
Before we proceed to consider the contentions made on behalf of the parties, it may be stated that in view of the divergence of judicial opinions as to the interpretation of rules 9 and 49, before they were amended, the Explanations to rules 9 and 49 have been added so as to obviate any doubt.
The Explanations to rule 9 and rule 49, inter alia, provide that commodity obtained at an intermediate stage of manufacture in a continuous process shall be deemed to have been removed from such place or premises as mentioned in sub rule (1) of rule 9 This deeming provision has been given retrospective effect by virtue of section S l of the Finance Act 1982.
It is urged by Mr. Sorabjee, learned Counsel for the appellants, that the amended rule 9 and rule 49 are arbitrary and unreasonable inasmuch as the goods which, in fact, are not removed from the factory and which are incapable of removal because of the nature and construction of the plant or the nature and character of the manufacturing process, are fictionally treated as having been removed.
It is submitted that as a result of the amendment of these rules the appellants are exposed to excessive hardship for not complying with the statutory provisions In view of the length of the retrospective operation of the amendments, namely 38 years from the date of the commencement of the Act, that is, February 28, 1944 the appellants would be called upon to pay enormous amount of duty in respect of the entire quantity of goods which have come into existence and have been captively consumed within the factory premises.
The appellants will not, however, be able to pass on this burden to consumers and will have to bear 713 the same themselves It is submitted that in view of the arbitrariness and unreasonableness of the amendments and the hardships that will be caused to the appellants and other manufacturers of excisable goods, the amendments should be struck down as violative of the provisions of Article 14 and Article 19(1)(g) of the Constitution of India.
It is not disputed that the Legislature is competent to make laws both prospectively and retrospectively But, as pointed out by this Court in Jawaharmal vs State of Rajasthan and others, [ 19661 I S.C. R. 890, the cases may conceivably occur where the court may have to consider the question as to whether excessive retrospective operation prescribed by a taxing statute amounts to the contravention of the citizens ' fundamental rights; and in dealing with such a question the court may have to take into account all the relevant and surrounding facts and circumstances in relation to the taxation.
Again in Rai Ramkrishna & others vs State of Bihar, [ 1964] I S C.R 897 this Court has pointed out that if the retrospective feature of a law is arbitrary and burdensome, the statute will not be sustained and the reasonableness of each retrospective statute will depend on the circumstances of each case; and the test of the length of time covered by the retrospective operation cannot, by itself, necessarily be a decisive test.
The apprehension of the appellants is that the amendments to rules 9 and 49 having been made retrospective from the date the Rules were framed, that is from February 28, 1944, the appellants and others similarly situated may be called upon to pay enormous amounts of duty in respect of intermediate goods which have come into existence and again consumed in the integrated process of manufacture of another commodity There can be no doubt that if one has to pay duty with retrospective effect from 1944, it would really cause great hardship but, in our opinion, in view of section I IA of the Act, there is no cause for such apprehension.
Section I IA(I) of the Act provides as follows: "Section l1A. (1) When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: 714 Provided that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub section shall have effect, as if for the words "six months", the words "five years ' were substituted.
Explanation.
Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be " Under section 11A( I) the excise authorities cannot recover duties not levied or not paid or short levied or short paid or erroneously refunded beyond the period of six months, the proviso to section l IA not being applicable in the present case.
Thus although section 5 l of the Finance Act, 1982 has given retrospective effect to the amendments of rules 9 and 49, yet it must be subject to the provision of section 11A of the Act.
We are unable to accept the contention of the learned Attorney General that as section 5 1 has made the amendments retrospective in operation since February 28, 1944, it should be held that it overrides the provision of section 11A.
If the intention of the Legislature was to nullify the effect of section 11A, in that case, the Legislature would have specifically provided for the same Section 5 1 does not contain any non obstante clause nor does it refer to the provision of section 1 IA.
In the circumstances it is difficult to hold that section 5 l overrides the provision of section 1 IA.
It is, however, contended by the learned Attorney General that as the law was amended for the first time on February 20, 1982, the cause of action for the excise authorities to demand excise duty in terms of the amended provision, arose on that day, that is, on February 20, 1982 and, accordingly, the authorities are entitled to make such demand with retrospective effect beyond the period of six months.
But such demand, though it may include within it demand for more than six months, must be made within a period of six months from the date of the amendment.
There is no provision in the Act or in the Rules enabling the excise authorities to make any demand beyond the periods mentioned 715 in section 11A of the Act on the ground of the accrual of cause of action.
The question that is really involved is whether in view of section 5 1 of the Finance Act, 1982, section 11A should be ignored or not.
In our view section S I does not, in any manner, affect the provision of section 11A of the Act.
In the absence of any specific provision overriding section 1 IA, it will be consistent with rules of harmonious construction to hold that section 51 of the Finance Act, 1982 in so far as it gives retrospective effect to the amendments made to rules 9 and 49 of the rules, is subject to the provision of section 11A.
In the circumstances, there is no question of the amended provision of rule 9 and rule 49 being arbitrary, unreasonable or violative of the provision of Article 14 and Article 19(1)(g) of the Constitution of India.
We may now deal with the challenge made to the retrospective operation of amendments of rules 9 and 49 on another ground.
In order to appreciate the ground of such challenge, we may once more refer to section 51 of the Finance Act, 1982.
The Explanation to section 5 1 provides as follows: "Explanation.
For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force.
" Under the Explanation, although rules 9 and 49 have been given retrospective effect, an act or omission which was not punishable before the amendment of the Rules, will not be punishable after amendment.
The Explanation does not however, provide for the penalties and confiscation of goods.
It is the contention of the appellants that as the appellants had not complied with the requirements of the amended rules 9 and 49, they would be subjected to penalties and their goods would be confiscated under the amended rules 9 and 49 read with rule 173Q of the Rules with retrospective effect.
It is, accordingly, submitted on behalf of the appellants that the amendment of these two rules with retrospective effect is arbitrary and unreasonable and should be struck down as violative of Article 14 of the Constitution.
Attractive though the argument is, we regret we are unable to accept the same.
It is true that the Explanation to section 51 has not mentioned anything about the penalties and confiscation of goods but H 716 we do not think that in view of such non mention in the Explanation excluding imposition of penalties for acts or omissions before amendment.
such penalties can be imposed or goods can be confiscated by virtue of the amended provisions of rules 9 and 49.
It will be against all principles of legal jurisprudence to impose a penalty on a person or to confiscate his goods for an act or omission which was lawful at the time when such act was performed or omission made, but subsequently made unlawful by virtue of any provision of law.
The contention made on behalf of the apellants is founded on the assumption that under the Explanation to section 5 1, the penalties can be imposed and goods can be confiscated with retrospective effect.
In the circumstances, the challenge to the amendments of rules 9 and 49, founded on the provision of the Explanation to section 51 of the Finance Act, 1982, is without any substance and is rejected The appellants have also challenged the prospective operation of the Explanation to rules 9 and 49 introduced by amendments of the same.
It is strenuously uged by Mr. Sorabjee, learned Counsel for the appellants, that even after amendment there must be removal of the goods from one place to another for the purpose of collection of excise duty.
Our attention has been drawn on behalf of the appellants to clause (b) of sub section (4) of section 4 of the Act, which defines "place of removal" as follows: "Sub section (4) For the purpose of this section, (a). . . . . . . (b) "place of removal" means (i) a factory or any other place or premises of production or manufacture of the excisable goods; or (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed.
It is submitted on behalf of the appellants that the Explanations to rule 9 and rule 49 are ultra vires the provision of clause (b) of sub section (4) of section 4 of the Act inasmuch as "place of removal" as defined therein, does not contemplate any deemed removal, but a 717 physical and actual removal of the goods from a factory or any other place or premises of production or manufacture or a warehouse etc.
A This contention is unsound and also does not follow from the definition of "place of removal .
Under the definition "place of removal" may be a factory or any other place or premises of production or manufacture of the excisable goods etc The Explanation to rules 9 and 49 do not contain any definition of "place of removal", but provide that excisable goods produced or manufactured in any place or premises at an intermediate stage and consumed or utilised for the manufacture of another commodity in a continuous process, shall be deemed to have been removed from such place or premises immediately before such consumption or utilization.
Clause (b) of sub section (4) of section 4 has defined "place of removal", but it has not defined 'removal '.
There can be no doubt that the word 'removal contemplated shifting of a thing from one place to another.
In other words, it contemplates physical movement of goods from one place to another It is well settled that a deeming provision is an admission of the non existence of the fact deemed.
Therefore, in view of the deeming provisions under Explanations to rules 9 and 49, although the goods which are produced or manufactured at an intermediate stage and, thereafter, consumed or utilised in the integrated process for the manufacture of another commodity is not actually removed, shall be construed and regarded as removed.
The Legislature is quite competent to enact a deeming provision for the purpose of assuming the existence of a fact which does not really exist.
It has been already noticed that the taxing event under section 3 of the Act is the production or manufacture of goods and not removal The Explanations to rules 9 and 49 contemplate the collection of duty levied on the production of a commodity at an intermediate stage of an integrated process of manufacture of another commodity by deeming such production or manufacture of the commodity at an intermediate stage to be removal from such place or premises of manufacture.
The deeming provisions are quite consistent with section 3 of the Act As observed by the Federal Court in Boddu 's case (supra) there is in theory nothing to prevent the central legislature from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to it after wards, whether it be sold, consumed or destroyed or given away.
It is for the convenience of the taxing authority that duty is collected at the time of removal of the commodity.
There is, therefore, nothing unreasonable in the deeming provision and, as discussed above, it is quite in conformity with the provision of section 3 of the Act The contention that the amendments to rules 9 and 49 are ultra vires clause H 718 (b) of sub section (4) of section 4 of the Act, is without substance and is overruled.
It is next contended on behalf of the appellants that even assuming that there can be fictional removal as provided in the Explanation to rules 9 and 49, there cannot be such fictional or deemed removal without the specification of the place where the excisable goods are produced, cured or manufactured or any premises appurtenant thereto.
Rule 9(1), inter alia provides that no excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf until the excise duty leviable thereon has been paid.
The Explanations to rules 9 and 49 refer to the specification that has been made by the Collector under sub rule (1) of rule 9.
It is submitted on behalf of the appellants that as no specification has been made by the Collector of such place or premises appurtenant thereto, the provision of deemed removal with regard to the commodity produced at the intermediate stage and consumed or utilised in the continuous process of manufacture of the end product, is inapplicable.
It is contended that so long as such specification is not made by the Collector of the place of manufacture or of any premises appurenant thereto, the provision of deemed removal as contained in the Explanations to rule 9 and 49 cannot be given effect to.
On the other hand, it is contended by the learned Attorney General that specification of the place of manufacture and other places for the storage of the goods, is made in the licence which is required to be obtained under rule 174 of the Rules.
Rule ]78 provides for the form.
of licence.
Clause (b) of rule 178(1) provides that every licence granted or renewed under rule 176 shall have reference only to the premises, if any, described in such licence.
Form A L. IV is the form of an application for licence under rule 176.
In the Schedule to the Form, description of the premises intended to be used as a factory and of each main division or sub division of the factory has to be given.
Further, the detailed description of store room or other place of storage and the purpose of each has also to be given in the application form for the grant of licence for the manufacture of excisable goods.
Again under rule 44 of the Rules, the Collector may require any manufacturer to make a prior declaration of factory premises and its equipments.
Such a declaration has to be given in Form D 2 in respect of buildings, rooms, vessel, etc.
In view of the particulars which are required to be given by a licensee for the manufacture of excisable goods, it is submitted by the learned Attorney General that the specification that is 719 required to be made under rule 9(1), is made in the licence and in the declaration that has to be furnished by the manufacturer in Form D 2.
It is true that under rule 9(1) there is a provision for specification by the Collector, but the question is what has to be specified by the Collector.
It is the contention of the appellants that the Collector has to specify the place of manufacture and also any premises appurtenant thereto.
We are, however, unable to accept this contention.
The place where the goods are to be manufactured by a manufacturer, that is to say, the site of the factory cannot be specified by the Collector.
It is for the manufacturer to choose the site or the place where the factory will be constructed and goods will be manufactured.
Rule 9(1), in our opinion, does not require the Collector to specify the place where the excisable goods are produced, cured or manufactured.
The words "which may be specified by the Collector in this behalf" occurring in rule 9(1) of the Rules do not qualify the words "any place where they are produced, cured or manufactured ', but relate to or qualify the words "any premises appurtenant thereto".
In other words, if the place of removal is not the place where the goods are produced, cured or manufactured, but any premises appurtenant to such place, in that case, the Collector has to specify such premises for the purpose of collection of excise duty.
Thus the contention of the appellants that the Collector has to specify the place of manufacture and also any premises appurtenant thereto under rule 9(1) of the Rules, is without any substance.
Our attention has, however, been drawn to the impugned circular dated September 24, 1980 issued by the Central Board of Excise & Customs.
In clause 3 of the circular, it is stated as follows: "Mere approval of the ground plan in a routine manner will not suffice for purposes of rule 9 as under the said rule the place of production etc.
Or premises appurtenant thereto have also to the specified separately " Under the circular, the Collector is required to specify under rule 9(1) both the place of production and premises appurtenant thereto, if any.
In view of this direction given in the circular, the learned Counsel for the appellants submits that it is not only binding on the Collector and the other officers of the Central Excise Department, but also the circular is in the nature of contemporanea exposito rendering useful aid in the construction of the provision of rule 9(I) of the Rules.
This contention finds support from the decision of this Court in K.P. Var 720 ghese vs The Income Tax officer, Ernakulam, [1982] I S.C.R. 629 relied on by the learned Counsel of the appellants.
Indeed, it has been observed in that case that the rule of construction by reference to contemporanea exposito is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the 13 statute is plain and unambiguous.
In our opinion, the language of rule 9(1) admits of only one interpretation and that is that the specification that has to be made by the Collector is of any premises appurtenant to the place of manufacture or production of the excisable goods.
The specification is not required to be made and, in our view, cannot be made of the place of manufacture or production of the excisable goods.
Apart from that, as observed by Subba Rao, J., upon a review of all the decisions on the point, in an earlier decision of this Court in the Senior Electric Inspector and others vs Laxmi Narayan Chopra, ; , the maxim contemporanea exposito as laid down by Coke was applied to construing ancient statutes but not to interpreting Acts which are comparatively modern.
Further, it has been observed that in a modern progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the word used at the time the law was made and, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them.
Most respectfully we agree with the said observation of Subba Rao, J.
In the circumstances, we do not agree with the direction of the Board of Central Excise & Customs given in the impugned circular that both the place of manufacture and the premises appurtenant thereto must be specified by the Collector under rule 9 1(1) of the Rules.
Thus, there being no question of specification of the place of manufacture, the contention of the appellants that without such specification there cannot be any deemed removal, fails.
In view of the discussion made above, we hold that the amendments to rules 9 and 49 are quite legal and valid.
Further, section S 1 of this Finance Act, 1982 giving retrospective effect to the said amendments is also legal and valid.
In the instant case, the appellants are liable to pay excise duty on the yarn which is obtained at an intermediate stage and, thereafter, further processed in an integrated process for weaving the same into fabrics.
Although it has been alleged that the yarn is obtained at an intermediate stage of an integrated process of manufacture of fabrics, it appears to be not so.
After the yarn is produced it is sized and, 721 thereafter, subjected to a process of weaving the same into fabrics.
Be that as it may, as we have held that the commodity which is obtained at an intermediate stage of an integrated process of manufacture of another commodity, is liable to the payment of excise duty, the yarn that is produced by the appellants is also liable to payment of excise duty.
In our view, the High Court by the impugned judgment has rightly held that the appellants are not liable to pay any excise duty on the yarn after it is sized for the purpose of weaving the same into fabrics.
No distinction can be made between unsized yarn and sized yarn, for the unsized yarn when converted into sized yarn does not lose its character as yarn.
For the reason aforesaid, the judgment of the High Court is affirmed and this appeal is dismissed.
There will.
however, be no order as to costs.
Civil Appeal Nos.
2658 and 4168 of 1983.
In view of the judgment passed in Civil Appeal No. 297 of 1983, these appeals are also dismissed.
There will, however, be no order as to costs.
S.L. Appeals dismissed.
| % The respondent assessee had purchased fresh frog legs and after removing the skin, washing and removing dirt etc.
and freezing it for the purpose of avoiding decomposition and decay exported the said frog legs and claimed entitlement to benefit of section 5(3) of the .
It was contended on behalf of the State that what was purchased as fresh legs was not exported as such, without freezing them and, therefore, the assessee was not entitled to the benefit of the section.
The Sales Tax Tribunal held that the fresh frog legs purchased by the assessee and exported after freezing for the purpose of avoiding decomposition and decay, were one and the same commodity and the frozen legs did not undergo any material change in character and the identity of the frog legs remained unchanged as such, and, therefore, the assessee was entitled to the benefit of section 5(3) of the Act.
The High Court upheld the view of the Tribunal.
Dismissing the State 's appeal, ^ HELD: Every processing does not bring about a change in the character and identity of the commodity.
The nature and extent of processing may vary from one case to another and indeed there may be several stages of processing and perhaps different kinds of processing at each stage.
With each process suffered, the original commodity experiences change.
But it is only when the change or a series of changes take the commodity to the point where commercially it can no longer be regarded as the original commodity but, instead, is recognised as a new and distinct commodity that it can be said that a new commodity, 99 distinct from the original, has come into being.
The test is whether in the eyes of those dealing in the commodity or in commercial parlance the processed commodity is regarded as distinct in character and identity from the original commodity.
In the instant case, the High Court was right in holding, on the facts found by the Tribunal, that frozen frog legs are same as fresh frog legs, and the process was only to prevent decomposition.
M/s. Sterling foods.
vs State of Karnataka and another, and Deputy Commissioner of Sales Tax vs Pio Food Packers, ; . relied on.
East Texas Motor Freight Lines vs Frozen Food Express, ; at 923) referred to.
Deputy Commissioner of Sales Tax and others vs A.B. lsmail and others, [1986] Suppl.
SCC 218 distinguished.
|
vil Appeal No. 3212 of 1979 etc.
From the Judgment and Order dated 20.8.1979 of the Delhi High Court in Civil Writ Petition No. 426 of 1978.
PG NO 927 Rajinder Sachar, G.B. Pai, Narayan Shetty, K.T. Anantharaman, Mrs. P.S. Shroff, section Shroff, Ms. Girija Krishan, C.C. Mathur, A.M. Mittal, D.N. Mishra, Dalbir Bhandari, Ms. C.K. Sucharita and Ms. A. Subhashini for the appearing parties.
The Judgment of the Court was delivered by DUTT, J.
Of these three appeals by special leave.
we may first of all deal with Civil Appeal No. 3214 of 1979 for.
admittedly, the disposal of that appeal will virtually mean the disposal of the other two appeals.
The said Civil Appeal No. 3214 of 1979 is directed against the judgment of the Delhi High Court whereby the High Court has quashed a circular dated March 8, 1978 issued by the Board of Directors of Caltex Oil Refinery (India) Ltd. (for short `CORIL '),a Government Company, on the writ petition filed by the employees of CORIL being Writ Petition No. 426 of 1978.
The Caltex (Acquisition of Shares of Caltex Refining (India) Ltd. and of the undertakings in India of Caltex (India) Ltd.) Act 17 of 1977, hereinafter referred to as `the Act ', was enacted by the Union Parliament and came into force with effect from April Z3.
the Act provides for the acquisition of shares of CORIL and for the acquisition and transfer of the right, title and interest of Caltex (India) Ltd. in relation to its Undertakings in India with a view to ensuring co ordinated distribution and utilisation of petroleum products.
Under section 3 of the Act, the share in the capital of the CORILS stood transferred to and vested in the Central Government On the appointed day being December 30, 1976.
Under section 5, the right.
title and interest of Caltex (India) Ltd. in relation to its Undertakings in India stood transferred to and vested in the Central Government on the appointed day.
Section 9 of the Act provides that the Central Government may by a notification direct that the right, title and interest and the liabilities of Caltex (Inida) Ltd. in relation to any of its Undertakings in India shall, instead of continuing to vest in the Central Government, vest in the Government Company either on the date of the notification or on such earlier or later date not being a date earlier than the appointed day, as may be specified in the notification.
Section 11(2) provides that subject to rules made in this behalf under section 23, every whole time officer or other employee of CORIL would on the appointed day continue to be an officer or other PG NO 928 employee of CORIL on the same terms and conditions and with the same rights to pension, gratuity and other matters as are admissible to him immediately before that day and shall continue to hold such office unless and until his employment under CORIL is duly terminated or until his remuneration and conditions of service are duly altered by that company.
The Chairman of the Board of Directors of CORIL issued the impugned circular dated March 8, 1978, inter alia, stating therein that consequent upon the take over of the Caltex (India) Ltd. by the Government, the question of rationalisation of the perquisites and allowances admissible to Management Staff had been under consideration of the Board for sometime, and that as an interim measure, the Board had decided that the perquisites admissible to the Management Staff should be rationalised in the manner stated in the said circular.
At this stage, it may be mentioned that by the Caltex Oil Refinery (India) Ltd. and Hindustan Petroleum Corporation Ltd. Amalgamation Order, 1978 which was published in the Gazette of India, Extraordinary, dated May 9, 1978, the Undertaking of CORIL was transferred to and vested in Hindustan Petroleum Corporation Ltd. which thus became a Government Company referred to in section 9 of the Act.
After the issue of the said circular, the respondent 's Nos. 1 to 4, who were some of the employees of CORIL, filed a writ petition in the Delhi High Court being Civil Writ Petition No. 426 of 1978 challenging the legality and validity of the impugned order.
It was submitted by the said respondents that under the said circular the terms and conditions of service of the employees of CORIL had been substantially and adversely altered to their prejudice.
At the hearing of the said writ petition before the High Court it was contended on behalf of the respondents Nos.
I to 4 that the notification issued under section 9 of the Act vesting the management of the Undertakings of Caltex (India) Ltd. in CORIL was ultra vires subsection (1) of section 9.
It was contended that the provision of subsection (1) of section 11 of the Act offended against the provisions of Articles 14, 19 and 31 of the Constitution of India and, as such, it should be struck down.
Further, it was contended that there was no valid classification between the contracts referred to in section 11(1) and Section 15 of the Act.
It was urged that unguided and arbitrary powers had been vested in the of official by sub section (1) of section 11 for the PG NO 929 alteration of the terms and conditions of service of the employees.
Besides the above contentions, another contention was advanced on behalf of the respondents Nos. 1 and 4, namely, that the employees not having been given an opportunity of being heard before altering to their prejudice the terms and conditions of service, the impugned circular should be struck down as void being opposed to the principles of natural justice.
All the contentions except the last contention of the respondents Nos. 1 to 4 were rejected by the High Court.
The High Court, however, took the view that as no opportunity was given to the employees of CORIL before the impugned circular was issued, the Board of Directors of CORIL acted illegally and in violation of the principles of natural justice.
In that view of the matter, the High Court quashed the impugned circular.
Hence this appeal by special leave.
It is not disputed that the employees were not given any opportunity of being heard before the impugned circular dated March 8, 1978 was issued.
It is, however, submitted by Mr. Pai, learned Counsel appearing on behalf of CORIL, that there has been no prejudicial alteration of the terms and conditions of service of the employees of CORIL by the impugned circular.
It is urged that nothing has been pleaded by the respondents Nos. 1 to 4 as to which clauses of the impugned circular are to their detriment.
The High Court has also not pointed out such clauses before quashing the impugned circular.
It appears that for the first time before us such a contention is advanced on behalf of CORIL.
In this connection we may refer to an observation of the High Court Which is "Admittedly, the impugned order adversely affects the perquisites of the petitioners.
It has resulted in civil consequence".
The above observation clearly indicates that it was admitted by the parties that the impugned circular had adversely affected the terms and conditions of service of the respondents Nos. 1 to 4 who were the petitioners in the writ petition before the High Court.
Mr. Sachhar learned Counsel appearing on behalf on the respondents spondents Nos. 1 to 4. has handed over to us a copy of the writ petition filed by the respondents Nos. 1 to 4 before the High Court being Civil Writ Petition No. 426 of 1978.
In paragraph 12 of the writ petition it has been inter alia stated as tollows: "The petitioners respectfully submit that under the said circular the terms and conditions of service of the employees of the second respondent including the petitioners herein have been substantially and adversely altered to the PG NO 930 prejudice of such employees.
The same would be clear inter alia from the statements annexed hereto and marked as Annexure IV.
" Annexure IV is a statement of Annual Loss in Remuneration Income per person/employee posted at Delhi and U.P. Nothing has been produced before us on behalf of CORIL or the Union of India to show that the statements contained in Annexure IV are untrue.
In the circumstances, there is no substance in the contention made by Mr. Pai that there has been no prejudicial alteration of the terms and conditions of service of the employees of CORIL, and that nothing has been pleaded by the respondents Nos. 1 to 4 as to which clauses of the impugned circular are to their detriment.
On of the contentions that was urged by the respondents Nos.1 to 4 before the High Court at the hearing of the writ petition, as noticed above, is that unguided and arbitrary powers have been vested in the official by sub section (1) of section; 11 for the alteration of the terms and conditions of service of the employees.
It has been observed by the High Court that although the terms and conditions of service could be altered by CORIL, but such alteration has to be made `duly ' as provided in sub section (2) of section 11 of the Act.
The High Court has placed reliance upon the ordinary dictionary meaning of the word duly ' which.
according to Concise Oxford Dictionary, means rightly, properly, fitly ' and according to Stroud 's Judicial Dictionary Fourth Edition, the word `duly means 'done in due course and according to law '.
In our opinion, the word `duly ' is very significant and excludes any arbitrary exercise of power under section 11(2).
It is now well established principle of law that there can be no deprivation or curtailment of any existing right, advantage or benefit enjoyed by a Government servant without complying with the rules of natural justice by giving the Government servant concerned an opportunity of being heard.
Any arbitrary or whimsical exercise of power prejudicially affecting the existing conditions of service of a Government servant will offend against the provision of Article of the Constitution Admittedly, the employees of CORIL were not given an opportunity of hearing or representing their case before the impugned circular was issued by the Board of Directors.
The impugned circular was therefore, be sustained as it Offends against the rules of natural justice.
It is, however, contended on behalf of CORIL that after the impugned circular was issued, an opportunity of hearing was given to the employees with regard to the alterations made in the conditions of their service by the impugned PG NO 931 circular.
In our opinion, the post decisional opportunity of hearing does not subserve the rules of natural justice.
The authority who embarks upon a post decisional hearing will naturally proceed with a closed mind and there is hardly any chance of getting a proper consideration of the representation at such a post decisional opportunity.
In this connection, we may refer to a recent decision of this Court in K.I. Shephard & Ors.
vs Union of India & Ors., JT 1987 (3) 600.
What happened in that case was that the Hindustan Commercial Bank, The Bank of Cochin Ltd. and Lakshmi Commercial Bank, which were private Banks, were amalgamated with Punjab National Bank, Canara Bank and State Bank of India respectively in terms of separate schemes drawn under section 45 of the Banking Regulation Act, 1949.
Pursuant to the schemes, certain employees of the first mentioned three Banks were excluded from employment and their services were not taken over by the respective transferee Banks.
Such exclusion was made without giving the employees, whose services were terminated, an opportunity of being heard.
Ranganath Misra, J. speaking for the Court observed as follows: "We may now point out that the learned Single Judge of the Kerala High Court had proposed a post amalgamation hearing to meet the situation but that has been vacated by the Division Bench.
For the reasons we have indicated, there is no justification to think of a post decisional hearing.
On the other hand, the normal rule should apply.
It was also contended on behalf of the respondents that the excluded employees could now represent and their case could be examined.
We do not think that would meet the ends of justice.
They have already been thrown our of employment and having been deprived of livelihood they must be facing serious difficulties.
I here is no justification to throw them out of employment and then given them an opportunity of representation when the requirement is that they should have the opportunity referred to above as a condition precedent to action.
It is common experience that once a decision has been taken.
there is a tendency to uphold it and a representation may not really yield any fruitful purpose.
" The view that has been taken by this Court in the above observation is that once a decision has been taken, there is a tendency to uphold it and a representation may not yield any fruitful purpose.
PG NO 932 Thus, even if any hearing was given to the employees of CORIL after the issuance of the impugned circular, that would not be any compliance with the rules of natural justice or avoid the mischief of arbitrariness as contemplated by Article 14 of the Constitution.
The High Court.
In our opinion was perfectly justified in quashing the impugned circular .
In the result, Civil appeal No. 3214 of 1979 is dismissed.
In view of the reasons given in Civil Appeal No. 3214 of 1979, Civil Appeal No. 3518 of 1979 is also dismissed.
Civil Appeal No. 3212 of 1979 has been preferred by the writ petitioners in civil Writ Petition No. 426 of 1978 filed before the High Court.
The writ petitioners succeded in getting the impugned circular quashed by the High Court.
As the High Court rejected some of the grounds of challenge to the impugned circular, the appeal has been preferred.
There is no merit in this appeal and it is wholly misconceived.
The appeal is, therefore, dismissed.
There will be no order as to costs in any of these appeals.
M.L.A. Appeal dismissed.
| In 1967 the second respondent landlord applied to the Prescribed Authority, under section 3 of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 for permission to file a suit for eviction against the appellant tenant on the ground of his own requirement because his brother with whom he was living had asked him to find accommodation elsewhere.
This application was rejected.
After the 1947 Rent Act was replaced by the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act 1972, the second respondent again sought the permission of the Prescribed Authority for recovery of possession of the leased premises either fully or partially, on the ground that he was living in great hardship in a single room in a house.
The Prescribed Authority refused to grant the permission on the ground that the application had been made within a period of six months from the commencement of the 1972 Rent Act and hence it was barred by Rule 18 (1) of the U.P. Urban Buildings (Regulation of letting, Rent and Eviction) Rules, 1972.
The Appellate Authority, however, granted permission to the second respondent to recover possession of the ground floor portion of the house.
The appellant moved a petition in the High Court against the order of the Appellate Authority but did not succeed.
Before this Court the appellant contends that(l) a second application on the same ground made within six months from the commencement of the 1972 Act was barred under Rule 18 (1) of the 1972 Rules; (2) the High Court 's view that it is not barred because it is the circumstances of requirement and not the nature of the requirement that would constitute PG NO 722 PG NO 723 the ground of eviction is erroneous and unsustainable (3) the Act and the Rules do not permit the creation of two dwelling units in a building covered by a single tenancy; (4) the Appellate Authority has erred in rendering a finding against the appellant in the matter of comparative hardship; and (5) the Appellate Authority and the High Court have failed to notice the without the ground floor, the first and second floors cannot be used as residence because the bath and toilet rooms are situated only in the ground floor.
Dismissing the appeal, it was, HELD: (I) All that Rule 18(1) says is that if a second application is made for release of the house on which permission to sue was sought for in the previous application on the same ground within a period of six months from the date of the final order in that application or within six months from the commencement of the Act, whichever is later, 'the prescribed authority shall accept the findings in those proceedings as conclusive." [727E Fl (2) Even if the two applications are treated as having been made on the same ground, the second application would not attract the operation of Rule 18(1) since the Rule contains only a formula of presumption based on facts.
The prescription of the rule is only of a directory nature and not of a mandatory nature [728C] (3) In the interpretation of statutes, where the situation and the context warrants, the word "shall" used in a section or rule has to be construed as "may".
The present context is one such where the words "the prescribed Authority shall accept the findings in those proceedings as conclusive" have to be read as "the Prescribed Authority may accept the findings in those proceedings as conclusive" because the finding are based upon existence of facts.
[728(, H] (4) It will be inequitable and unrealistic to construe Rule 18(1) as containing an inexorable legal prescription for rejecting a second application filed within the prescribed time limit solely on the basis of the findings rendered in the earlier application.
[729F] (5) The long interval of time between the rejection of the first application and the date of making the second application viz., about five years, and the significant changes that had taken place during the interval in the living conditions of the second respondent undoubtedly rendered irrelevant the earlier findings.
[730A B] PG NO 724 (6) Section 21(1) provides for an order of eviction being passed against a tenant 'From the building under tenancy or any specified part thereof." [730C] (7) It is open to the appellant to move the Prescribed Authority for directions being given to the second respondent to make suitable provision in the ground floor for the appellant and his family members to have access to and make use of the bath and toilet rooms in the ground floor.
[730G]
|
minal Appeal No. 143 of 1957.
Appeal from the judgment and order dated the 8th May, 1957, of the Allahabad High Court, in Criminal Reference No. 149 of 1956, arising out of the judgment and order dated the 14th January, 1956, of the First Additional Sessions Judge, Agra, in Sessions Trial No. 141 of 1954 and Criminal Misc.
No. 1 of 1956.
G. section Pathak and Mohan Behari Lal, for the appellants.
G. C. Mathur, C. P. Lal and G. N. Dikshit, for the respondent No. 1.
Janardan Sharma, for respondent No. 2. 1959.
September 14.
The Judgment of the Court was delivered by WANCHOO J.
This is an appeal oil a certificate granted by the Allahabad High Court in a criminal matter.
The facts of the case may be set out in some 738 detail to bring out the point raised in this appeal.
A complaint was filed by Rajendra Kumar Jain against the four appellants and three others under sections 409, 465, 467, 471 and 477A of the Indian Penal Code.
It is not necessary for present purposes to set out the details of the complaint.
Suffice it to say that after the statement of the complainant under section 200 of the Code of Criminal Procedure hereinafter referred to as the Code) summonses were issued to the accused persons requiring them to answer a charge under section 406 of the Penal Code.
Prosecution witnesses were then examined and cross examined and the statements of the accused persons recorded.
The Magistrate then heard argu ments on the question of framing of charges which were concluded on September 23, 1954.
It was then ordered that the case should be put up on September 30, 1954, for orders.
On that date the Magistrate framed charges against the four appellants under sections 409 and 465 read with section 471 and 477A of the Penal Code.
On the same date the Magistrate ordered commitment of the four appellants to the Court of Session on these charges.
The remaining three accused were discharged.
There was then a revision petition by Rajendra Kumar Jain against the discharge of one of the three accused, namely, Bhajan Lal.
When the matter came up before the First Additional Sessions Judge Agra, he ordered suo motu on April 9, 1955, after a perusal of the commitment order that Bhajan Lal be committed to the Court of Session to stand his trial.
In view of this order he dismissed the revision petition as infructuous.
Thereupon Bhajan Lal went in revision to the High Court.
That petition was heard by Roy, J., and he set aside the order of commitment of Bhajan Lal and one of the reasons given by him for doing so was that a Magistrate was not empowered to frame a charge and make an order of commitment until he had taken all such evidence as the accused might produce before him.
As Bhajan Lal had not been called upon to produce evidence in defence the order of commitment made by the Sessions Judge was held to be not in accordance with law.
This order was passed on 739 October 6, 1955.
Thereupon on January 7, 1956, the four appellants filed a revision petition before the Sessions Judge praying that the order of commitment passed against them be quashed and the main reason advanced in support of this petition was that the learned Magistrate had not observed the mandatory provisions of law laid down in sections 208 to 213 of the Code which were essential for a valid commitment.
This petition came up before the same First Additional Sessions Judge and he made a reference to the High Court that as the procedure followed by the Magistrate was irregular the order of commitment, dated September 30, 1954, was bad in law, and should be quashed.
This reference came up for bearing before another learned Judge of the High Court, namely, Chowdhry, J., and he took the view that the Magistrate had not failed to comply with the provisions of section 208 and that non compliance with the provisions of sections 211 and 212 was curable under section 537 of the Code.
He, therefore, rejected the reference.
There was then an application for a certificate to appeal to this Court which was allowed, particularly, as the view taken by Chowdhry, J., was in conflict with the view taken by Roy, J., already referred to.
The main contention of the appellants before us is that as the case began before the Magistrate as a warrant case under section 406 of the Penal Code, it was incumbent upon the Magistrate, when he decided, in view of the provisions of section 347 (1) of the Code, that the case should be committed to the Court of Session, to follow the procedure provided in Ch.
XVIII of the Code and inasmuch as he had failed to comply with sections 208 to 213 of the Code the commitment was bad in law and should be quashed.
The first question that falls for consideration, therefore, is whether the Magistrate when he began this case, was proceeding in the manner provided for the trial of warrant cases.
Section 347 (1) of the Code comes into play when at any stage of the proceedings in any trial before a Magistrate, it appears to him that the ease ought to be tried by the Court of 740 Session; he has then to commit the accused under the provisions herein before contained.
The Sessions Judge who made the reference held that the case before the Magistrate proceeded from the beginning as if it was a trial of a warrant case.
It was on that basis that the Sessions Judge held that when the Magistrate made up his mind that the case ought to be committed to the Court of Sessions in view of the provisions of section 347(1) of the Code it was his duty to observe the procedure laid down in Ch.
XVIII, particularly, under sections 208, 211 and 212 of the Code.
The order of reference was sent to the Magistrate for explanation, if any, and the Magistrate replied that he had no explanation to submit.
He did not say in his explanation that he was not proceeding as in a warrant case and that the proceedings before him throughout were proceedings in the nature of an inquiry under Ch.
XVIII.
When, however, the matter came up before the High Court, Chowdhry, J., was of opinion that though the Magistrate was competent to try the case as summonses has been issued under section 406 1.
P. C. only, it was open to him to hold an inquiry under Ch.
XVIII from the very beginning in view of the provisions of section 207 which empower a Magistrate to follow the procedure provided in Ch.
XVIII in cases exclusively triable by a Court of Session and also in cases which are not exclusively triable by the Court of Session but which in the opinion of the Magistrate ought to be tried by such Court.
The High Court was further of the view that the offence mentioned in the summons should be deemed to have given notice to the accused that it was optional with the Magistrate to hold an inquiry with a view to commit them to the Court of Session or to try them himself as in a warrant case because column 8 of Schedule 11 of the Code says that a case under section 406 is triable by a Court of Session, Presidency Magistrate or Magistrate of the first or second class.
Therefore, according to the High Court the matter was at large whether the Magistrate was going to adopt one procedure or the other despite the issue of summonses under section 406 of the Penal Code and that 741 nothing had happened to induce the belief in the accused that they would be tried as in a warrant case.
The High Court, therefore, held that the case was proceeded with from the beginning as if it was an inquiry under Ch.
XVIII and on that view it held that there was no non compliance with section 208 of the Code.
As for non compliance with sections 211 and 213, the High Court was of the view that it was curable under section 537 of the Code as no prejudice was caused.
We must say with respect that this view of the nature of the proceedings before the Magistrate is not correct.
It is true that it is open to a Magistrate to hold an inquiry from the beginning under Chapter XVIII in a case not exclusively triable by the Court of Session.
But the mere fact that the Magistrate has such power does not necessarily indicate to the accused that he is holding an inquiry under Ch.
XVIII rather than a trial before himself.
Where the case is not exclusively triable by the Court of Session, the accused would naturally conclude that the proceedings before the Magistrate are in nature of a trial and not an inquiry under Ch.
XVIII.
If the Magistrate intends to use his powers under section 207 and hold an inquiry from the beginning in a case not exclusively triable by the Court of Session, the only way in which the accused 'Can know that he is holding an inquiry and not a trial is by the Magistrate informing the accused that he is holding an inquiry under Ch.
XVIII and not trial.
If he fails to do so, the accused can reasonably conclude that a trial is being held.
In this case undoubtedly the Magistrate did not indicate to the accused from the beginning that his proceedings were in the nature of an inquiry under Ch.
XVIII.
Therefore the accused would naturally conclude that the proceedings before him were in the nature of a trial of a warrant case as the summonses that they had received were under section 406 of the Penal Code only.
The fact that in the complaint section 467, which is exclusively triable by a Court of Session, was mentioned is of no consequence for the summonses.
to the accused were only for a trial under section 406 of the Penal Code.
It must, therefore, be held that the proceedings before 742 the Magistrate began as in the trial of a warrant case and if the Magistrate at a subsequent stage of the proceedings was of the view that the case should be committed to the Court of Session, he would have to act under section 347 (1) of the Code.
We have been at pains to refer to this aspect of the matter for considerations would be different if the case was exclusively triable by the Court of Session and began from the outset as an inquiry under Ch.
XVIII.
What we shall say hereafter must, therefore, be taken to apply only to a case which began as a proceeding in a warrant or summons case and in which the Magistrate at a later stage takes action under section 347 (1).
This brings us to a consideration of the duty of the Magistrate who takes action under section 347 (1) of the Code.
That section reads as follows: " If in any inquiry before a Magistrate or in any trial before a Magistrate, before signing judgment, it appears to him at any stage of the proceedings that the case is one which ought to be tried by the Court of Session or High Court, and if he his empowered to commit for trial, he shall commit the accused under the provisions hereinbefore contained.
" The first question that has to be decided is the meaning of the words " under the provisions hereinbefore contained ".
These words have been the subject of decision by a number of High Courts and the High Courts are unanimous that they mean that if the Magistrate decides at some stage of the trial to commit the accused, he has to follow the provisions contained in Ch.
XVIII.
It is not necessary to refer to those decisions for the words themselves are quite clear.
They lay down that if the Magistrate comes to the conclusion that the accused ought to be committed for trial, he shall commit in accordance with the provisions contained in the earlier part of the Code, namely, in Ch.
XVIII.
This of course does not mean that the Magistrate must begin over again from the beginning.
All that he has to do when he decides that the case ought to be committed is to inform the accused and see that the provisions of Ch.
XVIII are complied with so far as they have not been complied 743 with up to the stage at which he decides that there ought to be a commitment.
Now the procedure under, Ch.
XVIII is laid down in sections 208 to 213 of ' the Code.
The Magistrate begins by hearing the complainant, if any, and takes all evidence that may be produced in support of the prosecution or on behalf of the accused or as the Magistrate may call himself.
The Magistrate is also required to issue process to compel the attendance of any witness or the production of any document or other thing if the complainant or officer conducting the prosecution of the accused applies to him.
After the evidence under section 208 has been taken the Magistrate then examines the accused for the purpose of enabling him to explain any circumstances appearing in evidence against him under section 209.
Thereafter if he is of opinion that there are not sufficient grounds for committing the accused for trial, lie can discharge him unless it appears to him ' that such person should be tried before himself or some other Magistrate in which case he has to proceed accordingly.
On the other hand, if the Magistrate is of opinion after taking the evidence and examining the accused that there are sufficient grounds for committing the accused for trial, he has to frame a charge under section 210 declaring with what offence the accused is charged.
The charge is then read over and explained to the accused and a copy thereof, if he so requires, is furnished to him free of cost.
After the charge is framed the Magistrate calls upon the accused under section 211 to furnish a list of persons orally or in writing whom he wishes to be summoned to give evidence on his trial.
The Magistrate may also allow the accused to furnish a further list at a later stage in his discretion.
Section 212 gives power to the Magistrate in his discretion to summon and examine any witness named in any list under section 211.
Then comes section 213 which lays down that if the accused has refused to give a list as required by section 211 or if he has given one and the witnesses, if any, included therein whom the Magistrate desires to examine, have been summoned and examined under section 212 the Magistrate may make an order committing the accused for trial by the High Court or the 744 Court of Session and shall also briefly record the reasons for such commitment.
On the other hand, if he is satisfied after hearing the witnesses for the defence that there are not sufficient grounds for committing the accused, he may cancel the charge and discharge the accused.
It will be seen from this analysis of the provisions relating to commitment that section 208 gives a right to the accused to produce evidence in defence before the Magistrate examines him under section 209 and proceeds to frame a charge under section 210.
Now when a Magistrate makes up his mind to commit a case not exclusively triable by the Court of Session under the power given to him under section 347 (1) of the Code, he has to follow this procedure.
But as we have said earlier it is not necessary that the Magistrate should begin from the beginning again when he so makes up his mind.
The Magistrate may make up his mind at any stage of the trial before him and generally speaking four contingencies may arise.
Firstly, he may make up his mind after the trial is practically over and the witnesses for the prosecution have been examined and crossexamined after the charge, the accused has be en examined both under sections 253 and 342 of the Code and and all the defence evidence has been taken.
In such a 'case sections 208, 209 and 210 have been complied with and all that the Magistrate has to do is to intimate to the accused that he intends to commit him for trial and ask him to give the list of witnesses under section 211 and proceed thereafter as provided in Ch.
XVIII.
Secondly, the Magistrate may make up his mind after all the witnesses for the prosecution have been examined and cross examined and the charge has been framed but no defence has been taken.
In such a case that part of section 208 which lays down that all the evidence for the prosecution shall be taken, has been complied with and the Magistrate may then proceed to comply with the rest of section 208 and take the defence evidence and then proceed further under sections 209 to 213 and amend the charge so as to make it conformable to a charge in an inquiry under Ch.
XVIII or cancel it.
Thirdly, the Magistrate may make up his mind after 745 some of the prosecution witnesses have been examined and cross examined and a charge has been framed.
In such a case he has to examine the rest of the prosecution witnesses under section 208 and take the defence evidence, if any, produced by the accused and then proceed under sections 209 to 213 amending or cancelling the charge already framed as indicated earlier.
Lastly, the Magistrate may have only just begun taking evidence for the prosecution and may not have framed a charge.
In such a case he takes the rest of the prosecution evidence and complies with the provisions from sections 208 to 213.
But in each of these four contingencies it is the duty of the Magistrate to intimate to the accused that he has made up his mind to commit in view of the provisions of section 347(1) and then proceed in the manner indicated above.
It is necessary that the accused should know when the Magistrate makes up his mind to commit so that their right under section 208 to produce defence, if any, before commitment is made is safeguarded.
Now what happened in this case was this.
The Magistrate had apparently taken all the prosecution evidence and the prosecution witnesses had been examined and cross examined; the Magistrate had framed no charges upto September 30, 1954.
He had heard arguments on the question whether any charges should be framed and had fixed September 30,1954, for orders in this respect.
When, therefore, he decided on September 30,1954, that the case ought to be committed to the Court of Session, the proper course for him was to refrain from framing any charges and intimate to the accused that he intended to commit them for trial.
He then should have called upon them to produce defence evidence, if any, under section 208 and then proceeded further under Ch.
XVIII.
The Magistrate, however, failed to inform the accused that he had made up his mind to proceed under section 347 (1) and to commit them for trial.
What he did on September 30, 1954, was to frame charges forthwith and record an order committing the accused to the Court of Session under section 213 of the Code.
He thus deprived them of their right to lead defence evidence, if any, under section 208.
It may be that if he had told them that he was 746 going to proceed under section 347 (1) and commit them for trial and asked them if there was any defence evidence to be produced, they might have said that they did not wish to produce any defence before him at that stage.
But what the accused would have said if the Magistrate had proceeded in this manner is irrelevant in considering the question whether the commitment in this case was bad in law inasmuch as it did not comply with section 208 so far as giving the accused an opportunity to lead defence evidence, if any, was concerned.
The fact remains, therefore, that in this case the Magistrate when he decided to act under section 347 (1) did not intimate that decision to the accused and proceeded forthwith to commit them for trial under section 213, thus depriving them of the right to produce defence evidence, if any, under section 208.
The next question which falls for consideration is the effect of this non compliance with section 208 of the Code and whether it is curable under section 537 of the Code.
The effect of Don compliance with various provisions of the Code and whether such non compliance is curable under section 537 have been the subject of a large number of cases before various High Courts and also before their Lordships of the Judicial Committee of the Privy Council.
It is not necessary to refer to this mass of authorities.
One of the earliest of these case decided by the Privy Council is Subramania Iyer vs King Emperor (1), while one of the latest is Pulukuri Kotayya vs King Emperor(2).
The law was summed up by their Lordships of the Judicial Committee in Pulukuri Kotayya 's case (2 ) at p. 75 in these words: When a trial is conducted in a maner different from that prescribed by the Code (as in N.A. Subramania Iyer 's case (1), the trial is bad, and no question of curing an irregularity arises; but if the trial is conducted substantially in the manner prescribed by the Code, but some irregularity occurs in the " course of such conduct, the irregularity can be cured under section 537, and none the less so because the irregularity involves ' as must nearly always be the case, a breach of one or more of the very comprehensive provisions of the code.
The distinction (1) (1901) L.R. 28 I.A. 257.
(2) (1948) L.R. 74 I.A. 65.
747 drawn in many of the cases in India between an illegality and an irregularity is one of degree rather than of kind.
This view finds support in the decision of their Lordships ' Board in Abdul Rehman vs The King Emperor(1) where failure to comply with sections 360 of the Code of Criminal Procedure was held to be cured by section 535 and 537.
" These observations were quoted with approval by this Court in Narain Rao vs The State of Andhra Pradesh(2).
It seems, therefore, fruitless to consider whether the non compliance with section 208 in this case is an illegality which cannot be cured under section 537 or an irregularity which is curable thereunder.
As the stage of trial has not been reached in this case, no question arises of considering whether the trial has been conducted in a manner different from that prescribed by the Code.
What we have to see is whether the breach of section 208 which has occurred in this case is such that the Court will presume prejudice to the accused by the mere fact of the breach.
If such presumption can be made, the breach would obviously be not curable under section 537 of the Code, even assuming that that section applies.
The question, therefore which eventually emerges is whether this breach of section 208 is of such a character that the Court will presume that there has been prejudice to the accused by the mere fact of the breach.
Now the accused has a right under section 208 to produce evidence in defence, if any, before the Magistrate proceeds to decide whether a charge should be framed or not.
The Magistrate 's decision whether the charge should be framed or not is bound to be affected one way or the other if evidence is produced by the accused, for the Magistrate 'Would then be bound to consider the effect of that evidence on the question of framing the charge.
If the accused is denied the opportunity of leading that evidence which he has a right to do under section 208, it seems to us that the denial of such right is sufficient to cause prejudice to the accused and section 537 would have no application to a case of this kind.
The possibility that the accused may not have produced defence if asked by the Magistrate whether he would do so, (1) (1926) L.R. 54 I.A. 96, (2) 748 is of no consequence, so far as this conclusion is concerned.
If this is the reply expected, it makes it all the more incumbent on the Magistrate to inform the accused that he was intending to commit the case and ask him if he wished to produce evidence.
If the accused did not want to do so, the Magistrate would have done his duty and his way would be clear to proceed further with his intention to commit the accused.
But when the Magistrate did not intimate to the appellants in this case that he was intending to commit them for trial and proceeded to frame charges and pass the order of commitment forthwith on September 30, he was denying to them their right to produce defence under section 208 of the Code.
The denial of that right is in our opinion in itself sufficient to cause prejudice to the accused and failure of justice inasmuch as the accused were prevented from leading evidence which might have induced the Magistrate not to frame a charge against them or cancel it.
We are, therefore, of opinion that the breach of section 208 which took place in this case was such as was bound to cause a failure of justice and there is, therefore, no question of the application of section 537 in these circumstances.
The commitment is, therefore, bad in law and must be quashed on this ground alone.
In the petition of appeal the appellants have referred also to breach of provisions of sections 211, 212 and 213 of the Code.
As we have come to the conclusion that the breach 'of section 208 in this case is sufficient to invalidate the commitment it is not necessary to consider the effect of the further breach of sections 211, 212 and 213.
What we have said in this case wit respect to the effect of the breach of section 208 may not be taken as applying to the breach of sections 211, 212 and 213 for the considerations arising out of those breaches may be different.
We, therefore, allow the appeal, quash the order of commitment as well as the charges framed and send the case back to the Magistrate to proceed in the manner indicated above according to law.
Appeal allowed.
| Although it is well settled that a court of appeal should not lightly disturb a finding of fact arrived at by the trial judge who had the opportunity of observing the demeanour of the witnesses and hearing them, that does not mean that an appellate court hearing an appeal on facts can never reverse such a finding.
Where the decision on a question of fact depends on a fair consideration of matters on record, and it appears to the Appeal Court that important considerations have not been taken into account and properly weighed by the trial judge, and such considerations clearly indicate that the view taken by the trial judge is wrong, it is its duty to reverse the finding even if it involves the disbelieving of witnesses believed by the trial court.
Where again the trial judge omits to properly weigh or take into account 664 important considerations bearing on the credibility of witnesses or the probability of their version, which point the other way, it is the duty of the court of appeal to reverse the findings of the trial Court.
If the question of fact does not solely depend on the credibility of witnesses for its determination, but is one of inference from proved facts, on a consideration of probabilities, the court of appeal stands in the same position as the trial court and is free to reverse its findings.
Shunmugayoya Mudaliay vs Manikka Mudaliar, (1909) L.R. 36 I.A. 185; Coghlan vs Cumberland, (1898) i Ch.
704; Wall (Thomas) vs Thomas, (1947) i All E.R. 582; Bonmax vs Austin Motor Co. Ltd. (1955) i All E.R. 326; Sayju Pershad vs Raja jwaleshwari Pratap Narain Singh, (195I) I.L.R. and Laljee Mohomet vs Girlder, , referred to.
Consequently, where, as in the present case, the plaintiff brought a suit for pre emption and the question for determination was one of fact, namely, whether the plaintiff had performed the essential ceremonies of Talab E Mowasibat and Talab E Ishtashad, and the trial court believed his witnesses, not because it had been impressed by their demearour, and the High Court in appeal disbelieved them in the light of the probabilities of the case and reversed the decision of the trial court.
Held, that it was not correct to contend that the way in which the High Court had approached the case was wrong or that its decision was not justified.
|
ivil Appeal No. 506 of 1989 Etc.
From the Judgment and Order dated 5.12.1986 of the Allahabad High Court in C.M.W.P. No. 207 of 1980.
Dr. L.M. Singhvi and R. B. Mehrotra for the Appellants.
Anil Dev Singh and Mrs. section Dikshit for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
Special leave granted.
The appellants are engaged in the business of manufac ture and sale of Indian made foreign liquor and country liquor, under licence granted to them under the Provisions of U.P. Excise Act.
The appellants have installed vats in their Breweries ' premises for the storage of liquor.
The liquor stored in vats is bottled and sold under the supervi sion of officers of the Excise Department.
The Inspector of Weights and Measures issued notices to the appellants call ing upon them to get their vats verified, calibrated and stamped in accordance with the provisions of the U.P. Weights and Measures (Enforcement) Act, 1959, (hereinafter referred to as the Act).
The appellants preferred appeals against the notice issued by the Inspector on the ground that the provision of the Act were not applicable to the appellants ' undertaking, manufacturing alcohol but the appeal was dismissed by the Controller of Weights and Meas ures.
The appellants made petitions under Article 226 of the Constitution before the High Court of Allahabad challenging the orders of the respondents.
Before the High Court the appellants contended that the provisions of the Act were attracted to the appellants ' undertaking only at the stage of sale and anything done in the process of manufacture and storage of liquor could not be 378 subjected to the provisions of the Act and the notice issued by the Inspector of Weights and Measures was without any authority of law.
It was further urged that the calibration of vats storing liquor was not necessary and the direction issued by the respondents was without any authority of law.
Similar petitions were filed by the manufacturers of Syn thetic Rubber and Campher.
All the three sets of petitions were disposed of by a Division Bench of the High Court by a common judgment and order dated December 5, 1985.
The Divi sion Bench allowed the petitions filed by the Manufacturers of Synthetic Rubber and Campher but it dismissed the peti tions filed by the manufacturers of liquor on the finding that the provisions of the Act and the Notification issued thereunder are applicable to the manufacturers of liquor in the distillery and the notices issued by the respondents for the calibration of the storage vats were legal and valid.
Aggrieved the appellants have preferred the present peti tions for special leave to appeal.
Dr. L.M. Singhvi, learned counsel for the appellants urged that the High Court committed error in holding that the storage vats are required to be calibrated under the provisions of the Act.
He added that the provisions of the Act would apply if measures are used for transaction in trade and commerce, but keeping alcohol in storage vats does not amount to transactions in trade or commerce.
Learned counsel emphasised that unless the storage vats are used in transaction for trade and commerce the provisions of the Act would not be attracted.
In order to appreciate the conten tion, we would briefly refer to the relevant provisions of the Act.
Section 7 of the Act imposes prohibition on use of weights and measures other than standard weights and meas ures.
It provides that no unit of mass or measure, other than the standard weights or measures shall be used in any transaction for trade or commerce or any dealing or contract or for any work to be done or goods to be sold or delivered.
Section 10 further imposes prohibition on the sale or use of unstamped commercial or measuring instrument in trade or commerce unless it has been verified or reverified and stamped in the prescribed manner by an Inspector with stamp of verification.
These provisions impose legislative prohi bition that no weight or measure or weighing or measuring instrument shall be used or be kept for use in any transac tion for trade or commerce or for being sold, unless it has been verified by the Inspector of the Department in the prescribed manner.
Section 2(jj) defines the expression "use in transaction for trade or commerce " which is as follows: 379 "2(jj) use in transaction for trade or com merce with its grammatical variation and cognate expressions, means use for the pur poses of determining or declaring the quantity of anything in terms of measurement of length, area, volume, capacity or weight in or in connection with (a) any contract, whether by way of sale, purchase, exchange or otherwise, or (b) any assessment of royalty; toll; duty or other dues ' or (c) the assessment of any work done or serv ices rendered, otherwise than in relation to research or scientific studies or in individu al households for house holds purposes" Under the aforesaid definition clause the legislature has given an artificial extended meaning to the expression "use in transaction for trade or commerce".
According to the definition it means use for the purposes of determining or declaring the quantity of anything in terms of measurement of length or capacity or weight in or in connection with the clauses (a) and (b) mentioned therein.
Clause (b) refers to any assessment of royalty; toil; duty or other dues.
Accord ing to the extended meaning given by the legislature the provisions of the Act would be attracted if the assessment of royalty; toll; duty or dues is to be determined on the basis of the quantity of anything in terms of measurement of length, area, volium or weight.
there is no dispute that for the purposes of determining excise duty on the liquor pro duced by a manufacturer the assessment is made on the basis of the volume of the liquor produced and sold by the appel lants.
Since volume of the liquor produced and stored in vats is connected with the assessment of excise duty, it is covered by the expression "use in transaction for trade or commerce".
Ordinarily, the storage of alcohol in vats by itself may not amount to transaction for trade or commerce but under the extended meaning of the expression under Section 2(jj) even the storage of liquor in vats would be covered by the expression "use in transaction for trade or commerce" as volume of the liquor is necessary to be deter mined in connection with the assessment of excise duty.
We are, therefore, in agreement with the view taken by the High Court.
The learned counsel for the appellants urged that the High Court failed to consider the effect of Notification dated 28.8.1961 which made the provisions of the Act ap plicable to an undertaking engaged in the manufacture of alcohol at the stage of sale only.
The Notification is as under: 380 NOTIFICATION "KHADYA TATHA RASAD VIBHAG NOTIFICATION NO.
UPWM 1(3) 28 2401/XXIX D 524 58 dated August 19, 1961, published in U.P. Gazette, Part I, dated 25th August, 1961, page 1537.
In exercise of the powers conferred by sub section (3) of Section 1 of the Uttar Pradesh Weights and Measures (Enforcement) Act, 1959 (U.P. Act No. V of 1959), the Governor of Uttar Pradesh is pleased to appoint the first day of October, 1961, as the date on which the provisions of the said Act shall come into force in the whole of Uttar Pradesh in respect of: (a) Undertaking engaged in the manufacture of alcohol in so far as they undertake the sale of alcohol; and (b) Departments of Government in so far as they undertake the levy of duties of excise on alcohol.
" By the aforesaid Notification the provisions of the Act were made applicable to an undertaking engaged in the manu facture and sale of alcohol with effect from October 1, 1961.
Emphasis was laid by the learned counsel for the appellants on the expression "in so far as they undertake the sale of alcohol".
He urged that provisions of the Act occurring in the aforesaid Notification have been made applicable to the appellants ' undertaking at the point of sale of alcohol.
Before the sale of alcohol the provisions of the Act are not attracted and as such the storage vats cannot be required to be calibrated under the law.
Having given our anxious consideration to the question, we do not find any merit in the submission.
The alcohol stored in the storage vats is essentially for the purpose of sale and there is no dispute that the appellants manufacture and store alcohol in storage vats for the purposes of sale.
There is further no dispute that the officers of the Excise Department measure storage vats as prescribed by Rule 75 1 of the Excise Mannual, Volume 1.
Since the volume of the storage vats is measured by the officers of the Excise Department, the provisions of the Act for the purpose of sale would be applicable to the storage vats also.
But if there be any doubt about the applicability of the provisions of the Act the same stood removed by the subsequent Notifi cations dated May 17, 1962 and July 18, 1967.
Under these Notifications the provisions of the Act have been made applicable to all the under 381 takings in so far as they relate to units of capacity in respect of those clauses of undertakings to which the Act has been made applicable.
Having regard to these facts the High Court, in our opinion, was fight in holding that the storage vats are covered by the provisions of the Act.
Learned counsel for the appellants then urged that excise duty is assessed at the point of sale as held by the High Court of Allahabad in M/s Mohan Meakins Breweries vs State of U.P., [1979] U.P. Tax Cases 1048, therefore, provi sions of the Act are applicable to the issue vats only and no calibration is necessary for the storage vats.
We find no merit in the submission.
In the aforesaid decision the High Court held that under the provisions of the U .P.
Excise Act excise duty is a charge essentially on the production or manufacture of an excisable article but for administrative convenience it is imposed at a stage subsequent to the stage of manufacture.
This itself would make it clear that pro duced material is the subject matter of excise duty, even though the assessment of duty is done at the point of sale for convenience sake.
The storage of alcohol is required to be measured by the officers of the Excise Department under the provisions of the Excise Manual to ensure that there is no pilferage or unauthorised removal of alcohol as that would adversely affect the assessment of duty.
Storage vats are intimately connected with the assessment of excise duty, therefore provisions of the Act are applicable to storage vats also.
We are, therefore, of the opinion that no exception can be taken to the view taken by the High Court.
The appeals fail and the same are accordingly dismissed.
There will be no order as to costs.
N.P.V. Appeals dis missed.
| The appellants, were engaged in manufacture and sale of liquor, under licence granted to them under the U.P. Excise Act.
They installed vats in their Breweries ' premises for the storage of liquor.
The liquor stored in vats was bottled and sold under the supervision of officers of the Excise Department.
The Inspector of Weights and Measures issued notices to them for getting their vats verified, calibrated and stamped in accordance with the provisions of the U.P Weights and Measures (Enforcement) Act, 1959.
The appellants filed appeals against the notices issued by the Inspector on the ground that the provisions of the Act were not applica ble to the appellants ' undertaking, manufacturing alcohol.
The appeals were dismissed by the Respondent Controller of Weights and measures.
The appellants filed writ petitions before the High Court challenging the orders of the respond ents.
The High Court dismissed the petitions holding that the provisions of the Act and the Notifications issued thereun der were applicable to the manufacturers of liquor in the distillery, and the notices issued by the respondents for the calibration of the storage vats were legal and valid.
Aggrieved, the appellants filed appeals by special leave in this Court contending that the High Court committed error in holding that the storage vats were required to be cali brated under the provisions of the Act, that the provisions of the Act would apply if measures were used for transaction in trade and commerce, but keeping alcohol in storage vats did not amount to transactions in trade or commerce, and that unless the storage vats were used in transaction for trade and 376 commerce, the provisions of the Act were not attracted.
Dismissing the appeals, HELD: 1.1 Under the definition clause in section 2(jj) of the U.P. Weights and Measures (Enforcement) Act, 1959, the legislature has given an artificial extended meaning to the expression "use in transaction for trade or commerce".
Ac cording to the definition it means use for the purposes of determining or declaring the quantity of anything in terms of measurement of length or capacity or weight in or in connection with the cls.
(a) and (b) mentioned therein.
Clause (b) refers to any assessment of royalty; toll; duty or other dues.
Thus, according to the extended meaning, the provisions of the Act would be attracted if the assessment of royalty; toll; duty or dues is to be determined on the basis of the quantity of anything in terms of measurement of length, area, volume or weight.
[379C E] 1.2 There is no dispute that for the purposes of deter mining excise duty on the liquor produced by a manufacturer, the assessment is made on the basis of the volume of the liquor produced and sold.
Since volume of the liquor pro duced and stored in vats is connected with the assessment of excise duty, it is covered by the expression "use in trans action for trade or commerce".
[379E F] 1.3 Ordinarily, the storage of alcohol in vats by itself may not amount to transaction for trade or commerce but under the extended meaning of the expression under section 2(jj), even the storage of liquor in vats would be covered by the expression "use in transaction for trade or commerce" as volume of the liquor is necessary to be determined in con nection with the assessment of excise duty.
[379F G] 1.4 The alcohol stored in the storage vats is essential ly for the purpose of sale and there is no dispute that the appellants manufacture and store alcohol in storage vats for the purpose of sale, and the officers of the Excise Depart ment measure storage vats as prescribed by Rule 751 of the Excise Manual, Volume 1.
Since the volume of the storage vats is measured by the officers of the Excise Department, the provisions of the Act for the purpose of sale would be applicable to the storage vats also.
[380F G] By Notification dated 19.8.1961 the provisions of the Act were made applicable to an undertaking engaged in the manufacture and sale of alcohol with effect from October 1, 1961.
Any doubts about the 377 applicability of the provisions of the Act stood removed by the subsequent Notifications dated May 17, 1962 and July 18, 1967, making the provisions of the Act applicable to all the undertakings in so far as they relate to units of capacity in respect of those classes of undertakings to which the Act has been made applicable.
[380E, H; 381A] Therefore, having regard to the above facts the High Court was right in holding that the storage vats were cov ered by the provisions of the Act.
[381B]
|
r Petition (Civil) No. 344 of 1983.
Under article 139A of the Constitution of India for transfer of Writ Petition No. 475 of 1983 pending before the Rajasthan High Court.
D. Bhandari for the Petitioner (Not Present) B. D. Sharma for the Respondent.
The Order of the court was delivered by 200 CHINNAPPA REDDY, J.
This petition is totally bereft of any statement of facts.
It has been drafted and filed in a most casual and careless manner.
All that is stated in the petition is that the Writ Petition pending in the Rajasthan High Court raises exactly the same questions as those raised in SLP (Civil) No. 7561/83 pending in this Court and the writ petition may, therefore, be transferred to this Court.
Nothing else is mentioned.
No facts relating to either case are mentioned.
Even the alleged common questions are not stated.
We can only say that it is most discourteous and disrespectful to the highest court in the country to file such indifferent petitions.
The advocate is not discharging his duty either to the court or to the client.
Transfer petition is dismissed.
H.S.K. Petition dismissed.
| The appellant was dismissed from the post of "Branch Manager" by respondent No. 3, Bank, after an inquiry relating to fraudulent encasement of a draft by one Labh singh.
His demand in regard to his dismissal, was referred by the Govt.
of Punjab to the Conciliation Officer, who recommended that the appellant 's case should be forwarded for adjudication on the question whether his dismissal from service was justified.
The Labour Commissioner, exercising the powers of the State Government, declined to refer the dispute to the Labour Court for adjudication but without giving any reasons for his conclusion that the appellant was not a "workman".
The appellant challenged before the High Court the decision of the Labour Commissioner in writ petition which was dismissed summarily.
Hence this appeal.
The grievance of the appellant is that the Labour Commissioner ought to have given reasons in support of his decision.
Allowing the appeal, ^ HELD: 1.
All that the Labour Commissioner has stated in the order is that the post held by the appellant did not fall within the category of "workman" but no reasons are given to justify that conclusion.
He ought to have given reasons why he came to the conclusion that the appellant is not a "workman" within the meaning of section 2(s) of the .
[319 D E] 2.
In the instant case, the Court keeping in view that remanding the matter to the Labour Commissioner for giving his reasons will entail delay, directed the Labour Commissioner, Chandigarh to make a reference either to the Labour Court or to the Industrial Tribunal section 12(5) of the Industrial 318 Disputes Act 1947 for adjudication of the question as to whether the dismissal of the appellant from the service of the Bank is legal and justified.
[319 E E]
|
Appeal No. 852 of 1964.
Appeal by special leave from the judgment and decree dated August 24, 1962 of the Punjab High Court in Regular Second Appeal No. 843 of 1956.
Bishan Narain and A. G. Ratnaparkhi, for the appellant.
K. C. Nayyar and Mohana Behar Lal, for respondent No. 1.
790 The Judgment of the Court was delivered by Bhargava, J.
This appeal has come up as a result of a dis pute relating to succession to the property of one Sunder Singh.
Sunder Singh, on 4th November, 1950, executed a will in respect of his property in favour of his niece, Udham Kaur.
Subsequently, on 27th October, 1951, one Tarlok Singh executed a document divorcing his wife, Mst.
Angrez Kaur, respondent No. 1 in this appeal, on the ground that she frequently went away from his house without his consent and whenever he made enquiries from her, she became furious with him.
In the document, he recited that Mst.
Angrez Kaur was no longer his wife and that she had gone to live with Sunder Singh.
According to respondent No. 1 on this divorce being granted to her by her first husband, Tarlok Singh, she was married to Sunder Singh by a custom, known as 'Chadar Andazi '.
On 7th June, 1952, Sunder Singh revoked his previous will and, in that document, acknowledged Mst.
Ang rez Kaur as his wife and left the property to her.
Sunder Singh died in 1953.
Thereafter, the appellant, Gurdit Singh, who was a collateral of Sunder Singh in the third degree, applied for mutation.
On 12th December, 1954, mutation of the property left by Sunder Singh was sanctioned in favour of Gurdit Singh by the authorities.
Thereupon, Mst.
Angrez Kaur filed a suit on 17th March, 1955, claiming the property as widow of Sunder Singh.
The trial Court decreed the suit, holding that respondent No. I had married Sunder Singh by 'Chadar Andazi ' and the marriage was valid.
On appeal, the Additional District Judge set aside the decree of the trial Court and held that the marriage of Mst.
Angrez Kaur with Sunder Singh during the life time of her first husband, Tarlok Singh, was invalid and was not justified by any custom and, consequently, she could not be treated as the widow of Sunder Singh.
Respondent No. 1, there on, appeale to the High Court of Punjab and the learned Judge, who heard the appeal, felt that the question of custom had not properly tried by the trial Court and the first appellate Court.
Consequently he framed the following issue : "Is there any custom amongst the tribes of the parties according to which the divorce given by Tarlok Singh 'to Mst.
Angrez Kaur is recognised enabling her to enter into a valid marriage by Chadar Andazi with Sunder Singh?" This issue was remitted to the trial Court for recording a finding after giving the parties an opportunity to lead further evidence.
Further evidence was led in the trial Court which answered this issue in the negative and against respondent No. 1.
The District Judge, in his report, endorsed the view of the trial Court.
The High Court, however, held that the 7 91 custom was proved under which Mst.
Angrez Kaur could validly marry Sunder Singh, even though her first husband, Tarlok Singh, was alive, and, consequently decreed the suit.
Gurdit Singh appellant has now come up to this Court against this decree of the High Court by special leave.
As is clear from the facts narrated above, the, only issue that arose in this case was whether respondent No. 1, Mst.
Angrez Kaur, had succeeded in proving the existence of a custom in the community to which she belonged, according to which Tarlok Singh, her first husband, could divorce her, whereupon she was at liberty to enter into a valid marriage by Chadar Andazi with Sunder Singh, whose property is now under dispute.
The parties are residents of the District of Jullundur where, according to Gurdit Singh appellant, no such custom, as claimed by respondent No. 1 exists amongst the Jats, which is the caste to which the parties belong.
To urge this point, learned counsel for the appellant relied before us on 'The Digest of Customary Law ' by Sir W. H. Rattigan, and on the 'Riwaj i am ' recorded at the time of the settlement in 1885 and 1914 15.
It was argued that Rattigan 's Digest of Customary Law in the Punjab had always been treated as an authoritative exposition of the customs prevailing in the Punjab and had been accepted as such by the Privy Council as well as other Courts in India.
Reliance was placed on para 72 at page 471 of the 14th Edition of Rattigan 's, 'Digest of Customary Law ', where it is stated that "amongst Muhammadans of all classes a man may divorce a wife without assigning any reason; but this power, in the absence of a special custom, is not allowed to Hindus nor to females of any class".
In paragraph 74, he proceeds to lay down that "until the former marriage is validly set aside, a woman cannot marry a second husband in the life time of her first husband;" and in paragraph 75, it is stated that "A 'Karewa ' marriage with the brother or some other male relative of the deceased husband requires no religious ceremonies, and confers all the rights of a valid marriage.
" The marriage claimed by respondent No. 1 with Sunder Singh was described as a 'karewa ' marriage.
On the basis of the principles laid down in the above paragraphs, it was urged that it should be held that respondent No. I could not have entered into a valid marriage with Sunder Singh, while her first husband, Tarlok Singh, was alive.
It is, however, to be noted that in paragraph 72, Rattigan himself makes an exception to the general rule, and recognises the fact that, if there be a special custom, divorce can be resorted to even by Hindus.
In earlier paragraphs of his book, Rattigan has dealt with existence of special customs in the Punjab and, in dealing with L Sup.
CI/67 7 792 the Jats, he expressed the view that, as regards Jats, and specially Sikh Jats who hold very liberal views on questions relating to marriage and whose notions of sexual morality are lax, it will be difficult to enunciate any general principles as are opposed to public policy.
Then, he goes on to say that custom in the Punjab is primarily tribal and not local, though the custom of a particular tribe may and often does differ in particular localities.
Rattigon 's conclusion is expressed by saying that it seems to be clear that there is no uniform custom applicable to the whole of the Punjab.
Custom varies from time to time and from place to place.
It is in this background that we have to consider further remarks recorded by Rattigan in paragraph 72 mentioned above, where he says that, in one case, it was doubted whether, in Jullundur District, a Hindu fat can divorce his wife.
He also noticed a number of decisions relating to divorce in the surrounding districts in which it was held that the custom of divorce prevailed in almost identical terms in those districts.
This custom according to him, is that the husband is entitled to turn out his wife and, if he does so, she is entitled to remarry.
It was on the basis of these observations of Rattigan that it was urged before us that the High Court committed an error in relying on the circumstance that, in a number of surrounding districts, it was found that the custom of divorce amongst the Hindu Jats so prevalent could lead to an inference that a similar custom prevailed in the district of Jullundur also.
In Rattigan 's book, by itself, we are unable to find any proposition laying down that, in the district of Jullundur, there is any custom among Hindu fats permitting divorce as claimed by respondent No. 1.
In fact, Rattigan leaves the question open by saying that it has been doubted whether such a custom exists in the Jullundur District.
He also mentions the Riwaj i am of Jullundur District, but does not attach much importance to it on the ground of its being un reliable.
Rattigan 's book on 'Customary Law ', in these circumstances, appears to us to be of little help in arriving at a conclusion about the existence of a custom on divorce amongst the Jats in Jullundur District.
The only other document relating to Jullundur District available was the Riwaj i am of that district and learned counsel for the appellant placed great reliance on it.
He drew our attention to the decision of their Lordships of the Privy Council in Kunwar Basant Singh vs Kinwar Brij Rai Saran Singh(1) where their Lordships held "The value of the riwaj i am as evidence of customary law is well established before this Board; the most recent decision is (1) 62 I.A. 180.
79 3 Vaishno Ditti vs Rameshri(1), in which the judgment of the Board was delivered by Sir John Wallis, who states : "It has been held by this Board that the riwaj i am is a public record prepared by a public officer in discharge of his duties and under Government rules; that it is clearly admissible in evidence to prove the facts entered thereon subject to rebuttal; and that the statements therein may be accepted even if unsupported by instances.
" Reliance was also placed upon the principle laid down by this Court in Mahant Salig Ram vs Musammat Maya Devi(2), where this Court held : "There is no doubt or dispute as to the value of the entries in the Riwaj i am.
It is well settled that though they are entitled to an initial presumption in favour of their correctness irrespective of the question whether or not the custom, as recorded, is in accord with the general custom, the quantum of evidence necessary to rebut that presumption will, however, vary with the facts and circumstances of each case.
" The Court also approved of the principle laid down by the Lahore High Court, indicating the circumstances in which Riwaj i am can be held to prove a custom, and in that connection said : "It has been held in Qamar ud Din vs Mt. Fateh Bano(3) that if the Riwaj i am, oil which reliance is placed, is a reliable and trustworthy document, has been carefully prepared, does not contain within its four corners contradictory statements of custom, and in the opinion of the Settlement Officer is not a record of the wishes of the persons appearing before him as to what the custom should be in those circumstances the Riwaj i am would be a presumptive piece of evidence in proof of the special custom set up therein.
If, on the other hand, the Riwaj i am is not a document of the kind indicated above, then such a Riwaj i am would have no value at all as a presumptive piece of evidence.
" It is in the light of these principles that we have to examine the value to be attached to the Riwaj i am in Jullundur District which has been relied upon by learned counsel for the appellant.
The Riwaj i am of Jullundar District appears in the form of questions and answers and an extract of it has been placed before us.
In answer to the questions about the grounds on which a wife may be divorced, whether change of religion is a sufficient cause and whether,a husband may divorce his wife without (1) [1928] L. R. 55 I.A. 407,421, (2) (3) Lah. 110.
7 94 assigning any cause, the record states that among all Muhammadans except Rajputs the Muhammadan Law is followed; and a husband can divorce his wife without assigning any reason.
Among the Muhammadan Rajputs and all Hindus no divorce is recognised.
But an exception is mentioned that the Kambohs of the Nakodar Tahsil also divorce their wives.
They are not required to assign any cause.
In answer to the question as to what are the formalities which must be observed to constitute a revocable or an irrevocable divorce, is was stated that among Hindus there is no divorce except among Kambohs of the Nakodar Tahsil who give 'talaq ' by executing a written deed.
Reliance is placed on the entry in the Riwaj i am that the custom of divorce among Hindus does not exist in the Jullundur District to urge that the High Court wrongly held that respondent No. 1 could be divorced by her first husband, Tarlok Singh, and could validly marry Sunder Singh by Chadar Andazi.
It, however, appears that the Riwaj i am of Jullundur District is unreliable, and, according to the principle laid down by this Court in the case of Mahant Salig Ram(1), such a Riwaj i am cannot be held to prove that there was no custom of divorce among Hindus in this district.
It does not appear necessary to refer to the various decisions of the Lahore High Court on 'the question of unreliability of the Riwaj i am of Jullundur District.
It is enough to quote the latest decision of the East Punjab High Court in Mohammad Khalil and Another vs Mohammad Bakhsh(2).
In that case., Bhandari J., delivering the judgment of the Bench, reproduced the principle laid down by the Lahore High Court in Qamar ud Din & Others(3), which was later approved by this Court in the case of Mahant Salig Ram(1).
,and then proceeded to hold : "Unfortunately, the Riwaj i am of the Jullundur District cannot be regarded as a reliable or trustworthy document, for, it has been held in a number of decided cases, such as Zakar Hussain vs Ghulam Fatima(1), Ghulam Mohammad vs Balli(5), and Mt. Fatima vs Sharaf Din(1), that it has not been prepared with care and attention.
It seems to me, therefore, that it is impossible to accept the statements appearing therein at their face value." Learned counsel for the appellant, however, urged before us that all these cases, in which the Riwaj i am of Jullundur District ,was held to be unreliable, related either to the custom about the right of succession to property of a daughter against collaterals, (1) (3) A. I. R. (36) 1949 E.Pb.
(5) A. I. R. (1 4) 1927 Lab.
(2) I. I. R. (4) A. 1.
R. (18) (6) A. 1.
R. (33) 79 5 or about the right to execute wills and gifts.
None of these cases related to the custom of divorce and at least, insofar as it records that there is no custom of divorce amongst Hindus in this district, the Riwaj i am should be accepted.
There are two reasons why we must reject this contention.
The first is that the Riwaj i am having been found unreliable in respect of two customs, the inference clearly follows that it was not drawn up carefully and correctly and, consequently it would not be safe to rely even on other aspects of the Riwaj i am.
The second, and which is the more important reason, is that, in this particular case which is 'before us, the evidence tendered by both the parties shows that this Riwaj i am has incorrectly recorded the custom about the right of a Hindu husband of this district to divorce his wife.
Respondent No. 1, in order to prove her case as to the existence of the custom, has primarily relied on two pieces of evidence.
The first piece of evidence consisted of the Riwaj i am of the neighbouring districts where there was a clear record that the custom of divorce among Hindu Jats existed.
The existence of such a custom.
in the neighbouring district, which surround the Jullundur District all around, is certainly a relevant consideration for an inference that such a custom may be prevalent in the Jul lundur District also, particularly in view of Rattigan 's opinion that the custom is primarily tribal though also local.
If the custom existed among the tribes of Hindu Jats in all the districts surrounding the district of Jullundur, it is probable that a similar custom exists in the district of Jullundur also.
The other piece of evidence relied upon was the statements of a number of witnesses examined to prove that not only such a custom existed, but also that instances were available showing that there had been divorces in recent times.
Respondent No. 1 has examined nine witnesses in this behalf.
The learned District Judge, in his report, did not place full reliance on the testimony of these witnesses, but their evidence has been accepted by the High Court.
On behalf of the appellant also, a number of witnesses were examined to prove the non existence of a custom of divorce.
It, however, appears that the appellant 's own witnesses belied his case.
Several of those witnesses clearly admitted that in this district a custom did exist permitting a husband to divorce his wife.
Three of the witnesses, Bhag Singh, Karam Singh and Kartar Singh, who were examined on behalf of the appellant, in their examination in chief itself, mentioned a custom under which a Zamindar could divorce his wife, though they added that, if the husband divorces his wife, the wife cannot contract Chadar Andazi during the life time of her husband.
Ujagar Singh, another witness, in his cross examination clearly admitted that the husband can divorce his wife, but a wife cannot divorce her husband.
He can divorce her both verbally as well as in writing.
Similarly, Niranjan Singh, another 796 witness, stated that a husband can divorce his wife, but a wife cannot divorce her husband.
Gurdit Singh, in his examination in chief, mentioned that a husband and wife could live separate from each other and, in such a case, the wife could not contract Chadar Andazi during the life time of her first husband, and added that, if she contracted Chadar Andazi, she could not inherit the property of her second husband.
In cross examination, he stated that "there is no custom among us for divorcing the wives with mutual consent".
All these witnesses examined on behalf of the appellant himself thus proved the existence of a custom under which a Hindu Jat in the district of Jullundur could divorce his wife, though all of them added a qualification that, in case a wife is divorced by a Hindu husband, she is not entitled to a second marriage during the life time of her first husband.
They all admit that a custom permitting, a Hindu Jat to divorce his wife does actually exists in the district of Jullundur.
Some of them, at some stages of their evidence, tried to distinguish the right of a husband by saying that he could desert his wife or that there ,could be separation between the husband and the wife, but, at ,other stages, they admitted in clear words that the custom recognised included the right of the husband to divorce his wife.
Thus, the record in the Riwaj i am that there is no such custom of divorce among the Hindus of the Jullundur District, is proved to be incorrect not only by the evidence of the witnesses examined ,on behalf of respondent No. 1, but even from the evidence given by the witnesses of the appellant.
In these circumstances, we hold that there is no force at all in the submission of the learned counsel that this Riwaj i am could be held to be reliable insofar as it records the absence of the custom, on the mere ground that in earlier cases the unreliability of this Riwaj i am was found in regard to record of customs relating to other matters.
There is no doubt that the witnesses examined on behalf of the appellant, while admitting the existence of a custom permitting a Hindu husband to divorce his wife, have added a qualification that, if such a divorce is brought into effect by a husband, the wife cannot legally contract a second marriage during his lifetime.
This limited custom sought to be proved by these witnesses does not.
find support from the Riwaj i am, nor is it in line with the principles laid down by Rattigan in his book on 'Customary Law '.
All that he stated in paragraph 74 of his book was that " until the former marriage is validly set aside, a woman cannot marry a second husband in the life time of her first husband.
" We have already held that, even according to the witnesses exa mined by the appellant, a custom exists which permits a valid divorce by a husband of his wife and that would dissolve the marriage.
On the dissolution of such a marriage, there seems to be no reason why the divorced wife cannot marry a second 797 husband in the life time of her first husband.
It also appears to us incongruous to accept the proposition put forward on behalf of the appellant that, though a wife can be divorced by her husband, she is not at liberty to enter into a second marriage and thus secure for herself means for proper living.
In these circumstances, the High Court committee no error in accepting the evidence given by witnesses examined on behalf of respondent No. 1 who stated that the custom as prevailing in the Jullundur District not only permitted divorce, but also recognised the validity of second marriage of the divorced wife even in the life time of her first husband.
The High Court was further right in relying on the instances proved by the evidence of these witnesses of respondent No. 1 showing that a number of divorced wives had actually contracted second marriages in the life time of the in husbands and these, marriages were recognised as valid marriages by the members of 'their community.
The appeal, consequently, fails and is dismissed with costs.
G.C. Appeal dismissed.
| The Income tax Officer, Bangalore commenced a proceeding under section 34 of the Mysore Income tax Act for reassessment of the income of the respondents for the assessment year 1949 50 and served a notice in that behalf in March 1951, on the respondents.
The Income tax Officer determined the total income of the respondents in May 1954, but the order was set aside by the Appellate Assistant Commissioner in November 1961, and the Income tax Officer was directed to make a fresh inquiry, When the Income tax Officer commenced inquiry, the respondents applied to the High Court for a writ of prohibition and the High Court passed an order restraining the Income tax Officer on the ground that the assessment proceeding was barred because of the expiry of the period of limitation.
In appeal to this Court, Held: The High Court was in error, because, though the Appellate Assistant Commissioner vacated the Income tax Officer 's assessment order of 1954 and remanded the case for further inquiry, the Appellate Assistant Commissioner did not set aside the notice of March 1951 served on the respondents, If a proper notice was served within the period provided by the section (four years from the close of the assessment year) the proceeding could be completed even after the expiry of four years for the Act prescribes no period for completion of the proceeding.
[8E G]
|
ition (Crl.) No. 1414 of 1979.
Under Article 32 of the Constitution.
Ram Jethamalani and Harjinder Singh for the Petitioner.
U. R. Lalit, E. C. Agarwala and M. N. Shroff for the Respondent.
The Judgment of the Court was delivered by KAILASAM, J.
The petitioner is brother of Virendra Ambalal Siroya who was detained by an order of detention dated 31 8 1979 issued by Additional Secretary to the Government of India under section 3(1) of the .
The detenu was served with the grounds of detention on 5 9 1979.
The counsel for the detenu made an application on 17 9 1979 for supply of documents, and statements recorded and relied on in the grounds of detention.
Before the documents were supplied, an incomplete representation was made by the detenu on 22 9 1979.
The documents were supplied on 25 9 1979, 27 9 1979 and 3 10 1979.
The detenu again made a second representation on 5 10 1979 and requested that the order of detention may be revoked by the Central Government.
Mr. A. K. Sen, the learned counsel for the petitioner, submitted that the representation requesting the Central Government to order the revocation under section 11 of the Act was not forwarded by the detaining authority to the Central Government and as such the detention is illegal.
In the memorandum of grounds in his writ petition at paragraph XIV the detenu submitted that he made representation to the Central Government and that the Central Government had not considered the representation at all.
In paragraph XV the detenu contended that the second representation was an application for revocation under section 11 of the Act wherein he specifically requested that the Central Government should revoke the order.
The said representation was not considered by the Central Government.
It was submitted that non consideration of the representation by the Central Government vitiated the detention order.
In reply the detaining authority stated in paragraph 15 as follows: "It is submitted that the consideration of representation of the detenu by the detaining authority is perfectly valid and legal and in accordance with the law.
It is, however, denied that merely because it was not considered by the Central Government, the detention order is vitiated in any way." 1080 It is clear from the statement that the representation was not forwarded to the Central Government.
The plea on behalf of the detaining authority is that merely because the representation was not considered by the Central Government, the detention order would not be vitiated.
The representation of the detenu dated 5 10 1979 is marked as Annexure 'E '.
It states that it is a further representation in the matter of his detention.
After setting out the various grounds, the relief asked for in paragraph 5 runs as follows: "The petitioner prays that: (a) That the order of detention be revoked by the Central Government.
(b) This further representation be placed before COFEPOSA Advisory Board alongwith the earlier representation.
(c) That the Advisory Board be pleased to report to the Central Government to revoke the impugned order of detention.
" The request of the detenu is clear: He prayed for the revocation of the order of detention by the Central Government.
It is not the case of the detaining authority that he did not understand the representation as being intended for the Central Government.
On the other hand, his plea is that the mere fact that the Central Government has not considered the representation would not vitiate the order of detention.
The detaining authority is the Additional Secretary, Government of India, Ministry of Finance and it is not disputed that a communication to that Central Government can be properly addressed by sending it to the Additional Secretary, Government of India, Ministry of Finance.
It is admitted that the representation was properly addressed to the Central Government.
The Central Government is empowered to revoke the order of detention at any stage.
It was submitted that the order of revocation by the Central Government can only be passed after the order of detention in confirmed by the detaining authority and the Advisory Board.
The power conferred on the Central Government by section 11 is wide enough to enable the Central Government to revoke the detention order at any stage for the words used are a detention order may at any time be revoked or modified.
The power of the Central Government to revoke the order of detention implies that the detenu can make a representation for exercise of that power.
Any petition for revocation of an order of detention should be dealt with reasonable expedition.
In this case it is the main ground urged 1081 on behalf of the detenu that the petition of the 5th of October, 1979 was not forwarded to the Central Government and consequently no order has been passed on that petition up to date.
In the course of arguments, Mr. A. K. Sen on behalf of the detenu submitted that even the earlier representation was addressed to the Central Government which was also not forwarded.
We do not think that we should entertain this plea as it was not pleaded in the memorandum of grounds that the first representation was to the Central Government but made for the first time in the Court before us.
In any event, it is clear that a representation properly addressed by the detenu to the Central Government was not forwarded to the Central Government and as such no action had been taken up to date.
It may be permissible for the Central Government to take reasonable time for disposing any revocation petition.
But it would not be justified in ignoring the representation for revocation of the detention as a statutory duty is cast upon the Central Government.
It is necessary that the Government should apply its mind and either revoke the order of detention or dismiss the petition, declining to order for revocation.
The question that arises for consideration is, as to what will be the consequence if a properly addressed petition is not forwarded to the Central Government and as such left unattended for a period of nearly four months.
We feel that in such circumstances the detention cannot be justified as being according to the procedure.
In the circumstances we do not feel that we will be justified in sending the representation to the Central Government for disposal at this stage.
Taking all the facts and circumstances of the case, we feel that the continued detention of the detenu cannot be held to be according to procedure.
His release has already been ordered.
P.B.R. Petition allowed.
| The accused (appellant) who was charged with offences under section 5(1) (d) of the Prevention of Corruption Act and section 161 of the Penal Code was convicted and sentenced by the Special Judge.
The convictions and sentences were confirmed by the High Court.
The prosecution alleged that the scooter rickshaw of the complainant driven by his driver was one day involved in a traffic accident and the vehicle was taken to the police station by the accused who was a police constable.
The complainant obtained orders of the Magistrate for its release but the accused declined to release the vehicle unless he was paid a sum of Rs. 60.
The complainant was not prepared to pay the sum demanded.
He then went to an Inspector of the Anti Corruption Department and lodged a complaint that the accused was demanding illegal gratification from him for the release of his scooter rickshaw which was ordered by the Magistrate to be released.
The prosecution further alleged that the Inspector called two panch witnesses and after noting down the numbers of six ten rupee currency notes given by the complainant, treated them with phenol phthalene powder and gave them to the complainant.
It was arranged that the complainant should hand over the currency notes to the accused and should thereafter make a signal at which the Inspector and panch witnesses would enter the room.
The complainant carried out the plan as arranged and gave the call on which the Inspector and panch witnesses entered the room of the accused.
On seeing the Inspector, the accused removed the currency notes from his pocket and flung them across the wall into the adjoining room.
The notes were collected and when compared with the numbers noted earlier, they tallied.
The hands of the accused were then dipped in sodium bicarbonate solution which, colourless earlier, turned pink.
Similarly the handkerchief in the right side pocket of the trousers of the accused was removed and also dipped in sodium bicarbonate solution.
That too turned pink.
Before the trial court many of the witnesses turned hostile and one of the panch witnesses became mentally deranged.
In appeal it was contended before this Court that (1) the courts below had made free use of the statements made by the witnesses in the course of investigation as if they were substantive evidence and, if they were excluded, the rest of the evidence would not be sufficient to draw the presumption under 1054 section 4(1) of the Prevention of Corruption Act, (2) the fact that the Inspector was the very police officer who laid the trap, should be sufficient to insist on corroboration of his evidence.
Dismissing the appeal, ^ HELD: 1(a) The courts below were clearly wrong in using as substantive evidence statements made by witnesses in the course of investigation.
[1059E] (b) Section 162 of the Code of Criminal Procedure imposes a bar on the use of any statement made by any person to a police officer in the course of investigation at any enquiry or trial in respect of any offence under investigation at the time when such statement was made, except for the purpose of contradicting the witnesses in the manner provided by section 145 of the Evidence Act.
Where any part of such statement is so used any part thereof may also be used in the re examination of the witness for the limited purpose of explaining any matter referred to in his cross examination.
The only other exception to this embargo on the use of statements made in the course of an investigation relates to the statements falling within the provisions of section 32(1) of the Evidence Act or permitted to be proved under section 27 of the Evidence Act.
[1059A C] (c) The contention of the prosecution that the earlier statements with which witnesses were confronted for the purpose of contradiction could be taken into consideration by the Court in view of the definition of "proved" in section 3 of the Evidence Act has no substance.
The definition of the term "proved" does not enable a Court to take into consideration matters, including statements, whose use is statutorily barred.
[1059G] 2(a) The evidence of the Inspector is entirely trustworthy and there is no need to seek any corroboration.
[1059H] (b) There is no rule of prudence which has crystalized into a rule of law, nor any rule of prudence which requires that the evidence of such police officers should be treated on the same footing as evidence of accomplices and there should be insistence on corroboration.
In the facts and circumstances of a particular case a court may be disinclined to act upon the evidence of such an officer without corroboration, but, equally in the facts and circumstances of another case the court may unhesitatingly accept the evidence of such an officer.
It is all a matter of appreciation of evidence and on such matters there can be no hard and fast rule nor can there be any precedential guidance.
[1060A B].
In the instant case the proved facts were that the complainant made a report to the Inspector, and currency notes whose numbers were noted and which were treated with phenol phthalene powder were handed over to the complainant.
The complainant went into the accused 's room and came out after a short while giving the agreed signal.
When the Inspector rushed in, the accused threw the currency notes across the wall into the adjoining room.
His hands and the handkerchief when dipped in sodium bicarbonate solution turned pink and lastly instead of giving a plausible explanation as to how the phenol phthalene powder came to his hands and the handkerchief in his pocket all that he could say was that he "knew nothing about it".
From all these facts the only inference that follows is that currency notes were obtained by the accused from the complainant.
It is not necessary that the passing of 1055 money should be proved by direct evidence, it may also be proved by circumstantial evidence.
The events which followed in quick succession in the present case led to the only inference that the money was obtained by the accused from the complainant.
Under section 114 of the Evidence Act the Court may presume the existence of any fact which is likely to have happened regard being had to the common course of natural events, human conduct and public and private business, in their relation to facts of the particular case.
One of the illustrations to this section is that the Court may presume that a person who is in possession of stolen goods soon after the theft is either the thief or has received the goods knowing them to be stolen, unless he can account for his possession.
So too in the facts and circumstances of the present case the Court may presume that the accused who took out the currency notes from his pocket and flung them across the wall had obtained them from the complainant who, a few minutes earlier, was shown to have been in possession of the notes.
Once it is found that the accused had obtained the money from the complainant the presumption under section 4 (1) of the Prevention of Corruption Act is immediately attracted.
The presumption is rebuttable, but in the present case there is no material to rebut the presumption.
The accused was, therefore, rightly convicted by the courts below.
[1061D F] Sita Ram vs The State of Rajasthan AIR 1975 SC 1432; Suraj Mal vs The State (Delhi Administration) AIR 1979 SC 1408 held inapplicable.
There is no force in the contention that persons holding clerical posts could not be called independent witnesses on the ground that they would be under fear of disciplinary action if they did not support the prosecution case.
The respectability and verasity of a witness is not necessarily dependent upon his status in life and it cannot be said that clerks are less truthful and amenable than superior officers.
[1060E]
|
05 of 1953.
Under article 32 of the Constitution of India for the enforcement of Fundamental Rights and APPELLATE JURISDICTION: Case No.1 of 1950 1047 Appeal under section 205 of the Government of India Act, 1935, from the Judgment and Decree, dated the 13th September, 1949, of the High Court of Judicature, Orion, in First Appeal No. 39 of 1949 arising out of the Judgment and Decree, dated the 11th September, 1945, of the Court of the District Judge, Cutback, in Original Suit No. 3 of 1943.
N. C. Chattanooga (B. K. Saran and B. C. Pratt, with him) for the petitioners and appellants Nos. 1 to 13.
section P. Sinclair (B. K. Saran and R. C. Pratt, with him) for appellants 14 to 16.
M. C. Seth (G. N. Jose, with him) for respondents in both the matters.
Agent R. H. Debar.
March 16.
delivered by MUKHERJEA J.
These two connected matters are taken up together for the sake of convenience and may be,disposed of by one and the same judgment.
Petition ;No. 405 of 1953 has been presented to this court under article 32 of the Constitution and the petitioners are the Mahants or superiors of two ancient and well known religiousinstitutions of Orissa, both of which have endowmentsof considerable value situated within and outside the Orissa State.
An Act, known as the .Orissa Hindu Religious Endowments Act was passed by the Orissa Legislative Assembly functioning under the Government of India Act, 1935.
in the vear 1939 and it received the assent of the Governor General on the 31st August, 1939.
The object of the Act, as stated in the preamble, is "to provide for the better administration and governance of certain Hindu religious endowments" and ' the expression "religious endowment" has been defined comprehensively in the Act as meaning all property belongto or given orendowed for the support of Maths or temples or for the performance of any service orcharity connected therewith.
The whole scheme of the Act is to vest the control and supervision of public temples and Maths in a statutory authority designated as the Commis.
sioner of Hindu Religious Endowments and to confer 1048 upon him certain powers with a view to enable him to exercise effective control over the trustees of the Maths and the temples.
The Commissioner is required to be a member of the Judicial or Executive Service of the Province and his actions are subject to the general control of the provincial Government.
For the purpose, of meeting the expenses of the Commissioner and his staff, every Math or temple, the annual income of which exceeds Rs. 250, is required under section 49 of the Act to pay an annual contribution at certain percentage of the annual income which increases I progressively with the increase in the income.
With this contribution as well as loans and grants made by the Government, a special fund is to be constituted as provided by section 50 and the expenses of administering the religious endowments are to be met out of this fund.
In July, 1940, a suit, out of "which the Case No. 1 of 1950 arises, was instituted in the court of the District Judge of Cuttack by a number.
of Mahants including .the two petitioners in the petition under article 32 before us.
praying for a declaration that the Orissa Relig ious Endowments Act of 1939 was ultra vires the Orissa Legislature and for other consequential reliefs.
The validity of the Act was challenged substantially on three grounds, namely, (1) that the subject matter of legislation was not covered by Entry 34 of List 11 in Schedule VII of the Government of India Act, 1935 ; (ii) that the, contribution levied under, section 49 was, in substance, a tax and could not have been imposed by the Provincial Legislature; and (iii) that as the provisions of the Act affected the income of properties situated outside the territorial limits of the Province, the Act was extra territorial in its operation and hence inoperative.
All these contentions were overruled by, the District Judge of Cuttack, who by his judgment dated the 11 th September, 1945, dismissed the plaintiffs ' suit.
Against that decision, an appeal was taken by the plaiitiffs to the High Court of Orissa and the appeal was heard by a Division Bench, consisting of Jagannedbadas and Narasimham JJ.
The learned Judges by two separate but concurring judgments, dated the 13th September.
1949, affirmed the decision 1049 of the District Judge and dismissed the appeal.
it is against this judgment that Case No. 1 of 1950 has come to this court.
During the pendency of the appeal in this court the Constitution came into force on the 26th January , 1950, with its chapter on fundamental rights, and the Orissa Hindu Religious Endowments Act also has been amended recently by the State Legislature of Orissa by Amending Act II of 1952.
In view of these changes, the present application under article 32 of the Constitution has been filed by two of the Mahants who figured as plaintiffs in the Declaratory Suit of 1940 and the application has been framed comprehensively so as to include all points that could be urged against the validity of the Orissa Hindu Religious Endowments Act on the basis of the provisions of the Constitution.
It is conceded by both the parties that in these circumstances it is not necessary for us to deal separately with the appeal.
The decision, which we would arrive at in the petition under article 32, will be our pronouncement on the validity or otherwise of the different provisions of the impugned Act.
It may be stated at the beginning that the Orissa Hindu Religious Endowments Act of 1939 follows closely the pattern of the Madras Hindu Religious Endowments Act of 1927 which has been now replaced by a later Act passed by the State Legislature of Madras in 1951 and described as the Madras Hindu Religious and Charitable Endowments Act.
The grounds upon which the validity of the Orissa Act has been attacked be fore us are substantially the same as were urged in assailing the constitutional validity of the Madras Act, in Civil Appeal No. 38 of 1953 (The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar), the judgment in which has just been delivered.
The grounds urged can be classified conveniently under two heads.
In the first place, some of the provisions of the impugned Act have been challenged as invalid on the ground that they invade the fundamental rights of the petitioners guaranteed under articles 19(1) (f), 25 26, and, 27 of the Constitution.
The other branch of the contention (1) ; 1050 relates to. the provision for levying contribution on religious institutions under section 49 of the Act and this provision has been impeached firstly on the ground that the contribution being in substance a tax, it was beyond the competency of the Provincial Legislature to enact any such provision.
The other ground raised is, that the payment of such tax or imposition is prohibited by article 27 of the Constitution.
The general questions relating to the scope and ambit of the fundamental rights embodied in articles 19 (1) (f ), 25, 26 and 27 of the Constitution in connection with Maths and temples have been discussed fully in our judgment in the Madras appeal referred to above and ,it would not, be necessary to reiterate these discussions for purposes of the present case.
We can straightaway proceed to examine the different provisions of the Act to which objections have been taken by the learned counsel appearing for, the petitioners in the light of the principles which this court has laid down in the Madras appeal.
It may be said that many of the impugned provisions of the Orissa Act correspond more or less.
to similar provisions in the Madras Act.
Section 11 of the Act has been objected to on the ground that it vests almost , an uncontrolled and arbitrary power upon the Commissioner.
This section corresponds to section 20 of the Madras Act and as has been pointed out in our Judgment, in the Madras appeal, the powers, though seemingly wide, can be exercised only to ensure that Maths and temples are properly maintained and the endowments are properly administered.
As the object and purpose for which these powers could be exercised have been indicated preoisely we do not think that it, could be said that the authority vested in the Commissioner is in any way arbitrary.or unrestricted.
The explanation attached to the section only makes it clear that the general power conferred upon the Commissioner extends to passing of interim orders as the Commissioner might think fit.
Section 14 lays down the duties of the trustee and the care which he should exercise in the management 1051 of the affairs of the religious institutions.
The care, which he has to exercise, is What is demanded normally of every trustee in charge of trust estate and the standard is that of a man of ordinary prudence dealing with his own funds or properties.
This is a matter relating to the administration of the estate and and does not interfere with any fundamental rights of the trustee.
For the same reason, we think, no objection could be taken to the provision of section 28 which lays down that the trustee of a temple shall be bound to obey all orders issued under the provisions of the Act by the Commissioner. if the orders are lawful and made in pursuance of authority properly vested in the officer, no legitimate ground could be urged for not complying with the orders.
The sections of the Act, to which serious objections have been taken are sections 38, 39, 46, 47 and 49.
Sections 38 and 39 relate to the framing of a scheme.
A scheme can certainly be settled to ensure due administration of the endowed property but the objection seems to be that the Act provides, for the framing.
of a scheme not by a civil Court or under its supervision but by the Commissioner who is a mete administrative or executive officer.
There is also no provision for appeal against his order to the court.
Under section 58 of the Madras Act, although the scheme is to be framed by the Deputy Commissioner, an appeal lies against his order to the Commissioner in the first place.
A party aggrieved by the order of the Commissioner again has a right of suit in the ordinary civil court, with a further right of appeal to the High Court.
It seems that sub section (4) of section 39 of the impugned Act, as it originally stood, allowed the, trustee or any person having an interest in the institution to file a suit in a civil court to modify or set aside an order framing a scheme; and under section 40, the order made under section 39 could be final only subject to the result of such suit.
Subsection (4) of section 39, however, was deleted by the Amending Act of 1952, and under the new sub section (4), the order passed by the Commissioner has been made final and conclusive.
Strangely, however, section 41 of the Act has still been retained in its 1052 original shape and that speaks of an order settling a scheme being set aside or modified by the court.
Obviously, this is careless drafting and the Legislature did not seem to have adverted to the apparently contradictory provisions that it made.
The learned Attorney General, appearing for the State of, Orissa, has also conceded that these sections require redrafting.
We think that the settling of a scheme in regard to a religious institution by an executive officer without the intervention of any judicial tribunal amounts to an unreasonable restriction upon the right of property of the superior of the religious institution which is blended with his office.
Sections 38 and 39 of the Act must, therefore, be held to be invalid.
There is nothing wrong in the provision of section 46 itself but legitimate exception, we think, can be taken to the proviso appended to the section.
Under the law, as it stands, the Mahant or the superior of a Math has very wide powers of disposal over the surplus income and the only restriction that is recognised is that he cannot spend the income for his own personal use unconnected with the dignity of his office.
The purposes specified in section 46 are all conducive to the benefit of the institution and there is no reason why the discretion of the trustee in regard to the spending of surplus for such purposes also should be still further restricted by directions which the Commissioner may choose to issue.
Section 47 (1) lays down how the rule of cy pres is to be applied not merely when the orginal purpose of the trust fails or becomes incapable of being carried out either in whole or in part by reason of subsequent events, but also where there is a surplus left after meeting the legitimate expenses of the institution.
Objection apparently could be raised against the last provision of the sub section, but as subsection(4) of section47gives the party aggrieved by any order of the Commissioner in this respect to file a suit in a civil court and the court is empowered to modify or set aside such order of the Commissioner, we do not ,think that there is any reasonable ground for complaint.
The only other section that requires consideration is sect ion 49 under which every Math or temple having 1053 an annual income exceeding Rs. 250 has got to make an annual contribution for meeting the expenses of the Commissioner and the officers and servants working under him.
The first question that arises with regard to this provision is whether the imposition is a tax or a fee; and it is not disputed that if it is a tax, the Provincial Legislature would have no authority to enact such a provision.
This question has been elaborately discussed in our judgment in the Madras appeal referred to above and it is not necessary to repeat the discussions over again.
As has been pointed out in the Madras appeal, there is no generic difference between a tax and a fee and both are different forms in which the taxing power of a State manifests itself.
Our Constitution, however, has made a distinction between a tax and a fee for legislative purposes and while there are various entries in the three lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees which could be levied in respect of every one of the matters that are included therein.
A tax is undoubtedly in the nature of a complusory exaction of money by a public authority for public purposes, the payment of which is enforced by law.
But the essential thing in a tax is that the imposition is made for public purposes to meet the general expenses of the State without reference to any special benefit to be conferred upon the payers of the tax.
The taxes collected are all merged in the general revenue of the State to be applied for general public purposes.
Thus, tax is a common burden and the only return which the taxpayer gets is the participation in the common benefits of the State.
Fees, on the other hand, are payments primarily in the public interest but for some special service rendered or some special work done for the benefit of those from whom payments are demanded.
Thus in fees there is always an element of quid pro quo which is absent in a tax.
Two elements are thus essential in order that a payment may be regarded as a fee.
It the first place,, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly.
But this by itself is not enough to make 136 1054 the imposition a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State.to be spent for general public purposes.
Judged by this test, the contribution that is levied by section 49 of the Orissa Act will have to be regarded as a fee and not a tax.
The payment is demanded only for the purpose of meeting the expenses of the Commissioner and his office which is the machinery set up for due administration of the affairs of the religious institution.
The collections made are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes.
They go to constitute the fund which is contemplated by section 50 of the Act and this fund, to which also the Provincial Government contributes both by way of loan and grant, is specifically set apart for the render ing of services involved in carrying out the provisions of the Act.
We think, therefore, that according to the Principles which this court has enunciated in the Madras appeal mentioned above, the contribution could legitimately be regarded as fees and hence it was within the competence of the Provincial Legislature to enact this provision.
The fact that the amount of levy is graded according to the capacity of the payers though it gives it the appearance of an income tax, is not by any means a decisive test.
We are further of opinion that an imposition like this cannot be said to be hit by article 27 of the Constitution.
What is forbidden by article 27 is the specific appropriation of the proceeds of any tax in payment of expenses for the promotion or maintenance of any particular religion or religious denomination.
The object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it; the purpose is to see that religious trusts and institutions wherever they exist are properly administered.
It is the secular administration of the religious institutions that the Legislature seeks to control and the object, as enunciated in the Act, is to ensure that the endowments attached to the religious institutions are properly administered and their income is duly appropriated for purposes for which they were founded or exist.
As there is no question of favouring any particular religion or religious denomination, article 27 could not possibly apply.
The result is that, in our opinion, the only sections of the Act, which are invalid, are sections 38, 39 and the proviso to section 46.
The application under article 32 is, therefore, allowed to this extent that a writ in the nature of mandamus would issue restraining the Commisoner and the State Government enforcing against the petitioners the provisions of the sections mentioned above.
The other prayers of the petitioners are disallowed.
No separate order is necessary in Case No. I of 1950, which will stand dismissed.
We make no order as to costs either in the petition or in the appeal.
| Held, that sections 38 and 39 and the proviso to section 46 of the Orissa Hindu Religious: Endowments Act, 1939 as amended by the Amending Act II of 1952 are ultra vires articles 19(1) (f), 25 and 26 of the Constitution.
The annual contribution provided in section 49 of the Act is in the nature of a fee and not a tax and therefore it was within the competence of the Provincial Legislature to enact such a provision.
Further an imposition like this is not hit by article 27 of the Constitution because the object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it but the proper administration of religious trusts and institutions wherever they exist.
Civil Appeal No. 38 of 1953 referred to.
|
Appeal No. 1117(NCM) of 1976.
(From the Judgment dated the 25.7.1975 of the Monopolies & Restrictive Trade Practices Commissioner New Delhi in R.T.P.E. No. 1 of 1974) N.A. Palkhivala, F.S. Nariman, Ashok H. Desai, Ravinder Narain, B. Dadachanji, O.C. Mathur, section Swarup, Talat Ansari, Shri Narain, John and D.N. Mishra, for the Appellant.
Lal Narain Sinha, Mrs. Shayamla Pappu, G.A. Shah, R.N. Sachthey, Girish Chandra and B.B. Sawhney, for the Respond ent.
R. Narain, J B. Dadachanji, O.C. Mathur, section Swarup, Talat Ansari, Interveners for M/s. Hindust*an Livers Ltd., Ashok Leyland Ltd. Escorts Ltd. K. J. John, for M/s. Hindustan Livers Ltd. Anil B. Divan, R. Narain, LB.
Dadachani, O.C. Mathur, section Swarup, Talat Ansari, section Narain, Interveners for CIBA Geigy of India Ltd. Ashok, M. Desai R. Narain J.
B. Dadachanji, O.C. Mathur, Talat Ansari, section Swarup & D.N. Mishra, Interveners for Batliboi & Co. (P) Ltd. The Judgment of the Court was delivered by RAY, C.J. This appeal is under Section 55 of the Monop olies and RestrictiveTrade Practices Act, 1969 (referred to as the Act) against 688 the judgment and order of the Monopolies and Restrictive Trade Practices Commission (referred to as the Commission) dated 25 July, 1975.
The principal question for consideration in this appeal is whether the agreement between the appellant referred to as Telco and its dealers allocating territories to its deal ers within which only the dealers can sell bus and truck chassis referred to as the vehicles produced by the company constitute a "restrictive trade practice".
Section 2(o) of the Act defines "restrictive trade prac tice" to be a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular (i) which tends to obstruct the flow of capital or resources into the stream of produc tion or (ii) which tends to bring about manipulation of prices, or conditions or delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions.
Section 33 of the Act provides that any agreement relat ing to a restrictive trade practice falling within one or more of the categories (a) to (1) specified in sub 2section(1) thereof shall be subject to registration.
Section 37 of the Act provides that the Commission may enquire into any restrictive trade practice, whether the agreement, if any, relating thereto has been registered under Section 35 or not which may come before its enquiry, and if, after such enquiry it is of opinion that the prac tice is prejudicial to the public interest the Commission may, by order direct that (a) the practice shall be discon tinued or shall not be repeated; (b) the agreement relating thereto shall be void in respect of such restrictive trade practice or shall stand modified in respect thereof in such manner as may be specified in the order.
Section 38 of the Act provides that a restrictive trade practice shall be deemed to be prejudicial to the public interest unless the Commission is satisfied of any one or more circumstances mentioned in that section.
The circum stances mentioned inter alia are these.
The restriction is reasonably necessary having regard to the character of the goods to which it applies to protect the public against injury in connection with the consumption, or installation or use of these goods.
The removal of the restriction would deny to the public.
as purchasers, consumers or users of any goods, other specific and substantial benefits or advantages enjoyed or likely to be enjoyed by them as such, whether by virtue of the restriction itself or of any arrangements for operations resulting therefrom.
The restriction is reasona bly necessary to counteract measure taken by any one person not party to the agreement with a view to preventing or restricting competition in or in relation to the trade or business in which the persons thereto are engaged.
The restriction is reasonably required for purposes in connec tion with the maintenance of any other restriction accepted by the parties whether under the same 'agreement or ' 689 under any other agreement between them, being a restriction which is found by the Commission not to be contrary to the public interest upon other grounds other than specified in this paragraph.
The restriction does not directly or indirectly restrict or discourage competition to any materi al degree in any relevant trade or industry and is not likely to do so.
The Commission is also to be satisfied that the restriction is reasonable having regard to the balance between the circumstances and any detriment to the public or to persons not parties to the agreement being purchas ers, consumers or users of goods produced or sold by such parties or persons engaged or seeking to become engaged in the trade or business of selling such goods or of producing or selling similar goods resulting or likely to result from the operations of restriction.
The expressions purchasers, consumers and users include persons purchasing, consuming or using for the purpose or in course of trade or business or for public purposes.
Section 38 of the Act is described in the phraseology of restrictive trade practices as providing "gateways" to trade.
The essence of the section is that when it is found by the Commission that such restrictions are necessary or justified in the circumstances mentioned in the section restrictions are permitted.
Again the balancing clause after clause (h) in section 38 of the Act, indicates when the restriction is not unreasonable having regard to the balance between the circumstances mentioned in the section and detriment to the public resulting from the operation of the restriction.
Telco is a public limited company and is a leading manufacturer of heavy and medium commercial vehicles.
The capital investment required for a new factory in this trade is of a high order.
At present there are only four princi pal manufacturers of commercial vehicles.
These are The Hindustan Motors Ltd., Premier Automobiles Ltd. and Ashok Leyland Ltd. and Telco.
The supply of commercial vehicles is said to be below the demand.
The scarcity of supply is particularly accentu ated in the case of Telco 's vehicles as they are in great demand all over the country and abroad.
The export of Telco was over 80% of the total exports of commercial vehicles from the country during the year 1974 75.
The marked consumer preference for Telco 's vehicles has been maintained because of the high quality if its products and also because of elaborate and comprehensive net work of after sales service provided by Telco 's dealers.
Telco has of its own initiative introduced.
certain procedures for a fair and wide geographical distribution of its vehicles which seek to ensure that the new vehicles are supplied not only to the urban areas of the country where there is a high demand ' but also to the remote areas such as Tripura, Naga land, Himachal Pradesh etc.
Telco has notified to its dealers the maximum price for each model of vehicle which they could charge to consumers.
In May, 1972 Telco intro duced a procedure to regulate the booking of 690 orders by its dealers and effecting the delivery of vehicles against such orders with a view to ensuring distribution of its vehicles in the chronological order in which orders had been registered with the dealers.
When Telco sells vehicles it has the responsibility of providing facilities for servicing and repairing the vehi cles marketed by it.
It is essential that in the interest of the consumers such facilities are widely distributed throughout the country.
Even in remote areas where the demand of new vehicles is less, it is necessary to provide facilities for after sales service in order to enable the owners of the vehicles to keep them in operation.
These facilities are provided by Telco through all India net work of 68 dealers, 69 service centres of sub dealers and 13 zonal offices of Telco.
Each dealer has to maintain premises for a show room and ' a service station and to keep special tools as welt as a comprehensive range of spare parts supplied by Telco.
Further a dealer has also to employ technically qualified personnel some of whom have been trained by Telco in its Apprentice School at Jamshedpur.
In addition Telco maintains its own staff of trained engineers and mobile vans in each of its zonal offices.
The Registrar, Restrictive Trade Agreements made an application under Section 10(a) (iii) of this Act before the Commission for enquiry under Section 37 of the Act into restrictive trade practices alleged therein.
The allega tions in the petition were these.
Clauses (1) and (3) of the agreement between Telco and its dealers provide for territo rial restriction or allocation of area or market and clauses 6 and 13 provide for resale price maintenance and clause 14 provides for exclusive dealership.
The Registrar submitted that Clauses 1, 3, 6 and 14 show that the company is in dulging in restrictive trade practices inter alia relating to allotment of territories/areas among its dealers and exclusive dealings and Telco is not willing to abandon the restrictive trade practices.
It is significant to notice that no 'particulars of such alleged restrictive trade practices were set out in the application.
Clauses 1, 3, 6 and 14 in so far as they are appropriate to the present appeal are as follows : "1.
(a) The Dealer agrees to buy from the Regional Sales Office of the Company regularly from time to time on principal to principal basis all such new Tata diesel truck and bus chassis with or without cab and/or body (hereinafter referred to as "the said vehi cles", for resale within the territory de scribed hereunder (hereinafter called "the said territory") in accordence with the provisions of this.
Agreement.
(b) This Agreement shall not preclude the Company from entering into or continuing any dealership agreement or agreements with any other person or persons within the said terri tory for sale of the said vehicles and resale by 691 that person thereof in the said territory, this Agreement with the Dealer does not con stitute him a selling agent of the Company in the said territory, much less a sole selling agent.
The Dealer shah not, either directly or indirectly and.
either alone or in conjunction with others, promote the sale of or sell any of the said vehicles to any person or party outside the said territory, nor shall ' he sell the same to any person within the said terri tory if the said vehicles are intended to be used outside the said territory.
(a) The Dealer shaH, at his own expense, maintain within the said territory such organ isation for the sale of the said vehicles as may, in the opinion of the Company which shall be binding, be deemed to be necessary to adequately cover the said territory and ensure the best possible results.
Except with the written permission of the Company first obtained, the Dealer shall not during the pendency of this Agreement either directly or indirectly engage in or promote the sale of or use, handle or sell any truck or bus chassis, which is not manufactured or supplied by the Company.
" Telco denied that any of the alleged clauses amounted to restrictive trade practices.
Telco submitted as follows: First, though alleged clauses imposed restrictions on the dealers these did not amount to restrictive trade prac tices within the meaning of the Act.
Second, Clauses 1 and 3 which deal with certain defined territories allocated to the dealers are intended to avoid unequal and unfair distribution of the vehicles among the customers.
Third, any restriction as to maximunm price at which goods can be resold to the Telco 's dealers particularly when Clause 6 (1) (ii) specifies what is implicit therein, namely, that the dealer may sell below the maximum price fixed by Telco cannot possibly amount to restrictive trade practice.
Fourth, Clause 14 which prohibits a distributor from dealing in products of other manufacturers would normally not be restrictive trade practice unless there are special circumstances which exist and indicate that the agreement has the effect of preventing, distorting or restricting competition.
Telco finally submits that none of the restrictions imposed in Clauses 1,3,6, and 14 are unreasonable having regard to the balance between the circumstances set out in section 38 of the Act and any alleged detriment to the customers of Telco and or the competitors of Telco allegedly resulting or likely to result from the operation of these restrictions.
10 112SC1/77 692 The Commission held that the moment an agreement con tained a trade practice falling within any of the clauses in Section 33(1) of the Act, the trade practice must be regard ed as a restrictive trade practice.
The Commission held that all the clauses alleged in the petition of the Regis trar amounted to restrictive trade practices.
The Commis sion further said that in regard to Clauses 6 and 13 in the light of the assurance given by Telco that in its future price lists it would specifically state that the dealer is free to charge on the resale of Telco 's vehicles, prices lower than the maximum prices fixed by Telco, no order was required to be passed regarding the alleged practice of maintenance of minimum resale prices.
The Commission further held that although the contractu al term that the dealers, could deal only in Telco 's vehi cles was a restrictive trade practice, it was not against public interest as it fell within subclauses (a), (b) and.
(h) and the balancing clause of Section 38(1) of the Act.
The Commisssion however held that the practice of allo cation of territories to Telco 's dealers was not justified.
In the result the Commission declared that Clauses 1 and 3 of the Agreements in so far as they related to allocation of any territory or area or market to any of the dealers for the distribution of the vehicles constituted restrictive trade practice and, therefore, void and restrained Telco from continuing or repeating the practice.
Before the Commission Telco contended that the applica tion of the Registrar was not in accordance with Regulation 55 of the Monopolies and Restrictive Trade Practices .Com mission Regulations, 1974, referred to as Regulations.
Under the Regulations an application under section 10(a)(iii) of the Act must contain facts which, in the Registrar 's opinion, constitute a restrictive trade practice and, if it is in relation to any agreement, set out, such portions of the agreement as may be necessary to bring out the facts complained of.
It has to be stated that in the present case Telco is right in contending that beyond making mere references to clauses of the agreement and bald allegations that the clauses constitute restrictive trade practice, no facts or features are set out in the petition to show or establish as to how the alleged clauses consti tute restrictive trade practice in the context of facts.
The Solicitor General contended as follows.
First, the definition of restrictive trade practice includes all trade practices permissible or forbidden provided they restrict competition or even tend to restrict competition.
The instances set forth in the definition of restrictive trade practice emphasize the factors which go to establish a restrictive trade practice.
Clauses (i) and (ii) in Section 2(0) of the Act afford graver instances of restrictive trade practice.
Second, Section 33 of the Act requires an agreement falling within the Clauses thereof to be registered.
In short an agreement which amounts to a restrictive trade practice will be first registered and then 693 an enquiry will be made under Chapter VI of the Act as to whether the restrictive trade practice is prejudicial to the public interest.
Irrespective of the injurious or beneficial consequence of a trade practice which restricts or may restrict competition, it may fall within the defini tion.
Injurious or beneficial result of the restriction is relevant only for purposes of Sections 37 and 38 of the Act.
Section 33 of the Act states that any agreement relat ing to a restrictive trade practice falling within one or more of the categories mentioned therein shall be subject to registration in accordance with the provisions of Chapter V of the Act.
Clauses (a) and (d) in subsection (1 ) of Section 33 are relevant in the present case.
These are, inter alia, (a) any agreement which restricts or is likely to restrict by any method the persons or clauses of persons to whom goods are sold or from whom goods 'are bought and (d) any agreement to purchase or sell goods or to tender for the sale or purchase of goods only at prices or on terms or conditions agreed upon between the sellers or purchasers.
The definition of restrictive trade practice is an exhaustive and not an inclusive one.
The decision whether trade practice is restrictive or not has to be arrived at by applying the rule of reason and not on that doctrine that any restriction as to area or price will per se be a re strictive trade practice.
Every trade agreement restrains or binds persons or places or prices.
The question is whether the restraint is such as regulates and thereby promotes competition or whether it is such as may suppress or even destroy competition.
To determine this question three matters are to be considered.
First, what facts are peculiar to the business to which the restraint is applied.
Second, what was the condition before and after the re straint is imposed.
Third ' what is the nature of the re straint and what is its actual and! probable effect.
Section 33(1) of the Act deals with registration of certain types of restrictive trade practices which have the subject matter described in categories mentioned in clauses (a) to (1) of Section 33(1) of the Act.
An agreement will be registrable, when it will have both the effect of re stricting competition within the meaning of Section 2(0) of the Act and also deal with the subject matter described in Clauses, (a) to (1) of sub section (1) of Section 33 of the Act. 'Clauses (a) to (1) aforesaid describe some species of agreement which require registration.
if they .are within the genus of restrictive trade practice defined in Section 2(0) of the Act.
A practice which is not restrictive under section 2 (0) of the Act cannot be restrictive trade prac tice only because 0f Clauses (a) to (1) of sub section (1) of Section 33 of the Act.
Section 33 does not provide statutory illustrations to Section 2(0) of the Act but only enumerates some types of trade practices which.
if they are restrictive within Section 2(0) of the Act require registra tion.
Section 33 fixes categories of restrictive trade prac tices.
Section 33 states that any agreement relating to a restrictive trade practice falling within one or more of the categories mentioned therein shall 694 be subject to registration.
Therefore, before an agreement becomes registrable it has to be a restrictive trade prac tice in accordance with the definition of Section 2(0) of the Act.
At the threshold it has to be found out whether an agreement constitutes a restrictive trade practice.
In Section 33 it is stated, for example, that any agreement which restricts, or is likely to restrict, by any method the persons or clauses of persons to whom goods are sold or from whom goods are bought is one of the categories of a regis trable restrictive trade practice.
In the present case it has to be found out first whether the agreement of exclusive dealership between Telco and the dealers containing the restriction on the dealer not to sell the commercial vehi cles of Telco in other territories falls within the vice: of a restrictive trade practice.
Under the Act, action can be taken against a restric tive.
trade practice.
Therefore, when the authorities under the Act want to challenge any agreement or any prac tice as a restrictive trade, practice, it has t0 be estab lished that it is a restrictive trade practice within the definition of the Act.
If it is found to.
be a restrictive trade practice, the next stage is to register agreements relating to a restrictive trade practice.
Section 33 states that any agreement relating to a restrictive trade practice failing within one or more of the categories mentioned.
therein shall be subject to registration.
The authorities have to examine the agreement and find out whether it fails within the vice of a restrictive trade practice before the authorities can ask that the agreement be registered under Chapter V of the Act.
It is only after an agreement has been registered that there is an enquiry under Chapter VI of the Act.
This enquiry under Section 37 0f the Act is to find out whether a restrictive trade practice is prejudicial to the public interest.
Section 38 of the Act lays down the circumstances under which a restrictive trade practice is presumed to be in the public interest and not to be deemed to be prejudi cial to the public interest.
In the present case the question is whether the dealer ship agreement between Telco and the dealers whereby the dealers are not permitted to sell the commercial vehicles outside their zones amounts to a restrictive trade practice.
The questions posed are: Does it prevent distort or restrict competition in any manner; Does it affect the flow of sup plies in the market relating to goods or service in such manner as to impose on the consumers unjustified costs or restrictions.
The evidence about the features of the trade is this.
The medium, and heavy vehicles in the trade are restricted to those licensed by Government for manufacture in the country.
The capital investment required for a new factory is of a very high order, namely, almost Rs. 100 crores.
At present the only manufacturers of commercial vehicles are Telco which produces Tats Vehicles, Hindustan Motors Ltd., which produces Hindustan Vehicles, Premier Automobiles, which produces Premier Vehicles and Ashok Leyland Ltd., which produces Leyland vehicles.
The supply of commercial vehicles is far below 695 the requirement of the industry.
The gap between the demand and the supply is increasing with the passage of time as the trade is developing at a faster pace than the growth in the number of vehicles produced.
The Government of India esti mated during the year 1974 75 the production of 56,300 ' medium and heavy vehicles.
The production, however, is now likely to be of the order of 35,000.
The Fifth Five Year Plan for the production is said to be increased to 80,1.0,0.
It is said that against this target the installation capaci ty today is 46,300 vehicles.
Even if the expansion pro gramme is fully implemented the installed capacity by the end of the Fifth Five Year Plan will be only 66,975 vehicles per year.
The scarcity which is a feature of this trade is accen tuated in the case of Telco 's vehicles because they are in great demand all over the country and even in the export market. ]n 1974.
it is said that Telco exported vehicles amounting to 86% of the total export from the country.
The export earnings are said to be Rs. 7.29 crores for 1101 vehicles.
At the time of arguments it was suggested that Telco exports now vehicles worth Rs. 10 crores.
The clauses relating to territorial restriction in the present case do not constitute restrictive trade practice for the following reasons: The domestic market in India is spread over this vast sub continent with very divers conditions of roads, popula tion and demand.
It is essential for the community, the consumer and the manufacturer to have an equitable geograph ical distribution of his vehicles.
Vehicles may be required for operation in any part of India and public interest requires that the channels of communication should be open throughout the country.
These vehicles should ply even in the remotest areas like Ladakh, Nagaland, etc.
A user of Telco vehicles expects to get all over the country the service of a high standard enjoined by Telco upon its dealers.
Telco on its part also needs a country wide network of dealers so that sales take place and the dealers can maintain the service stations, spare part stocks and workshops with the requisite equipment, machinery and trained personnel all over the country.
This also enables the consumers to rely on Telco 's vehicles since they in turn can expect services, repairs and spare parts all over India.
Telco has thus to ensure an all India network of dealers, including those which will serve remote areas.
It is evidence that commercial vehicles is a highly complex mechanical product.
When Telco sells a vehicle it also.
has a responsibility that the vehicle is kept running and maintained in the optimum condition Telco must preserve its reputation and ensure that the vehicles are only sold by dealers who have the requisite facilities and organisation to give the proper after sales service.
Unlike most consum er products, a commercial vehicle involves a continuous relationship between a dealer and a consumer.
The consumer looks to the dealer, for keeping the vehicle running and for all attendent facilities like 696 service stations, workshops and spare parts.
Reliability and repair of a vehicle, which represents a substantial invest ment for the consumer, is vital also to the public as a whole and there must be constantly available throughout the country a network of dealers with adequate repair and main tenance service.
Even before the delivery of a commercial vehicle to the consumer, there is a meticulous pre delivery inspection and service by the dealer.
After delivery, Telco gives three free services.
Telco also gives a war ranty for a period of six months from the date of registra tion or 12 months from the date of delivery of vehicle from the factory or for a period in which the vehicle has run for a distance of 32,0.00 kilometers, whichever expires earlier.
There are outstanding distinctions between a car dealer and a commercial vehicle dealer.
The peculiar characteris tics of dealers ' in commercial vehicles are these:The pur chase of a car in India rarely represents the substantial or the bulk of the investment of a purchaser.
The purchase of a commercial vehicle, however, represents the substantial and often the only capital investment of the owner.
A chassis manufactured by Telco is sold to the customer at almost a lakh of rupees and the body costs him about Rs. 15,000/ for a truck and about Rs. 40,000/ for a bus.
Over 80% of per sons owning trucks are individual owners having not more than two trucks and mostly only one truck.
The vehicle is normally constantly on the road and is put to the maximum possible use with often more than one driver plying it.
Thus a vehicle plies on an average over a lakh of kilometers per year.
The heavy investment also makes it necessary that a vehicle should be constantly on the move.
The owner can ill afford to waste time and requires easily accessible and prompt Service Stations, Workshops and stocks of spares.
The purchaser regards the .truck as a life time investment.
The purchaser looks to the dealer for prompt after sales service and repairs.
Since 80% of truck operators are individual operators and often have scant mechanical knowl edge, they have to depend upon the dealer for keeping the truck moving with the necessary trained personnel, work shop, service stations and stocks of spares.
As a result of these characteristics, the relationship between a dealer and the truck purchaser is much more constant than with the car purchaser.
The standard of service he expects is more vigorous and prompt.
Vehicles of Telco are in keen demand, both because of their quality as also because of the assurance of efficient after sales service, by the network of Telco dealers.
These requirements cannot be met unless there is a network of dealers with specific territories.
It is essential from the angle of the consumer, Telco and the public that there should be widest and equitable geographical distribution of the vehicles of Telco.
Public interest itself requires that the vehicles should not be concentrated in metro centres or urban areas where there is a high demand for them, to the determent of the remote, areas or sami urban areas.
The consumer also plies trucks all over the country and expects that where ever he goes, whether to Kerala or Assam, there should be a dealer, a service station, a workshop, trained personnel and spare parts which can attend to Telco trucks.
697 Urban area centres like Bombay, Delhi and Calcutta, have a very large demand as compared to the rest of the country.
But at the same time Telco.
has to ensure sales in places like Kashmir, Nagaland.
and Tripura, where the demand is much less.
In fact, in some of these areas, there are no alternative means of communication and transport like rail ways and the life of the community is largely dependent upon road transport.
Even where the demand is less, there has to be a dealer with the necessary facilities and organisation for after sales service Telco appoints dealers.
for different territories in India.
The geographical network is natural to the industry itself.
The purchaser will purchase and get his vehicle serviced in his own territory.
The purchaser looks to a dealer in his own territory with whom he has relationship and who will give him credit facilities, who will render after sales service and from whom he can purchase spares, who will handle warranty claims and with 'whOm he can have constant relationship for purchases in future.
Unless a 'dealer is assured of customers in his own area and zones; he will not have the necessary incentive to maintain the optimum level of service stations, workshops and spare part stocks, nor can the dealer plan his resources including technical personnel, capital equipment and financial resources for his future commitment.
Telco regards after sales service of crucial importance to serve its consumers.
It is natural and cheaper for a purchaser to buy and service his vehicles in his own terri tory.
After sales service of Telco is fairly elaborate and complex and it is because of the standard of this service that Telco has been 'able to maintain the reputation.
Each, dealer is required to provide one premises for show room, service station, workshop, spare parts, shop, canteen and also (a) rest house for drivers; (b) equipment and machinery for maintenance and repairs; (c) set or sets of special tools specially designed for carrying out repairs to Telco 's vehicle; (d) Technical personnel including person nel trained by the appellant at its factory in Jamshedpur and.
(e) adequate stock of spare parts to meet the potential demand in the territory.
Telco has set up 13 zonal offices throughout India at New Delhi, Kanpur, Ahmedabad, Indore, Bombay, Bangalore, Madras, Vijyawada, Bhubaneshwar, Jamshedpur, Gauhati, Jul lunder and Jaipur.
If the territorial restriction is re moved, there will be a tendency for persons to book orders in areas thus starving the consumers of that area of their equitable share and disrupting the flow of vehicles in both areas.
This will create pockets of artificial scarcity and dislocate the network.
If the dealer is not assured of a steady demand in his territory, he may have no incentive or may not find it economic to organise proper after sales service.
This would also result in dealers diverting their supplies to metro centres starving the semi urban and rural areas.
Network of dealers and service stations has a direct relation with the territorial assurances given to each dealer.
It is as a result of such assurances that a dealer is able to maintain the whole chain of dealership network, service stations, stocks of spare parts, trained per 698 sonnel, equipment, special tool kits and given the optimum service as laid down by Telco to its vehicles.
Some of the dealers have even maintained mobile service vans.
The dealer has to invest a large amount in providing all these facilities.
The dealer is familiar with his territory and in view of the potential sales, takes steps to improve his organisation.
If these clauses are omitted, the dealer would not make investment and would neglect the service facilities to the detriment of the consumer.
In the light of scarcity in the supply of vehicle 's and the need to distribute Vehicles to all the dealers in India, Telco makes equitable distribution of its products by taking into account these factors: (a) Population of commercial vehicles in the dealer 's territory; (b) Orders from customers pending with the dealer; (c) Preference for Tata diesel vehicles as against other makes in the territory of the dealer (d) Past sales performance of the dealer; (e) Effective after sales service provided by the dealers; (f) Special requirements of the territory during the erection of Government Projects such as steel plants, construction of dams etc.
; (g) Emergency requirements of the territory on account of drought, flood relief etc; (h) Government recom mendations for meeting certain specific requirements; (i) Dependence of the particular territory on road transport and (j) Requirements of State Government and nationalised trans port undertakings which are procured through dealers.
The demand for the vehicles has always exceeded the supply making it imperative for Telco to ensure equitable distribution of the vehicles to the various parts of the country.
There are many commercial agreements under which the territories are divided among distributors and 'such agreements do not constitute restrictive trade practice, where the whole object is to ensure fair, efficient and even distribution particularly of a commodity which is in short supply and in great demand.
If these were not done and it was permitted for one dealer to encroach on the territory of another this would affect the flow of vehicles into the market leaving some territories unsupplied.
In order to prevent this undesirable position that dealers were appointed for different territories and care was taken consistently to see that all parts of the country are treat ed equally and fairly.
The exclusive dealings do not impede competition but promote it.
Such dealings lead to specialisation and im provement in after sales service.
The exclusive dealership agreements do not restrict distribution in any area or prevent competition.
The customer has the choice of buying any make he likes.
The advantage of exclusive dealership is that a dealer specialises in his own type of vehicle with all the attending advantages of trained personnel, special service stations, workshops and spare parts.
Each set of special tools costs approximately Rs. 55,000.
The set is suitable for servicing one vehicle at a time.
Some dealers like the United Motors Pvt. Ltd., Bombay have four sets at Colaba, Wadi Bunder, Jogeshwari and Chembur.
The invest ment of United Motors is approximately Rs. 24 lakhs.
It is estimated that one service station with special tools of Telco and workshop equipment will cost as much as Rupees five lakhs.
699 It is by specialising in each make of vehicle and pro viding the best possible service that the competition between the various makes is enhanced.
It is practically not possible for the same dealer to have parallel lines of service stations, workshops, spare parts, trained personnel for different makes.
It is also not practical for the dealer to maintain different and competitive standards laid down by different companies which may differ from manufac turer to manufacturer.
If a dealer has more than one fran chise, the competition between the various makes will be reduced.
It will be difficult for the manufacturer to make the dealer responsible for his make and concentrate on it.
There may be conflicts between his responsibility for after sales service.
Telco commenced appointing dealers in 1954.
At that time 25 or 26 dealer 's were appointed.
The number increased to 68.
There are also sub dealers.
Each dealer is required to make a security deposit varying from Rs. 1 lakh to Rs. 6 lakhs.
Telco pays interest ,on deposits and security depos its.
A dealer has to invest a minimum of Rs. 5 lakhs in his establishment.
The range of investment would vary from Rs. 5 lakhs to Rs. 50 lakhs depending upon the largeness of the place.
Dealer Apprentices are trained by Telco in its factory at Jamshedpur.
Telco also trains Trade Apprentices.
The dealer also pays the apprentice stipend.
If territorial restrictions are removed, there will be unequal distribu tion of vehicles in various territories.
While there 'will be shortage in some territories, there will be larger sup plies in others.
Vehicles are supplied by Telco according to territorial requirements.
Various factors are taken into consideration in assessing the requirements of territo ries.
By making it 's dealers exclusive to Telco, there cannot be said to be any prevention, distortion or restriction of competition in the territory in which a dealer operates, either between manufacturers of the same type of vehicles or between dealers in these vehicle.
Any manufacturer of vehicles such as those of Telco may manufacture and sell its vehicles in a territory in which Telco 's dealers operate.
Any other manufacturer of vehicles 'similar to those of Talco is also free to appoint dealers of its choice in the same territory covered by Telco 's dealers.
The channels for outlet for vehicles have not been blocked by the fact that the dealers appointed by Telco are exclusive to Telco nor it can be said that Telco has by its exclusive arrange ment with its dealers affected the flow of supplies of vehicles into the market.
If Telco Sold themselves in each territory it could not be said that Telco was pursuing any restrictive trade practice.
Would the position change if Telco asked their dealers not to sell Telco bus chassis outside the dealer 's territory? Just as Telco could not complete with itself similarly dealers would not compete with one another.
The competition would be between Telco products and the products of the other manufacturers Premier, Hindustan and Leyland. 'Restrictive trade practice is based on reason embodied in Section 2(0) of the Act.
When trucks are in short supply and dealers are 700 restrained from selling at above the maximum price they cannot sell below the maximum price and compete with one another.
Dealers of the same manufacturer do not compete with one another in every case irrespective of the market conditions or the character of the product sold.
Competition between dealers appointed by the same manu facturer can be reduced when there is a practical possibili ty. of such competition as for example, When the goods are in abundance.
When there is an acute scarcity of goods and there is no possibility of dealers selling the product at less than the permissible price, it would be irrational to talk of territorial limits restricting competition.
Restric tion on competition postulates the existence or the possi bility of competition.
On the facts proved in the present case the only competition possible is between the ,dealers and the manufacturer 'section The territorial restriction pro motes competition between the four manufacturers in every part of India while it has no effect of any theoretical competition between the dealers because such competition between dealers does not and cannot exist.
The question of competition cannot be considered in vacuo or in a doctrinaire spirit.
The concept of competi tion is to be understood in a commercial sense.
Territorial restriction will promote competition whereas the removal of territorial restriction would reduce competition.
As a result of territorial restriction there is in each part of India open competition among the four manufacturers.
If the territorial restriction is removed there will be pockets without any competition in certain parts of India.
If the dealer in Kashmir is allowed to sell anywhere in India wealthy cities like Delhi, Bombay, Calcutta will buy up trucks allocated for Kashmir and the buyer in Kashmir will not be able to get the trucks.
The other three manufactur ers whose trucks are not in equal demand will have Kashmir as an open field to them without competition by Telco.
Therefore, competition will be reduced in Kashmir by the successful competitor being put out of the field.
The real reason for exclusive dealership is that instead of diminishing competition between four manufacturers each dealer tries to do his best for his own trucks, bus and thus reduce keen competition among the four manufacturers.
If one dealer deals in trucks of one or more manufacturers one cannot be expected to compete with itself it is, therefore, clear that exclusive dealership promotes instead of re tarding competition.
Clauses 1 and 3 are in the interest of the consumer and ensure equal distribution as far as possible of the goods at a fair price.
These provisions do not tend to obstruct the flow of capital or resources into the stream of production or to bring about manipulation of prices or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions.
701 In the present case the restriction imposed by Telco on dealers not to sell bus and chassis outside their territo ries does not restrict competition for the foregoing rea sons.
The other term of exclusive dealership in clauses 6 and 14 of the agreement between Telco and the dealers that the dealer will not sell commercial vehicles of other manufac turers, does not amount to a restriction in competition because other manufacturers can appoint other persons to deal in their commercial vehicles.
It is also in public interest to see that vehicles of other manufacturers are sold in the same territory by other dealers.
Therefore, there will be competition between the manufacturers of different commercial vehicles and as far as exclusive dealership of Telco commercial vehicles is concerned, it will be in public interest ' and not be a restriction in competition.
The two terms of restriction on dealers, namely, 'sale being confined within the territory and the other being confined to dealing in only Telco vehicles are not prejudi cial to public interest.
The Commission found that exclu sive nature of dealership of being confined to Telco vehi cles is not prejudicial to public interest.
The territorial restriction is also.
in public interest and the Commission was in error in thinking that it is not so.
For the foregoing reasons the appeal is accepted.
The decision of the Commission is set aside.
We hold that the agreement in the present case is not within the vice of restrictive trade practice and is, therefore, not registra ble.
We make it clear that in a given case sale of commodi ties being confined to a territory may amount to a restric tive trade practice.
In the special features and facts and circumstances of the exclusive dealership agreement between Telco and the dealers the territorial restriction imposed on the sellers not to sell vehicles outside their territories is not a restrictive trade practice.
Parties will pay and bear their own costs.
P.B.R. Appeal allowed.
| The Central Provinces and Berar Municipalities .Act, 1922, empowers a municipality to assess and recover octroi duty on goods brought within the municipal limits for sale.
consumption and use therein.
Under the Act an appeal against assessment or levy or refusal to refund any tax lies to a designated official.
A person aggrieved by the decision of the appellate authority has a right to apply to the State Government for revision.
The Act also provides for refer ence to the High Court on questions like liability to as sessment or principles of assessment and so on.
Section 84 (3) lays down that "no objection shall be taken to any valuation.
assessment or levy nor shall the liability of any person to be taxed or assessed be questioned in any other manner or by any other authority than is provided in the Act." Rule 14(b) of the Rules framed under the Act provides that any person importing or bringing any dutiable articles within the octroi limits of a municipality without paying the duty or without giving a declaration to the octroi Moharrir, shall be liable to pay double the duty and shall in addition be liable to be prosecuted for evasion of duty.
The plaintiffs imported within the municipal limits for sale in their retail shops articles manufactured by them in their factories situated at different places in the country.
They paid the octroi levied by the municipality at a certain rate.
But Sometime later the municipality reopened and revised the assessment and charged octroi at a different rate.
It also levied double the duty by way of penalty on the ground that the plaintiffs had intentionally evaded payment of duty on the goods.
The appellate author ity modified the decision of the municipality but upheld the assessment of double duty.
The plaintiffs ' revision appli cation was rejected by the Board of Revenue.
The plaintiffs paid the duty and penalty under protest and filed a suit for recovery of the amount on the ground that the municipality was not entitled to recover the amount of octroi duty and penalty.
Overruling the defendant munic ipality 's objection as regards the civil court 's jurisdic tion to entertain the suit the trial court decreed the suit.
On appeal, the High Court held that the defendants were entitled to revise and reopen the assessment and that the reassessment of duty fixed in appeal by the appellate au thority could not be questioned by the plaintiffs in a civil court.
In appeal it was contended in this Court by the plain tiffs that section 84(3) may bar a suit to challenge an act which was within the purview of the Act, but it could not bar a suit to challenge an act which was outside the Act or the Rules and since in this case the defendant had no power to revise or reopen the assessment.
its action was wholly lacking in jurisdiction and so the suit was competent.
Dismissing the appeal, HELD: Since section 84(3) expressly prohibits a challenge to valuation, assessment or levy "in any other manner . . than is provided in this Act" and since the Act has devised its own special machinery for inquiring into and adjudicating upon such challenges, the common remedy .of a suit stands necessarily cxcluded and cannot be availed of by a person aggrieved by an order 183 assessment to octroi duty.
Similarly the sub section excludes expressly the power of "any other authority than is provided in this Act" to entertain an objection to any valuation, assessment or levy of octroi.
This art of the provision is in the nature of ouster of jurisdiction of civil courts, at least by necessary implication, to enter tain an objection to any valuation, assessment or levy. [187 A] 1.
Two of the propositions bearing on the construction of statutes which expressly or by necessary implication bar the jurisdiction of civil courts stated in Dhulabhai & Ors.
vs The State of Madhya Pradesh ; and which are relevant for the purposes of this case are: (i) where the statute gives finality to the orders of special tribunals the civil court 's jurisdiction must be held to be excluded if there is an adequate remedy to do what the civil courts would normally do in a suit.
Such provision, howev er, does not exclude cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure, (ii) questions of the correctness of the assessment, apart from its constitution ality, are for the decision of the authorities and a civil suit does not lie.
if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act, In either case the scheme of the par ticular Act must be examined because it is a relevant en quiry.
[189 D F] (a) In the instant case, the various provisions of the Act show in the first place that the municipality possesses the right and the power to assess and recover octroi duty and double duty on goods brought within the municipal limits for sale, consumption or use therein.
The circumstance that the municility might have acted in excess of or irregularly in the exercise of that power could not support the conclusion that the assessment or recovery of the tax was without jurisdiction.
If the appropriate authority, while exercis ing its jurisdiction and powers under the relevant provi sions of the.
Act, holds erroneously that an assessment already made can be corrected or that an ,assessee is liable to, pay double duty, it cannot be said that the decision of the authority is without jurisdiction.
[192 E F] (b) Both the Act and the Rules contain provisions ena bling the aggrieved party to challenge an illegal assessment or levy of double duty.
By reason of the existence and availability of those special remedies, the ordinary remedy by way of a suit would be excluded on a true interpretation of section 84(3) of the Act.
[193 H] (c) Levy of double duty, though not justified by the terms of r. 14(b) goes to the correctness of the levy and not to the jurisdiction of the assessing authority.
Assuming that neither of the two eventualities mentioned in r. 14(b) occurred and, therefore, there was no justification for imposing double duty, the error could be corrected only in the manner provided in the Act and by the authority pre scribed therein.
The remedy by way of a suit is barred.
[193 A B] (d) The suit for refund of double duty or revised duty is not maintainable because in the first place the assess ment was made by the authority duly empowered to do so and secondly the authority was acting under the Act while revis ing the assessment and imposing double duty.
It had the power to assess and levy double duty.
If it exceeded that power it acted wrongly, but not without jurisdiction.
[193 C D] (e) It is not correct to say that the Act protects correct assessments only and that every incorrect or wrong order of assessment can be challenged by a suit though the statute gives it finality and provides full and effective remedies to challenge it.
Except in matters of constitu tionality and the like a selfcontained Code must have priority over the common means of vindicating rights.
If the appropriate authority, while exercising its jurisdic tion anti power under the relevant provisions of the Act.
comes to an erroneous conclusion it cannot be said that the decision is without jurisdiction.
[193 F. G] Dhulabhai and Others vs The State of Madhya Pradesh ; Kamla Mills Ltd. vs State of Bombay ; applied.
13 240SCI/77 184 Bharat Kala Bhandar Ltd. vs Municipal Committee, Dha mangaon; , , B.M. Lahani vs Malkapur Munici pality, and Firm Seth Radka Kishan vs Administrator, Municipal Committee, Ludhiana [19541 2 SCR 273, 284 distinguished.
Wolverhamton New Waterworks Company vs Hawkerford ; Secretary of State vs Mask & Company, 67 I.R. 222, Naville vs London "Express" Newspaper, Limited, , Bengal Immunity Co. Ltd. vs State of Bihar.
and Firm and Illuri Subbaya Chetty & Sons.
vs The State of Andhra Pradesh, ; referred to.
(f) The instant case does not fall within the proposi tions in Dhulabhai 's case because section 84(3) not merely gives finality to the orders passed by the special tribunal but expressly provides that such orders shall not be questioned in any other manner or by any other authority than is pro vided in the Act.
[194 B] (g) In the instant case, the plaintiffs availed them selves of the remedies provided under the Act and.
succeeded to art extent.
Having exhausted their remedies under the Act and having been benefited by the appellate decision, they turned to the civil court to claim refund.
This is impermissible under section 84(3).
[194 F G]
|
Appeal No. 61 of 1953.
Appeal from the Judgment and Decree dated the 16th day of May, 1952 of the High Court of Judicature at Calcutta in Appeal from Original Decree No. 124 of 1951 arising out of the decree dated the 25th day of May, 1951 of the High Court of Calcutta in its Ordinary Original Civil Jurisdiction in Suit No. 3614 of 1950.
M. C. Setalvad, Attorney General for India, (P. Mandaland section P. Varma, with him), for the appellant.
N. C. Chatterjee, (A. N. Sinha and P. C. Dutta, with him), for the respondent.
December 3.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with certificate from the High Court of Judicature at Calcutta arises out of the suit filed on the original side of the High Court by the appellant against the respondent to recover a sum of Rs. 1,25,962 2 0 with interest and costs, 1073 The appellant entered into three contracts, two dated the 8th August 1949 and the third dated the 17th August 1949 with the respondent agreeing to purchase 1,80,000 bags of 'B ' twills at the price of Rs. 134/4/ per 100 bags, 1,80,000 bags at the rate of Rs. 135/4/ per 100 bags and 90,000 bags at the rate of Rs. 138/ per 100 bags respectively for October, November and December 1949 deliveries in equal monthly instalments on terms and conditions contained in the relative contract forms of the Indian Jute Mills Association.
In September 1949 the respondent expressed its inability to deliver the goods under the said contracts and requested the appellant to settle the same by selling back the goods under the said contracts to the respondent at the price of Rs. 161 8 0 per 100 bags.
Three settlement contracts were accordingly entered into between the parties on the 28th September 1949 whereby the appellant agreed to sell the goods under the original contracts to the respondent at the rate of Rs. 161 8 0 per 100 bags on the terms and conditions contained in the relative contract forms of the Indian Jute Mills Association.
The appellant duly submitted to the respondent his bills for the amounts due at the foot of the said contracts aggregating to Rs. 1,15,650 which the respondent accepted but failed and neglected to pay in spite of repeated demands of the appellant.
The appellant therefore filed the suit for recovery of the said sum with interest and costs.
The respondent filed its written statement contesting the appellant 's claim on the main around that the three settlement contracts above mentioned were illegal and prohibited by the West Bengal Jute Goods Future Ordinance, 1949.
The respondent contended that it never dealt in the sale and/or purchase of jute goods involving actual delivery of possession thereof, nor did it possess or have control over any godown and other means or equipments necessary for the storage and supply of jute goods and that therefore the said settlement contracts were void and not binding upon it and that the appellant was not entitled to any relief as prayed.
The Trial Court negatived the contention of the respon 1074 dent and decreed the appellant 's claim.
The learned Judges of the Appeal Court however came to the conclusion that the said settlement contracts were contracts relating to the purchase of jute goods made on a forward basis by the respondent not being a person who habitually dealt in the sale or purchase of jute goods involving the actual delivery of possession thereof and were therefore void and unenforceable.
The only right which the appellant had against the respondent was to have the said original contracts settled on the basis of the last closing rate in a notified market which was Rs. 146/14/ per 100 bags.
No such claim was however made by the appellant.
A further contention which was raised by the respondent, viz. that the Ordinance was ultra vires was negatived by the Court.
But in view of its finding on the main issue the Appeal Court dismissed the appellant 's suit with costs.
The relevant provisions of the West Bengal Jute Goods Future Ordinance, 1949 were as under: Section 2.
In this Ordinance, unless there is anything repugnant in the subject or context: (1) 'Contract relating to jute goods futures ' means a contract relating to the sale or purchase of jute goods made on a forward basis (a)providing for the payment or receipt, as the case may be, of margin in such manner and on such dates as may be specified in the contract, or (b) by or with any person not being a person who, (i)habitually deals in the sale or purchase of jute goods involving the actual delivery of possession thereof, or (ii)possesses, or has control over, a godown and other means and equipments necessary for the storage and supply of jute goods:. . . . . . 3.(1) The Provincial Government may, from time to time, if it so thinks fit, by notification in the Official Gazette prohibit the making of contracts, relating to jute goods futures and may, by like notification, withdraw such prohibition . . . . . . . 1075 (2)When the making of contracts relating to jute goods futures is prohibited by a notification under sub section (I), (a)no person shall make any such contract or pay or receive any margin except, in the case of any such contract made prior to the date of the notification, to the extent to which the payment or receipt, as the case may be, of margin is allowable on the basis of the last closing rate in a notified market:. . . (c)notwithstanding anything contained in any other law for the time being in force, (i)every such contract made, and every claim in respect of margin, in contravention of the provisions of clause (a), shall be void and unenforceable, and (ii) every such contract made prior to the date of publication of the notification shall be varied and settled on the basis of the last closing rate in a notified market.
Explanation In this sub section, (a)"last closing rate" means the rate fixed by the Directors of a notified market to be the closing rate of such market immediately preceding the date of publication of the notification under sub section (1) prohibiting the making of contracts relating to jute goods futures: and (b)"notified market" means a jute goods futures market recognised by the Provincial Government by notification in the Official Gazette.
The Ordinance came into force on.
the 22nd September 1949.
In pursuance of the power conferred under section 3(1) of the Ordinance the Government of West Bengal issued a notification, being notification No. 4665 Com.
dated the 23rd September 1949 prohibiting the making of contracts relating to jute goods futures on and from the date of publication of the notification in the Official Gazette and by another notification No. 4666 Com.
of the same date recognised certain jute goods futures markets for the purpose of Para.
(b) of the Explanation to section 3(2) as notified markets.
These notifications were published in the 138 1076 Calcutta Gazette on the same day, the 23rd September 1949.
The relevant terms and conditions of the standard form of the Indian Jute Mills Association contracts may be conveniently set out here: (1)Buyers to give 7 Clear Working days ' notice to place goods alongside. . . . . . . . (3)Payment to be made in cash in exchange for Delivery Orders on Sellers, or for Railway Receipts, or for Dock 's Receipts or for Mate 's Receipts (which Dock 's Receipt or Mate 's Receipts are to be handed by a Ship 's or Dock 's officers to the Sellers ' representatives).
(4)The Buyers hereby acknowledge, that so long as such Railway Receipts or Mate 's or Dock 's Receipts (whether in Sellers ' or Buyers ' names) are in the possession of the Sellers, the lien of the sellers, as unpaid vendors, subsists both on such Railway Receipts Dock 's or Mate 's Receipts and the goods they represent until payment is made in full.
There were other terms and conditions appertaining to the delivery of goods under the contracts including inspection by the buyers, insurance, tender, etc.
The settlement contracts were also practically in the same form except that in the body of the contracts it was mentioned that the particular contract represented settlement of an original contract which had been already entered into between the parties and that the buyers in the settlement contract would pay to the sellers the difference at the particular rate on due date.
In respect of the goods deliverable under the contracts the mills would, in the case of goods sent by them alongside the vessel in accordance with the shippers ' instructions in that behalf, obtain the mate 's receipts in respect of the same and such mate 's receipts would be delivered by the mills to their immediate buyers who in their turn would pass them on to their respective buyers in the chain of contracts resting with the ultimate shipper.
If the mills held the goods in their godown they would issue 1077 delivery orders on the due date, which delivery orders would be dealt with in the same manner as the mate 's receipts aforesaid.
Both these sets of documents would represent the goods and would be passed on from seller to buyer against payment of cash.
As a matter of fact on the evidence the learned Trial Judge held that in the Calcutta jute trade mills ' delivery orders are ordinarily issued by the mills against cash payment and pass from hand to hand by endorse ment and are used in the ordinary course of business authorising the endorsee to receive the goods which they represent and that they are dealt with in the market as representing the goods.
The Appeal Court accepted this position and further found that in the instant case "the mills who held the goods sold them to A, A to B, B to the defendant to the plaintiff to C and C to the shipper.
This is what is known as a chain contract.
It is admitted by the plaintiff, that the mills give the delivery order to A. A endorses it to B, B to the defendant, defendant to the plaintiff and so on".
The question that falls to be determined on these facts and circumstances is whether the settlement contracts mentioned above could be called contracts between the appellant and the respondent involving the actual delivery of possession of the goods.
It was common ground that the contracts did not provide for the payment or receipt of margin.
It was also common ground that the respondent did not possess or have control over a godown and other means and equipments necessary for the storage and supply of jute goods.
The only point at issue was whether the respondent was a person who habitually dealt in the sale or purchase of jute goods involving the actual delivery of possession thereof and the contention which was vehemently urged on behalf of the respondent in the Courts below was that the transactions were purely speculative, that mere delivery orders passed between the parties, which delivery orders did not represent the goods and the transfer thereof did not involve as between the intermediate parties actual delivery of possession of the goods but 1078 differences in rates were only paid or received by the parties.
The appellant on the other hand contended that the delivery orders represented the goods, that each successive buyer paid to his immediate seller the full price of the goods represented by the delivery order in cash before the relative delivery order was endorsed in his favour and thus obtained not only the title to the goods but actual delivery of possession thereof and that in any event when the goods were delivered alongside the vessel or actual delivery was taken by the ultimate buyer there was the giving and taking of actual delivery of possession of the goods all along the chain at the same moment.
The Trial Court accepted the contention of the appellant that the delivery orders are dealt with in the market as representing the goods and that they pass from hand to hand by endorsement being received by the successive buyers against cash payment land are used in the ordinary course of business authorising the endorsee to receive the goods which they represent.
The learned Trial Judge further observed: "Now visualize the long chain of contracts in which the defendant 's contract is one of the connecting links.
The defendant buys from its immediate seller and sells to its immediate buyer.
As seller it is liable to give and as buyer it is entitled to take delivery.
As seller it receives and as buyer it shipping instructions.
Similar shipping instruction is given by each link until it reaches the mills.
The mills deliver the goods alongside the steamer.
Such delivery is in implement of the contract betweenthe mills and their immediate buyer.
But eo instanti it is also in implement of each of the chain contracts including the contract between the defendant and its immediate buyer and the contract between the defendant and its immediate seller.
Not only does the mill give and its immediate buyer take actual delivery but eo instanti each middleman gives and takes actual delivery.
Simultaneously the defendant takes actual delivery of possession of the jute goods from its immediate seller and gives actual delivery of possession 1079 of jute goods to its immediate buyer.
Prima facie at the moment of the delivery alongside the steamer there is appropriation and the passing of the property in the goods and the giving and taking of actual delivery of possession thereof all along the chain at the same moment".
The learned Trial Judge then referred to the following observations of Lord Wright in Nippon Yusen Kaisha vs Ramjiban(1) in regard to the standard form of the Indian Jute Mills Association contract: "This is a form under which the entire export business in gunnies in Calcutta is conducted. .
In the present case the sale being free alongside, the property prima facie passes when the goods are appropriated by delivery alongside in implement of the contracts," and added: "The sale and purchases of the defendant where there is actual shipment and delivery of possession of the goods alongside the vessel involves actual delivery of possession of the jute goods.
The delivery of the goods alongside the vessel is physical delivery of the goods and necessarily changes the actual custody of the goods.
It is said that there is no actual physical delivery of the goods by the defendant himself.
The Legislature, however, does not say that the dealer must himself give actual delivery of the goods.
I cannot read in the statute words which are not there and say that the dealer must himself give delivery of the goods in order to come within the definition in sub section 2 (1) (b) (i) of the Ordinance.
The Legislature simply insists that the sales and purchases of the dealer involve actual delivery of possession of the jute goods.
I do not see why the sales and purchases do not involve actual delivery if such actual delivery is given not by the dealer but by a third party in performance of and in relation to the sales and purchases of the dealer.
Even the buyer and the seller of jute goods over the counter rarely takes and gives manual delivery of the goods.
Very often such manual delivery is given and taken not by the buyer and (1) [1938] L. R. 65 1.
A. 263.
1080 seller but by their respective servants and agents.
I do not see why instead of the buyers ' and sellers ' employees and servants giving and taking delivery of the goods somebody else on their behalf gives and takes delivery; such delivery is not actual delivery of possession of the goods".
The learned Judges of the Appeal Court however did not accept this view and misdirected themselves both in regard to the facts and the position in law.
They took it that none of the parties in the chain contracts paid the actual price of the goods except the shipper who took delivery of the goods from the mills against payment.
They wrongly assumed that A endorsed the delivery order over to B and took the difference, B in his turn endorsed the delivery order to the defendant and took the difference and so on and concluded that nobody was concerned to pay the actual price or take delivery of the goods except the shipper who took the goods and paid the price to the mills.
This assumption was absolutely unwarranted, the evidence on record being that each of the successive buyers paid to his immediate seller the full price of the goods represented by the delivery order in cash against the endorsement of the relative delivery order in his favour by the seller.
The learned Judges of the Appeal Court also laid unwarranted emphasis on the words "actual delivery of possession" and contrasted actual delivery with symbolical or constructive delivery and held that only actual delivery of possession meaning thereby physical or manual delivery was within the intendment of the Ordinance.
Delivery has been defined in section 2(2) of the Indian as meaning voluntary transfer of possession from one person to another and if nothing more was said delivery would not only include actual delivery but also symbolic or constructive delivery within the meaning of the term.
The use of the word "actual" in section 2 (1) (b) (i) of the Ordinance was considered by the Appeal Court as indicative of the intention of the Government to include within the scope of the exemption only cases of actual delivery of possession as 1081 contrasted with symbolical or constructive delivery.
This construction in our opinion is too narrow.
Even if regard be had to the mischief which was sought to be averted by the promulgation of the Ordinance, the Government intended to prevent persons who dealt in differences only and never intended to take delivery under any circumstances, from entering into the market.
Provided a person habitually dealt in the sale or purchase of jute goods involving delivery of the goods, he was not to be included in the ban.
This could be the only intendment of the Ordinance, because otherwise having regard to the ordinary course of business in jute goods would become absolutely impossible.
The manufacturer of jute goods does not come normally into direct contact with the shipper.
It is only through a chain of contracting parties that the shipper obtains the goods from the manufacturer and if only actual delivery of possession as contrasted with symbolical or constructive delivery were contemplated it would be impossible to carry on the business.
If the narrow construction which was put by the Appeal Court on the expression "actual delivery of possession" was accepted it would involve each one of the intermediate parties actually taking physical or manual delivery of the goods from their sellers and again in their turn giving physical or manual delivery of the goods which they had thus obtained to their immediate buyers.
Such an eventuality could never have been contemplated by the Government and the only reasonable interpretation of the expression "actual delivery of possession" can be that actual delivery as contrasted with mere dealings in differences was within the intendment of the Ordinance and such actual delivery of possession included within its scope symbolical as well as constructive delivery of possession.
Once this conclusion is reached it is easy to visualise the course of events.
The mate 's receipts or the delivery orders as the case may be, represented the goods.
The sellers banded over these documents to the buyers against cash payment, and the buyers obtained these documents in token of delivery of 1082 possession of the goods.
They in turn passed these documents from hand to hand until they rested with the ultimate buyer who took physical or manual delivery of possession of those goods.
The constructive delivery of possession which was obtained by the intermediate parties was thus translated into a physical or manual delivery of possession in the ultimate analysis eliminating the unnecessary process of each of the intermediate parties taking and in his turn giving actual delivery of possession of the goods in the narrow sense of physical or manual delivery thereof.
It is necessary to remember in this connection that the words used in section 2(1) (b) (i) are "involving the actual delivery of possession thereof".
The word "involving" in the context means resulting in and this condition would be satisfied if the chain contracts as entered into in the market resulted in actual delivery of possession of goods in the ultimate analysis.
The Appeal Court was therefore clearly in error when it put a narrow construction on the expression "actual delivery of possession" and held that the transactions were purely speculative and the parties in no event.
contemplated actual delivery of possession of the goods.
The learned Trial Judge was in our opinion correct in his appreciation of the whole position on facts as well as in law and in negativing the contention of the respondent.
In view of this conclusion it is unnecessary to consider the argument which was submitted before us based upon the definition of "documents of title" in section 2(4) and the provisions of section 30, proviso to section 36(3) and the proviso to section 53(1) of the Indian that all the documents of title enumerated in section 2(4) were assimilated to a bill of lading and a mere transfer of the documents of title in favour of a buyer was tantamount to a transfer of possession of the goods represented thereby.
The contention that the Ordinance was ultra vires was not seriously pressed before us.
We may however add that the Appeal Court rightly held that the 1083 Ordinance came within Head 27 of List 2 of the Seventh Schedule of the Government of India Act: "Trade and commerce within the Province; markets and fair; money lending and money lenders", and that the Provincial Legislature was competent to legislate on that topic.
The result therefore is that the appeal will be allowed, the decision of the Appeal Court will be reversed and the decree passed by the Trial Court in favour of the Appellant will be restored with costs throughout.
Appeal allowed.
| The appellants carried on the business of Commission Agents in Jaggery in Andhra Pradesh.
They arranged for the sale of jaggery charging a small commission for their service and rendering an account to their Principals in respect of those sales.
Every buyer was fully apprised of the fact that he was purchasing jaggery of specified agriculturist Principals and not that of the appellants.
Till about 1963 under section II of the Andhra Pradesh General Sales Tax Act, 1957, commission agents were required to obtain and were being issued licences and if they conformed to the conditions of those licences, they were not subjected to tax.
In 1963 the principal Act was amended by Andhra Pradesh General Sales Tax Amendment Act 16of 1963.
By the new section I I introduced by the Amending Act the Agentsof resident Principals were made liable for assessment and collection of tax though the liability of the Agent was made co extensive with that of the principal.
The High Court held that in assessing the Agent the turnover of those Principals whose turnover was below the taxable limit of Rs. 10,000 could not be taken into account.
As a consequence of this decision the Andhra Pradesh General Sales Tax Amendment Act 5 of 1968 was enacted and a new section I 1 substituted for the existing section.
This section II was given retrospective effect from 1st August 1963.
The object of this amendment was to enable the taxing authorities to assess levy and collect tax or penalty under the Sales Tax Act from the Agent irrespective of the fact that the Principal was not liable to tax.
This new section was also struck down by the High Court, on the ground that it was violative of article 14 of the Constitution.
In view of this judgment which restored the legal position to that prevailing before the Amendment, large sums of money which bad been collected as tax from the Agents became refundable.
To meet this situation the Andhra Pradesh Legislature enacted the Andhra Pradesh General gales Tax Amendment Act 9 of 1970, Section 8 of which validated the assessments already made.
Under section 9 Agents who had not collected the tax from their Principals were exempted from tax.
Under section I I Agents who had collected the tax were made liable to pay the same.
In writ petitions under article 226 filed by Agents it was contended that section II as amended and section 9 of the Amending Act were violative of article 14.
The High Court held that section 1 1 was valid but section 9 violated article 14.
In appeal filed against the High Court 's judgment by certificate, HELD:(i) The appeals filed by the agents were not maintainable.
What was sought to be recovered from the appellants was in respect of a tax collected on past dealings and not with respect to the future transactions.
The tax had already been collected, no doubt at first illegally, but 368 due to the Amendment Act, that collection had become legal and as dealers, the appellants were liable to pay that amount to the State.
As there was nothing to show that what was sought to be recovered from the dealer was more than what he had collected he had not suffered any loss nor any disadvantage which would entitle him to seek a remedy under article 226 of the Constitution [373B C] (ii) Section 9 had been wrongly struck down by the High Court as invalid.
This section was enacted by the legislature with the object of removing shortcomings in the principal Act which were found wanting by judicial interpretation.
The interregnum between the declaration by the High Court of certain provisions of the Act as being unconstitutional and the attempt of the legislature to remedy the defects and to give retrospective effect thereto created two distinct categories between the same class of dealers namely those who had collected the tax whether they were assessed or not and those who had not collected the tax.
This classification was certainly reasonable and was related to the object which the Amendment Act sought to achieve.
The dealers who had not collected the tax could not have collected it as the law stood and therefore the legislature thought it just or proper to collect the tax from those who were not liable.
Even this exemption was given to those who could establish that they had not in fact collected it, the burden of which was upon those who claimed the exemption.
[374D E],
|
Appeal No. 1283 of 1967.
Appeal by special leave from the Order dated April 2/3, 1967, of the Court of Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur in Appeal No. D.F.78 of 1966.
J. P. Goyal and Sobhag Mal Jain, for the appellant.
O. P. Rana, for the respondents.
The Judgment of the Court was delivered by Hidayatullah, J.
This is an appeal by special leave against an order 2/3 April, 1967, of the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur by which the Assistant Commissioner rejected as defective the memorandum of appeal filed by the present appellant against the assessment order passed by the Sales Tax Officer (S 1) Kanpur.
The defect, according to the Assistant Commissioner, was that the memorandum of appeal (which had been filed well within time) was not accompanied by the challan showing the deposit of admitted tax under section 9 of the Uttar Pradesh Sales Tax Act, 1948.
The appellant did not file an application for revision and did not also invite a reference to the High Court of Allahabad but came direct to this Court by special leave which was granted by us on August 23, 1967.
At the first hearing of the petition, the State of Uttar Pradesh represented by Mr. O.P. Rana objected to the grant of special leave inasmuch as the other provisions under which remedy could be obtained under the Sales tax Act had been bypassed.
At that time, we overruled the objection and in the course of this judgment, we shall briefly indicate the reasons which had then prevailed with us.
The facts of the case are as follows: The appellant had declared his turnover for the year 1964 65 at Rs. 3,70,941.7 P. on which the admitted tax under the Act came to Rs. 11,135,58p.
The Sales tax authorities, however, assessed his turnover at Rs. 30 lakhs on which tax was calculated at Rs. 90.000.
The appellant appealed to the Assistant Commissioner (Judicial) 1, Sales tax, Kanpur Range, Kanpur.
His appeal was filed on May 16, 1966, the order of assessment and the demand notice having been served on him on April 16, 1966.
The appeal was therefore filed within time.
Section 9 of the Act provides that no appeal against an ,assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due or of such instalments thereof as may have become payable.
As is stated earlier, the admitted tax came to 507 Rs. 11,135.58 P.
The appellant was required under this provisions of law to give satisfactory proof, at the time of the entertainment of the appeal, that this tax was duly paid.
It appears that the appellant had paid a greater portion of the tax even before the assessment order had been made, and a balance of Rs. 99.99 P. was due from him from the amount of admitted tax.
This amount was deposited on April 26, 1966 before the appeal was filed by him.
He did not however present any proof of such deposit, because there is a dispute in the case whether the assessee bad shown proof of it to the mumarim or not.
As the finding is that he had not shown it we shall proceed on the assumption that the assessee had not furnished proof at the time of the filing of the appeal that the balance of tax had been paid, It is on this premise that the present appeal has proceeded before us.
On August 16, 1966 the assessee addressed a letter to the Sales tax Officer and asked for a certificate of payment of tax and this certificate having been furnished he filed it on January 24, 1967 before the Assistant Commissioner.
He also, as a matter of abundant caution, filed an application for condonation of delay under section 9(6) of the Act read with section 5 of the Indian Limitation Act.
The order against which the present appeal has been brought before us was made on 2/3 April, 1967 and the appeal of the assessee was rejected,.
because in the opinion of the Assistant Commissioner section 9 of the Act read with r. 66(2) had not been complied with since no proof had been given along with the memorandum of appeal that the tax had been paid.
Simultaneously, the application for condonation of delay was also dismissed.
Against this order the assessee has filed the present appeal.
The short question in this case is whether having made the deposit even before the appeal was filed and well within the period of limitation, the assessee could be deprived of his right of appeal under section 9 of the Act.
Alternatively, it is to be considered whether the proof of the payment of the admitted tax had to accompany the memorandum of appeal as required by r. 66(2) and on failure to furnish such proof, the appeal itself became incompetent.
In support of his order the Assistant Commissioner relied on a decision of the Allahabad High Court reported in Swastika Tannery of Jaimau vs Commissioner of Sales tax, U.P. Lucknow(1) in which the learned Chief Justice of that Court and another learned Judge have laid down that the proof of payment must be as required by the rules and, therefore.
the memorandum of appeal ouaht to be accompanied by the Challan showing payment of tax before the appeal can be said to be competent.
We shall refer to that ruling presently.
in this appeal, learned counsel for the assessee has relied upon a number of authorities in which the interpretation runs (1) (1963) 14 S.T.C. 518.
508 counter to the decision of the learned Chief Justice just adverted to and had contended that section 9 of the Act does not create the bar which the ruling and the Assistant Commissioner 's reliance on that ruling has created in the way of the appeal.
His contention is that if satisfactory proof is given before the appeal is heard or at any rate before it is admitted, the requirement of law under section 9 is satisfied and that it is not always incumbent to produce a challan with the memorandum of appeal, r. 66(2) notwithstanding.
It is this point which has given rise to the great controversy before us and the matter was argued at great length both at the time of grant of special leave and today.
To consider the matter, we may begin by quoting section 9 of the Act.
Section 9 which gives the power of appeal provides as follows: (1) Any dealer objecting to an order allowing 'or refusing an application for exemption certificate under cl.
(b) of sub section (1) of section 4 or to an order refusing an application under section .30 or to an order imposing a penalty under section 15 A or to an assessment made under section 7, 7 A, 7 B, 18 or 21, may within 30 days from the date of service of the copy of the order or notice of assessment, as the case may be, appeal to such authority as may be prescribed; Provided that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due, or of such instalments thereof as may have become payable: Under section 24 of the Act power has been conferred upon the State ,"Government to make rules to carry out the purposes of the Act and in particular, to provide for all matters expressly required or allowed by this Act to be prescribed.
Under sub section
(4) of that section, it is provided that all rules made under the section shall be published in the Gazette and upon such publication, shall have effect immediately as if enacted in the Act and under the 5th sub section, it is further provided that all rules made under the Act shall be laid for fourteen days before the Legislature as soon as possible after they are made and shall be subject to such modifications as the Legislature may make during the session in which . they are so laid.
In exercise of this power, the State Government has framed the U.P. Sales tax Rules, 1948.
Rules 66 and 67 of these rules bear, among others, upon appeals.
Sub r. 1 of r. 66 provides for the content of the appeal by stating what the memorandum of appeal shall specify in relation to the name and address of the appellant etc.
We are not concerned with it.
Sub r.
509 2 then states that "the memorandum of appeal shall be accom panied by. . a challan showing deposit in the Treasury of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable.
" Rule 67 days down how the appeals have to be presented.
Sub r. 1 provides that the memorandum of appeal shall be presented by the appellant or his lawyer or duly authorised agent to the Assistant Commissioner (Judicial) or may be sent by registered post addressed to the Assistant Commissioner,(Judicial).Sub r 2 provides that if the memorandum of appealis in order.
the Assistant Commissioner, (Judicial) shall admitit and on admission.
the Reader of the Assistant Commissioner (Judicial) shall endorse thereon the date of its presentation and shall register it in a book to be known as Register of Appeals.
The third sub rule says that if the memorandum of appeal is not in order.
it may be rejected or returned after the necessary endorsement on its back about the presentation and return to the applicant for correction and representation within the time to be fixed by the Assistant Commissioner (Judicial) or be amended then and there.
Lastly sub r. 4 provides that on admission of an appeal.
the Assistant Commissioner (Judicial) shall fix a date for hearing of the appeal and may send for the record,.
if necessary.
The contention of counsel for the assessee is that he had fully complied with the requirements of section 9 although not strictly as laid down in r. 66 which he characterised as directory.
The contention on the other side is that the rule lays down the only manner of compliance with the provisions of the Section and in support Counsel for the State refers to the provisions of section 24(4) and (5) in which it is stated that the rules on being framed become part of the Statute.
From this, counsel for the State infers that there is no other modeof compliance except the one stated in the rules and as in thiscase that mode of compliance was not followed, the appeal is rightly considered to be incompetent and properly rejected.
This in main represents the essence of the controversy between the parties.
To begin with it must be noticed that the proviso merely requires that the appeal shall not be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due.
A question thus arises what is the meaning of the word 'entertained ' in this context? Does it mean that no appeal shall be received or filed or does it mean that no appeal shall be admitted or heard and disposed of unless satisfactory proof is available ' The dictionary meaning of the word 'entertain ' was brought to our notice by the parties, and both sides agreed that it means either "to deal with or admit to consideration".
We are also of the same opinion.
The question, therefore, is at what stage can the appeal be said to be entertained for the purpose of the appllication of the proviso? Is it 510 entertained when it is tiled or is it 'entertained ' when it is admitted and the date is fixed for hearing or is it finally 'entertained ' when it is heard and disposed of? Numerous cases exist in the law reports in which the word 'entertained ' or similar cognate expressions have been interpreted by the courts.
Some of them from the Allahabad High Court itself have been brought to our notice and we shall deal with them in due course.
For the present we must say that if the legislature intended that the word 'file ' or 'receive ' was to be used, there was no difficulty in using those words.
In some of the statutes which were brought to our .notice such expressions have in fact been used.
For example.
under Order 41.
rule I of the Code of Civil Procedure it is stated 'that a memorandum shall not be filed or presented unless it is accompanied etc.
; in section 17 of the Small Causes Courts Act, the expression is 'at the time of presenting the application '.
In sec.
6 .of the Court Fees Act, the words are 'file ' or 'shall be received '.
It would appear from this that the legislature was not at a loss for words if it had wanted to express itself in such forceful manner as is now suggested by counsel for the State.
It has used the word 'e entertain ' and it must be accepted that it has used it advisedly.
This word has come in for examination in some of the cases of the Allahabad High Court and we shall now refer to them.
In Kundan Lal vs Jagannath Sharma(1) the Court was concerned with Order 21, rule 90, of the Code of Civil Procedure which bad been amended by the High Court by changing the pro visions of the original Code.
The changed rule is as follows: "Provided that no application to set aside the sale shall be entertained: (a) upon any ground which should have been taken by the applicant on or before the date on which the sale proclamation was drawn up: (b) Unless the applicant deposits such amount not exceeding 12 1/2 " of the sum realised by the sale or furnishes such security as the court may in its discretion fix, except when for reasons to be recorded it dispenses with the requirements of this clause. . " The word 'entertain ' is explained by a Divisional Bench of the Allahabad High Court as denoting the point of time at which an application to set aside the sale is heard by the court.
The expression 'entertain ', it is stated.
does not mean.
the same thing as the filing of the application or admission of the application by the court.
A similar view was again taken in Dhoom Chand Jain vs Chamanlal Gupta & Anr.(2) in which the learned Chief (1) A.I.R. 1962 All. 547.
(2) A.LR.
1962 AU.
511 Justice Desai and Mr. Justice Dwivedi gave the same meaning to the expression 'entertain '.
It is observed by Dwivedi J. that the word 'entertain ' in its application bears the meaning 'admitting to consideration ', and therefore when the court cannot refuse to take an application which is backed by deposit or security, it cannot refuse judicially to consider it.
In a single bench decision of the same court reported in Bawan Ram & Anr.
vs Kunj Beharilal(1) one of us (Bhargava, J.) bad to consider the same rule.
There the deposit had not been made within the period of limitation and the question had arisen whether the court could entertain the application or not.
It was decided that the application could not be entertained because proviso (b) debarred the court from entertaining an objection unless the requirement of depositing the amount or furnishing security was complied with within the time prescribed.
In that case the word 'entertain ' is not interpreted but it is held that the Court cannot proceed to consider the application in the absence of deposit made within the time allowed by law.
This case turned on the fact that the deposit was made out of time.
In yet another case of the Allahabad High Court reported in Haji Rahim Bux & Sons and Ors.
vs Firm Samiullah & Sons(2) a division bench consisting of Cheif Justice Desai and Mr. Justice section D. Singh interpreted the words of 0. 21, r. 90, by saying that the word 'entertain ' meant not"receive ' or 'accept ' but 'proceed to consider on merits ' or 'adjudicate upon '.
In our opinion these cases have taken a correct view of the word 'entertain ' which according to dictionary also means 'admit to consideration '.
It would therefore appear that the direction to the court in the proviso to section 9 is that the court shall not proceed to admit to consideration an appeal which is not accompanied by satisfactory proof of the payment of the admitted tax.
This will be when the case is taken up by the court for, the first time.
In the decision on which the Assistant Commissioner relied, the learned Chief Justice (Desai C.J.) holds that the words 'accompanied by ' showed that something tangible had to accompany the memorandum of appeal.
If the memorandum of appeal had to be accompanied by satisfactory proof, it had to be in the shape of something tangible, because no intangible thing can accompany a document like the memorandum of appeal.
In our opinion, making 'an appeal ' the equivalent of the memorandum of appeal is not sound.
Even under 0.
41 of the Code of Civil Procedure.
the expressions "appeal" and "memorandum of appeal" are used to denote two distinct things.
In Wharton 's Law Lexicon, the word "appeal" is defined as the judicial examination of the decisions by a hi her Court of the decision of an inferior court.
The appeal is the judicial examination; the memorandum of appeal contains the rounds on which the judicial examination is invited.
(1) A.I.R. 1961 All. 42.
(2) A.I.R. 1963 All.
512 For purposes of limitation and for purposes of the rules of the Court it is required that a written memorandum of appeal shall be filed.
When the proviso speaks of the entertainment of the appeal, it means that the appeal such as was filed will not be admitted to consideration unless there is satisfactory proof available of the making of the deposit of admitted tax.
Now the complicating factor is the existence of the rule, and here, the divergence of submission arises on whether the rules can be regarded as mandatory or merely directory.
It is quite obvious that the section as it stands only requires that at the time of the consideration of the appeal, There should be satisfactory proof that the admitted tax has been deposited.
It only says that no appeal shall be entertained unless accompanied by satisfactory proof of the payment of the tax.
This satisfactory proof may take any form; in fact in the present case satisfactory proof was tendered in the shape of a certificate from the Sales tax Officer that the admitted tax had been deposited and well within time.
Under section 9 and its proviso as they stand, it is quite obvious that 'entertainment ' means the point of time when the appeal is being considered.
There was thus satisfactory proof in the present case.
No doubt, proof was not tendered following the method required by the rules but the question is whether the rules can make the section narrower by prescribing a particular mode.
The section is general; it provides that the court should accept satisfactory proof.
The rule requires that the memorandum of appeal shall be accompanied by the challan showing payment of tax.
The rule lays down one uncontestable mode of proof which the Court will always accept but it does not exclude the operation of the proviso when equally satisfactory proof is made available to the officer hearing the appeal and it is proved to his satisfaction that the payment of the tax has been duly made and in time.
In this sense, the rule can be regarded as directory since it lays down one of those modes which will be unquestioned for its validity.
The other modes of proof are not necessarily shut out.
It is to be remembered that all rules of procedure are intended to advance justice and not to defeat it.
Here the right of appeal has been made subservient to the payment of the admitted tax.
If the admitted tax is paid and there is proof available that it has been so paid, there exists no reason to create a second impediment in the way of the appeal.
No doubt, rule makes it easy for the assessee to bring satisfactory proof in an uncontestable manner, but the provision of the rule is not to the exclusion of other satisfactory modes of proof.
Suppose for instance that the I challan was lost and the time for the filing of the appeal was expiring, could or could not the person concerned say that he had the certificate but had lost it and that he would produce a copy of the challan from the Treasury or obtain a certificate from the 513 Treasury Officer.
Could he not obtain from the bank the discharged cheque by which the amount of tax was deposited by him and produce it as the discharged counterfoil of payment.
All those modes of proof will be equally, irrefutable.
In the present case the,, assessee had in his petition of appeal 'stated that the amount of tax had been paid and had fortified the 'Statement by an affidavit.
Before the hearing he produced, a certificate from the.
Sales tax Officer that the tax had, been paid.
The Assistant Commissioner ought therefore to have proceeded: with the appeal because it was accompanied by satisfactory proof of,; the payment of the tax.
To hold otherwise would put a premium upon a technicality which we do not see will advance the case either for the collection of the tax or,, for the: administration of justice.
, The rule, as we have stated, indicate& what :is the best and easiest method of achieving satisfactory proof.
The certificate from the Sales tax Officer, however, is as good proof as the challan from the Treasury and if such certificate was produced at the admission of the appeal, how the memorandum of appeal can be said to be defective under the section as it stands.
In these circumstances, we hold that the rule is merely directory and indicates only one of the modes of satisfactory proof.
The distinction made by the learned Chief Justice between the tangible and intangible objects does not in our opinion fall for consideration in the present case.
If one holds that by 'entertainment ' is meant the time of admission of the appeal, satisfactory proof may be furnished at the time of admission of the appeal.
We are of opinion that by the word "entertain" here is meant the first occasion on which the court takes up the matter for consideration.
It may be at the admission stage or if by the rules of that Tribunal the appeals are automatically admitted, it will be the time of hearing of the appeal.
But on the first occasion when the court takes up the matter for consideration, satisfactory proof must be presented that the tax was paid within the period by limitation available for the appeal.
, In the present case when the Assistant Commissioner took up the appeal for consideration, satisfactory proof was available in the shape of a certificate which even today is not denied.
In our opinion the Assistant Commissioner was wrong in declining to consider the appeal in the presence of such uncontestable proof.
It remains to point out why we did not insist upon the assessee exhausting his other remedies under the Act before coming to this Court.
It was made to appear to us that there is a right of revision and right of reference to the High Court ' in all such cases and that this remedy was not resorted to by the assessee before making a petition for special leave in this Court.
We were taken through a number of cases in which it has been laid down by this Court that this Court will not ordinarily grant special leave to appeal against an order when other remedies are available and L/JN)6 SCI No 7 514 have not been exhausted.
But there is no inflexible rule that 'this Court will never entertain an appeal and numerous instances have occurred in, this Court where such appeals have been admitted.
It would have been ,futile in this.
case for the assessee to have gone to the court , of revision which was bound by the ruling of :the Allahabad High, Court reported in Swastika Tannery of Jaimau v Commissioner of .
Sales tax U.P. Lucknow (1 ') and ' it would have been equally futile to, have.
gone to the High Court; on a reference.
The matter was more easily disposed of by giving special leave in this Court and we therefore felt that this was one of those extraordinary cases, in which the ends of justice would be better served, by avoiding a circuity of action and by dealing with this matter in this Court directly.
It is for this reason that we granted special leave to appeal.
The appeal shall therefore be allowed and the appeal shall be remitted to the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur, for disposal in accordance with law.
There shall be no order as to costs.
Y.P. Appeal allowed and remitted.
(1) (1963) 14 S.T.C. 518.
| Under section 13(1)(e) of the Delhi and Ajmer Rent Control Act, 1952, the jurisdiction of the court to evict a tenant, may be exercised in favour of a landlord who wants the premises bona fide for his own residence, only when the premises are let out for residential purposes, and not, when the premises being let out for composite purposes, are used for residential and non residential purposes.
The owner of a house let it out to the appellant for her residence and for running a school.
The respondent purchased the house and filed a suit for eviction of the appellant.
The suit was dismissed, but the High Court, in revision, held that a decree in ejectment limited to that portion of the house which was used for residential purposes by the tenant could be granted, and remanded the case for demarcating that portion and passing a decree.
In appeal to this Court, HELD:The order of the High Court was without jurisdiction and should be set aside.
[540A] The contract of tenancy was a single and indivisible contract, and, in the absence of any statutory provision to that effect, it was not open to the Court to divide it into two contracts one of letting out for residential purposes and the other for non residential purposes and to grant relief under the section in respect of that portion of the property which was being used for residential purposes.
[538E] Dr. Gopal Das Verma vs section K. Bhardwaj & Anr.
[1962] 2 S.C.R. 678, followed.
Kunwar Behari vs Smt.
Vindhya Devi, A.I.R. 1966 Punj.
approved.
Motilal and Anr.
vs Nanak Chand & Anr. (1964) Punj.
L.R. 179, overruled.
|
Appeals Nos. 1689 and 1690 of 1968.
Appeals from the judgment and order dated January 19, 1967 of the Madras High Court in Writ Petitions Nos.
1030 and 1031 of 1963.
T A. Ramachandran, for the appellant (in both the appeals).
section C. Manchanda, R. N. Sachthey, B. D. Sharma and section P. Nayar, for the respondents (in both the appeals).
The Judgment of the Court was delivered by Hegde, J.
These appeals by certificate arise from the decision of the High Court of Madras in Writ Petitions Nos.
1030 and 1031 of 1963.
Therein the petitioner Invoked the extraordinary jurisdiction of the High Court under Article 226 of the Constitution to quash the orders of the Respondents wherein he was not granted the abatement he sought to obtain in the assessment years 1959 60 and 1960 61 The High Court came to the conclusion hat the appellant is not entitled to any in ore abatement than that was given by the authorities under the 'Assessment for Relief or for Avoidance of double Taxation in India and Ceylon ' which will be hereinafter referred to S the "agreement".
It accordingly dismissed the Writ Petitions but gave a certificate under article 133(1)(c) of the Constitution of India certifying that this is a fit case )r appeal to this Court.
The appellant is a resident in this country.
But he carrying on business in Ceylon.
During the assessment car 1959 60 he earned a gross income of Rs. 39,473/ id in the assessment year 1 '960 61 he earned a gross income of Rs. 39,047/ .
He had only a house in India hose annual rental value was Rs. 38,/ .
The entire assessable income of his was that what he earned in Ceylon.
in his income in Ceylon, he was taxed in a sum of Rs. 919/ for the assessment year 1959 60 and in a sum of section 6,036/ for the assessment year 1960 61.
For the ,.me income, in India, under the Indian Jaw his tax was computed for the assessment year 1959 60 at Rs. 10,282 62P id for the assessment year 1960 61 at Rs. 9,521 35P 90 The tax payable by him in Ceylon was given as abatement and he was called upon to pay only the balance.
The tax payable by him in Ceylon as a non resident would have been Rs. 9,889/ in the assessment year 1959 60 and Rs. 9,983/ in the assessment year 1960 61.
But in view of section 45(2) of the Ceylon Income Tax ordinance 1932 and also in view of the 'Agreement ' he was taxed as if he was a resident in Ceylon.
Two questions arising for decision are whether he was not liable to be taxed at all in India and if he was liable to be taxed in India, what should have been the proper abatement given to him.
Mr. Ramachandran appearing for the assessee contended firstly that in view of the 'Agreement ' entered into between India and Ceylon as provided in section 49C of the Indian Income Tax Act, 1922 he was not liable to be taxed in India at all.
In the alternative, he contended ' that while determining the tax payable by him in this country, the department should have deducted the entire tax that he would have had to pay had been taxed as a non resident.
For this contention also he relies on the terms of the agreement entered into between India and Ceylon.
He does not dispute the fact but for the agreement the assessee would have been liable to pay in this country a tax of Rs. 10,282 62 p. in the assessment year 1959 60 and Rs. 9,521 35p.
in the assessment year 1960 61.
In order to consider the correctness of the contention,, advanced by Mr. Ramachandran, we will now turn to the relevant provisions of the 'Agreement '.
That 'Agreement ' was notified in Modification SRO 456 dt.
the 6th February, 1957.
The portion of the notification which is relevant for our present purposes is contained in Article 3 and column 8 of the Schedule to that agreement.
Article 3 reads "Each country shall make assessment in the ordinary way under its own laws; and where either country under the operation of its laws charges any income from the sources or categories of transactions specified in column 1 of the Schedule to this Agreement (hereinafter referred to as the Schedule) in 91 excess of the amount calculated according to the percentages specified in column II and III thereof, that country shall allow an abatement equal to the lower of the amounts of tax attributable to such excess in either country." SCHEDULE Sources of income or nature of Percentage of income Remarks transaction from which income is which each country derived is entitled to charge under the Agreement.
I II III IV 8.
Any income derived from a source 100 per cent Nil by ,or category of transactions not men by the country the other.
tioned in any of the foregoing items in which of the Schedule.
the income actually ac crues or arises.
The first portion of article 3 says that "each country shall make an assessment in the ordinary way under its own laws." This means to begin with both India and Ceylon were required to assess the assessee in accordance with law prevailing in each of these countries.
Thus far it is plain.
From this it is clear that first contention advanced on behalf of the assessee has no basis.
Hence it must fail.
Now we come to the second part of that article to the extent necessary for determining the second contention.
It reads : " and where either country under the opera tion of its laws charges any income from the sources or categories of transactions specified in column 1 of the schedule to this Agreement . in excess of the amount calculated according to the percentages specified in columns 11 and III thereof, that country shall allow an abatement equal to the lower of the amounts of tax attributable to such excess in either country.
" The language employed in this part of the article 'is quite confusing.
That part of the article has to be read with the 92 schedule.
On a proper reading of that provision alongwith the schedule, which means in the present case, item 8 of the schedule, it appears to us that what it says is From out of the amount ascertained under the first part of the Article deduct the tax payable by the assessee in the other country in respect of the whole or any portion of the amount brought to tax under the first part of article.
The word 'attributable ' in that Article merely means 'payable Applying the principle mentioned above to the facts of the present case, the following result is reached.
The tax payable under the Indian law as seen earlier was Rs. 10,282.62p.
in the assessment year 1959 60.
The tax payable under the Ceylonese law in that year was Rs. 5,919/ .
That has to be deducted from the tax computed under the Indian law.
The balance alone is leviable.
Similarly in the assessment year 1960 61 the tax computed under the Indian law is Rs. 9,521 35 p. and the tax levied under the Ceylonese is being Rs. 6,036/ .
In levying tax in this country the tax payable in Ceylon has to be deducted.
It was urged by Mr. Ramchandran that what we have to take into consideration is not the actual tax levied in Ceylon but the tax leviable in Ceylon on a non resident.
He says that the deduction given under section 45 (2) of the Ordinance promulgated in Ceylon is only an allowance.
Hence the same does not form part of the actual taxation.
We are unable to accede to that contention.
In considering what taxes are attributable to the tax laws of a particular country, one has to take into consideration all the provisions of the statutes levying tax.
In other words for determining the tax due from an assessee, we have not merely to look to the charging section but also to the provisions providing exemptions and 'allowances.
If so read, it is quite clear that the amount of tax attributable to the Ceylonese law is that which was ultimately levied on the assessee.
The agreement that was entered into between India and Pakistan is similar in terms with the agreement, with which we are concerned in these appeals, except that in article 4 therein which corresponds to article 3 in the agreement before us in the place of the word 'attributable ' the word 'payable ' is used.
But this change does not make any difference in substance.
Interpreting that 93 agreement this Court in, Ramesh R. Saraiva vs Commissioner of India Tax, Bombay City 11 held that article IV of the Indo Pakistan Agreement for the avoidance of Double Taxation clearly shows that each Dominion can make an assessment in the ordinary way regardless of the Agreement.
The restriction which is imposed on each Dominion under the Agreement is not on the power of assessment but on the liberty to retain the tax assessed.
Nor does the Schedule to the Agreement limit the power of each Dominion to assess, in the normal way all the income that is liable to taxation under its laws.
The Schedule has been appended only for the purpose of calculating the abatement to be allowed by each Dominion.
The ratio of this decision, in our opinion, governs the facts of this case.
We also do not see any reason for treating the appellant in a manner different from other assessees, who are resident in this country.
In the result these appeals fail and the same are dismissed.
No costs.
V.P.S. Appeals dismissed.
| In pursuance of an agreement between the assessee respondent and another firm L & Co., by which, L agreed to assist the respondent in procuring coal for export whenever asked to do so and not to export any coal during the subsistence of the agreement, L supplied various quantities of coal to the respondent and the respondent made payments as pet the agreement.
The respondent claimed the payments as admissible expenditure under section 10(2)(xv) of the Income tax Act, 1922, during the relevant assessment years.
The Department held that they were payments.
to secure a monopoly and were therefore not allowable as revenue ex penditure.
The Tribunal found that the respondent did not acquire any monopoly rights, that the payments were only made to carry on trade in a more facile and profitable manner, that the arrangement was a temporary measure liable to be terminated at will, that the respondent did not derive any advantage of an enduring character and that therefore.
the expenditure was attributable to revenue and not to capital.
and held in favour of the assessee.
The High Court, on, reference, agreeing with the findings of the Tribunal and holding that the consideration was not paid once for all but was related to uncertain shipments to be made, decided in favour of the assessee.
In appeal to this Court it was contended that though the payment for assistance to the Respondent in procuring coal was an item of revenue expenditure, that part of the payment which was made because of L agreeing not to export coal during the subsistence of the agreement constituted a capital expenditure and not a revenue expenditure.
Dismissing the appeal, HELD : Although payments made to ward off competition in business, to a rival dealer would constitute capital expenditure if the object of making that payment is to derive an advantage by eliminating the competition over some length of time, the same result would not follow if there is no certainty of the duration of the advantage and the same can be put to an end at any time.
How long the period of contemplated advantage should be in order to constitute an enduring benefit would depend upon the circumstances and facts of each individual case.
An enduring benefit need not be of an everlasting character, but it should not, at the same time, be so transitory and ephemeral that it can be terminated at any time at the volition of any of the parties.
[1096 B; 1097 B C] Further, the payments were related to the actual shipments of coal in the course of the trading activities of the respondent and had no relation to the capital value of the assets.
The payments were not related to or tied up in any way to any fixed sum agreed between the parties.
It was not a case of monopoly value payments being permitted to be paid in instalments giving a false appearance of periodicity.
[1097 F G; 1099 G H] 1090 Travancore Sugars and Chemicals Ltd. vs C.I.T., Kerala , followed.
Atherton vs British Insulated and Halaby Cables Ltd. 10 T.C. 155, Robert Addie and Sons ' Collieries Ltd. vs Commissioners of Inland Revenue, 1, Assam Bengal Cement Co. Ltd. vs C. I. T., West Bengal, , Commissioner of Taxes vs Nchanga Consolidated Copper Mines Ltd. 58 I.T.R. 241 and Hanrikesen (Inspector of Taxes) vs Grafton Hotel Ltd., , referred to.
|
: Criminal Appeals Nos. 130 and 131 of 1954.
Appeals by special leave from the judgment and order dated September 11, 1953, of the former Madhya Bharat High Court in Appeals Nos.
42 and 43 of 1953.
Shiv Dayal and R. H. Dhebar, for the appellant.
B. C. Misra, amicus curiae, for the respondent.
April 5.
The Judgment of the Court was delivered by GOVINDA MENON J.
The State of Madhya Bharat, G which after November 1, 1956, had become merged in the present State of Madhya Pradesh, had obtained special leave from this court on April 11, 1954, to appeal against the judgment and order of acquittal passed in favour of the respondent herein, by the High Court of Judicature of Madhya Bharat on September 11, 1953, in two consolidated Criminal Appeals Nos.
42 and 43 of 1953, by the identical appellant before that court.
The question for decision in these two appeals is how far the High Court was justified in ordering the acquittal.
The respondent herein was a Tax Collector in the Municipal Committee of Lashkar, Gwalior, and was prosecuted in the court of the City Magistrate and Additional District Magistrate, Lashkar, firstly by means of a challan dated October 23, 1951, for offences under sections 468, 477 A and 409 of the Indian Penal Code and section 5 (2) of the Prevention of Corruption Act II of 1947, in that he misappropriated a sum of more than Rs. 7,000, entrusted to him in the capacity of Tax Collector, and during the course of the said transaction committed various offences.
On July 4, 1952, a second complaint was filed against him in the same court under the identical sections for having misappropriated in 1950 a sum of Rs. 3,500 in all under similar circumstances.
While these two complaints were pending in the trial court, on July 28, 1952, the Criminal 112 870 Law Amendment Act (Act No. 46 of 1952) came into force and by section 6 of that statute, the State Government was authorised to appoint a Special Judge for the trial of an offence under sub section
(2) of section 5 of the Prevention of Corruption Act 11 of 1947.
Section 7 of the same statute laid down that notwithstanding any.
thing contained in the Criminal Procedure Code, or any other law for the time being in force, an offence under section 5 (2) of the Prevention of Corruption Act could be tried only by a Special Judge, appointed under section 6 of the Criminal Law Amendment Act.
Sub cl.
(b) of section 7 laid down that when trying a case, triable exclusively by a Special Judge under this statute, he may also try any other offence with which the accused may under the Code of Criminal Procedure, be charged at the same trial.
The last section of the Criminal Law Amendment Act aforesaid provided that all cases triable by a Special Judge under section 7, which immediately :before the commencement of the Act were pending before any Magistrate, shall on such commencement be forwarded for trial to the Special Judge having jurisdiction over such cases.
In accordance with the above mentioned provisions of the statute, the cases pending before the City Magistrate and Additional District Magistrate, Lashkar, were transferred to a Special Judge constituted for the purpose before whom they were numbered as Case No. 3 of 1953 and No. 6 of 1953.
After the prosecution evidence was over, on March 10, 1953, the Special Judge framed charges under all the sections complained against.
By separate judgments dated June 5, 1953, the Special Judge found the respondent guilty of an offence under section 409 of the Indian Penal Code and sentenced him to rigorous imprisonment for three years.
He, however, passed an order of acquittal under sections 468 and 477 A, of the Indian Penal Code.
As regards the charge under section 5 (2) of Act II of 1947, the learned Special Judge was of the view that since the provisions of sub.s.
(4) of section 5 of the Prevention of Corruption Act to the effect that no police officer below the rank of Deputy Superintendent of Police shall investigate any offence punishable under sub section
(2) 871 of section 5 of the Prevention of Corruption Act without an order of a 1st Class Magistrate, had not been complied with, the foundation for preferring a complaint had not been established and, therefore, there was an illegality which affected the jurisdiction of the court to try the case, the result being that the accused could not be tried for that offence.
Such being the case, no formal order of acquittal was passed by the trial court.
Aggrieved by the convictions under section 409 of the Indian Penal Code, the respondent preferred two appeals to the High Court of Madhya Bharat which were consolidated by that court, and by a common judgment that court applying the doctrine of autrefois acquit held that when once on the same facts the trial Judge found that the respondent could not be found guilty of an offence under section 5 (2) of the Prevention of Corruption Act, it was tantamount to an acquittal for that offence in which case no conviction could be had under section 409 of the Indian Penal Code.
The respondent was, therefore, acquitted.
As mentioned already, the State has been granted special leave to appeal against the orders of acquittal.
The correctness of the conclusion of the High Court has been challenged in more ways than one by the appellant 's counsel.
Firstly, it is argued that the offence under section 5 (2) of the Prevention of Corruption Act and that under section 409 of the Indian Penal Code, are not the same, and such being the case, granting that the order of the Special Judge amounted to an acquittal under section 5 (2) of the Prevention of Corruption Act, still that would not bar the conviction of the respondent under section 409 of the Indian Penal Code.
Secondly, it is pointed out that when at the same trial there are two alternative charges like those with which we are now concerned, acquittal of the accused under one charge is no impediment to his conviction on the other; and lastly it is contended that any defect in the investigation would not amount to an illegality which would invalidate the trial and conviction if the proceedings culminate that way.
872 This court has recently held in Om Prakash Gupta vs The State of U. P.(1), that the offence of criminal misconduct punishable under section 5 (2) of the Prevention of Corruption Act II of 1947 is not identical in essence, import and content with an offence under section 409 of the Indian Penal Code.
The offence of criminal misconduct is a new offence created by that enactment and it does not repeal by implication or abrogate section 409 of the Indian Penal Code.
In the common judgment in those appeals the conclusion has been expressed in the following words: "Our conclusion, therefore, is that the offence created under section 5(1)(c) of the Prevention of Corruption Act is distinct and separate from the one under section 405 I.P.C. and, therefore, there can be no question of s.5(1)(c) repealing section 405 I.P.C." In view of the above pronouncement, the view taken by the learned Judge of the High Court that the two offences are one and the same, is wrong, and if that is so, there can be no objection to a trial and conviction under a. 409 of the Indian Penal Code, even if the respondent has been acquitted of an offence under section 5(2) of the Prevention of Corruption Act II of 1947.
Section 403(1) of the Criminal Procedure Code only prohibits a subsequent trial for the same offence, or on the same facts for any other offence for which a different charge from the one made against an accused person might have been made under section 236 of the Criminal Procedure Code, or for which he might have been convicted under section 237 when the earlier conviction or acquittal for such an offence remains in force.
It is obvious that section 403(1) has no application to the facts of the present case, where there was only one trial for several offences, of some of which the accused person was acquitted while being convicted of one.
On this ground alone the order of the High Court is liable to be set aside.
The High Court also relied on article 20 of the Constitution for the order of acquittal but that Article cannot apply because the respondent was not prosecuted after he had already been tried and acquitted for the same offence in an earlier trial and, therefore, the (1) [1957] S.C.R.423.
873 well known maxim " Nemo debet bis vexari, si constat curice quod sit pro una et eadem causa" (No man shall be twice punished, if it appears to the court that it is for one and the same cause) " embodied in article 20 cannot apply.
The next argument on behalf of the appellant is that where there are two alternate charges in the same trial, the fact that the accused is acquitted of one of them, will not prevent the conviction on the other, is also well founded.
Section 26 of the General Clauses Act can be called in aid in support of this proposition.
There is no question of double jeopardy.
Section 26 runs as follows: "Provisions as to offences punishable under two or more enactments: Where an act or omission constitutes an offence under two or more enactments then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same.
" We are, therefore, of the opinion that the learned Judge 's view on this aspect of the case is also unsound.
In view of what has been stated above, it is unnecessary to deal with the last contention of the learned counsel for the appellant except merely to state that the Special Judge had jurisdiction to try the accused person under section 7 of the Prevention of Corruption Act, 1947.
The result is that the appeals succeed, the order of the High Court acquitting the respondent of an offence under section 409 of the Indian Penal Code is set aside and the appeals are remanded to the High Court of Madhya Pradesh for re hearing on the merits.
| The appellants were workmen employee, of the first respondent company.
It was alleged that they assaulted another workman as a result of which he sustained bleeding injuries on his head.
A chargesheet was drawn up by the management was served on the appellants, which was followed by a composite domestic enquiry at the end of which all of them were dismissed from service.
The appellants moved five different applications before the Labour Court questioning the validity of the domestic enquiry as also the legality and propriety of the orders terminating their services.
The Labour Court finding that the domestic enquiry was held according to the relevant rules, and that there was evidence in support of the alleged misconduct, held that the management was justified in imposing the penalty of dismissal from service.
The appellants filed five Separate revision petitions before the Industrial Court under sections 66 and 67 of the Madhya Pradesh Industrial Relations Act, 1960.
The President of the Industrial Court finding that the entire approach of the Inquiry Officer Manager in arriving at the findings of mis conduct in the domestic enquiry appeared to be biased and unfair and that the conclusions neither fair nor reasonable, held that the dismissal could not be sustained.
All the revision petitions were therefore allowed, and the orders of the Labour Court dismissing the applications were set aside, and 773 the matters were remanded for a fresh decision after giving the parties due opportunity to adduce evidence in respect of the alleged misconduct.
The respondent company filed writ petitions before the High Court questioning the correctness of the order of the Industrial Court and a Division Bench held that the Industrial Court exceeded its jurisdiction by interfering with the findings of facts, and as this was an error apparent on the face of the award, quashed the decision of the Industrial Court.
Allowing the appeals to this Court, ^ HELD: 1.
(i) Times without number, it has been pointed out that article 226 is a device to secure and advance justice and not otherwise.
[787E] Sadhu Ram vs Delhi Transport Corporation, ; , referred to.
(ii) ordinarily, the Courts exercising extraordinary jurisdiction is loathe to interfere with an order remanding the matter to the authority directed to investigate facts.
[787F] D.P. Maheshwari vs Delhi Administration and Ors., , referred to.
In the instant case, the Industrial Court had made an order of remand.
The High Court was not justified in interfering with the same.
By this uncalled for interference, it has merely prolonged the agony of the unemployed workmen and permitted the jurisdiction of the High Court under article 226 to he exploited by those who can well afford to writ to the detriment of those who can ill afford to wait by dragging the latter from court to court for adjudication of peripheral issues more vital to them.
[787F G] 2.
(i) Dismissal from a service is an order made under the relevant standing orders.
A relief against such an order can be obtained by making an application under section 61 to the Labour Court.
Against the order made by the Labour Court under section 61, a revision would lie under section 66 to the Industrial Court.
[779H; 780C] (ii) If and when an application under section 61 is made the Labour Court will have jurisdiction to decide the legality and propriety of the order of dismissal or removal from service.
When jurisdiction is conferred upon the Labour Court, not only to examine the legality of the order as also the propriety of the order, the Labour Court can in exercise of the jurisdiction examine the propriety or impropriety of the order.
[781C] 3.
(i) The main part of Sec. 66 clearly spells out the jurisdiction of the Industrial Court to pass any order in reference to the case brought before it as it thinks fit '.
The expression 'as it thinks fit; confers a very 774 wide jurisdiction enabling it to take an entirely different view on the same set of facts: The expression 'as it thinks fit ' has the same connotation, unless the context otherwise indicates 'as he deems fit '.
[785B C] Raja Ram Mahadev Paranjype and ors.
vs Aba Maruti Mali and ors., [1962] Suppl.
1 SCR 739; referred to.
(ii) Sub cl.
(c) of the first proviso to Section 66 (1) will permit the Industrial Court to interfere with the order made by the Labour Court, if the Labour Court has acted with material irregularity in disposal of the dispute before it.
If the finding recorded by the Labour Court is such to which no reasonable man can arrive, the Industrial Court in exercise of its revisional jurisdiction would be entitled to interfere even if patent jurisdictional error is not pointed out.
[785E F] 4.
The expression propriety is variously understood; one meaning assigned to it being 'justice '.
Amongst various shades of meaning assigned to the expression, the dictionary sets out; 'fitness, appropriateness; aptitude; suitability etc. ' as some of them.
[781D E] 5.
If the justice or the justness in relation to a legal proceeding where evidence is led is questioned and the authority is conferred with jurisdiction to examine the propriety of the order or decision that authority will have the same jurisdiction as the original authority to come to a different conclusion on the same set of facts.
If any other view is taken, the expression 'propriety ' would lose all significance.
The expression 'legality and propriety ' has been used in various statutes where appellate or revisional jurisdiction is conferred upon a superior authority.
[781E G] Raman and Raman Ltd. vs The State of Madras and Anr., ; , Moti Ram vs Suraj Bhan and Ors.
, ; , Awdesh Kumar Bhatnagar vs The Gwalior Rayon Silk Mfg.
(Weaving) Co. Ltd and Anr.
[1972] Lab.
and IC. 842; referred to.
In the instant case, the Industrial Court while hearing the revision petitions found that the petitioners were trade union workers and that three of them were office bearers of the union, and that a material place of evidence clearly pointing to the contrary was wholly overlooked by the inquiry officer.
The Industrial Court also pointed out that report (Ex D/18) purporting to have been made by the assaulted worker to the factory Manager on the day following the date of occurrence when properly scanned appeared to be highly suspicious evidence because: 'it was not dated and did not bear the endorsement of the officer to whom it was presented.
After referring to other infirmities in the approach of the Labour Court, the Industrial Court concluded that the entire approach of the Manager in arriving at the findings of misconduct in his enquiry 'appeared to be biased and unfair ', and 'the conclusions neither fair nor reasonable and any order of dismissal based thereon could not be sustained. ' The Industrial Court was, therefore perfectly justified in interfering with the order of the Labour Court.
It merely set aside the award 775 of the Labour Court and did not proceed to re appraise the evidence but remitted the case to the Labour Court for fresh decision.
It was thus an eminently just order.
The High Court however, observed that the Labour Court could only interfere with the decision of the inquiry officer if the findings arrived at were perverse.
The High Court completely missed the ambit of jurisdiction of the Labour Court in that it had the jurisdiction to decide the legality and propriety of the order.
Impropriety as converse of propriety cannot be equated with perversity.
The High Court wholly, misread the relevant provision and interfered with the decision of the Industrial Court which was preeminently just and within the four corners of its jurisdiction.
[785G; 786A G; 787A D]
|
ivil Appeal No. 11 of 1950.
Appeal from the judgment and decree of the High Court of Bombay (Bhagwati and Dixit JJ.) dated 16th December, 1948, in Second Appeal No. 1226 of 1945 confirming a judg ment and decree of the District Judge of Dharwar in Appeal No. 123 of 1943.
The facts of 404 the case and the arguments of the counsel appear in the judgment.
B. Somayya and Sanjiva Rao Naidu (N. C. Shaw, with them) for the appellant.
M.C. Setalvad, Attorney General for India, (V. N. Lokur, with him) for the respondents Nos. 1 and 2.
M.C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for respondent No. 3 (the State of Bombay.) 1952.
January 30.
Judgment was delivered by BOSE J. PATANJALI SASTRI C.J. and DAS J. agreed with Bose J. Bose J.
The plaintiff appeals.
The suit relates to a Saranjam estate in the State of Bombay.
The plaintiff claims to be the sole Saranjamdar and seeks certain declarations and other reliefs appropriate to such a claim.
The first and second defendants are members of the plaintiff 's family while the third defendant is the State of Bombay (Province of Bombay at the date of the suit).
The only question is whether the suit is barred by section 4 (a) of Bombay Act X of 1876 (Bombay Revenue Juris diction Act).
The following genealogical tree will show the relation ship between the parties: Bhujangrao Appasaheb (British grantee) Daulatrao I (died 24 7 1864) Bhujangrao I Malojirao Yeshwantrao alias (died 1881 ) : Annasaheb : : : (widow) Krishnabai Daulatrao III Bhujangrao II Daulatrao II (Del. 1) (Def. 2) (died 8 5 1931) : Bhujangrao III (Plaintiff) 405 The facts are as follows.
A common ancestor of the present parties was given the Gajendragad estate as a Saran jam some time before the advent of the British.
When they arrived on the scene they decided, as far as possible, to continue such Saranjams, jagirs and inams as had been grant ed by the earlier rulers, and accordingly they framed rules under Schedule B, Rule 10 of Bombay Act XI of 1852 (The Bombay Rent Free Estates Act of 1852) to regulate the mode of recognition and the succession and conditions of tenure to Saranjams, which are analogous to jagirs.
In compliance with this, the common ancestor shown at the head of the genealogical tree set out above was recognised by the Brit ish Government as the Saranjamdar of the Gajendragad estate.
He may for convenience be termed the British Grantee.
The Register exhibit P 53 shows that the estate consisted of 26 villages.
We do not know the date of the British recognition but the nature of the tenure is described as follows : "Continuable to all male legitimate descendants of the holder at the time of British conquest, viz., Bhujangrao Appasaheb, the first British Grantee, son of Bahirojirao Ghorpade.
" On the death of the British Grantee (Bhujangrao Appa saheb) he was succeeded by his son Daulatrao I who died on the 24th of July, 1864.
This Daulatrao I left three sons, Bhujangrao I, Yeshwantrao and Malojirao.
In the year 1866 Bhujangrao I and his brother Yesh wantrao alias Annasaheb sued Malojirao for possession of this Saranjam.
A question of impartibility was raised but the Bombay High Court declared that the property in British India was partible.
They further declared that Bhujangrao I was the head of the family and as such was entitled to a special assignment which was not to exceed a quarter share, for the expenses and duties which might devolve on him by virtue of his position, and that after this had been set aside each of the three brothers was entitled to an equal one third Share in the landed property in India.
This judgment 406 is reported in The duties enumerated at page 170 included the "keeping up of armed retainers for the fort of Gajendragad, and for the improvement of that vil lage, which was the chief seat of this branch of the Ghor pade family, and also to enable him to distribute on ceremo nial occasions the customary presents to the junior members of the family.
" The judgment is dated the 12th of October, 1868.
As a consequence a division of the property was ef fected.
Malojirao separated himself from his brothers and was allotted seven villages.
The other two brothers continued joint and took the remainder.
But this was only with respect to property situate in British India.
The parties also had property in the State of Kolhapur.
That was left undivided.
Bhujangrao I died in 1881 and his younger brother Yesh wantrao (alias Annasaheb) claimed to succeed as the sole heir.
The Political Department of the Government of India refused to recognise this claim and permitted Bhujangrao I 's widow Krishnabai to adopt a a boy from the family and recog nised him as the heir in respect of that portion of the estate which lay within the Principality of Kolhapur.
This was on the 3rd of February, 1882.
The Bombay Government followed a similar course regarding the property in British India.
On the 26th of April, 1882, they passed a Resolution embodying the follow ing decision: (1) The adoption was to be recognised and the adopted son was to occupy the same position as his adoptive father, that is to say, he was to get one third of the property plus the assignment given to him as head of the family.
(2) Malojirao who had already taken his share of the estate was to continue in possession.
(3) Yeshwantrao (alias Annasaheb) was given the option of remaining joint with the adopted boy or separating.
Finally, the Resolution Concluded 407 ``The two brothers will hold their respective shares as their private property in virtue of the decree of the High Court and the Jahagir will henceforth be restricted to the portion awarded by the High Court to Bhujangrao which the adopted son will now inherit.
It should however be clearly understood that the decision of the High Court is not to be held as a precedent and that no partition of the Jahagir Estate to be continued to the adopted son will ever be allowed.
" This position was emphasised by Government in the same year on the 22nd August, 1882.
Krishnabai, who had been allowed by Government to adopt Daulatrao II, asked that her husband 's one third share in the estate be also treated as private property in the same way as the shares of the other two brothers.
This prayer was refused and Government stat ed: "It should be plainly understood that Government allow the adoption to be made by her only in consideration of Bhujangrao 's one third share as well as the portion assigned to him as head of the family being continued to the adopted son as indivisible Jahagir Estate descending in the line of male heirs in the order of primogeniture and subject to no terms whatsoever as to the enjoyment of the same by Krishna bai during her lifetime.
" The position was re examined by Government in 1891 and its decision was embodied in the following resolution dated the 17th of March, 1891: "It appears to Government that the whole Gajendragad Estate is a Saranjam continuable as hereditary in the full est sense of the word as interpreted by the Court of Direc tors in paragraph 9 of their Despatch No. 27 dated 12th December, 1855.
It is continuable to all male legitimate descendants of the holder at the time of the British con quest; and should Government ever sanction an adoption the terms of sanction would be those applicable to Saranjamdars.
The property should be dealt with like Other Saranjams in the Political Department.
" 53 408 In the year 1901 the adopted son Daulatrao II sued Yeshwantrao 's son Bhujangrao II for partition.
It will be remembered that in the litigation of 1866, which ended in the Bombay High Court 's judgment reported in 5 Bom.
H.C.R. 161, Malojirao alone separated and the other two brothers continued joint.
The litigation of 1901 put an end to that position.
High Court 's judgment dated the 12th of March, 1908, makes it clear that as Government was not a party to that litigation its rights against either or both of the parties were not affected.
But as between the parties inter se they were bound by the previous decision and so the adopted son was entitled to partition and separate posses sion of such properties as might fall to his share.
After this decision was given the two partitioned the property between themselves amicably.
In or about the year 1930 a Record of Rights was intro duced in fourteen of the villages in the Gajendragad Jaha gir and a dispute arose again between the three branches of the family.
The District Deputy Collector, after inspecting the records, found that "the name of the Khatedar Saran jamdar alone has found place in the village Inam register, in the Saranjam list and the land alienation register," while in the other village records the various members of the family were entered according to the "actual wahivat or enjoyment." After due consideration he thought that the interest of Government and the Saranjamdar would be sufficiently safeguarded by allowing the same position to continue.
He ordered the entries to be made accordingly.
The order also discloses that the matter had been referred to the Legal Remembrancer to the Bombay Government.
In the meanwhile, on the 5th of May, 1898, a set of Rules framed under Schedule B, Rule 10, of the Bombay Rent Free Estates Act of 1852 were drawn up and published in the Bombay Gazette.
These Rules were republished, probably with some modification, in the Gazette of 8th July, 1901.
The portions applicable here were as follows: 409 "I. Saranjams shall ordinarily be continued in accordance with the decision already passed by Government in each case.
A Saranjam which has been decided to be hereditarily continuable shall ordinarily descend to the eldest male representative, in the order of primogeniture, of the senior branch of the family descended from the first British Gran tee or any of his brothers who were undivided in interest.
But Government reserve to themselves their rights for suffi cient reason to direct the continuance of the Saranjam to any other member of the said family, or as an act of grace, to a person adopted into the same family with the sanction of Government.
V. Every Saranjam shall be held as a life estate.
It shall be formally resumed on the death of the holder and in cases in which it is capable of further continuance it shall be made over to the next holder as a fresh grant from Gov ernment, unencumbered by any debts, or charges, save such as may be specially imposed by Government itself.
No Saranjam shall be capable of sub division.
Every Saranjamdar shall be responsible for making a suitable provision for the maintenance of. "(certain members of the family enumerated in the Rule).
If an order passed by Government under Rule VII is not carried out, Government may, whatever the reason may be, direct the Saranjam, or a portion of it, to be resumed. .
Provision for the members of the Saranjam dar 's family entitled to maintenance shall then be made by Government out of the revenues of the Saranjam so resumed.
" After the District Deputy Collector 's orders were passed on the 20th of May, 1930, Daulatrao II died on the 8th of May, 1931, and the matter was again taken up by Government.
This time it passed the following 410 Resolution on the 7th of June, 1932.
The Resolution was headed, "Resumption and regrant of the Gajendragad Saranjam standing at No. 91 of the Saranjam List.
" It reads "Resolution : The Governor in Council is pleased to direct that the Gajendragad Saranjam should be formally resumed and regranted to Bhujangrao Daulatrao Ghorpade eldest son of the deceased Saranjamdar Sardar Daulatrao Bhujangrao Ghorpade and that it should be entered in his sole name in the accounts of the Collector of Dharwar with effect from the date of the death of the last holder.
The Collector should take steps to place the Saranjamdar in possession of the villages of the Saranjam estate which were in possession of the deceased Saranjamdar.
The Governor in Council agrees with the Commis sioner, Southern Division, that the assignments held by the Bhaubands as potgi holders should be continued to them as at present.
" The Bhujangrao mentioned in the Resolution is the plain tiff who is shown as Bhujangrao III in the genealogical tree.
The defendants were evidently aggrieved by this, for they filed Suit No. 23 of 1934 against the present plaintiff and the Secretary of State/or India in Council praying inter alia "that the properties in that suit, viz., the villages allotted to their shares, were their independent and private properties and in case they were held to be Saranjam proper ties, they be declared as independent Saranjams, separate and distinct from the one held by the present plaintiff.
" This suit was withdrawn with liberty to bring a fresh suit on the same cause of action against the present plain tiff but not against the Secretary of State for India in Council.
According to defendants 1 and 2, this was pursuant to an arrangement between the Government and themselves that Government would issue a fresh Resolution in terms of the earlier Resolution dated the 17th of March, 1891.
411 This was done.
On the 25th of February, 1936, Government passed the following Resolution : "Resolution : After careful consideration the Governor in Council is pleased to confirm the decision in Government Resolution (Political Department) No. 1769 dated the 17th of March, 1891,and to declare that the whole of the Gajendragad Estate shall be continuable as an inalienable and impartible Saranjam on the conditions stated in the said Resolution.
Having regard, however, to the manner in which different portions of the estate have been held by different branches of the family, the Governor in Council, in modification of the orders contained in Government Resolution No. 8969 dated the 7th June, 1932, is pleased to direct that the portions of the said estate held by Sardar Bhujangrao Daulatrao Ghorpade, Daulatrao Malojirao Ghorpade and Bhujangrao Yeshwantrao Ghorpade, respectively, shall henceforth be entered in the Revenue Records as de facto shares in the said estate held by the said persons as representatives, respectively, of three branches of the Ghorpade family.
Each of the said de facto shares shall be continuable hereditarily as such as ii it were a separate Saranjam estate in accordance with the rules made for the continuance of Saranjams by the Governor in Council in exercise of the powers referred to in the rules framed under the Bombay Rent Free Estates Act, 1852, and section 2 (3) of the Bombay Summary Settlement Act (VII of 1863) and such special orders as the Governor in Council may make in regard to the Gajendragad Estate as a whole or in regard to the said share.
The recognition of the aforesaid shares and their entry in the Revenue Records as separate shares shall not be deemed to amount to a recognition of the estate of Gajendragad as in any manner partible or alienable and shall not in any way affect the right of Government to treat the said estate as an entire impartible and inalien able Saranjam estate.
The Governor in Council further directs that the aforesaid shares shall in no case be capable of 412 sub division and shall not in any way be alienated or encum bered except in accordance with the rules and orders re ferred to above. " The present suit is an attack on the action of Govern ment in passing this Resolution.
The first and second defendants are the present representatives of the other branches of the family and the third defendant is the Prov ince of Bombay (now the State of Bombay).
The plaint states "9.
Government can have no jurisdiction to deprive the plaintiff at any rate during his lifetime of the full bene fit of all the rights and privileges appertaining to the holder of a Saranjam.
The Order of Government of the 8th February, 1936 is, therefore, ultra vires and in no way binding on the present plaintiff. 10.
Defendants 1 and 2, therefore, are not entitled to any rights or privileges claimable by the holder of a Saran jam which according to the G.R. is continuable 'as an inali enable and impartible Saranjam ', such as for example in the matter of appointment of the village officers in any of the 27 villages appertaining to the Gajendragad Saranjam.
The cause of action arose in April 1938 and the resolution and the entry being ultra vires is not binding. 12.
As this is a suit claiming for relief primarily against defendants 1 and 2, defendant 3 is made a party to the suit in order to enable Government (defendant 3) to give proper effect to the decision of Government of the 17th March, 1891, and of 7th June, 1932, as against defendants 1 and 2 who have no right to the position which they claim. " The reliefs prayed for are "(a) That it be declared that defendants 1 and 2 have no right to go behind the order of the Government as per Reso lution No. 8969 of 7th June, 1932, under which plaintiff is entitled to be recognised as the sole Saranjamdar in the Revenue Records, and that the assignments held by defendants 1 and 2 are held by them as mere potgi holders.
413 (b) That in consequence of his position of a sole Saran jamdar the plaintiff alone at any rate during his lifetime has the sole right to the rights and privileges appertaining to the post of a sole Saranjamdar, to wit, to be consulted in the appointment of the village officers in all the villages appertaining to the Saranjam estate, but assigned to defendants 1 and 2 for potgi. (c) Defendants 1 and 2 be restrained from doing any acts or taking any steps in contravention of the aforesaid right of the plaintiff.
(d) That it be declared that defendant 3 (Government) have no right to change the Resolution No. 8969 of 7th June, 1932, and at any rate during the lifetime of the plaintiff.
" The first Court dismissed the plaintiff 's claim on the merits holding that Government had the right to amend its Resolution in the way it did.
The lower appellate Court also dismissed the suit on three grounds: (1) that the two previous decisions of 1868 and 1908 operate as res judicata, (2) that the impugned Resolution is intra vires and (3) that section 4 (a) and (d) of the Revenue Jurisdiction Act bars the jurisdiction of the Court.
In second appeal the High Court only considered the question of jurisdiction and, agreeing with the lower appel late Court on the point, dismissed the appeal but it granted the plaintiff leave to appeal to this Court.
The only question we have to consider is the one of jurisdiction.
Section 4 of the Bombay Revenue Jurisdiction Act, 1876 (Bombay Act X of 1876), runs Subject to the exceptions hereinafter appearing, no Civil Court shall exercise jurisdiction as to (a). claims against the Crown relating to lands. held as Saranjam. " It was strenuously contended that this is not a claim against the Crown but one against the first and second defendants.
That, in my opinion, is an idle contention in view of paragraphs 9 and 12 of the plaint and reliefs (a)and (d).
In any event, Mr. Somayya was asked whether he would strike out the third defendant 414 and those portions of the plaint which sought relief against it.
He said he was not prepared to do so.
I cannot see how a plaintiff can insist on retaining a person against whom he claims no relief as a party.
I am clear that this is a suit against the "Crown" within the meaning of section 4(a).
The next question is whether, assuming that to be the case, it is also one "relating to lands held as Saranjam.
" So far as the reliefs sought against Government are concerned, that is clearly the case.
Paragraph 9 of the plaint challenges Government 's jurisdiction to deprive the plaintiff of the full benefit of all rights and privileges appertaining to the holder of a Saranjam.
These rights cannot exist apart from the lands which form part of the Saranjam estate and the implication of the prayer is that Government has, for example, no right to resume the Saranjam either under Rule V on the death of the last Saran jamdar or under Rule IX during his lifetime.
It is to be observed that a resumption under Rule IX can only be of the land because the rule directs that when the Saranjam is resumed Government itself shall make provisions for the maintenance of those entitled to it "out of the revenues of the Saranjam so resumed.
" These revenues can only come out of the land.
Relief (d) in the prayer clause seeks a declaration that Government has no right to change Resolution No. 8969 dated the 7th of June, 1932.
That Resolution directly relates to the land because it directs that the Gajendragad Saranjam be resumed and the Collector is directed to take steps to place the Saranjamdar in possession of the villages of the Saran jam estate etc.
It is impossible to contend that this is not a claim relating to lands held as Saranjam.
It was next argued that if that be the case the claim against Government can be dismissed and the plaintiff can at least be given the reliefs claimed against the other two defendants.
These, it was contended, do not relate to land and in any event are not claims against the "Crown".
415 In my opinion, this is not a suit in which the rights claimed against the other defendants can be divorced from the claim against Government and considered separately.
That is evident enough from paragraph 10 of the plaint.
In para graph 9 the power of Government to deprive the plaintiff of the rights he claims is challenged and in paragraph 10 the plaintiff explains that "therefore" the first and second defendants are not entitled to any of the rights and privileges of the Saranjamdar.
One of those rights, as we have seen from Rules VII and IX, is to take the revenues of the entire estate in order that he might fulfil his obligation regarding the payment of maintenance to certain members of the family; and if the defendants claim to hold their lands under the orders of Government and the plaintiff insists on retaining Government as a party in order that it may be bound by the decree he wants against the other defendants it is obvious that his claim against these defendants cannot be separated from his claim against the Government.
In any event, if the claim against Government is to be ignored it can only be on the basis that its orders cannot be challenged and if the orders stand it is evident that the plaintiff can have no hope of success because both sides hold their respective properties on the basis of those orders.
There are two decisions of the Bombay High Court which have taken this view.
Basalingappagouda vs The Secretary of State for India(1) was a Watan case.
Government had recog nised the second defendant as the Watandar.
Plaintiff sued Government and the second defendant and sought a declaration and injunction.
On being faced with the dilemma that the suit against Government did not lie because of section 4 (a) (3) of the Bombay Revenue Jurisdiction Act of 1876, he asked the Court, as here, to leave the Government out of consider ation and decree his claim against the second defendant alone.
The learned Judges held that that would amount to striking out the main relief sought against both the defend ants and would entirely (1) 28 Born.
L.R. 651.
54 416 change the character of the suit and added that "as long as the Secretary of State is a party to the suit, such a decla ration could not be granted.
" In the other case, Basangauda vs The Secretary State(1), Beaumont C.J. and Baker J. took the same view.
They said "Mr. Gumaste, who appears for the appellant, says that his claim is not a claim against the Government but in that case he ought to strike out the Government.
He is not pre pared to strike out the Government, because if he does they will not be bound by these proceedings and will follow the decision of their revenue tribunals.
Therefore, he wants to make the Government a party in order that they may be bound.
But, if they remain a party, it seems to me that there is a claim against them relating to property appertaining to the office of an hereditary officer, although no doubt it is quite true that the appellant does not desire to get any order against the Government as to the way in which the property should be dealt ' with or anything of the sort, and he only wants a declaration as to his title which will bind Government." They held that the jurisdiction of the courts was oust ed.
It was next contended, on the strength of a decision of the Judicial Committee of the Privy Council reported in Province of Bombay vs Horrnusji Manekji(2).
that the courts have jurisdiction to decide whether Government acted in excess of its powers and that that question must be decided first.
In my opinion, this decision does not apply here.
Their Lordships were dealing with a case falling under section 4 (b) of the Bombay Revenue Jurisdiction Act of 1876.
That provides that ". no Civil Court shall exercise jurisdiction as to. . (b) objections to the amount or incidence of any assess ment of land revenue authorised by the Provincial Govern ment.
" (1) (2) 74 I A. 103 417 As pointed out by Strangman K.C., on behalf of the plaintiff respondent, "authorised" must mean "duly autho rised," and in that particular case the impugned assessment would not be duly authorised if the Government Resolution of 11 4 1990 purporting to treat the agreement relied on by the respondent as cancelled and authorising the levy of the full assessment was ultra vires under section 211 of the Land Revenue Code.
Thus, before the exclusion of the Civil Court 's jurisdiction under section 4 (b) could come into play, the Court had to determine the issue of ultra vires.
Consequently, their Lordships held that that question was outside the scope of the bar.
But the position here is different.
We are concerned here with section 4 (a) and under that no question about an authorised act of Government arises.
The section is general and bars all "claims against the Crown relating to lands. held as Saranjam.
" That is to say, even if the Government 's act in relation to such lands was ultra vires, a claim impugning the validity of such an act would fall within the scope of the exclusion in clause (a) provided it relates to such land.
There is a difference of opinion in the Bombay High Court as to whether section 4 is attracted if the only relief sought against Government is a declaration.
One set of decisions holds that that does not amount to a "claim against Government.
" Dattatraya Vishwanath vs The Secretary of State for India(1) is typical of that view.
On the other hand, Daulatrao vs Government of bombay(2), a case relating to the Gajendragad estate, took the other view.
In my opin ion, the latter view is correct.
In my opinion, the decision of the High Court was right and I would dismiss the appeal with costs.
PATANJALI SASTRI C.J. I agree.
S.R. DAS J. I agree.
Appeal dismissed.
Agent for respondents Nos. 1 & 2: M.S.K. Sastri.
Agent for respondent No. 3; P.A. Mehta.
(1)I.L.R. 1948 Born.
809 at 820.
| The appellant and his co heirs mortgaged their two third interest in the property as security for a loan of Rs. 27,000 obtained from one Smt.
Biswas, the predecessor in interest of the plaintiffsrespondents.
After the death of the mortgagee, some of her heirs and legal representatives filed a mortgage suit on 13.3.1961 for the recovery of the mortgage money before the Subordinate Judge and seeking enforcement and sale of the mortgaged property.
The left out heir of the mortgagee, originally arrayed as a defendant was transposed.
as a co plaintiff.
On 25.7.1962, the trial court passed a preliminary decree for.
Rs.51,570 totalling the principal sum and inter est, and costs.
The 234 decretal amount was proportioned in as much as two third was ordered as payable to the original plaintiffs and the re maining onethird to the transposed co plaintiff.
The decre tal amount was to be paid by the mortgagors in 15 equal annual instalments and in default of any one of the instal ments, the mortgagee plaintiffs were at liberty to apply for making the decree final and in the event of such application being made the mortgaged property, or a part thereof, shall be directed to be sold.
Interest also was allowed on the sum due from the date of institution of the suit till the date of realisation of the entire sum.
On 18.12.1962, the proforma respondent no.8 filed an appeal against the preliminary decree in the High Court.
Prayer for stay of execution of the decree was rejected.
Though some deposits were made on the basis of the preliminary decree, there was a failure to deposit in terms thereof.
Therefore a final decree was passed by the trial court on 6.3.1963, when the appeal against the preliminary decree was pending in the High Court.
The decree holders representing two third interest and the decree holder representing one third interest filed two separate execution petitions for realisation of their shares under the decree.
Both the execution petitions contained identical prayers for sale of the mortgaged property and the execution petitions were consolidated and numbered.
On 10.8.1963, proclamation of sale was drawn.
The value of the mortgaged property was suggested as Rs. 75,000 and Rs. 3 lacs, by the decree holders and the appellant respectively.
On 4.3.1968, before the sale of the property, the appellant made a regular objection u/s 47, C.P.C.
The appel lant had also made some more deposits within the intervening period of 41/2 years.
The property was sold on 15.3.1968 on the proclamation of sale as was drawn on 10.8.1963 for Rs. 1,00,500 in favour of the auction purchasers [respondents nos.
6 & 7].
On 11.4.1968 the appellant filed an application under Order 21, Rule 90, C.P.C. for setting aside the sale and prayed for stay of its confirmation on the grounds that the judgment debtors had no 235 saleable interest in the mortgaged property; that legally two execution petitions could not be consolidated; and that the provisions of section 35 of the Bengal Money Lenders ' Act had been overlooked.
The application under Order 21 Rule 90 was treated as part of the original objection section 47, C.P.C. The executing Court on 11.4.1968 dismissed the objection u/s 47 C.P.C. against which the appellant preferred an appeal before the High Court.
Later the petition under Order 21 Rule 90, C.P.C. was formally dismissed in default.
On 14.9.1968 the auction sale was confirmed.
In the appeal against the preliminary decree, the par ties arrived at a settlement on 13.12.1971 before the High Court.
In the place of the preliminary decree dated 21.7.1962 a new preliminary decree on settlement between the parties was passed by the High Court, whereunder the secre tal amount was principally agreed not to exceed Rs.54,000.
The sums deposited by the appellant were adjusted and the final amount struck as unpaid was put at Rs.44,000.
Having cleared off the mortgage debt, the appellant in his appeal, preferred against the rejection of objection, raised the additional legal ground that after the displace ment of the original preliminary decree by substitution, the final decree as well as the auction sale did not survive.
The High Court rejected all the legal points otherwise raised, but certified as fit questions as raised to be answered by this Court without framing anyone of them as such.
Hence this appeal by certificate, involving the question of law as to whether a court sale held in execution of a final decree, passed in a suit for recovery of mortgage money can be upset under the provisions of section 47 of C.P.C., on the displacement of the preliminary decree upon which such final decree was based.
The appellant contended that the preliminary decree dated 25.7.1962 was a preliminary decree for sale passed in terms of Order 34 Rule 4 and the final decree dated 6.3.1963 was a final decree for sale under Order 34 Rule 5(3) of the C.P.C., that the 236 right to apply for the final decree arose from the terms of the preliminary decree and on the failure of the defendant making payments in terms thereof.
And since the preliminary decree of 25.7.1962 was displaced and substituted by the preliminary decree passed b) the High Court in appeal, which was instantly satisfied, the foundation under the final decree stood removed; that the plaintiff had lost the right to ask for a final decree, there was no compulsion for the purpose or the occasion to pass it; and that the auction had become non est having no legal foundation or sanction in law.
The respondents on the other hand contended that there could not be a reverse process when the final decree had factually been passed and an auction sale in terms thereof had taken place bringing in the rights of the stranger auction purchasers.
Allowing the appeal of the judgment debtor appellant, this Court, HELD: 1.
On the substitution of the preliminary decree, even though by consent, there is no denying the fact that the seal of adjudication gets affixed to it.
The court passing it has formally expressed the terms itself under its own authority, even though at the suggestion of the parties.
It conclusively determines the right of the parties with regard to the matters in controversy valid in the suit till the stage of passing of the preliminary decree.
In the field, the only preliminary decree is the one, which was passed by the High Court substituting the original prelimi nary decree of the Trial Court, and the final decree, if at all required, is to be passed in accordance therewith.
[244 B, G] 2.
The Explanation to Section 2(2) of the Code of Civil Procedure defining the word "decree", goes to say that a decree is preliminary when further proceedings had to be taken before a suit can be completely disposed of.
It is final where such adjudication completely disposes of the suit.
It may be partly preliminary and partly final.
[244 C] 3.
In the instant case the preliminary decree whether as originally made or as substituted in appeal, had not disposed of the suit completely.
It was to be enforceable on the terms it was drawn.
There were obligations for the defendants to fulfil and on the violation to observe the obligations, rights accrued to the plaintiffs.
It cannot be twistedly said that the obligations of the defendants may substitutedly be that as defined by the appellate prelimi nary decree, but the right of the plaintiffs kept accrued on the failure of non fulfilment of the 237 obligations of the defendants under the preliminary decree of the Court of first instance.
Such an interpretation or construction would render the substantive right of appeal redundant and choked defeating the ends of justice and would otherwise be ill fitted in the scheme of Order 34, C.P.C. [244 D F] 4.
For the purposes of Section 47, the auction purchas er deemingly is a party to the suit in which the decree is passed if he has purchased the property at the sale and execution of that decree.
[245 B] 5.
Instantly, the auction purchasers had purchased the property in execution Of the final decree and not in execu tion of the preliminary decree and on that basis can at best be deemed to be parties to the suit throughout only on the strength the final decree if obtained on the terms of the existing preliminary decree.
But the property was not put to sale in execution of the preliminary decree.
The auction purchasers cannot claim themselves to be parties to the suit at the time of or at any time prior to the passing of the preliminary decree.
The preliminary decree and final decree are passed under Order 34 of the Code of Civil Procedure in one and the same suit, in which two decrees may be required to be passed at separate stages.
And both being formal adjudications to the stage are formal expressions of deci sion of the Court.
At the stage of the preliminary decree there arises no question of the property under mortgage being put to sale in execution of the decree, and if that is so the ultimate auction purchaser cannot be held deemingly to be party to the suit upto the stage of the preliminary decree.
[245 B E] 6.
The converse interpretation that the auction pur chaser at a sale and execution of the final decree shall be deemed to be a party to the suit at and prior to the stage when preliminary decree is passed, unless sustaining, would be contrary to the spirit and scheme of Order 34 of the Code of Civil Procedure.
And since all questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution dis charge or satisfaction of the decree are required to be determined by the Court executing the decree and not by a separate suit, the objection of the appellant judgment debtor with regard to the knocking out of the original preliminary decree was sustainable.
[245 E G] 7.
In terms of the preliminary appellate decree and fulfilment of the obligations of the defendants on payment of the sum as struck, there remained no occasion for enter taining, maintaining or 238 sustaining the application of the plaintiff mortgagees for sale of the property mortgaged and on that basis the auction sale in favour of the auction purchasers and confirmation of that sale automatically becomes non est.
The High Court went wrong in rejecting the objection of the appellant judgment debtor.
[245 G H] 8.
No compensatory sum is due to the auction purchasers under the strict terms of sub rule (2) of Rule 5 of Order 34.
In exercise of the Court 's inherent powers under the C.P.C. and powers otherwise under Article 142 of the Consti tution, to further the cause of complete justice, confining it to the facts of the case, and to be fair to the auction purchasers, the appellant is directed to burden himself in paying to the auction purchasers, interest on their blocked sum of Rs.1,05,000 the purchase money, lying in Court since 1963, which was quantified as equivalent to the sum deposit ed.
[246 D,E F] Hukumchand vs Bansilal & Ors., ; ; Janak Raj vs Gurdial Singh and Anr., ; and Sardar Govindrao Mahadik & Anr.
vs Devi Sahai & Ors., ; , referred to.
|
iminal Appeals Nos. 24 and 25 of 1957.
Appeals by special leave from the judgment and order dated July 25, 1956, of the Madras High Court in Criminal Appeals Nos. 247 & 248 of 1956 and Referred Trial No. 41 of 1956 arising out of the judgment and order dated March 28, 1956 of the Court of Sessions, East Tanjore Division at Nagapatam, in care S.C. No. 5 of 1956.
982 H. J. Umrigar and section Subramanian, for the Appellants.
P. section Kailasham and T. M. Sen, for the respondent.
April 12.
The Judgment of the Court was delivered by SINHA J.
These two appeals by special leave, which arise out of the same occurrence, are directed against the Judgment and Order dated July 25, 1956, of the Madras High Court, confirming the sentence of death passed by the Court of Sessions, East Tanjore Division, at Nagapattinam, under section 302 of the Indian Penal Code, against appellant in Criminal Appeal No. 24 of 1957, for the murder of Kannuswami, and modifying the order of conviction and sentence under section 302, read with section 109 of the Indian Penal Code, to one under section 326, Indian Penal Code, and reducing the sentence of imprisonment for life to one for 5 years, in respect of the appellant in Criminal Appeal No. 25 of 1957.
In the course of this Judgment, we shall call the appellant in Criminal Appeal No. 24 of 1957, as the " first appellant ", and the appellant in Criminal Appeal No. 25 of 1957, as the " second appellant ".
The occurrence which was the subject matter of the charges against the two appellants took place at about 11 30 p.m. on November 10, 1955, at Muthupet, in front of the tea stall of Kannuswami, husband of Shrimati Dhanabagyam prosecution witness No. 1who will be referred to, in the course of this judgment, as the " first witness ", and who is the principal witness for the prosecution, because, as will presently appear, the prosecution case and the convictions and sentences of the appellants depend entirely upon her testimony.
The occurrence took place in the immediate vicinity of a cinema house in which the second show was in progress at the time of the alleged cold blooded murder.
As there were no customers at that time at the tea shop run by Kannuswami, his wife called him for his dinner to be served to him behind the tea stall, as the husband and wife used to live there.
Kannuswami was about to attend to the call for dinner when 983 an old man came into the shop and asked for a cup of tea.
When Kannuswami got busy preparing the tea, the two appellants rushed into the premises.
The old man the intending customer naturally ran away, and the two accused dragged Kannuswami out of the shop on to the road side; and the first appellant gave him several blows on the front part of his body in the region of the chest with an aruval a cutting instrument about 2 feet long including the handle.
Kannuswami fell down on his back and cried out for help.
His wife, the only other inmate of the house, tried to come to his rescue by raising and putting his head into her lap after the two accused had left him.
But soon after, perhaps, realising that Kannuswami was not dead as a result of the first blows, as deposed by the wife, both the accused returned.
Kannuswami 's wife who figures in court as the sole witness to the killing, placed his head on the ground and went and stood on the steps of the tea stall.
The first appellant this time, made the body of Kannuswami lie with face downwards and gave a number of cuts in the region of the head, the neck and back.
These injuries were such as to cause instantaneous death.
At the time of the second assault, according to the evidence of the first witness, Shunmuga Thevar Prosecution Witness No. 3, one of the proprietors of the cinema housecame and remonstrated with the accused but to no purpose.
After inflicting the injuries, both the accused ran away.
According to the testimony of the first witness, it was the first appellant, the second accused (A 2 in therecord), who inflicted cutting injuries with the aruval.
The second appellant, the first accused (A 1 inthe record), was standing nearby at the time the cutting injuries were inflicted.
There were two electric lights burning in the tea shop, a Panchayat Board light burning on the road, as also a light burning on the pathway leading to the cinema house.
The wife of the deceased, finding her husband thus murdered, went and told Ganapathi Prosecution Witness No. 4 who had a tea stall on the other side of the road, and informed him as to what had taken place.
He asked her to lodge information of the 984 occurrence at the Police Station.
She then went to the Mathupet Police Station, but found it shut.
She went to the house of the Sub Inspector of Police, who took her to the Police Station, and recorded her statement as the first information report (Exhibit P. 1).
After recording the first information report, the SubInspector came along with the first informant to the scene of occurrence.
He held an inquest early in the morning.
At the trial, the Prosecution examined, besides the widow of the murdered man (P.W. 1), P.W. 2 an assistant in the tea shop of Ganapathi Thevar, P.W.3 one of the proprietors of the cinema house and P.W. 4Ganapathi who kept another tea stall near the cinemahouse, in support of the prosecution case.
P.W. 2Singaram testified to the occurrence and stated that he had seen Vadivelu 'Cut ' Kannuswami and Chinniah standing by the side of Vadivelu, a few feet away; but he added that the accused persons were not those con cerned with the crime though they bore the same names.
The Public Prosecutor was permitted to cross examine this witness who admitted that he knew that the Police were searching for the accused in the dock and that he did not tell the Police that these were not the persons who had committed the murder.
He went to the length of admitting that he did not tell anybody that the accused in the dock were not the persons who had committed the murder and that it was in the committal court that he stated, for the first time, that the accused persons were not concerned with the crime.
He also admitted that at the time of the occurrence, lights were burning at the place of occurrence, in the tea shop and in the theatre.
P.W. 3, one of the proprietors of the cinema house, when examined in court, admitted that he had been examined by the police two days after the occurrence, but stated that he did not tell the Police that he had seen the accused assaulting Kannuswami.
It appears that, though the record of the examination in chief of this witness would itself indicate that the Public Prosecutor had, put questions to him in the nature of cross examination, yet it is not recorded, unlike the record of the depositions 985 of P.W. 2 and P.W. 4, that this witness had been declared hostile and the Public Prosecutor had been permitted to cross examine him.
That appears to be a slip of the learned Sessions Judge, as he had been so treated even in the committal court.
The Investigating Sub Inspector, P.W. 14, stated, with reference to his diary, that P.W. 3 had stated before him that he had seen accused No. 2 cutting the deceased on the head and neck with an aruval, and accused No. I standing by the side of the second accused.
Witness No. 4 for the Prosecution Ganapathi who ran a tea stall near the cinema house, about 50 to 60 feet away from the tea stall of the deceased Kannuswami, stated in court that the first witness came to him weeping and saying that Chinniah and Vadivelu Thevar had cut her husband, but added that the two accused in court were not those persons.
Thus, whatever may have been the previous statements of the prosecution witnesses 2 to 4, aforesaid, their evidence in court does not directly support the prosecution case.
The orders of conviction and sentence, as passed by the courts below, as indicated above, rest solely on the testimony of the first witness.
It has been argued by the, learned counsel for the appellants that the conviction and sentences of the appellants should not, be upheld because they rest on the sole testimony of the first witness, particularly, because, it is further argued, her testimony is not free from all blemish.
In this connection, her statement in court that it was the second accused (first appellant) who gave the number of cut injuries with the aruval to the deceased Kannuswami, was challenged in crossexamination.
She has been cross examined with reference to her statement (Exhibit D 2) recorded by the committing Magistrate, and she has categorically stated : " Accused 1 had no weapon of any kind with him.
He did not give any cut.
I have not stated in the committal court that accused 1 continued to cut even after Shanmugham Thevar asked him not to cut.
" Exhibit D 2 is in these terms: 127 986 " Even while he was asking not to cut, accused 1 was cutting.
Soon after, accused 1 stopped cutting and went away.
" With reference to the statement of the first witness, as recorded in Exhibit D 2, the learned Sessions Judge has observed that it was a mistake of recording by the committing Magistrate.
We have looked into the whole evidence of the first witness, as recorded by the committing Magistrate not printed in the record, but supplied to us by the learned counsel for the appellants and in our opinion, there is no doubt that the learned Sessions Judge was correct in his conclusion that the recording by the Magistrate is defective in the sense that accused 1 has been recorded in place of accused 2, inasmuch as, throughout her deposition, the first witness had consistently stated that it was accused 2 who actually used the deadly weapon against her husband and that accused I was only aiding and abetting him and lending him strength by his presence.
That this conclusion is well founded, is also substantiated by the state of the record of the appeal in the High Court.
Each of the two appellants in the High Court filed a separate Memorandum of Appeal through his own counsel.
In neither of the Memoranda of Appeal, any ground has been taken that the first witness had materially contradicted herself with reference to her previous statement in the committal court.
Her testimony was assailed only as 'interested, artificial and unnatural '.
It is not even suggested that the learned Sessions Judge 's conclusion in respect of the recording by the committing Magistrate (Exhibit D 2) was not based on any material.
When the matter was argued before a Bench of the High Court, there is no indication in the judgment that any point was sought to be made of this alleged serious discrepancy in the statement of the first witness at different stages.
In the High Court, it was sought to be argued only that she was an interested witness though her testimony throughout had been consistent, as will appear from the following observations of the High Court 987 " To prove that it was the two accused that caused these injuries to the deceased, the prosecution put forth as many as four witnesses.
Of these four witnesses, P.Ws. 2, 3 and 4 turned hostile both in the committal court as also in the Sessions Court.
The only witness that remained constant throughout was P.W. I who is no other than the wife of the deceased.
" The same was the position with reference to the petition for leave to appeal to this Court filed in the High Court.
It was a joint petition on behalf of both the appellants, and as many as 13 grounds had been taken.
There is not even a suggestion that the testimony of the first witness was vitiated by any such discrepancy as has been sought to be made out in this Court.
It was after the High Court refused to grant the necessary certificate that for the first time, in the petition for special leave to appeal, filed in this Court, the ground is taken that the High Court failed to appreciate that the testimony of the first witness was untrustworthy for the reason that there was the alleged discrepancy between her statement in the committal court and in the Court of Sessions.
Thus, it is abundantly clear that the finding of the learned Sessions Judge about the mistake in recording the evidence of the first witness, by the committal court, has not been challenged at any stage in the court below.
The second ground of attack against the veracity of the first witness is that she had stated that Shanmugham Thevar Prosecution Witness No. 3 had also seen the first appellant giving the deadly blows to her husband, and that the assailant continued giving his blows in spite of protests of P.W. 3.
This argument proceeds upon the assumption that Prosecution Witness No. 3 is telling the truth and that, therefore, his evidence effectively contradicts that of the first witness.
P.W. 3 was, as indicated above, cross examined by the Public Prosecutor with reference to his previous statement before the Investigating Police Officer (P.W. 14).
P.W. 14 has stated that before him P.W. 3 had stated just the contrary Of what he stated in court.
The statements of P.W. 3 at 988 the earlier stage, before the Police, and later when examined in court, may or may, not have been false, but certainly both cannot be true.
Hence, it cannot be said that the evidence of P.W. 3 in court was the true version.
That being so, his evidence in court is not strong enough to wipe out the evidence of the first witness on the ground that it is contrary to what P.W. 3 had stated.
It is, thus, clear that none of the grounds, urged in support of the contention that the evidence of the first witness is unreliable, has been made out.
On the other hand, the first witness, being the most important witness from the point of view of the prosecution, was put to a severe test in her cross examination.
She has frankly made admissions in her cross examination, which throw a very lurid light on the past life of her deceased husband.
She admitted that he had been transported for life for having committed a murder and that after his release also, he had been sent to jail twice for having caused cut injuries to others.
If the first witness were inclined to tell falsehoods or at least to conceal her husband 's past, she could have taken shelter behind failing memory or want of information not an uncommon characteristic of prevaricating witnesses.
Her evidence, read as a whole, rings quite true, and we have no hesitation in acting upon it.
It is true that her evidence in court has been sought to be contradicted by the evidence of P.Ws. 2 to 4, but the latter set of witnesses have been shown to be not reliable because they appear to have made different statements at different stages for reasons of their own.
Their testimony does not inspire confidence and we cannot, therefore, brush aside the testimony of the first witness as compared to the evidence of P.Ws. 2 to 4.
The testimony of the first witness is consistent with what &he has stated in her first information report at the Police Station without any avoidable delay, within less than an hour of the occurrence.
It cannot, therefore, be said that her statement in court, is an afterthought, or the result of tutoring by other interested persons.
Her story of the double attack, first on the front,: and subsequently on the back and 989 side of the victim, is also consistent with the medical evidence as deposed to by the Medical Officer P.W. 8.
It is not necessary to set out in detail the dozen incised gaping.
wounds on the person of the deceased, which are all set out in extenso in the judgment of the learned Sessions Judge who has written a very careful and satisfactory judgment.
Alternatively, it has been argued on behalf of the appellants that it is not safe to convict the appellants on the testimony of a single witness even though she may not have been demonstrated to have been a lying witness.
It has not even been claimed by counsel for the appellants that this is a rule of law.
He has only put it on the ground of prudence that, ordinarily, the court should not, in a case involving a charge of murder, convict an accused person upon the testimony of a single witness.
In this connection, our attention was drawn to the observations of their Lordships of the Judicial Committee of the Privy Council in the case of Mohamed Sugal Esa Mamasan Rer Alalah vs The, King (1).
In that case, their Lordships looked for corroboration of the testimony of a single witness in a murder case.
It is true that in that case, the court had to look for and found corroboration of the testimony of the single witness in support of the murder charge, but the testimony of that witness suffered from two infirmities, namely: (1)The witness was a girl of about 10 or 11 years at the time of occurrence.
(2)The girl witness had not been administered oath because the Court did not consider that she was able to understand the nature of the oath though she was competent to testify.
That was a case from Somaliland to which the provisions of the Indian Evidence Act (1 of 1872) and of the Indian Oaths Act (X of 1873), had been made applicable.
Special leave had been granted to appeal to His Majesty in Council on the ground that the local courts had admitted and acted upon the unsworn evidence of a girl of 10 or 11 years of age.
Their Lordship upheld the conviction and sentence of death, holding that the (1) A.I.R. (1946) P.C. 3. 990 evidence, such as it was, was admissible.
In the course of their Judgment, they made the following observations (at pp.
5 6) which are pertinent to the present controversy : " It was also submitted on behalf of the appellant that assuming the unsworn evidence was admissible the Court could not act upon it unless it was corroborated.
In England where provision has been made for the reception of unsworn evidence from a child it has always been provided that the evidence must be corroborated in some material particular implicating the accused.
But in the Indian Act there is no such provision and the evidence is made admissible whether corroborated or not.
Once there is admissible evidence a court can act upon it; corroboration, unless required by statute, goes only to the weight and value of the evidence.
It is a sound rule in practice not to act on the uncorroborated evidence of a child, whether sworn or unsworn, but this is a rule of prudence and not of law.
" The decision of this Court in the case of Vemireddy Satyanarayan Reddy and three others vs The State of Hyderabad (1) was also relied upon in support of the contention that in a murder case the court insists on corroboration of the testimony of a single witness.
In the said reported decision of this Court, P.W. 14 has been described as " a dhobi boy named Gopai. " He was the only person who had witnessed the murder and his testimony had been assailed on the ground that he was an accomplice.
Though this Court repelled the contention that he was an accomplice, it held that his position was analogous to that of an accomplice.
This Court insisted on corroboration of the testimony of the single witness not on the ground that his was the only evidence on which the conviction could be based, but on the ground that though he was not an accomplice, his evidence was analogous to that of an accomplice in the peculiar circumstances of that case as would be clear from the following observations at p. 252: (1) ; 991 is.
Though he was not an accomplice, we would still want corroboration on material particulars in this particular case, as he is the only witness to the crime and as it would be unsafe to hang four people on his sole testimony unless we feel convinced that he is speaking the truth.
Such corroboration need not, however, be on the question of the actual commission of the offence; if this was the requirement, then we would have independent testimony on which to act and there would be no need to rely on the evidence of one whose position may, in this particular case, be said to be somewhat analogous to that of an accomplice, though not exactly the same.
" It is not necessary specifically to notice the other decisions of the different High Courts in India in which the court insisted on corroboration of the testimony of a single witness, not as a proposition of law, but in view of the circumstances of those cases.
On a consideration of the relevant authorities and the provisions of the Indian Evidence Act, the following propositions may be safely stated as firmly established: (1) As a general rule, a court can and may act on the testimony of a single witness though uncorroborated.
One credible witness outweighs the testimony of a number of other witnesses of indifferent character.
(2) Unless corroboration is insisted upon by statute, courts should not insist on corroboration except in cases where the nature of the testimony of the single witness itself requires as a rule of prudence, that corroboration should be insisted upon, for example in the case of a child witness, or of a witness whose evidence is that of an accomplice or of an analogous character.
(3) Whether corroboration of the testimony of a single witness is or is not necessary, must depend upon facts and circumstances of each case and no general rule can be laid down in a matter like this and much depends upon the judicial discretion of the Judge before whom the case comes.
In view of these considerations, we have no hesitation in holding that the contention that in a murder case, the court should insist upon plurality of witnesses, is 992 much too broadly stated.
Section 134 of the Indian Evidence Act has categorically laid it down that " no particular number of witnesses shall in any case be required for the proof of any fact.
" The legislature determined, as long ago as 1872, presumably after due consideration of the pros and cons, that it shall not be necessary for proof or disproof of a fact, to call any particular number of witnesses.
In England, both before and after the passing of the , there have been a number of statutes as set out in Sarkar 's I Law of Evidence 9th Edition, at pp.
1 100 and 1 101, forbidding convictions on the testimony of a single witness.
The Indian Legislature has not insisted on laying down any such exceptions to the general rule recognized in section 134 quoted above.
The section enshrines the well recognized maxim that " Evidence has to be weighed and not counted".
Our Legislature has given statutory recognition to the fact that administration of justice may be hampered if a particular number of witnesses were to be insisted upon.
It is not seldom that a crime has been committed in the presence of only one witness, leaving aside those cases which are not of uncommon occurrence, where determination of guilt depends entirely on circumstantial evidence.
If the Legislature were to insist upon plurality of witnesses, cases where the testimony of a single witness only could be available in proof of the crime, would go unpunished.
It is here that the discretion of the presiding judge comes into play.
The matter thus must depend upon the circumstances of each case and the quality of the evidence of the single witness whose testimony has to be either accepted or rejected.
If such a testimony is found by the court to be entirely reliable, there is no legal impediment to the conviction of the accused person on such proof.
Even as the guilt of an accused person may be proved by the testimony of a single witness, the innocence of an accused person may be established on the testimony of a single witness, even though a considerable number of witnesses may be forthcoming to testify to the truth of the case for the prosecution.
Hence, in our opinion, it is a sound and well established rule of law that the 993 court is concerned with the quality and not with the quantity of the evidence necessary for, proving or disproving a fact.
Generally speaking, oral testimony in this context may be classified into three categories, namely: (1) Wholly reliable.
(2) Wholly unreliable.
(3) Neither wholly reliable nor wholly unreliable.
In the first category of proof, the court should have no difficulty in coming to its conclusion either way it may convict or may acquit on the testimony of a single witness, if it is found to be above reproach or suspicion of interestedness, incompetence or subornation.
In the second category, the court, equally has no difficulty in coming to its conclusion.
It is in the third category of cases, that the court has to be circumspect and has to look for corroboration in material particulars by reliable testimony, direct or circumstantial.
There is another danger in insisting on plurality of witnesses.
Irrespective of the quality of the oral evidence of a single witness, if courts were to insist on plurality of witnesses in proof of any fact, they will be indirectly encouraging subornation of witnesses.
Situations may arise and do arise where only a single person is available to give evidence in support of a disputed fact.
The court naturally has to weigh carefully such a testimony and if it is satisfied that the evidence is reliable and free from all taints which tend to render oral testimony open to suspicion, it becomes its duty to act upon such testimony.
The law reports contain many precedents where the court had to depend and act upon the testimony of a single witness in support of the prosecution.
There are exceptions to this rule, for example, in cases of sexual offences or of the testimony of an approver; both these are cases in which the oral testimony is, by its very nature, suspect, being that of a participator in crime.
But, where there are no such exceptional reasons operating, it becomes the duty of the court to convict,if it is satisfied that the testimony of a single witness is entirely reliable.
We have, therefore, no reasons to refuse to act upon the testimony of the 128 994 first witness, which is the only reliable evidence in support of the prosecution.
Lastly, it was urged that assuming that the court was inclined to act upon the testimony of the first witness and to record a conviction for murder as against the first appellant, the court should not impose the extreme penalty of law and in the state of the record as it is, the lesser punishment provided by law should be deemed to meet the ends of justice.
We cannot accede to this line of argument.
The first question which the court has to consider in a case like this, is whether the accused has been proved, to the satisfaction of the court, to have committed the crime.
If the court is convinced about the truth of the prosecution story, conviction has to follow.
The question of sentence has to be determined, not with reference to the volume or character of the evidence adduced by the prosecution in support of the prosecution case, but with reference to the fact whether there are any extenuating circumstances which can be said to mitigate the enormity of the crime.
If the court is satisfied that there are such mitigating circumstances, only then, it would be justified in imposing the lesser of the two sentences provided by law.
In other words, the nature of the proof has nothing to to with the character of the punishment.
The nature of the proof can only bear upon the question of conviction whether or not the accused has been proved to be guilty.
If the court comes to the conclusion that the guilt has been brought home to the accused, and conviction follows, the process of proof is at an end.
The question as to what punishment should be imposed is for the court to decide in all the circumstances of the case with particular reference to any extenuating circumstances.
But the nature of proof, as we have indicated, has nothing to do with the question of punishment.
In this case, there are no such extenuating circumstances which can be legitimately urged in support of the view that the lesser penalty under section 302 of the Indian Penal Code, should meet the ends of justice.
It was a cold blooded murder.
The accused came for the second 995 time, determined to see that their victim did not possibly escape the assassins ' hands.
As regards the second appellant, we need not say anything more than that he was lucky enough to escape conviction under section 302 of the Indian Penal Code, for the reasons given by the High Court, which may not bear close scrutiny.
He amply deserves the punishment of 5 years ' rigorous imprisonment under s.326 of the Indian Penal Code.
For the reasons aforesaid, both the appeals fail and are dismissed.
Appeals dismissed.
| The appellants were charged with murder and convicted on the sole testimony of a witness.
The first appellant was sentenced to death and the second to five years ' rigorous imprisonment.
it was contended for them, inter alia, that the conviction and sentences should not be upheld because in a case involving a charge of murder the court should not, on the ground of prudence, convict an accused person upon the testimony of a single witness, and, in any case, impose the extreme penalty of law.
Held, that the question whether in such a case the court could convict him depended upon the facts and circumstances of the case and unless corroboration was a statutory requirement, a court could act upon such evidence, though uncorroborated, except in cases where the nature of the testimony of the single witness itself required, as a matter of prudence, that corroboration should be insisted upon, as in the case of a child witness, an accomplice or any others of an analogous character.
Where the court has recorded an order of conviction the question of sentence must be determined, not by the volume or character of the evidence adduced, but on a consideration of any extenuating circumstances which could mitigate the enormity of the crime.
Mohamed Sugal Esa Mamasan Rer Alalah vs The King, A.I.R. and Vemireddy Satyanarayan Reddy and three others vs The State of Hyderabad; , , distinguished.
|
ivil Appeal No. 1617 of 1968.
Appeal by special leave from the judgment and decree dated March 19, 1968 of the Allahabad High Court in Second ' Appeal No. 2296 of 1961.
1. P. Goyal and A. G. Ratnaparkhi, for the appellant.
C.B.Agarwala and R. Mahalingier, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
The question of law that arises for decision in this appeal by special leave is not free from difficulty.
That question is whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under sub section
3 of section 3 of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 (to be hereinafter referred to as the Act) becomes unenforceable if the State Government acting under section 7(F) of that Act revokes the permission granted by the Commissioner after the decree is passed ? The appellant was a tenant of the respondent in respect of a shop in Balugani in Agra.
On January 2, 1959, the respondent applied to the District Magistrate under section 3(1) of the Act for permission to institute a suit against the appellant for evicting him from the shop in question.
That application was rejected by the District Magistrate as per his order of July 9, 1959.
The respondent took up the matter in revision to the Commissioner under sub section 2 of section 3.
The Commissioner reversed the order of the District Magistrate and granted the permission asked for on October 16, 1959.
As against that order the appellant moved the State Government under section 7(F) on November 17, 1959.
On January 299 1, 1960, the respondent served on the appellant a notice under section 106 of the Transfer of Property Act.
The appellant replied to that notice on January 6, 1960.
In that reply he informed the respondent that he had already moved the State Government to revoke the permission granted by the Commissioner.
On February 13, 1960 the respondent instituted suit No. 115 of 1960 in the Court of Munsiff, Agra seeking the eviction of the appellant from the suit premises.
The appellant filed his written statement in that case on May 7, 1960.
Therein again he took the plea that the permission granted by the Commissioner is not final as he had moved the Government to revoke the same.
The suit was decreed by the learned Munsiff on November 2, 1960.
The appellant went up in appeal as against that order to the Civil Judge, Agra.
On January 27, 1961, the State Government revoked the permission granted by the Commissioner during the pendency of the appeal.
Relying on this order the Civil Judge of Agra allowed the appeal of the appellant on February 9, 1961.
As against that decision the respondent went up in second appeal to the High Court.
The High Court allowed the second appeal on 19th March 1968 following the Full Bench decision of the Court in Bashi Ram vs Mantri Lal(1).
This appeal is directed against that decision.
The Act was intended as a temporary measure as could be gathered from its title as well as the preamble.
It is deemed to have come into force on the 1st day of October 1946 though it was passed in 1947.
Under the Act as originally stood, the decision of the District Magistrate under section 3 was neither appealable nor revisable.
As per the amendments effected in 1952 a Limited power of revision was conferred on the Commissioner.
By the Amending Act 17 of 1954, the power conferred on the Commissioner was enlarged and section 7(F) was incorporated in the Act which says that: "the State Government may call for the records of any case granting or refusing to grant permission for the filing of a suit for eviction referred to in section 3 . . and make such order as appears to it necessary for the ends of justice.
" The only sections in the Act material for the purpose of this appeal are sections 3 and 7(F).
Section 3 reads thus.
: "Restrictions on evictions.
Subject to any order passed under sub section ( 3 ), no suit shall: without the permission of the District Magistrate, be filed in any civil court against a tenant for his eviction from any accommodation, except on one or more of the following grounds: (1) (1965) 1 A11.
300 (a) that the tenant is in arrears of rent for more than three months and has ,failed to pay the same to the landlord within one month of the service upon him of a notice of demand; (b) the at the tenant has wilfully caused or permitted to be caused substantial damage to the accommodation; (c) that the tenant has, without the permission in writing of the landlord, made or permitted to be made any such construction as, in the opinion the court, has materially altered the accommodation or is likely substantially to diminish its value; (d) that the tenant has created a nuisance or has done any act which is inconsistent with the purpose for which he was admitted to the tenancy of the accommodation, or which is likely to affect adversely and substantially the landlord 's interest therein; (e) that the tenant has on or after the 1st day of October, 1946, sub let the whole or any portion of the accommodation without the permission of the landlord; (f) that the tenant has renounced his character as such or denied the title of the landlord and the latter has not waived his right or condoned the conduct of the tenant; (g) that the tenant was allowed to occupy the accommodation as a part of his contract of employment under the landlord and his employment has been determined.
Explanation.
For the purposes of sub section (e) lodging a person in a hotel or a lodging house shall not be deemed to be sub letting.
(2) Where any application h:as been made to the District Magistrate/or permission to sue a tenant for eviction from any accommodation and the District Magistrate grants or refuses the permission, the party aggrieved by his order may within 30 days from the date on which the order is communicated to him, apply to the Commissioner to revise the order.
(3) The Commissioner shall hear the application made under sub section (2), as far as may be, 301 within six weeks from the date of making it, and he may, if he is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate or as to the regularity of proceedings held before him, alter or revise his order, or make such other order as may be just and proper.
(4) The order of the Commissioner under subsection (3) shall, subject to any order passed. ' by the State Government under section 7 (F) be We have earlier quoted the relevant portion of section 7 (F).
Conflicting opinions were expressed by different Benches of the Allahabad High Court as to the scope of section 3, till the decision of the Full Bench in Bashi Ram 's case(x).
The Full Bench held that a decree obtained in a suit for eviction instituted after obtaining the requisite permission will not become unenforceable even if the State Government revoked, after the decree is passed, the permission granted, in exercise of its powers under section 7(F).
Majority of the Judges in that case further held that once a suit is instituted after obtaining the permission of the District Magistrate, any further order made either by the Commissioner or the State Government cannot affect the course of that suit or the decree passed therein.
Dwivedi J. the other Judge did not express any opinion on that question but even according to him in the appeal filed against the decree, the appellate court cannot receive in evidence the order made by the State Government which means that the decree cannot be reversed on the ground that the State Government had revoked the permission granted.
The correctness of the Full Bench decision is challenged by the appellant in this appeal.
In support of his interpretation of sections 3 and 7(F) he placed reliance on the decision of a Division Bench of the High Court of Allahabad in Dr. S.L. Khoparji vs State Government(a).
He also sought support from the decision of a Single Judge of that Court in Basant Lal Sah vs Bhagwan Prasad Sah(3).
It is not necessary to refer to the various decisions of the Allahabad High Court on this question.
Suffice it to say that in that Court there was serious cleavage of opinion on the question that we are considering in this appeal till the decision of the Full Bench in Bashi Ram 's case(x).
We were given to understand that Dhavan, j. had doubted the correctness of the decision of the Full Bench and had requested the Chief Justice to constitute a larger Bench to consider the correctness of the decision in Bashi Ram 's case(1) but in view of the pendency of this appeal, the constitution of a larger bench was not considered necessary.
(1) (1965) 1 All.
(3) A.I.R. 1964 All p. 210.
(2) 302 The contention of Mr. Goyal, the learned Counsel for the appellant was that the Act generally speaking, ' has restricted the right of the landlord to evict his tenant, to one or other of the grounds mentioned in cls.
(a) to.
(g) of section 3(1 ); but in order to meet any exceptional case, it is provided in section 3 (1 ) that a suit for eviction may be instituted on any ground other than those mentioned in cls.
(a) to (g) if the permission of the District Magistrate is obtained; the order made by the District Magistrate is revisable both by the Commissioner as well as the State Government; the only order that is final is that made by the State Government.
If a landlord chooses to institute a suit on the basis of the permission granted by the District Magistrate or the Commissioner without waiting for the decision of the State Government he takes the risk; if the State Government revokes the permission granted by the District Magistrate or the Commissioner then the suit must be deemed to have been instituted without permission and consequently not maintainable.
Mr. Goyal urged that if the decision in Bashi Ram 's case(1) is accepted as correct then so far as the tenant is concerned, generally speaking, he cannot invoke the powers of the State Government under section 7(F) because immediately after the decision of the Commissioner, if the same is in his favour, the landlord is likely to institute a suit for eviction and thus nullify the power of the State Government under section 7(F).
He urged that as section 7(F) empowers the State Government to revise the order made by the subordinate authorities whether the same is in favour of the landlord or the tenant we should not place an interpretation on section 3 which would affect the power of the State Government to do justice to the tenants for whose benefit the Act has been enacted.
On the other hand it was urged by Mr. C.B. Aggarwal, learned Counsel for the respondent that the landlord has a right to sue for the eviction of his tenant under the provision of the Transfer of Property Act subject to the restrictions stipulated therein.
That is a statutory right.
The provisions contained in the Act to the extent they encroach upon the rights of the landlord either specifically or by necessary implication further control the rights of the landlord.
In other respects the landlord 's rights under the Transfer of Property Act remain unaffected.
According to him the only restriction placed on the landlord in the matter of instituting a suit for eviction on grounds other than those mentioned in cls.
(a) to (g) of section 3(1) is to obtain the prior permission of the District Magistrate subject to the order made under sub section
(3) of section 3 by the Commissioner; once a suit is validly instituted in accordance with those provisions, no order of the State Government can either interfere with the course of that suit or invalidate the decree obtained therein.
He urged that if the position is as (1) 1965) 1 Ali.
545 303 contended by the.
learned Counsel for the appellant, curious results are likely to follow.
Section 7 (F) does not fix any period within which the State Government must act.
It can exercise its power under that provision at any time it pleases may be after 10 years or 20 years; the power conferred on the State Government is extremely wide as observed by this Court in Shri Bhagwan and anr.
vs Ram Chand and anr.(1).
Therefore it can revoke the permission granted after the decree for eviction is confirmed by the High Court or even the Supreme Court and thus make a mockery of the judicial process; this could not have been the intention of the legislature.
According to Mr. Aggarwal from the very scheme of the Act and from the very nature of the power conferred on the State Government, it cannot be exercised after a suit is instituted after complying with the requirements of subs.
(1 ) of section 3.
His further contention was that on a proper construction of sub section
( 1 ) of section 3, it would be seen that the suit instituted after obtaining the required permission being a validly instituted suit, its progress cannot be interrupted; the permission required under section 3 (1 ) is the permission of the District Magistrate subject to any order under section 3(3) by the Commissioner; in other words the permission given by the District Magistrate is not final till affirmed by the Commissioner; till then it remains tentative; once the Commissioner affirms the same or grants the permission asked for it becomes final and thus amounts to a valid permission to sue; hence a suit filed on the basis of that permission is a validly instituted suit unless the permission granted was revoke by the State Government before the institution of the suit.
Proceeding further he stated that it is true that the order of the Commissioner though final yet it is subject to any order that may be passed by the State Government; but section 3 (1 ), the provision dealing with the permission to file a suit for eviction does not refer to the order under section 7(F); it only speaks of the permission granted by the District Magistrate subject to the order of the Commissioner and not further subject to any orders made by the State Government.
In this connection he invited our attention to the fact that as against the order passed by the District Magistrate under subs.
( 1 ) of section 3, a revision petition can be filed before the Commissioner within 30 days of that order and not thereafter.
The Commissioner has not even the power to condone the delay in filing the revision petition.
Further under subs.
(3) of section 3, the Commissioner is required to hear the application made under sub section
(2) of section 3, as far as may be, within six week from the date of making it.
All these provisions indicate that the legislature was of the opinion that the proceedings under section 3 should be carded_on expeditiously and the decision of the Commissioner should be considered as final.
According to Mr. Aggarwal the question of granting or refusing to grant the permission under s, 3 are primarily to be (1) [1965] 3 S.C.R.218, 304 dealt with only by the District Magistrate and the Commissioner.
They are the only tribunals in the hierarchy of the tribunals constituted for that purpose.
The power given to the Government under section 7(F) is merely a supervisory power.
That is why no limitation is imposed on the exercise of that power either in the matter of time within which it should be exercised or the circumstances under which it can be exercised.
Such a power according to him is a reserve power and therefore has to be exercised before the court 's jurisdiction is invoked, He particularly laid emphasis on the fact that sub section
(1) of section 3, the compliance of which is necessary before validly instituting the suit does not at all refer to an order under section 7(F).
After examining the provisions of this Act, we are constrained to observe that the drafting of this Act leaves considerable room for improvement despite the fact that it was amended twice over.
Though it was intended to be a temporary measure when it was originally enacted it has now reminded in the statute book for over 20 years and there is no knowing how long the same will continue to be in force.
Therefore it is but appropriate that the provisions of this Act should be clear and unambiguous.
From sub section
(1 ) of section 3 it is not possible to find out the contents of the powers of the District Magistrate.
No guide lines are laid down therein to regulate the exercise of the powers of the District Magistrate.
It is not possible to find out from that provision under what circumstances the District Magistrate can grant the permission asked for and under what circumstances he can refuse the same.
It is likely that different District Magistrates are exercising that power in different ways.
One consideration may appeal to one District Magistrate and a totally different consideration may influence another District Magistrate.
It would have been appropriate if the legislature had defined the scope of the powers of the District Magistrate or at least laid down certain guide lines for regulating his discretion.
Sub section
(3 ) of section 3 says that if the Commissioner is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate, he may alter or reverse the order of the District Magistrate or make such other order as may be just and proper.
It is not possible to find out on what basis the Commissioner can determine the correctness, legality or propriety of the order made by the District Magistrate.
As seen earlier, no restrictions are placed on the powers of the District Magistrate in granting or refusing to grant the permission asked for under section 3 (1 ).
Therefore the only thing the Commissioner can do is to exercise his discretion in preference to the discretion exercised by the District Magistrate.
Now coming to the power conferred on the State Government under section 7 (F), it would be seen that it is a power of wide amplitude.
It can be exercised by it in any way it pleases.
No restriction either as to the time 305 within which it can be exercised or as to the circumstances under which it can be exercised is placed on the State Government.
Under these circumstances the anomalies pointed out by Mr.Goyal as well as by Mr. Agarwal are inevitable.
Therefore in construing this Act, no useful purpose will be served by taking into consideration the hardship to the parties.
In whatever way we may construe sections 3 and 7(F) hardship to one party or the other is inevitable.
Neither Counsel suggested to us any interpretation which could steer clear of the anomalies pointed out at the bar.
Therefore we have to fall back on the grammatical construction of sub section
(1 ) of section 3 and leave out of consideration all other rules of construction for finding out the intention of the legislature.
Section 3(1) does not.
restrict the landlord 's right to evict his tenant on any of the grounds mentioned in cls.
(a ) to (g) of that sub section.
But if he wants to sue his tenant for eviction on any ground other than those mentioned in those clauses then he has to obtain the permission of the District Magistrate whose discretion is subject to any order passed under sub section
(3) of section 3 by the Commissioner.
These are the only restrictions placed on the power of a landlord to institute a suit for eviction of his tenant.
If a landlord files a suit for the eviction of his tenant without obtaining the permission of the District Magistrate that suit is not maintainable but if he files a suit after obtaining the permission of the District Magistrate and if the Commissioner revokes the permission granted by the District Magistrate in a properly instituted application under section 3(2) then the suit instituted by him will be considered as having been filed without the permission of the District Magistrate because section 3 (1 ) in specific terms says that the permission given by the District Magistrate is subject to any order passed under sub section
In other words the permission given by the District Magistrate does not acquire any finality until either the period fixed for filing an application under sub section (2) of section 3 expires and no application under that section was filed within that time or if an application had been filed within that time, the same had been disposed of by the Commissioner.
The permission to file a suit for eviction assumes finality under section 3 (1 ) once the Commissioner decides the revision petition pending before him.
In fact sub section
(4) of section 3 says that the order of the Commissioner is final.
It is true that that order despite the fact that it is final is subject to any order passed by the State Government under section 7(F).
There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F).
Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit.
Section 14 provides : 306 "no decree for the eviction of a tenant from any accommodation passed before the date of commencement of this Act shall, in so far as it relates to the eviction of such tenant be executed against him 'as long as this Act remains in force except on any of the grounds mentioned in section 3: Provided that the tenant agrees to pay to the landlord "reasonable annual rent" or the rent payable by him before the passing of the decree whichever is higher ." This provision applies only to decrees passed before the date of the commencement of the Act.
A decree of a Court in a suit validly instituted is binding on the parties to.
the same.
It is true that the finality or the force of a decree can be taken away by a statute, but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is showy that a provision of law has specifically or by necessary implication made that decree unenforceable.
No such provision was brought to our notice.
On an examination o/the relevant provisions of the Act our conclusion is that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails.
If he cancels the permission granted by the District Magistrate there is no effective permission left and the suit instituted by the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate.
To this extent we are in agreement with the decision of Upadhyaya, J. in Munshi Lal and anr.
vs Shambhu Nath Ram Kishan(1).
From this it follows that the Full Bench decision in Bashi Ram 's case(2) to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, is incorrect.
But we agree with the Full Bench that a suit validly instituted after obtaining a permission as required by section 3 (1 ) does not cease to be maintainable even if the State Government revokes after the institution of the suit, the permission granted.
If the State Government revokes the permission granted before the institution of the suit then there would be no valid permission to sue.
In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validly instituted.
For the reasons mentioned above, this appeal fails and the same is dismissed.
But in the circumstances of the case, we make no order as to costs.
R.K.P.S. Appeal dismissed.
| The appellant was a tenant of the respondent in respect of a shop in Agra, Uttar Pradesh.
The respondent applied to the District Magistrate under section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 for permission to institute a suit against the appellant for evicting him from the shop.
The application was rejected by the District Magistrate, but the Commissioner, by order under section 3(3 ), granted the permission.
The appellant thereupon moved the State Government under section, 7(F) of the Act, but it was only after the respondent had flied a suit and ,obtained a decree that the State Government passed an order revoking the permission granted by the Commissioner.
The first Appellate Court, in view of the order under 7(F) act aside the decree of the trial Court.
However in second appeal the High Court, relying upon a Full Bench decision of that Court in Bashi Ram vs Mantri Lal (1965) 1 All 545, decided in favour of the respondent.
In appeal before this Court by.
special leave, the question for consideration was whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under section 3(3) of the Act becomes unenforceable if the State Government acting under section 7(F) of the Act revokes the permission granted by the Commissioner after the decree is passed.
HELD: The order of the District Magistrate is by section 3(1) specifically made subject to the order of the Commissioner in revision under section 3(3 ), but the Commissioner 's order according to section 3 (4 ) is final though subject to the order of the State Government under section 7(F).
There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F).
[305 G H] Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit.
The finality or the force of a decree can be taken away by a statute, .but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is shown that a provision of law has specifically or by necessary implication made that decree unenforceable.
[305 H 306 C D] On an examination of the relevant provisions of the Act the conclusion must be that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails.
If he cancels the permission granted by the District Magistrate, there is no effective permission left and the suit instituted by.
the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate.
To this extent the decision in Munshi Lal and ant.
Shambhu Nath Ramkishan, was correct.
[305 D F] Sup.
C1/69 2 298 It follows that the Full Bench decision in Bashi Ram 's case to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, was incorrect.
[306 F] Bashi Ram 's case was however correctly decided in so far as it held that a suit validly instituted after obtaining a permission as required by section 3(1) does not cease to be maintainable even if the State Government revokes, after the institution of the suit, the permission granted.
if the State Government revokes the permission granted before the institution of the suit, then there would be no valid permission to sue.
In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validity instituted.
[306 G] Bashi Ram vs Mantri Lal, (1965) 1, All. 545 and Munshi Lal and ant.
vs Shambhu Nath Ram Kishan, (1958) A.L.J., p. 584; considered.
Dr. S.L. Khoparji vs State Government, (1958) A.LJ., p. 724; Basant Lal Sah vs Bhagwan Prasad Sah, A.I.R. 1964 All.
p. 210 and Shri Bhagwan and ant.
vs Ram Chand and anr.
; , ; referred
|
Appeal No. 108 of 1957.
Appeal by special leave from the judgment and order dated February 16, 1955, of the Bombay High Court in Income tax Reference No. 35/x of 1954.
A.V. Viswanatha Sastri, B. K. B. Naidu and I. N. Shroff, for the appellants.
C. K. Daphtary, Solicitor General of India K. N. Rajagopal Sastri and D. Gupta, for the respondents.
March 15.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is an appeal with the Hid special leave of this Court against the judgment and order dated February 16, 1955, of the High Court of Bombay in an Income tax Reference under section 66(2) of the Indian Income tax Act.
The appellants are two assessees, Charandas Haridas and Chinubhai Haridas, whose cases are identical, and, in fact, there was a consolidated reference by the Income tax Appellate Tribunal, which was answered by the High Court by its judgment.
The respondents are respectively the Commissioner of Income tax, Bombay North, Kutch and Saurashtra and the Commissioner of Income tax, Delhi, Ajmer, Rajasthan and Madhya Bharat.
The two appellants represented two units of Hindu undivided families.
Charandas Haridas represented his wife, three sons and himself, and Chinubhai Haridas represented his wife, son and himself.
In stating the facts relative to the two families, it will not be necessary to give them separately, because the question which was answered by the High Court in the judgment under appeal arose in identical circumstances in the two families.
The only difference is in the shares held respectively by the two Hindu undivided families in the managing 298 agencies to be hereafter mentioned.
We will, therefore, confine ourselves to a statement of the facts relating to Charandas Haridas only.
Charandas Haridas was the Karta of the Hindu undivided family consisting of his wife, three sons and himself.
He was a partner in six managing agency firms in six Mills.
In previous years, the income received by him as partner in these managing agencies was being assessed as the income of the Hindu undivided family.
On December 31, 1945, Charandas Haridas acting for his three minor sons and himself and Shantaben, his wife, entered into an oral agreement for a partial partition.
By that agreement Charandas Haridas gave an one pie share to his daughter, Pratima, in the managing agency commission from two of the six managing agencies held by the family.
The balance together with the shares in the other managing agencies was divided into five equal shares between Charandas Haridas, his wife and sons.
This agreement was to come into effect from January 1, 1946, which was the beginning of a fresh accounting year.
On September 11, 1946, Charandas Haridas acting for himself and his minor sons, and Shantaben executed a memorandum of partial partition in which the above facts were recited, the document purporting to be a record of what had taken place orally earlier.
In the assessment years 1947 48 and 1948 49, Charandas Haridas claimed that the income should no longer be treated as the income of the Hindu undivided family but as the separate income of the divided members.
The Income tax Officer declined to treat the income as any but of the Hindu undivided family, and assessed the income as before.
An appeal to the Appellate Assistant Commissioner was un.successful, and the matter was taken to the Income tax Appellate Tribunal.
The Appellate Tribunal held that by the document in question, the division, if any, was of the income and not of the assets from which the income was derived, inasmuch as " the agreements of the managing agency with the managed Companies did not undergo any change whatever as a result of the alleged partition The Appellate Tribunal, 299 therefore, held that the arrangement to share the receipts from this source of income was not binding on the Department, if the assets themselves continued to remain joint.
It further held that the document was " a farce ", and did not save the family from assessment as Hindu undivided family.
The Tribunal having declined to state a ease under section 66(1) of the Indian Income tax Act, Charandas Haridas moved the Bombay High Court, and obtained an order under section 66(2) of the Act.
The question on which the case was stated was: " Whether there were materials to justify the finding of the Tribunal that the income in the share of the commission agency of the Mills was the income of the Hindu undivided family ? " The High Court stated that though the reference was very elaborately argued, it raised a very simple question of fact and all that it was required to find out was whether there were materials before the Appellate Tribunal upon which the finding of fact could be rested.
The High Court held that though the finding given by the Appellate Tribunal could not be construed as a finding that the document was not genuine, the method adopted by the family to partition the assets was insufficient to bring about the result intended by it.
According to the High Court, the Appellate Tribunal war, right in holding that the document was ineffective, and though the income might have been purported to be divided and might, in fact, have been so divided, the source of income.
still remained united as belonging to the Hindu un divided family.
It accordingly answered the question in the affirmative, holding that there were materials before the Tribunal on which it could reach the conclusion that in so far as these income bearing assets were concerned, they still belonged to the Hindu undivided family.
Leave to appeal to this Court was refused by the High Court, but Charandas Haridas applied to this Court and obtained special leave, and the present appeal was filed.
Mr. Viswanatha Sastri appearing for Charandas Haridas, pointed out that a Hindu undivided family cannot be a partner of a firm Charandasa, Haridas, 300 therefore, though he represented the Hindu undivided family, in his capacity as a partner could not insist that the other members of the family be received as partners, or admitted to the benefits of partnership.
The only mode in which the partition could be made was to divide the income, and this bad the necessary effect, in law, of dividing the assets, if not for the purposes of the Partnership Act, at least for the purposes of assessing income tax.
lie, therefore, contended that the Hindu undivided family which had ceased to exist in so far as these assets were concern ed, could not be assessed as such after January 1, 1946, the date from which the partition was effective.
The learned Solicitor General for the Department contended that the argument itself involved the assumption that the assets were not, in fact, divided, and since income tax was payable at the moment of time when income accrued, this income must be taken to have accrued to the Hindu undivided family and its subsequent partition into five or six shares did not affect the position.
Before we deal with these arguments, it is necessary to quote the operative portion of the document, which is as follows: " Re: Partial partition of the Hindu Undivided Family of Charandas Haridas of Ahmedabad.
We the undersigned Sheth Charandas Haridas by himself and as the guardian of minors Rameshchandra Charandas, Anilkumar Charandas and Gautamkumar Charandas and Shantaben Charandas all residing in Shahibaug, Ahmedabad make this memorandum (Nondh) that, we have a Hindu undivided family and Sheth Charandas Haridas manages our family 's joint property as Karta or Manager and all of us as members of the joint undivided family are entitled to our joint undivided family as Malik.
Our family received a commission of Re. 0 1 11. 5112 from the Vijaya Mills Co., Ltd. and out of this commission Sheth Charandas Haridas as Karta or Manager of the family has given already a commission of one pie to Pratima, the daughter of the family.
So also out of the commission of Re. 0 2 1/2 received by the family from the Gopal 301 Mills Co., Ltd. Sheth Charandas Haridasas Karta and Manager has given already to Pratima one pie commission.
After deducting these Re. 0 1 10. 5/12 and Re. 0 1 11 commission remained.
These commissions and other commission received from various other mills have been partitioned orally by us on Samvat Year 2002 Magsar Vadi 12, dated 31st December, 1945.
By this partition we decided that whatever commission fell due till 31 12 45 and which is received after 31 12 45 should be kept joint and in respect of the commission which accrues from 1 1 46 and received after that date each of us become absolute owner of his one fifth share and therefore from the date,i.e., from 1 1 46 these commissions cease to be the joint property of our family.
But it is our desire that we should keep a memorandum for our memory of the oral partial partition effected on Samvat Year 2002 Magsar Vadi 12, dated 31 12 45 pursuant to which we have partitioned the commissions to be received by our family.
Because of this we keep this note.
" The document no doubt mentions "a commission" in respect of each of the six managing agencies, which commission was divided by the document.
The word "commission", however, has been used in two different senses; sometimes it refers to the amount of the managing agency commission to be received by Charandas Haridas and sometimes to the right to that commission which Charandas Haridas bad as a partner.
The sole question is whether the source was effectively divided for purposes of the Income tax law, so that the assessment could not be made upon a Hindu undivided family.
The law was stated by Mayne, and approved by the Privy Council in Pichappa vs Chokalingam in the following words: " Where a managing member of a joint family enters into a partnership with a stranger the other members of the family do not ipso facto become partners in the business so as to clothe them with all the rights and obligations of a partner as defined by the Indian Contract Act.
In such a, case the (1) A.I.R. 1934 P.C. 192.
39 302 family as a unit does not become a partner, but only such of its members as in fact enter into a contractual relation with the stranger: the partnership will be governed by the Act.
" Further, the Privy Council in Appovier vs Rama Subba Aiyan (1) observed: " Nothing can express more definitely a conversion of the tenancy, and with that conversion a change of the status of the family quad this property.
The produce is no longer to be brought to the common chest, as representing the income of an undivided property, but the proceeds are to be enjoyed in six distinct equal shares by the members of the family, who are thenceforth to become entitled to those definite shares.
" The Bombay High Court quoted this passage, and stated that there must be a division of the right as well as a division of the property; and unless the division effected a separation of the property into shares, it would remain only as a separation of the income after its accrual and would not affect the asset as such.
In this view of the matter, the Bombay High Court held that the asset continued to be joint in spite of the division of the income after its accrual.
In our opinion, here there are three different branches of law to notice.
There is the law of Partnership, which takes no account of a Hindu undivided family.
There is also the Hindu law, which permits a partition of the family and also a partial partition binding upon the family.
There is then the Income tax law, under which a particular income may be treated as the income of the Hindu undivided family or as the income of the separated members enjoying separate shares by partition.
The fact of a partition in the Hindu law may have no effect upon the position of the partner, in so far as the law of Partnership is concerned, but it has full effect upon the family in so far as the Hindu law is concerned.
Just as the fact of a Karta becoming a partner does not introduce the members of the undivided family into the partnership, the division of the family does not change the position of the partner Vis a vis the other partner or partners.
The Income (1) (1866) 11 M.I.A. 75.
303 tax law before the partition takes note, factually, of the position of the Karta, and assesses not him qua partner but as representing the Hindu undivided family.
In doing so, the Income tax law looks not to the provisions of the Partnership Act, but to the provisions of Hindu law.
When once the family has disrupted, the position under the partnership continues as before, but the position under the Hindu law changes.
There is then no Hindu undivided family as a unit of assessment in point of fact, and the income which accrues, cannot be said to be of a Hindu undivided family.
There is nothing in the Indian Income tax law or the law of Partnership which prevents the members of a Hindu joint family from dividing any asset.
Such division must, of course, be effective so as to bind the members; but Hindu law does not further require that the property must in every case be partitioned by metes and bounds, if separate enjoy ment can otherwise be secured according to the shares of the members.
For an asset of this kind, there was no other mode of partition open to the parties if they wished to retain the property and yet hold it not jointly but in severally, and the law does not contemplate that a person should do the impossible.
Indeed, the result would have been the same, even if the dividing members had said in so many words that they had partitioned the assets, because in so far as the firms were concerned, the step would have been wholly inconsequential.
The respondent suggested that the family could have partitioned the managing agencies 'among the members of the family by balloting them severally; but that would not have been possible without a dissolution of the managing agency firms and their reconstitution, which was not altogether in the hands of Charandas Haridas.
It was also suggested that the managing agencies could have been allotted to Charandas Haridas while the others took some other property, or a receiver could have been appointed.
No doubt, there were many modes of partition which might have been adopted; but the question remains that if the family desired to partition these assets only and no more, could they have acted in some other manner 304 to achieve the same result? No answer to this question was attempted.
It is, therefore, manifest that the family took the fullest measure possible for dividing the joint interest into separate interests.
There is no suggestion here that this division was a mere pretence; nor has the Appellate Tribunal given such a finding.
The document was fully effective between the members of the family, and there was factually no Hindu undivided family in respect of these particular assets.
The assets at all times stood in the name of Charandas Haridas, and looked at from the point of view of the law of Partnership, the family had no standing.
The assets still are in the name of Charandas Haridas, and looked again from the same viewpoint, the division has no different signification.
What has altered is the status of the family.
While it was joint, the Department could treat the income as that of the family; but after partition, the Department could not say that it was still the income of the Hindu undivided family, when there was none.
In the face of the finding that this was a genuine document and not a sham, and that it effectually divided the income and in the circumstances, the assets, the question answers itself in the negative, that is to say, that there were no materials to justify the finding that the income in the share of the commission agency of the Mills was the income of the Hindu undivided family.
The appeal will be allowed.
The respondents will pay the costs of the two assessees here and below.
There will be only one set of costs here.
Appeal allowed.
| The respondent workman was dismissed by his employer, the appellant, pending adjudication of an:industrial dispute, and without the permission of the Industrial Tribunal, relating to the discharge of 7 other employees working as apprentices under the appellant.
The respondent raised a dispute before the Industrial Tribunal under section 33A of the , and his case was that he was concerned in the dispute relating to the said 7 employees and gave evidence on their behalf and that his dismissal was solely due to the interest he took in their cause.
The Tribunal found in his favour and passed an award directing his reinstatement.
The appellant contended that the respondent was incompetent to raise the dispute under section 33A of the Act.
The question for decision, therefore, was one relating to the construction of section 33(1)(a) of the Act: 351 Held, that the expression " workmen concerned in such dis pute " occurring in section 33(1)(a) of the , as amended by Act 36 of 1956, includes not merely such workmen as are directly or immediately concerned with the dispute, but also those on whose behalf the dispute is raised as well as those who, when the award is made, will be bound by it.
Eastern Plywood Mfg. Co. Ltd. vs Eastern Plywood Mfg. Workers ' Union, and Newtone Studios Ltd. vs Ethirajula (T.R.), , approved.
The New jehangir Vakil Mills Ltd., Bhavnagar vs N. L. Vyas & Others, A.I.R. 1959 BOM.
248, disapproved.
|
ivil Appeal No. 314 of 1987.
From the judgment and Order dated 16.5.
1986 of the Delhi High Court in Suit No. 234 A of 1977 154 S.K. Dholkia and P.C. Kapur for the Appellant.
Manoj Swarup, Ms. Lalitha Kohli and Pramod Dayal for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave is granted.
The appeal arises from the judgment and order of the High Court of Delhi dated 16th May, 1986 whereby the award of the Arbitrator was adjudged incapable of being made rule of the court and no decree in terms thereof was passed under sec tion 17 of the , (hereinafter called the 'Act ').
The High Court, however, held that the award was not liable to be set aside but only that it could not be made a rule of the court.
In order to appreciate the contentions urged, it is necessary to note few facts.
The father of the parties involved in the matter, Shri section Lal, died; on 13th November, 1975 leaving behind him his two daughters, Mrs. Sudha Va sisht and Miss Shail and Capt.
(now Major) Ashok Kshyap, the son.
The wife of the said deceased Shri section Lal predeceased him.
Mrs. Sudha Vasisht is the eldest child and Major Kshyap is the youngest, who is the son.
Mrs. Sudha Vasisht is married, Miss Shail is a spinster and Major Kshyap is also married.
The said section Lal left only one immovable property, namely, premises No.
F 4, Green Park, New Delhi and some movables including about Rs.8,000 in the Punjab National Bank, Green Park, New Delhi.
It was claimed that Miss Shail was not capable of managing her affairs.
Indeed one of the objections against the award was that Miss Shail who was the unmarried sister of Major Kshyap and Mrs. Sudha Vasisht was of unsound mind and due to her mental incapacity the arbi tration agreement, arbitration proceedings and the resultant award were all bad in the eye of law.
The arbitration agree ment was, however, signed by all the three parties.
It may be noted that disputes and differences arose between the parties and arbitration agreement as entered into by the three parties to settle these on 9th June, 1976, soon after the death of their father, Shri section Lal.
The arbitration agreement recited that their father died intestate leaving behind him premises No. F 4, Green Park , New Delhi and the sum of Rs.8,000 in the Punjab National Bank.
Further it was recited that disputes and differences had arisen in between them with regard to the immovable as well as movable proper ty left by their father and Shri section Lal died without making any will and the parties were desirous ' to get their dis putes and differences 155 settled through arbitration to maintain family peace, harmo ny and goodwill amongst themselves and to avoid unnecessary litigation by arriving at a "family settlement" through arbitration.
The agreement, thereafter nominated and ap pointed one Shri D.C. Singhania, Advocate, as the arbitrator and to enter upon reference and to decide all the disputes and differences existing between them "pertaining to or relating to or in any manner touching upon the matter of inheritance and/or division of all movable and immovable property left behind by their late father, Shri section Lal.
The agreement, further recited that the parties undertook that the decision given by the arbitrator would be accepted as ' final.
The arbitration proceedings have been filed before this Court.
The son, the appellant gave evidence and stated that two houses, one at Meerut and one at Hapur were inher ited by him from his mother Smt.
Sarla Devi, which she got from her parents without leaving any male issue behind them.
These houses were sold for Rs.21,000 which sum according to Major Kshyap was invested by the father in the construction of the house in question.
Major Kshyap further claimed that he had invested a further amount of Rs. 10,000 out of his savings of his service as a Commissioned Officer.
This amount, according to him; was spent on wood work, painting of two rooms etc.
The father, Shri.
section Lal was a teacher in a school and in order to realise his pension, according to Major Kshyap, he paid to his father a sum of Rs.4440.93 which the father had drawn to build the house.
Major Kshyap further claimed that he had purchased a geyser for Rs.887 and he had spent certain amount of money for certain other expenses.
Mrs. Sudha Vasisht gave evidence stating that her father died without making any will and she was entitled to 1/3rd share in the house left behind him.
Miss Shail deposed before the arbitrator that during her life time, she was not to be financially dependent upon anybody but after her death, her share in the house should go to her brother.
She further asserted that she always wanted that the complete house should go to her brother.
It is not necessary to give the break up of the expenses of the houses as appearing from the evidence.
All the parties agreed, the arbitrator noted that there could be no exact and feasible division of the house.
Mrs. Sudha expressed her desire that if she was given a fair share in money, she would not insist for the division of the house, according to the arbitrator.
Her other alter native suggestion was that the house has got 10 rooms or nine rooms in the sense that one big room on Barsati floor has been divided in two and as such each person could be given three rooms each.
According to Miss Shail, the divi sion of the house was not at all feasible, since there was a lot of bad blood and differences between the parties.
Ac cording to her, the deposition states, it is not at all in the interest of anybody that all should live in one house.
156 The other important thing to note in the arbitration proceedings was that Capt.
Kshyap stated that the house could not possibly be divided into three parts.
It did not have three kitchens.
Miss Shail stated that if the house was divided into three parts, there would aIways be quarrels and disputes among them.
She could not say whether the house could be divided into three parts or not.
Miss Shail further stated that she would like to live with her brother Capt.
Kshyap or whatever arrangement he made for her, that would be acceptable to her.
Mrs. Sudha Vasisht stated that she would not like to live or associate with Miss Shail in any manner.
Miss Shail further stated that her share of the property, if any, might be allotted to her brother or what ever otherwise considered proper.
It is further noted that according to Major Kshyap, the house could not be divided in three parts.
He would not like to share it with his sister, Mrs. Sudha Vasisht who is now married.
He further stated, at that time in the deposition that he still had to serve in the army for about another 21 years.
He was prepared to have his share in the property in cash also.
He further asserted that he wanted to keep and maintain his sister Miss Shail.
He further asserted that he was also prepared to pay his sister Mrs. Sudha Vasisht in cash whatever share was considered to be due and payable to her.
According to him, he was not in a position to pay both of his sisters in cash for their shares in the property.
But he could pay her sister Shail, her share in cash gradually.
Mrs. Sudha Vasisht stated that she was not in a position to pay the share either of her brother or her sister Miss Shail in cash.
She further stated, she had no money nor any arrangement for the same.
All this narration is necessary in order to judge wheth er the award was just and fair because a contention was advanced about the mental capacity of the unmarried sister Miss Shail.
The award made on 12th February, 1977, stated that the appellant should pay Rs.40,800 to Mrs. Sudha Va sisht and upon payment Mrs. Sudha Vasisht would vacate the house.
In view of the contentions raised, it is necessary to set out the relevant part of the award which is as follows: "NOW, THEREFORE, I hereby make and publish my award as follows: 1.
A. Kshyap, shall pay an amount of Rs.40,800 to Mrs. Sudha Vasisht by way of her share in the said property No. F.4, Green Park and other assets left behind 157 by late Shri section Lal and on payment of this full amount she shall vacate the house.
Mrs. Sudha Vasisht shall be entitled to live in the portion of the house already in her occupation till the full amount of Rs.40,800 has been paid to her and she will also not be liable to pay any rent for occupa tion of the portion of the house so far occu pied by her and further until the total amount of Rs.40,800 is paid to her by Capt.
A.Kshyap.
On payment of this amount she will have no right to live in the house and also have no other interests left in the said property as legal heir of Shri section Lal.
Miss Shail shall have a right of residence in the said house, i.e. F 4, Green Park throughout her life or till she iS mar ried and in addition to her right in residence in the house, Capt.
Kshyap shall also pay her an amount of Rs.350 per month for her mainte nance till she is married.
In case Miss Shail is married, Capt.
Kshyap shall pay her a lumpsum amount of Rs.40,800 and thereafter she will also have no right to live in the house or get any mainte nance from Capt.
Kshyap on full payment of said amount.
A. Kshyap shall be liable to pay all the outstanding amount of loan along with interest due thereon taken by late Shri section Lal from L.I.C. and also bear Estate Duty, if any, already paid or to be payable with regard to the movable and immovable assets left behind by Shri section Lal.
He shall also be entitled to have all other movable and immovable assets including withdrawal of an amount of about Rs.8500 or so, along with interest if any due thereon, lying deposited to the credit of late Shri Lal in Punjab National Bank, Green Park.
" The award was filed by the Arbitrator on th March, 1977.
The respondent No. 1 filed objections to the same on 11th October, 1977.
Major Kshyap and Miss Shail accepted the award before the Deputy Registrar, Delhi High Court on 11th May, 1977.
This position is stated in the petition for special leave and this is not denied in the affidavit 158 filed on ' behalf of Mrs. Sudha Vasisht.
Mrs. Sudha Vasisht filed an objection on two grounds, namely, that the award being ' unregistered could not be made a rule of the court and the other Miss Shail being mentally retarded could not be ' a party to the arbitration proceedings.
The ' High Court rejected the contention about the invalidity of the Award on ' the ground of mental capacity of Miss Shail but held that the award could not be made rule of the court because it was an unregistered Award.
In view of the submission made on behalf of the respond ent that Miss Shail was of unsound mind and as this conten tion was advanced before us in support of the order of the High ' COurt, we may briefly deal with it.
We have gone through the evidence considered by the learned judge about the mental capacity of Miss Shail.
It is an unfortunatecase of border line intellectual retardation which ' was one part of the diagnosis in respect of her and on the other hand the arbitrator had noted that Major Kshyap had come into the witness box and he had also examined one ' Brig.
Dr. Sangat Singh Syalee who is a medical practitioner.
The testimony of Capt.
Kshyap showed that the arbitration agreement was executed in the office of the arbitrator and that the arbi tration proceedings used to be attended by himself, Miss Shail, Mrs. Sudha Vasisht and her husband, and the proceedings used to be signed by all the parties.
He had further stated that Miss Shail 's case was of border line mental retardation but she could perform her duties satis factorily, intelligently and socially and she knew what was good and what was bad for her.
She had been living all alone in house F 4, Green, Park from 1977 to 1980 and had been doing everything for herself.
It is true that story of this spinster living alone in Green Park house in Delhi belonging to her late father, does not make pleasant read ing, yet from the evidence which the learned judge has exhaustively examined, he found that the medical record obtained from the All India Institute of Medical sciences indicated that Miss Shail was suffering from schizophrenia and even in the year 1974 1981 she was suffering from mental retardation.
But the arbitrator noted that Miss Shail was never given any ECT treatment.
She was never hospitalised and Mrs. Vasisht did not at any point of time objected to the arbitration because of Miss Shail 's mental capacities.
The arbitrator expressed his opinion that the objection against the mental capacity of Miss Shail during the period from 9th June, 1976 to 12th February, 1977 could not be accepted.
We may note that before us all the parties were present.
We had asked counsel for Miss Shail to ascertain from her whether she 159 accepted the award with a free will? We did so not because we found any defect in the evidence or in the order of the learned judge of the High Court but being an appeal under ' article 136 of the Constitution even if there was no legal material in these aspects, the court was entitled to be Satisfied.
Though it is difficult to hazard an opinion on the mental Capacity of a lady by her looks, it appeared to Us that though she was not of a very cheerful disposition, it would perhaps be unfair to conclude that she was mental ly incapable.
We watched her manner during the time the proceedings were going on in the court and observed that she Was understanding what was happening in the court.
We have not any material to disagree with the views of the learned judge on this aspect.
Therefore, we cannot accept this submission urged on behalf of respondent No. 1, Mrs. Vasisht about the mental capacity of Miss Shail.
The High Court noted that apart from the question of registration and the question of mental Capacity, no other contentions Were raised.
Therefore the only other question is, was this award bad having not been registered under the law under section 17 of the ? Before we deal with that point, we might record that a submission was made that even if the award was not properly registered as required under section 17 of the , in view of the ' facts and cir cumstances of the case and further in view of the facts that the award was filed within a period of one month of making of the award and further in view of the 'fact that four months ' time was there to have the award registered by the arbitrator when the award came to the court from the date of making of the award the court should have exercised its powers under section 15(b) and under section 16(1).(c), of the Act.
We are unable to accept the submission urged on behalf of the appellant in this behalf.
Section 16 of the Act, we are of the opinion, does not apply to the facts of this case, There is no objection to the legality of the award apparantly, We are in agreement with the views ex pressed by the learned judge on this aspect.
The factum of registration of the award does not pertain to the decision of the arbitrator on its merits and is de bors the award and for this purpose the award can not be remitted to the arbi trator under section 16 of the Act.
The principles enunciat ed by this Court in Rikhabdass vs Ballabhdas and others, [1962] Suppl.
1 SCR 475 are applicable to the. facts of this case The purpose of remitting the award is to enable the arbitrator to reconsider the decision where the legality was connected with the decision as contained in the award.
It must not relate to a matter which has 160 no connection with the decision or decree.
See in this connection the observations of the Calcutta High Court in the case of Nani Bain Saha vs Ram Gopal Saha and another, AIR 32 1945 Calcutta 19.
The award is also not imperfect in terms of section 15(b) of the Act as rightly held by the High Court.
Therefore, in our opinion, there was no scope, in the facts and circumstances of the case, of exercising its powers by the High Court under section 15 of the Act and powers under section 15 1 of the Code of Civil Procedure could also not be exercised in this case.
The objection against the award was filed by Mrs. Sudha Vasisht on 11th October, 1977 after that more than eight months have expired and there was no prayer to the court to extend the time for registration.
The main contention, however, that requires considera tion is whether the award could not be made a rule of the court because it affects the partition of immovable property and affects rights in immovable property.
We are of the opinion that the High Court was not right in the view it took on this aspect of the matter.
The document in question did not effect the partition if read properly.
Section 17(1)(b) of the enjoins that any nontestamentary instrument which purports or operates to create, declare, assign, 'limit or extinguish, whether in present or in future, any fight, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property should be registered.
Therefore, the question is, does the document itself extin guish or purports to create or declare any right in immova ble property.
It certainly declares the share of the parties in the property but.
it enjoins that only upon payment of Rs.40,800 Mrs. Vasisht would vacate the house.
It further enjoins that "she will be entitled to live in the house in the portion occupied by her till the full payment of Rs.40,800 is made to her and she will not be liable to pay any rent for the occupation of the portion and on the said payment, she will not have any right and also no interest left in the said property".
So her right in the said proper ty and her interest in the property ceases on payment of the amount of Rs.40,800 and not otherwise not by the operation of document itself.
The document itself creates a right by itself to get Rs.40,800 and right to obtain the payment and on payment the obligation or relinquishment of her right or interest in the property.
It does nothing more.
A similar position arose before the Judicial Committee in the case of Rajangara Ayyar vs Rajangam Ayyar, AIR 1922 Privy Council 161 p. 266 where dealing with the document of similar nature the Judicial Committee observed that that document was not a document by itself creating, declaring, assigning, limiting or extinguishing any fight, title or interest in the immova ble property.
It merely creates a right to obtain another document which will, when executed, create a right in the person claiming the relief.
There was a memorandum of agree ment which specified the shares and provided for a further deed effectuating the partition.
It was held that it did not require to be registered.
In our opinion, the entitlement of the members namely Miss Shail as well as Mrs. Vasisht in the property and the cessor of interest in the properties on payment of the money in case of Mrs. Vasisht and other conditions in case of Miss Shail were indicated in the Award.
This position was again reiterated by the Judicial Committee in Upendra Nath Bose vs Lall and Others, AIR 1940, Privy Council p. 222.
There the document recited that the ownership of the second party in one half of the Raitar would not come till after the payment of a sum of Rupees sixty one thousand and four hundred as well as the amounts mentioned in the statement exhibit B together with interest specified in respect of both be fully paid up.
The question before the Judicial Committee was whether the last sentence of para 2 of the Award purported to confer upon "the second party" a right, title or interest which commenced with the Award and came to an end when the sum of Rs.61,400 with interest was paid or whether it intended merely to provide that the interest which arose from the exercise of the option should remain unaltered until Rs.61,400 and interest had been paid or whether they intended merely to provide that the status quo should remain unaltered (i.e. the con tractual interest which arose from the exercise of the option) would remain unaltered until Rs.61,400 and interest had been paid.
The Judicial Committee was of the view that the latter was the true view.
The sentence was not framed as one which purports to create or confer any interest.
This Court in the unreported judgment which is in the Supreme Court judgments 1962, in the case of Sheonarain Lal vs Ratneshwari Devi and another (Civil Appeal No. 296 of 1960) had also to deal with a similar situation.
There fifth clause of the Award was as follows: "Shri Sheo Narain Lal and his heirs should execute as early as possible a registered document in respect of the shop let out on rent to Beli Sao Sukhdeo Prasad, in favour of Shri Prabhu Chand for which Shri Prabhu Chand will have to pay nothing as consideration.
He will pay only costs of stamp etc.
" 162 This Court had to deal with this clause and to consider the question whether this clause purported or created or de clared or assigned, limited or extinguished any right.
This Court held that the award merely provided that some right could be created in future by means of a document to be executed.
Therefore, this Court was of the view that it did not require registration.
We are of the opinion that the same principle should be applicable here, Two decisions upon which reliance was placed by the High Court to which our attention was drawn by the learned coun sel, firstly, Satish Kurnar & Ors.
vs Surinder Kumar & Ors., [1969] 2 SCR p. 244 and the second one was Ratan Lal Sharma vs Purshottam Harit, [1974] 3 SCR p. 109 do not help the respondent.
1n the first case Hegde, J. observed that for the purpose of section 17(1)(b) of the , it was necessary to determine whether the Award purported to create rights in the immovable property.
If it did, it was necessary to have it registered.
As it was found by the court that it did, it needed compulsory registration.
But the facts of this case are entirely different.
Here the award did not create right to get the money, the award only declared that the rights to get the immovable property was dependent upon the payment of the amount.
A right to the property was not created by the award itself, a right to certain property was declared.
A right to get the property was declared on the payment of the money.
The award did not create any right to the property to extinguish any right to the property, which was not there.
It quantified in terms of money the value of that right and declared the method of working out those rights.
In the second case, the question was whether assignment of the share in the partnership required registration? The share of partner in the partnership which has also immovable property is movable property and assignment of that share did not require registration under section 17 of the Regis tration Act.
But the award in that case expressly made an exclusive allottment of the partnership assets including factory and liabilities over Rs., 100 to the appellant in that case.
It went further and made the appellant absolutely entitled to the same.
That is not the position in the in stant case.
In that view of the matter, though there is no dispute about the propositions, these two decisions would be applicable to the facts of the instant case, we are of the opinion on an analysis of award that it did not create any right in any immovable property and as such it was not compulsory to register it.
Though the ,above should be sufficient to dispose of the order as 163 it iS an appeal under Article 136 of the Constitution, we should see in the interest of justice to the interest of all the parties and we must protect as far as practicable the interests of all the parties.
A submission was made on behalf of Miss Shail that Rs.350 per month which has been fixed for the maintenance to be paid by Major Kshyap was inadequate.
It was further submitted that Rs.40,800 which was the share of the money to be allotted to either Mrs. Vasisht and also to Miss Shail for getting their relinqhish ment of their property in the event mentioned in the award is also not proper.
In view of the present position of inflation and rise in price of life and living, we are of the opinion that so far as Miss Shail is concerned, we would dismiss this appeal with the directions that she will be titled to a monthly maintenance of Rs.500 instead of Rs.350 and that this sum should form a charge on the share allotted to Major Kshyap.
Furthermore we direct that in the contingencies mentioned in clauses (1) and (2) of the Award, Mrs. Vasisht should be paid Rs.75.000 instead of Rs.40,800.
Similarly in the con tingency mentioned in clause (4) of the Award, Miss Shail should be paid Rs.75,000 instead of Rs.40,800.
The appeal is allowed and the award as modified with the aforesaid direc tion is made a rule of the court.
In the facts and circumstances of the case, the parties will pay and bear their own costs except that the cost on behalf of Miss Shail should be paid by Major Kshyap.
P.S.S. Appeal al lowed.
| The respondent while he was posted as a Squadron Leader at Delhi was on June 27, 1968 allotted by the Directorate of Estate a residential fiat in the Curzon Road Hostel on a monthly rent of Rs. 161, under sub r.(1) of SR 317 .B 11.
Although he was transferred from Delhi to Chandigarh on June 11, 1970, he did not give any intimation of his transfer to the Directorate of Estates and therefore the said allotment stood automatically cancelled under sub r.
(2) thereof after the concessional period of two months from the date of his transfer i.e. w.e.f. August 11, 1970.
The respondent contin ued in unauthorised occupation of the said fiat for a period of nearly five years and in the meanwhile he was being charged the normal rent for that period.
On February 28, 1975 the Estate Officer having come to know of the transfer of the respondent from Delhi, the Directorate addressed a letter dated March 18, 1975 cancelling the allotment w.e.f.
August 11, 1970.
On the next day i.e. the 19th, the Direc torate sent another letter asking the respondent to vacate the fiat, which he did on March 25, 1975.
The Estate Officer raised a demand for recovery of Rs.38,811.
17 p. under SR 3 17 B 22 and served the respondent with a notice under s.7(3) of the .
The 95 respondent disputed his liability to pay damages for the period of his unauthorised occupation.
Thereupon, the Estate Officer initiated proceedings under s.7 of the Act to recov er the amount of Rs.38,811. 17p.
Subsequentiy, the Central Government on a representation being made by the respondent reduced the amount to Rs.20,482.78p.
On compassionate grounds and deducted the same on October 30, 1976 from out of the commuted pension payable to him.
The respondent filed a petition under Art.226 of the Constitution before the High Court.
The writ petition was allowed by a learned Single Judge holding that although the allotment of the flat stood cancelled in terms of sub r.(3) of SR 317 B 11 w.e.f. August 11, 1970 i.e. after the conces sional period of two months from the date of his transfer, the government was estopped from claiming the amount of Rs.20,482.78p.
as damages equivalent to the market rent under SR 317 B 22 for the period from August 11, 1970 to March 25, 1975 on the ground that the government not only knowingly allowed the respondent to continue in occupation till March 25, 1975 but also charged him the normal rent of Rs. 161 p.m. presumably under its power of relaxation under SR 317 B 25.
Further, he held that the government having failed to serve the respondent with a notice that he would be liable to pay market rent for the period of his unautho rised occupation, the doctrine of promissory estoppel pre cluded the government from claiming damages equivalent to the market rent under SR 317 B 22 for the period in ques tion.
On appeal, a Division Bench upheld the decision of the learned Single Judge mainly on the terms of SR 317 B 23 which conferred the power of relaxation on the government.
Hence the appeal by Special Leave.
Allowing the appeal, in part, the Court, HELD: 1.1 The Government could not unilaterally deduct the amount of Rs.20,482.78p.
from the commuted pension payable to the respondent, contrary to s.11 of the Pension Act, 1871.
[106B C] 1.2 According to its plain terms, section 11 of the protects from attachment seizure or sequestration pension or money due or to become due on account of any such pension.
The words "money due or to become due on account of pension" by necessary implication mean money that has not yet been paid on account of pension or has not been received by the pensioner and therefore wide enough to include commuted pension.
[103A B] 96 Union of India vs Jyoti Chit Fund & Finance & Ors., ; , followed.
Crowe vs Price, 15; Municipal Council, Salem vs
B. Gururaja Rao, ILR ; C. Gopala chariar vs Deep Chand Sowcar, AIR 1941 Mad.
207; and Hasso mal Sangumal vs Diaromal Laloomal, AIR 1942 Sind 19, re ferred to.
2.1 The construction placed by the High Court on the two provisions contained in SR 317 B 22 and SR 3 17 B 25 is apparently erroneous.
It is plain upon the terms of SR 3 17 B 22 that the liability to pay damages equal to the market rent beyond the concessional period is an absolute liability and not a contingent one.
The Court was clearly in error in subjecting the liability of a government officer to pay market rent for period of unauthorised occupation to the fulfilment of the condition that the Director of Estate should serve him with a notice that in the event of his continuing in unauthorised occupation he would be liable to pay market rent.
[101A C] 2.2 Non recovery of the rent at the market rent as permissible under SR 317 B 22 due to inaction of the govern ment and allowing the allottee to continue in authorised occupation for a period of nearly five years, as in this case, does not lead to the presumption that the government had relaxed the condition in his favour under SR 317 B 25.
[101D] 2.3 For a valid exercise of power of relaxation, the condition pre requisite under SR 3 17 B 25 is that the government may relax all or any of the provisions of the Rules in the case of an officer or residence or class of officers or types of residences, for reasons to be recorded in writing.
There was no question of any presumption arising for the relaxation which had to be by a specific order by the government for reasons to be recorded in writing.
[101D E] 3.
There was no question of any promissory estoppel operating against the government in a matter of this kind.
Before an estoppel can arise, there must be first a repre sentation of an existing fact distinct from a mere promise made by one party to the other; secondly that the other party believing it must have been induced to act on the faith of it; and thirdly, that he must have so acted to his detriment.
In this case, there was no representation or conduct amounting to representation on the part of the government intended to induce the respondent to believe that he was permitted to occupy the fiat in question on payment of normal rent or that he was induced to change his position on the faith of it.
[101E;102A C] 97
|
Civil Appeal No. 1682 of 1984.
From the Judgment and order dated 23.12.1983 of the Punjab and Haryana High Court in Civil Revision No. 959 of 1979 V.M. Tarkunde, A.D. Sikri for the Appellant.
Hardev Singh and R.S. Sodhi for the Respondents.
The judgment of the Court was delivered by NATARAJAN, J.
What falls for consideration in this appeal by special leave by a tenant against the judgment of the High Court of Punjab and Haryana in a Civil Revision is whether the High Court had transgressed its revisional powers in interfering with the concurrent findings rendered by the Rent Controller and the Appellate Authority and ordering the eviction of the appellant herein from the leased premises and secondly whether the High Court had erred in holding that the leased premises had become unsafe and unfit for human habitation as envisaged in Section 13(3)(a)(iii) of the East Punjab Urban Rent Eviction Act, 1949 (hereinafter the Act).
205 The respondent 's petition for eviction was originally based on other grounds such as bona fide requirement of the premises for own use and change of user of the premises by the tenant.
As he failed before the Rent Controller, the respondent preferred an appeal and during the pendency of the appeal he obtained orders and amended the petition and raised an additional ground under Section 13(3)(a)(iii) for seeking the eviction of the appellant viz. the leased premises had become unsafe and unfit for human habitation.
The Appellate Authority called for a finding on the additional ground from the Rent Controller and the finding went against the respondent.
The Appellate Authority concurred with the Rent Controller on the said finding and dismissed the appeal.
Before the appellate Authority the respondent did not seriously press the original grounds on which eviction was sought for and laid stress only upon the ground under Section 13(3)(a)(iii) of the Act.
The respondent then preferred a Civil Revision wherein the High Court sustained his case and ordered the eviction of the appellant under Section 13(3)(a)(iii) and hence the present appeal by the appellant tenant.
Section 13(3)(a)(iii) was resorted to for seeking eviction of the tenant on the footing that one room in the rear side of the leased premises had fallen down.
We may state, even at this juncture that the High Court had wrongly assumed that besides the falling down of the roof, one of the walls had also crumbled.
This assumption was a mistaken one because the expert witnesses examined during the trial by the parties have spoken about the good condition of three walls alone of the room and not the fourth because they are the outer walls of the room while the fourth wall was a common wall for the room in question and the adjoining room and hence there was no need to certify its good condition.
It was therefore wrong for the High Court to have assumed that only three walls of the room were in good condition and not the fourth wall.
The High Court deemed it necessary to allow the Revision and set aside the order of the Rent Controller and the Appellate Authority because of its view that the falling down of the roof of one of the rooms afforded by itself a cause of action to the landlord to seek eviction of the tenant under Section 13(3)(a)(iii) and the said cause of action would subsist even if the tenant had repaired the roof under orders of the Rent Controller, under Section 12 of the Act.
It is necessary to mention here that during the pendency of the proceedings before the Rent Controller, the appellant obtained the permission of the Rent Controller under Section 12 to replace the roof fallen down and re 206 cover the cost from the respondent since the respondent had failed to do the work himself.
The High Court relied upon two decision Balbir Singh vs Hari Ram, AIR 1983 Punjab and Haryana 132 and Chander Mohini vs Jiva Singh, for holding that once a cause of action ensued under Section 13(3)(a)(iii), it would subsist inspite of any repairs effected by the tenant.
It also relied on another decision Sardarni Sampurna Kaur vs Sant Singh & Anr., for holding that even if the rest of the building was in good condition, the falling down of the roof of one room would constitute sufficient material to sustain a landlord 's claim under Section 13(3)(a)(iii) of the Act for seeking the tenant 's eviction.
A few facts may now be set out.
The leased portion comprises of four rooms in the ground floor where the appellant is running his office.
There is a room in the first floor in the possession of the respondent himself but we are not concerned with it.
It is common ground that the roof of one room in the rear side of the leased portion had fallen down and it had been replaced by the appellant after obtaining orders of the Rent Controller under Section 12.
The appellant 's contention is that the falling down of the roof in one of the four rooms would not by itself render the entire building unsafe and unfit for human habitation as envisaged under Section 13(3)(a)(iii) of the Act and, as such, the High Court had erred in ordering eviction under the said provision.
It was further urged that the Rent Controller and the Appellate Authority had concurrently found that the building was neither unsafe nor unfit for human habitation and as such the High Court was not justified in interfering with those findings especially when they were findings of fact.
In reply to the above said contentions, the learned counsel for the respondent argued that the falling down of the roof in a room was indicative of the damaged condition of the building and, therefore, the High Court was fully justified in ordering the eviction of the appellant under Section 13(3)(a)(iii) of the Act.
It was further urged that the replacement of the roof by the appellant would not extinguish the right which had accrued to the respondent under Section 13(3)(a)(iii) to seek recovery of possession of the leased premises and the High Court had rightly adverted to this aspect of the matter also while allowing the revision filed by the respondent.
On a careful consideration of the matter with reference to the contentions put forth by the learned counsel for the parties, we are clearly of opinion that the High Court was not justified in allowing the revision and directing the eviction of the appellant under Section 13(3)(a)(iii).
It is true that a roof of one of the rooms on the rear side 207 had fallen down and required replacement but there was no evidence whatever that the entire building or a substantial portion of it was in a damaged condition and consequently the building as a whole had become unfit and unsafe for human habitation.
Unless the evidence warranted an inference that the falling down of the roof in one room was fully indicative of the damaged and weak condition of the entire building and that the collapse of the roof was not a localised event, we fail to see how the High Court could have concluded that the entire building had become unsafe and unfit for human habitation.
In fact, the appellant had replaced the roof only at a cost of about Rs.200 and this would independently show that the damage that had occurred could not have been of a serious or disquieting nature.
The High Court has failed to notice two factors of relevance, viz., (1) that the respondent had given his consent to the Rent Controller granting permission under Section 12 of the Act to the appellant to replace the roof and (2) that inspite of the alleged cause of action having arisen due to the falling down of the,roof, the respondent did not immediately seek amendment of the petition so as to seek eviction of the appellant on the additional ground under Section 13(3)(a)(iii) but instead he chose to prosecute his petition only on the original grounds for eviction set forth therein and only after failing before the Rent Controller and preferring an appeal to the Appellate Authority, he deemed it necessary to amend the petition and ask for eviction of the appellant or the additional ground under Section 13(3)(a)(iii).
The above said conduct of the respondent would clearly reveal that he himself had not attached any significance to the falling down of the roof in one of the rooms and had not seriously considered that a sustainable cause of action had accrued to him under Section 13(3)(a)(iii) for seeking the eviction of the appellant.
The High Court has not only failed to appreciate these factors but has also proceeded on the erroneous assumption that the falling down of the roof in one room was by itself sufficient to warrant a finding that the entire building had become unfit and unsafe for human habitation and called for a declaration to that effect.
It is this basic error which has affected the reasoning of the High Court lead the High Court to apply the ratio laid down in certain cases where the facts and circumstances were entirely different.
What arose for consideration in Balbir Singh 's case (supra) was whether a tenant would stand deprived of his right under Section 12 to carry out repairs of the tenanted premises by reason of an application filed by a landlord under Section 13(3)(c) of the Haryana Urban Control on Rent and Eviction Act (Corresponding to Section 13(3)(a)(iii) of the East Punjab Urban Rent Restriction 'Act, 1949) and con 208 versely whether a landlord would stand deprived of his right to seek eviction of his tenant under Section 13(3)(c) by reason of an order passed under Section 12 empowering the tenant to carry out repairs to the tenanted premises.
It was in that context, the High Court held that the two sections operated in their respective spheres and they were not mutually destructive of each other and consequently, when a right accrued to a landlord under Section 13(3)(c) of the Haryana Act to seek eviction of a tenant, the right would not get extinguished on account of an order passed under Section 12 of the Act.
In other words, it was held that once a cause of action had arisen for a landlord to seek eviction under Section 13(3)(c) of the Haryana Act that the said cause of action would ensure to the benefit of the landlord in spite of the tenant effecting repairs to the building for his benefit in pursuance of permission obtained under Section 12 of the Act.
The decision does not lay down that each and every damage to a building, without reference to the seriousness of its nature or to the condition of the building as a whole would by itself entitle a landlord to invoke Section 13(3)(a)(iii) to seek eviction of the tenant.
In Chander Mohini 's case (supra) wherein Balbir Singh 's case (supra) was followed, it was held that if the tenants had pulled down the roof of one of the rooms under their tenancy and replaced the same, obviously for their own convenience and for pre empting the landlord from filing a petition for eviction under Section 13(3)(a)(iii), the landlord would undoubtedly, acquire a cause of action under Section 13(3)(a)(iii) as soon as the tenants had pulled down the roof of the room and his rights could not be defeated by the tenants by the replacement of the roof of their own volition.
The other decision in Sardarni Sampurna Kaur vs Sant Singh has also no relevance because it was found in that case that even though the portion under the ocupation of the tenant was in a sound condition, a substantial portion of the composite building had become unfit and unsafe for human habitation.
In that situation, the High Court held that what was relevant for consideration for passing an order of eviction under Section 13(3)(a)(iii) was the condition of the building viewed as a whole and not in parts or blocks.
In the instant case, the admitted position is that except for the roof in one of the rooms falling down, no other damage to the building was noticed and in such circumstances, there is no scope for holding that a substantial or major part of the building had become unfit and unsafe for human habitation and hence an order of eviction was called for.
It is therefore obvious that the ratio laid down in the earlier decisions were not at all attracted to the facts of the case and the High Court had wrongly applied them because of its erroneous assumptions.
209 Learned counsel for the respondent tried to contend that apart from the building having become unsafe and unfit for human habitation, the respondent had also sought eviction on the ground he was genuinely in need of additional accommodation but the Appellant Court had unjustly rejected the plea by saying that since the respondent was jointly living with his son, he can secure additional accommodation from out of the portion in his son 's occupation.
We do not find any merit in this contention because the requirement of the building on this ground was not canvassed before the High Court.
Even the Appellant Authority has observed that the only ground pressed for seeking eviction of the tenant was under Section 13(3)(a)(iii) and the other grounds were not pressed seriously and only incidentally a halfhearted argument was advanced regarding the requirement of the leased premises by way of additional accommodation.
In the result, the appeal is allowed and the judgment of the High Court is set aside.
The respondent 's application for eviction of the appellant will stand dismissed as ordered by the Rent Controller and the Appellate Authority.
The parties are, however, directed to pay and bear their respective costs.
N.V.K. Appeal allowed.
| The appellant was the widow of a tonga driver who died in police custody.
It is alleged that on the fateful night of 22/23.8.1986 two sub inspectors accompanied by two constables visited the house of one Sudesh Kumar, and started beating him.
On hearing his shrieks his maternal uncle Gopi Ram, the tonga driver tried to intervene whereupon the policemen are alleged to have beaten him also.
Both of them were arrested taken to the police station, stripped of their clothes and beaten with iron rods.
The tonga driver succumbed to his injuries at the police station.
Thereafter, a post mortem was conducted and the dead body was cremated without handing it over to the appellant.
The aforesaid incident caused consternation in the locality, and a mob surrounded the police station to lodge its protest against the death of the tonga driver in police custody.
Undaunted the police registered a case under Sections 147 149 and 353/332 I.P.C. against the brother of the deceased and others as they were members of the mob.
Sudesh Kumar filed a written complaint naming the two sub inspectors and the constables as responsible for the death of his maternal uncle which was registered under Section 302/342 I.P.C. No action was however taken against those officers.
After some time the case was converted to Section 304 I.P.C. for purpose of investigation.
701 The appellant approached the High Court by a writ petition under Article 226 for transferring the investigation of the case from the Crime Branch of the State Police to the Central Bureau of Investigation.
The Division Bench, however, dismissed the petition.
Disposing of the Appeal, this Court, ^ HELD: 1.
The police have not acted in a forthright manner in investigating the case registered on the complaint of Sudesh Kumar.
[704C D] 2.
The circumstances available on record prima facie show that effort has been made to protect and shield the guilty officers of the police who are alleged to have perpetrated the barbaric offence of murdering Gopi Ram by beating and torturing.
[704D] 3.
The appellant had been crying hoarse to get the investigation done by an independent authority but none responded to her complaint.
[704D E] 4.
The Additional Sessions Judge while considering the bail application of one of the Constables Jagmal Singh, considered the autopsy report and observed that the Doctor had postponed giving his opinion regarding the cause of death although the injuries were antimortem.
[704D E] 5.
The Sessions Judge referring to a number of circumstances observed that the investigating officer had converted the case from Section 302 IPC to 304 IPC on flimsy grounds within hours of the registration of the case even without waiting for the post mortem report and that it was a prima facie case of deliberate murder of an innocent illiterate poor citizen of Delhi in police custody and investigation was partisan.
[704E F] 6.
In the interest of justice it is necessary to get a fresh investigation made through an independent authority so that the truth may be known.
[704H] 7.
The trial court before whom the charge sheet has been submitted shall exercise its powers under Section 173(8) Cr.
P.C. to direct the Central Bureau of Investigation for proper and thorough investigation of the case.
On issue of such direction the C.B.I. will investigate the case in an independent and objective manner and submit additional charge sheet if any in accordance with law.
[705A B] 702
|
Civil Appeal Nos.
1122 and 1123 of 1970 Appeals by special leave from the Judgment and order dated the 13th February 1970 of the Allahabad High Court in S.A. Nos. 267 and 268 of 1962.
520 section C. Manchanda, section K. Bagga, (Mrs.) Sureshta Bagga and (Mrs) Yash Bagga; for the Appellant.
R. N. Sharma and C. P. Lal; for Respondent.
The Judgement of the Court was delivered by CHANDRACHUD, J.
These appeals by special leave arise out of the judgment rendered by the High Court of Allahabad on February 13, 1970 in Second Appeals 267 and 268 of 1962.
Mahant Vishwa Nath Bharthi, the sarbrahkar of the temple of Shankarji Maharaj, Khowja, gave lands belonging to the temple, ad measuring about 44 acres, on Theka to one Sukai.
The Thekanama was executed on June 5, 1942 to be effective from July 1, 1942.
The lease was to enure for a period of 10 years and was due to expire on June 30, 1952.
The Thekanama contained an express term that the Thekadar will not sub let the leasehold property and that on the expiry of the period of lease he shall hand over the possession of the property to the lessor.
In spite of this term against sub letting, on July 27, 1942 the Lessee executed a power of attorney in favour of his nephews Haqiqullah and Ghani, apparently authorising them to cultivate the lands on his be half.
On the expiry of the period of lease the Mahant instituted a suit for ejectment of the lessee which was decreed on November 25, 1 952.
The Mahant then filed an application for executing the decree but an objection was raised thereto by the respondents, Sanaullah and Fakhrul Hasan who are respectively the brother and cousin of Haqiqullah.
They filed two separate applications objecting to the execution of the decree on the ground that they had been cultivating the lands for several years and that they were entitled to continue in possession as Sirdars.
On June 2, 1954 the objection raised by the respondents was allowed by the executing court which passed an order that the possession of the lands which on March 13, 1953 was given to the decree holder in execution of the decree should be re delivered to the respondents.
Accordingly, the respondents were put back in possession in July, 1954.
The lessor then instituted two separate suits under order XXI, Rule 103 of the Civil Procedure Code, the suit filed against Fakhrul Hasan being No. 17 of 1954 and the one against Sanaullah being No. of 1954.
His case was that the lands were given on lease to Sukai on condition that he shall not sublet them, that a decree for possession was accordingly passed against Sukai on the expiry of the lease and that the respondents had got their names entered fraudulently in the revenue record as the cultivators of the lands.
Respondents took up various inconsistent pleas in answer to the suits.
They contended that they were in possession of the lands with the consent of the original lessor.
that they had become hereditary 521 tenants and that they must be deemed to have become Adhivasis of the lands.
The learned Munsiff who tried the suits framed six issues, issue No. 2 being whether the respondents were Sirdars of the lands as alleged in paragraphs 17 and 18 of their written statements.
This issue was referred to the revenue court for decision.
The lessor having died during the pendency of those suits, the appellant was substituted in his placed as the Mahant of the Math.
The revenue court found in favour of the respondents and accepting that finding the trial court dismissed the suits.
In appeal, the District Court took the view that there was no justification for referring the particular issue to the revenue court and that the trial court ought to have decided all the issues for itself.
The District Court accordingly remanded the suit with a direction that the Munsiff should decide the suit afresh uninfluenced by the finding given by the revenue court.
The trial court then assessed the evidence, held the respondents and dismissed both the suits by its judgment dated November 17, 1961 The District Court reversed the findings of the trial court in appeal and held that the appellant, being the Bhumidar of the lands, was entitled to recover possession thereof from the respondents.
The appeals were accordingly allowed by the District Court by its judgment dated April 18, 1962.
The respondents filed Second Appeals Nos. 267 and 268 of 1962 against the decrees passed by the District Court.
The High Court having allowed those appeals the Mahant of the Math has filed these appeals by special leave.
The decision of these appeals involves a very narrow question as regards the power of the High Court in second appeal.
Section 10 of the Code of Civil Procedure provides to the extent that the appeal can lie to the High Court from a decree passed ill appeal by any court subordinate to it if the decision is contrary to law or to some usage having the force of law.
The only question for decision before the High Court was whether the respondents were entitled to the protection of section 20(b)(ii) of the U.P. Zamindari Abolition and Land Reforms Act, 1 of 1951.
That section provides, in so far as material, that every person who was recorded as an occupant of any land in the Khasra or Khatauni of 1356 Fasli but who was not in possession in the year 1359 Fasli shall be called an 'Adhivasi ' of the land and shall be entitled to retain possession thereof.
The names of the respondents were entered as occupants in the revenue record of 1356 Fasli but after considering the entire evidence, the District Court rejected those entries on the ground that they were fraudulent.
Thus, the only question before the High Court was whether the entries on which the respondents relied were genuine or fraudulent.
That is a question of fact and the High Court had no jurisdiction to set aside in second appeal the finding recorded on that question by the district Court.
522 The High Court assumed erroneously that the District Court had not given any finding on the question of fraud and on that assumption, it accepted mechanically the entries in the revenue record showing that the respondents were in possession of the lands as occupants.
The learned District Judge, by his judgment dated April 18, 1962 had gone in great details into the question whether the particular entries showing that the respondents were occupants of the land were genuine or fraudulent.
Those entries are Exs.
A 5 to A 12.
As pointed out by the learned Judge, the original lessee Sukai had migrated to Bombay after handing over the charge of the lands to his nephews who got the names of the respondents entered in the revenue record "surreptitiously".
The learned Judge points out that Fakhrul Hasan, who alone was examined on behalf of the respondents, was just a lad of 10 at the time when he is alleged to have entered into adverse possession of the lands.
Neither Sukai, who was the original lessee, nor Haqiqullah and Ghani who were said to : be cultivating the lands under a power of attorney executed by Sukai, were examined by the respondents.
The other respondent Sanaullah was not living in the village at all and is said to have been doing business in second hand spares in Bombay.
Haqiqullah was summoned by the appellant for producing the power of attorney dated July 27, 1942 and taking advantage of that opportunity the respondents cross examined him.
Haqiqullah, being a close relation of the respondents was only too willing to oblige them by giving pre conceived answers in the so called cross examination.
But the learned trial Judge overlooked that Haqiqullah was only summoned to produce a document and by reason of section 139 of the Evidence Act he could not become a witness in the case and could not therefore have been cross examined on the merits of the case.
But, even her considering the evidence of Haqiqullah the learned District Judge recorded a finding that "The entries were all fictitious".
He then proceeded to examine the documentary evidence in the case and held: "After a careful consideration of the pros and cons of the whole case I am of opinion that the Thekedar Sukai had I cultivated the sir and Khudkashi of the temple land which was given to him on Theka through his brother and his cousin, namely Haqiqullah and Ghani and these two per sons in order to create permanent rights in the Theka property, had fraudulently got the names of their boys entered , in the revenue records right from the inception.
I am also of the opinion that these by of the house hold never cultivated the land and they acquired no right, title or interest in the Theka land".
We find it quite difficult to understand how the High Court could hold that the District Court had not recorded any "clear finding" that the entries in the revenue record for the year 1356 Fasli were fraudulent.
Evidently, the attention of the High Court was not drawn to at least half a dozen reasons given by the District Court for holding that the entries were "fictitious" and were made "surreptitiously" and "fraudulently".
523 We could have even appreciated if, under section 103 of the Code of Civil Procedure, the High Court were to determine the issue whether the entries were fraudulent, if it though, wrongly though, that the District Court had not recorded a clear finding on that issue.
But the High Court did not discuss the evidence at all and chose instead to place a blind and easy reliance on the entries which are utterly uninspiring.
B It is true that the entries in the revenue record ought, generally, to be accepted at their face value and courts should not embark upon an appellate inquiry in to their correctness.
But the presumption of correctness can apply only to genuine, not forged or fraudulent, entries.
The distinction may be fine but it is real.
The distinction is that one cannot challenge the correctness of what the entry is the revenue record states but the entry is open to the attack that it was Made fraudulently or surreptitiously.
Fraud and forgery rob a document of all its legal effect and cannot found a claim to possessory title.
In Amba Prasad vs Abdul Noor Khan and ors.(1), it was held by this Court that section 20 of the U.P. Act 1 of 1.951 does not require proof of actual possession and that its purpose is to eliminate inquiries into disputed possession by acceptance of the entries in the Khasra or Khatauni of 1356 Fasli.
While commenting on this decision, this Court observed in Sonawati and ors.
vs Sri Ram and Anr.(2) that "the Civil Court in adjudging a claim of a person to the rights of an adhivasi is not called upon to make an enquiry whether the claimant was actually in possession of the land or held the right as an occupant: cases of fraud apart, the entry in the record alone is relevant".
We have supplied the emphasis in order to show that the normal presumption of correctness attaching to entries in the revenue record, which by law constitute evidence of a legal title, is displaced by proof of fraud.
For these reasons we allow these appeals, set aside the judgment li.
Of the High Court and restore that of the District Court.
The suits filed by the appellant shall stand decreed.
Respondents shall pay to the appellant the costs of these appeals in one set.
P.H.PAppeals allowed.
(1) ; (2) [1968] 1 S.C.R. 617, 620.
| The petitioners, two Insurance Companies, carrying on business both in life insurance and general insurance, questioned the validity of notifications issued against them under section 52 A of the Insurance Act for appointment of Administrators to take over management of their affairs on the ground, inter alia, that section 52 A was exclusively restricted to life insurance business and the Government had no power to take oyer management of general insurance busi ness.
Held, that the Insurance Act of 1938 no doubt makes a distinction between life insurance business and general insurance business, but its main concern is to protect life insurance policy holders.
Although section 52 A of the Act has no application to an insurer who carries on business in general insurance alone, it undoubtedly applies to an insurer who combines both and gives the Central Government the power, on the report of the Controller, to appoint an Administrator to take over the management of the entire business of the insurer including general insurance business when such insurer is found to act in a manner prejudicial to the interests of the life policy holders.
That grounds not specifically taken in petitions under article 32 cannot be urged at the time of the hearing.
|
65 of 1958.
Petition under Article 32 of the Constitution of India for enforcement of fundamental rights.
AND CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 112 of 1958.
277 Appeal by special leave from the judgment and order dated February 28, 1958, of the Punjab High Court in Criminal Revision No. 145 of 1958.
N. C. Chatterjee and Nanak Chand, for the petitioner and the appellant.
H. N. Sanyal, Additional Solicitor General of India, H J. Umrigar, R. H. Dhebar and T. M. Sen, for the respondent in both the matters.
November 4.
The Judgment of Das, C. J., Bhagwati, Sinha and Wanchoo, JJ. was delivered by Sinha J., Subba Rao, J., delivered a separate judgment.
SINHA, J. Petition Nos.
65 of 1958, under article 32 of the Constitution, on behalf of one Thomas Dana, and Criminal Appeal No. 112 of 1958, by special leave to appeal granted to one Leo Roy Frey (appellant), raise substantially the same question of some constitutional importance, and have, therefore, been heard together, and will be covered by this judgment.
The main question for determination in these two cases, is whether there has been an infringement of the constitutional protection granted under article 20(2) of the Constitution.
For the sake of brevity and convenience, we shall refer to Thomas Dana as the first petitioner, and Leo Roy Frey, as the second petitioner, in the course of this Judgment.
The relevant facts are these : The first petitioner is a Cuban national.
He came to India on a special Cuban passport No. 11822, dated November 16, 1954, issued by the Government of the Republic of Cuba.
The second petitioner is a citizen of the United States of America, and holds a U.S.A. passport No. 45252, dated July 1, 1955.
In May, 1957, both the petitioners were in Paris.
There, the second petitioner purchased a motor car from an officer of the American Embassy.
He is said to have sold that car to the first petitioner on May 14, 1957, and the same month, it was registered in the first petitioner 's name.
The two petitioners sailed by the same steamer at the end of May. The car was also shipped by the same steamer.
They reached Karachi on June 11, 1957, and from there, flew to Bombay.
From June 11 to 19, 1957, they 278 stayed together in Hotel Ambassador in Bombay.
The car was delivered to the first petitioner in Bombay on June 13, and on June 19, both of them flew from Bombay to Delhi.
In Delhi also, they stayed together at Hotel Janpath.
The first petitioner received the car at Delhi by rail on June 22, and the same night, the two petitioners left by the said car for Amritsar, where they reached after mid night, and stayed in Mrs. Bhandari 's Lodge.
On the morning of June 23, they reached Attari Road Land Customs Station by the same car (No. CD On arrival at Attari, the petitioners presented themselves for completing customs formalities for crossing over to Pakistan.
The Customs officers at Attari Road Land Customs Station, handed over to them the Baggage Declaration forms, to declare the articles that they had in their possession, including any goods which were subject to the Export Trade Control and/or Foreign Exchange Restrictions, and/or were dutiable.
Both the petitioners completed the forms aforesaid, and handed those completed statements over to the Customs officers.
The first petitioner declared the under noted articles: Indian currency Rs. 40 Pakistan currency Rs. 50 U. section Dollars $. 30.00 Gold ring I (valued at Rs. 100) Personal effects Valued at $ 100.00 Car Valued at Rs. 15,000 On suspicion, the Customs officers searched his baggage which was being carried in the car aforesaid.
His person was also searched, and as a result of the search, the under noted articles which had not been declared by him, were recovered : Indian currency Rs. 900 Pakistan currency Rs. 250 U. section Dollars $ 1.00 Hong Kong Dollars $ 1100 Thailand currency 78 Pocket radio 1 Time piece 1 279 The second petitioner, in his statement, had declared the following articles: Indian currency Rs. 40 U. section Dollars $ 500.00 U. section Coins $ 1.23 Belgian coins BF 26.00 French coins BF 205.00 Italian coins L. 400.00 Wrist watch I Personal effects Rs. 1,00,000 On suspicion, the Customs staff searched the person of the second petitioner also.
They recovered from him one pistol of 22 bore with 48 live cartridges of the same bore.
As he could not produce a valid licence under the Indian law, the pistol and the cartridges were handed over to the police, for taking appropriate action under the Indian Arms Act.
The car was thoroughly searched, and as a result of the intensive search and minute examination on June 30, 1957, a secret chamber above the petrol tank, behind the hind seat of the car, was discovered.
The chamber was opened, and the following things which had not been declared by the petitioners, were recovered from inside the secret chamber: Indian currency Rs. 8,50,000 U. section Dollars $ 10,000.00 Empty tin containers 10(The containers bore (rectangular) marks to indicate that they were used for carrying gold bars) Mirror 1.
besides other insignificant things.
Under the Indian law, Indian currency over Rs. 50, Pakistan currency over Rs. 100 and any foreign currency, could not be exported out of India, without the permission of the Reserve Bank of India.
The export of a pocket radio also required a valid licence under the Imports and Exports (Control) Act, 1947.
The petitioners could not produce, on demand the requisite permission from the Reserve Bank of India. ' or the licence for the export of the pocket radio, or a permit for exporting 280 a time piece, as required by the .
The car also was handed over to the police for necessary action.
The offending articles, namely Indian currency Rs.8,50,900 Pakistan currency Rs.250 U. section Dollars $ 10,001.00 Hong Kong Dollar $.1.00
Thailand currency T.78.00 pocket radio, and the time piece, etc., were seized under section 178 of the .
Both the petitioners were taken into custody for infringement of the law.
On July 7, both the petitioners were called upon to show cause before the Collector of Central Excise and Land Customs, New Delhi, why a penalty should not be imposed upon them under section 167(8) of the , and why the seized articles aforesaid, should not be confiscated under section 167(8) and section 168 of the Act.
Both the petitioners objected to making any statements in answer to the show cause notice, on the ground that the matter was.
subjudice and any statement made by them, might prejudice them in their defence.
But at the same time, the second petitioner disclaimed any connection with the car in which the two petitioners were travelling, and which had been seized.
After some adjournments granted to the petitioners to avail themselves of the opportunity of showing cause, the Collector of Central Excise and Land Customs, New Delhi, passed orders on July 24, 1957.
He came to the conclusion that the petitioners had planned to smuggle Indian and foreign currency out of India, in contravention of the law.
They had been acting in concert with each other, and had, throughout the different stages of their journey from France to India, been acting together, and while leaving India for Pakistan, were travelling together by the same car, until they reached the Attari Road Land Customs Station, on their way to Pakistan.
He directed that the different kinds of currency which had been seized, as aforesaid, from the possession of the petitioners, be " absolutely confiscated " for contravention of section 8(2) of the Foreign Exchange Regulation Act, 1947, read with sections 23 A 281 and 23 B of the Act.
He also directed the confiscation of the car aforesaid, which could be redeemed on payment of a " redemption fine " of Rs. 50,000.
He also ordered the confiscation of the pocket radio and the time piece and other articles seized, as aforesaid, under section 167(8) of the , read with section 5 of the Imports and Exports (Control) Act, 1947, and section 7 of the .
He further imposed a personal penalty of Rs. 25,00,000 on each of the petitioners, under section 167(8) of the .
After making further inquiry, on August 12, 1957, the Assistant Collector of Customs and Central Excise, Amritsar, under authority from the Chief Customs Officer, Delhi, filed a complaint against the petitioners and a third person, named Moshe Baruk of Bombay, (since acquitted), under section 23, read with section 8, of the Foreign Exchange Regulation Act, 1947, and section 167 (81) of the .
The petition of complaint, after stating the facts stated above, charged the accused persons with offences of attempt ing to take out of India Indian and foreign currency, in contravention of the provisions of the Acts referred to above.
After recording considerable oral and documentary evidence, the learned Additional District Magistrate, Amritsar, by his judgment dated November 13, 1957, convicted the petitioners, and sentenced them each to two years ' rigorous imprisonment under section 23, read with section 23 B, of the Foreign Exchange Regulation Act, six month 's rigorous imprisonment under section 120 B(2) of the Indian Penal Code, the sentences to run con currently.
It is not necessary to set out the convictions and sentences in respect of the third accused Moshe, who was subsequently acquitted by the High Court of Punjab, in exercise of its revisional jurisdiction.
The learned Magistrate also, perhaps, out of abundant caution, directed that " The entire amount of currency and foreign exchange and the car in which the currency had been smuggled as well as the sleeveless shirt exhibit P. 39 and belt exhibit P. 40 shall be 36 282 confiscated to Government ".
This order of confiscation was passed by the criminal court, notwithstanding the fact, as already stated, that the Collector of Central Excise and Land Customs, New Delhi, had ordered the confiscation of the offending articles under section 167(8) of the and the other related Acts referred to above.
On appeal by the convicted persons, the learned Additional Sessions Judge, Amritsar, by his judgment and order dated.
December 13, 1957, dismissed the appeal after a very elaborate examination of the facts and circumstances brought out in the large volume of evidence adduced on behalf of the prosecution.
It is riot necessary, for the purposes of these cases, to set out in detail the findings arrived at by the appellate court, or the evidence on which those conclusions were based.
It is enough to state that both the courts of fact agreed in coming to the conclusion that the accused persons had entered into a conspiracy to smuggle contraband property out of this country.
The petitioners moved the High Court of Judicature for the State of Punjab, separately, against their convictions and sentences passed by the courts below, as aforesaid.
Both the revisional applications were dismissed summarily by the learned Chief Justice.
By his order dated February 28, 1958, the learned Chief Justice refused to certify that the case was a fit one for appeal to this Court.
The petitioners then moved this Court for, and obtained, special leave to appeal from the judgment and orders of the courts below, convicting and sentencing them, as stated above.
They also moved this Court for writs of habeas corpus.
The petition of the first petitioner for a writ of habeas carp= was admitted, and was numbered as petition No. 65 of 1958, and a rule issued.
The writ petition on behalf of the second petitioner was dismissed in limited.
All these orders were passed on April 28, 1958.
Subsequently, the first petitioner moved this Court for revocation of the special leave granted to him, and for an early hearing of his writ petition No. 65 of 1958, as the points for consideration were common to both the cases.
This 283 Court granted the prayers by its order dated May 13,1958.
Before dealing with the arguments advanced on behalf of the petitioners, in order to complete the narrative of events leading up to the filing of the cases in this Court, it is necessary to state that the petitioners had moved this Court separately under article 32 of the Constitution, against their prosecution in the Magistrate 's court, after the aforesaid orders of confiscation and penalty, passed by the Collector of Customs.
They prayed for a writ of certiorari and/or prohibition, and for quashing the proceedings.
There was also a prayer for a writ in the nature of habeas corpus.
On that occasion also, the protection afforded by article 20(2) of the Constitution, was pressed in aid of the petitioners ' writ applications.
This Court, after hearing the parties, dismissed those writ petitions, holding that the charge against the petitioners included an offence under s.120B of the Indian Penal Code, which certainly was not one of the heads of charge against them before the Collector of Customs.
This Court, therefore, without deciding the applicability of the provisions of article 20(2) of the Constitution, to the facts and circumstances of the present case, refused to quash the prosecution.
The question whether article 20(2) of the Constitution, barred the pro secution of the petitioners under the provisions of the and the Foreign Exchange Regulation Act, was apparently left open for future determination, if and when the occasion arose.
In view of the events that have happened since after the passing of the order of this Court, dated October 31, 1957, (reported in ; , it has now become necessary to determine that controversy.
It was vehemently argued on behalf of the petitioners that the prosecution of the petitioners under the provisions of the Acts aforesaid, and their convictions and imposition of sentences by the courts below, infringe the protection against double jeopardy enshrined in article 20(2) of the Constitution, which is in these terms 284 " No person shall be prosecuted and punished, for the same offence more than once.
" It is manifest that in order to bring the petitioners ' case within the prohibition of article 20(2), it must be shown that they had been " prosecuted " before the Collector of Customs, and " punished " by him for the " same offence " for which they have been convicted and punished as a result of the judgment and orders of the courts below, now impugned.
If any one of these three essential conditions, is not fulfilled, that is to say, if it is not shown that the petitioners had been it prosecuted " before the Collector of Customs, or that they had been " punished " by him in the proceedings before him, resulting in the confiscation of the properties aforesaid, and the imposition of a heavy penalty of Rs. 25,00,000, each, or that they had been convicted and " sentenced" for the " same offence ", the petitioners will have failed to bring their case within the prohibition of article 20(2).
It has been argued, in the first instance, on behalf of the petitioners that they had been " prosecuted " within the meaning of the article.
On the other hand, the learned Additional Solicitor General has countered that argument by the contention that the previous adjudication by the Collector of Customs, was by an administrative body which has to act judicially, as held by this Court in F. N. Roy vs Collector of Customs(1), and reiterated in Leo Roy Frey vs Superintendent, District Jail, Amritsar (2); but the Collector was not a criminal court which could in law, be said to have tried the petitioner for an offence under the Indian Penal Code, or under the penal provisions of the other Acts mentioned above.
It is, therefore, necessary first to consider whether the petitioners had really been prosecuted before the Collector of Customs, within the meaning of article 20(2).
To " prosecute ", in the special sense of law, means, according to Webster 's Dictionary, " (a) to seek to obtain, enforce, or the like, by legal process; as, to prosecute a right or a claim in a court of law.
(b) to pursue (a person) by legal proceedings for redress or (1) ; (2) ; 285 punishment; to proceed against judicially; espy., to accuse of some crime or breach of law, or to pursue for redress or punishment of a crime or violation of law, in due legal form before a legal tribunal; as, to prosecute a man for trespass, or for a riot." According to Wharton 's Law Lexicon, 14th edn., p. 810, " prosecution " means " a proceeding either by way of indictment or information,, in the criminal courts, in order to put an offender upon his trial.
In all criminal prosecutions the King is nominally the prosecutor.
" This very question was discussed by this Court in the case of Maqbool Hussain vs The State of Bombay (1), with of reference to the context in which the word " prosecution " occurred in article 20.
In the course of the judgment, the following observations, which apply with full force to the present case, were made: ". . 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 regulates the procedure.
" In that case, this Court discussed in detail the provisions of the , with particular reference to Chapter XVI, headed " Offences and Penalties ".
After examining those provisions, this Court came to the following conclusion: "We are of the opinion that the Sea Customs Authorities are not a judicial tribunal and the adjudgeing of confiscation, increased rate of duty or penalty under the provisions of the do not constitute a judgment or order of a court or judicial tribunal necessary for the purpose of supporting a plea of double jeopardy." The learned counsel for the petitioners, did not categorically attack the correctness of that decision, but suggested that that case could be distinguished on the ground that in the present case, unlike the case then before this Court, a heavy penalty of Rs. 25,00,000 on each of the petitioners, was imposed by the Collector of Central Excise and Land Customs, (1) ; , 738, 739, 743. 286 besides ordering confiscation of properties and currency worth over 81 lacs.
But that circumstance alone cannot be sufficient in law to distinguish the previous decision of this Court, which is otherwise directly in point.
Simply because the Revenue Authorities took a very serious view of the smuggling activities of the petitioners, and imposed very heavy penalties under item 8 of the Schedule to section 167 of the , would not convert the Revenue Authorities into a court of law, if the Act did not contemplate their functioning as such.
That the did not envisage the Chief Customs Officer or the other officers under him in the hierarchy of the Revenue Authorities under the Act, to function as a Court, is made absolutely clear by certain provisions of that Act.
The most important of those is the new section 187A, which was inserted by the Sea Customs (Amendment) Act, (21 of 1955).
That section is in these terms:" 187A. No Court shall take cognizance of any offence relating to Smuggling of goods punishable under item 81 of the Schedule to section 167, except upon complaint in writing, made by the Chief Customs officer or any other officer of Customs not lower in rank than an Assistant Collector of Customs authorized in this behalf by the Chief Customs officer.
" This section makes it clear that the Chief Customs Officer or any other officer lower in rank than him, in the Customs department, is not a " court ", and that the offence punishable under item 81 of the Schedule to section 167, cannot be taken cognizance of by any court, except upon a complaint in writing, made, as prescribed in that section.
This section, in our opinion, sets at rest the controversy, which has been raised in the past upon certain expressions, like " offences " and " penalties used in Chapter XVI.
These words have been used in that Chapter in their generic sense and not in their specific sense under the penal law.
When a proceeding by the Revenue Officers is meant, as is the case in most of the items in the Schedule to section 167, those officers have been empowered to deal with the offending articles by way of confiscation, or with the person 287 infringing those rules, by way of imposition of penalties in contradistinction to a sentence of imprisonment or fine or both.
When a criminal prosecution and punishment of the criminal, in the sense of the Penal law, is intended, the section makes a specific reference to a trial by a Magistrate, a conviction by such Magistrate, and on such conviction, to imprisonment or to fine or both.
In this connection, reference may be made to the penalties mentioned in the third column against items 72, 74, 75, 76, 76A, 76B, 77, 78 and 81, which illustrate the latter class of the penalty in column 3.
The penalties mentioned in the third column of most of the items of the Schedule to section 167 of the Act, do not make any reference to a conviction by a Magistrate and punishment by him in terms of imprisonment or of fine or of both.
For example, item 76C, which was inserted by the Sea Customs Amendment Act X of 1957, in the third column meant for penalties, has only this " such vessel shall be liable to confiscation and the master of such vessel shall be liable to a penalty not exceeding one thousand rupees".
Item 76A, on the other hand, specifically mentioning conviction, imprisonment and fine, was inserted by XXI of 1955.
Both the amending Acts, by which the aforesaid additional offences were created, and penalties prescribed, were enacted after the coming into force of the Constitution.
The Legislature was, therefore, aware of the distinction made throughout the Schedule to section 167, between a proceeding before Revenue authorities by way of enforcing the preventive and penal provisions of the Schedule and a criminal trial before a Magistrate, with a view to punishing offenders under the provisions of the same section.
It is, therefore, in the teeth of these provisions to contend that the imposition of a penalty by the Revenue officers in the hierarchy created by the Act, is the same thing as a punishment imposed by a criminal court by way of punishment for a criminal offence.
This distinction has been very clearly brought out in the recent judgment of this Court in the case of Sewpujanrai Indrasanrai Ltd. vs The Collector of 288 Customs(2).
In that case, though the question of double jeopardy under article 20(2) of the Constitution, had not been raised, this Court has pointed out the difference in the nature of proceedings against offending articles and offending persons.
A proceeding under the and the corresponding provisions of the Foreign Exchange Regulation Act, in respect of goods which have been the subject matter of the proceeding, has been held to be of the nature of a proceeding in rem whereas, a proceeding against a person concerned in smuggling goods within the purview of those Acts, is a proceeding in personam, resulting in the imposition of a punishment by way of imprisonment or fine on him, where the offender is known.
In the former case, the offender may not have been known, but still the offending goods seized may be confiscated as a result of the proceedings in rem.
That case was not concerned with the further question whether, besides the liability to the penalty as contemplated by section 23(1)(a), namely, a penalty not exceeding three times the value of the foreign exchange in respect of which the contravention had taken place, the person contravening the provisions of the Foreign Exchange Regulation Act, 1947, upon conviction by a court, is also punishable with imprisonment which section 23(1)(b) prescribes, namely, imprisonment for a term which may extend to 2 years, or with fine, or with both.
The decision of this Court (supra) is also an authority for the proposition that in imposing confiscation and penalty under the , the Collector acts judicially.
But that is not the same thing as holding that the Authority under section 167 of the Act, functions as a Judicial Tribunal or as a Court.
An Administra.
five Tribunal, like the Collector and other officers in the hierarchy, may have to act judicially in the sense of having to consider evidence and hear arguments in an informal way, but the Act does not contemplate that in so doing, it is functioning as a court.
As already pointed out, section 187A, which was inserted by the Amending Act of 1955 (21 of 1955), brings out, in bold relief, the legal position that the Chief Customs (I) ; 289 Officer or any other officer of Customs, does not function as a court or as a Judicial Tribunal.
All criminal offences are offences, but all offences in the sense of infringement of a law, are not criminal offences.
Likewise, the other expressions have been used in their generic sense and not as they are understood in the Indian Penal Code or other laws relating to criminal offences.
Section 167 speaks of offences mentioned in the first column in the Schedule, and the third column in that Schedule lays down the penalties in respect of each of the contravention of the rules or of the sections in the Act.
There are as many as 81 entries in the Schedule to section 167, besides those added later, but each one of those 81 and more entries, though an offence, being an act infringing certain provisions of the section is and rules under the Act, is not a criminal offence.
Out of the more than 81 entries in the Schedule to section 167, it is only about a dozen entries, which contemplate prosecution in the criminal sense, the remaining entries contemplate penalties other than punishments for a criminal offence.
The provisions of Chapter XVII of the Act, headed " Procedure relating to offences, Appeals, etc.", also make it clear that the hierarchy of the Customs Officers under the Act have not been empowered to try criminal offences.
They have been only given limited powers of search.
Similarly, they have been given limited powers to summon persons to give evidence or to produce documents.
It is true that the Customs Authorities have been empowered to start proceedings in respect of suspected infringements of the provisions of the Act, and to impose penalties upon persons concerned with those infringements, or to order confiscation of goods or property which are found to have been the subjectmatter of the infringements, but when a trial on a charge of a criminal offence is intended under any one of the entries of the Schedule aforesaid, it is only the Magistrate having jurisdiction, who is empowered to impose a sentence of imprisonment or fine or both.
it was also suggested in the course of the argument that the use of a particular phraseology in the Act, 37 290 should not stand in the way of looking at the substance of the matter.
It may be that the Act has drawn a distinction between confiscation of property and goods, and imposition of penalties on persons concerned with the infringement, on the one hand, and the imposition of a sentence of imprisonment or fine or both by a Magistrate, on the other hand; but, it is further contended, the Customs Authorities, who impose a penalty or who order confiscation of goods of very large value, are in substance imposing punishments within the meaning of the criminal law.
In this connection, our particular attention was drawn to para.
24 of the order dated July 24, 1957, passed by the Collector of Central Excise and Land Customs, New Delhi, which is in these terms: " 24.
Having regard to all the circumstances of the case, I find that both Sarvshri Thomas Dana and Leo Roy Frey are equally guilty of the offence.
They attempted to smuggle Indian and foreign currency out of India.
I hold both of them as the persons concerned in the offence committed under section 167(8) of the .
The foregoing facts prove beyond doubt that the offence was the result of the most deliberate and calculated conspiracy to smuggle this huge amount of currency out of the country.
The offenders, therefore, deserve deterrent punishment.
1, therefore, impose a personal penalty of Rs. 25,00,000 (Rupees twenty five lakhs only) each on Shri Thomas Dana and Shri Leo Roy Frey which should be paid within two months from the date of this order or such extended period as the adjudicating officer may allow.
" The expressions " equally guilty of the offence the offence was the result of the most deliberate and calculated conspiracy to smuggle ", and " deserve deterrent punishment ", have been greatly emphasized in aid of the argument that the Collector had really intended to punish the petitioners in respect of the " offence", and found them ',guilty".
It is true that these expressions are commonly used in judgments given in criminal trials, but the same argument can be used 291 against the petitioners by saying that mere nomenclature does not matter.
What really matters is whether there has been a " prosecution ".
It is true that the petitioners were dealt with by the Collector of Central Excise and Land Customs, for the" offence " of smuggling; were found " guilty ", and a deterrent " punishment " was imposed upon them, but as he had not been vested with the powers of a Magistrate or a criminal court, his proceedings against the petitioners were in the nature of Revenue proceedings, with a view to detecting the infringement of the provisions of the , and imposing penalties when it was found that they had been guilty of those infringements.
Those penalties, the Collector had been empowered to impose in order not only to prevent a recurrence of such infringements, but also to recoup the loss of revenue resulting from such infringe ments.
A person may be guilty of certain acts which expose him to a criminal prosecution for a criminal offence, to a penalty under the law intended to collect the maximum revenue under the Taxing law, and/or, at the same time, make him liable to damages in torts.
For example, an assessee under the Income tax law, may have submitted a false return with a view to defrauding the Revenue.
His fraud being detected, the Taxing Officer may realise from him an amount which may be some multiple of the amount of tax sought to be evaded.
But the fact that he has been subjected to such a penalty by the Taxing Authorities, may not avail him against a criminal prosecution for the offence of having submitted a return containing false statements to his knowledge.
Similarly, a person may use defamatory language against another person who may recover damages in tort against the maker of such a defamatory statement.
But the fact that a decree for damages has been passed against him by the civil court, would not stand in the way of his being prosecuted for defamation.
In such cases, the law does not allow him the plea of double jeopardy.
That this is the law in America also, is borne out by the following quotation from the " Constitution 292 of the United States of America " revised and annotated in 1952 by Edward section Corwin at p. 840: "A plea of former jeopardy must be upon a prosecution for the same identical offense.
The test of identity of offenses is whether the same evidence is required to sustain them; if not, the fact that both charges relate to one transaction does not make a single offense where two are defined by the statutes.
Where a person is convicted of a crime which includes several incidents, a second trial for one of those incidents puts him twice in jeopardy.
Congress may impose both criminal and civil sanctions with respect to the same act or omission, and may separate a conspiracy to commit a substantive offense from the commission of the offense and affix to each a different penalty.
A conviction for the conspiracy may be had though the subsequent offense was not completed.
Separate convictions under different counts charging a monopolization and a conspiracy to monopolize trade, in an indictment under the Sherman Antitrust Act, do not amount to double jeopardy. ".
A forfeiture proceeding for defrauding the Government of a tax on alcohol diverted to beverage uses is a proceeding in rem, rather than a punishment for a criminal offense, and may be prosecuted after a conviction of conspiracy to violate the statute imposing the tax.
" To the same effect is the following placitum tinder article 240 in Vol.
22 of 'Corpus Juris Secundum ', headed " Offenses and Proceedings in Which Former Jeopardy Is a Defense ": " The doctrine applies to criminal prosecution only and generally to misdemeanours as well as felonies.
A former conviction or acquittal does not ordinarily preclude subsequent in rem proceedings, civil actions to recover statutory penalties or exemplary damages, or proceedings to abate a nuisance.
" On behalf of the petitioners, their learned counsel placed reliance upon the two American decisions in Morgan vs Zevine (1) and United States of America vs (1) ; ; 293 Anthony La Franca (,).
The former decision is really against the contention of double jeopardy, raised in this case.
That case lays down that persons who steal postage stamps and postal funds from a post office of the United States, after having committed burglary, and thus, having effected their entry into the premises, committed two distinct offences which may be separately charged and punished under the United States ' Penal Code.
Two separate convictions and Sentences as for two distinct offences in those circumstances were not held to be within double jeopardy within the meaning of the United States ' Constitutional 5th Amendment.
The reason given for the decision against the contention of double jeopardy was that though the offences had been committed in the same transaction, they had been constituted separate and distinct offences by the United States ' Penal Code articles 190 and 192.
In the latter case, the plea of double jeopardy was given effect to because the special statutes, infringements of which formed the subjectmatter of the controversy, namely, for unlawfully selling intoxicating liquor, had made a specific provision that if any act is a violation of earlier laws in regard to the manufacture and taxation of and traffic in intoxicating liquor, and also of the National Prohibition Act, a conviction for such act or offence under one statute, shall be a bar to prosecution therefor under the other.
It is clear, therefore, that where there is a specific statutory provision creating a bar to a second prosecution, the court is bound to give effect to the plea of double jeopardy.
It is not necessary to refer to certain decisions of the English courts, relied upon by the learned counsel for the petitioners, because those cases had reference to the question whether certain orders passed by certain courts were or were not made in a criminal case or matter within the meaning of the statutes then under consideration before the court.
Those are observations made with reference to the terms of those statutes, and are of no assistance in the present controversy.
The learned counsel for the petitioners was not able to produce before us any (1) ; ; 294 authority in support of the proposition that once a person has been dealt with by the Revenue Authorities for an infringement of the law against smuggling, he cannot also be prosecuted in a criminal court for a criminal offence.
In view of these considerations, and particularly in view of the decision of this Court in the case of Maqbool Hussain vs The State of Bombay (1), there is no escape from the conclusion that the proceedings before the Sea Customs Authorities under section 167(8) were not " prosecution " within the meaning of article 20 (2) of the Constitution.
In that view of the matter, it is not necessary to pronounce upon the other points which were argued at the Bar, namely, whether there was a " punishment " and whether " the same offence " was involved in the proceedings before the Revenue Authorities and the criminal court.
Unless all the three essential conditions laid down in el.
(2) of article 20, are fulfilled, the protection does not become effective.
The prohibition against double jeopardy would not become operative if any one of those elements is wanting.
It remains to consider a short point raised particularly on behalf of the second petitioner (Leo Roy Frey).
It was argued that the letter exhibit P. DD/2, admittedly written by him to his father in German, had not been specifically put to him with a view to eliciting his explanation as to the circumstances and the sense in which it had been written.
The learned Magistrate in the trial court put the following question (No. 20) to him : " It is in evidence that exhibit P. FF/I is the translation of the letter exhibit P. DD/2.
What have you to say about it The answer given by the accused to this question was " The translation of exhibit P. FF/I is mostly correct except for few variations which could have been due to misinterpretation of handwriting ".
It is clear from the question and answer quoted above, that the learned Magistrate did afford an opportunity to this petitioner to explain the circumstances appearing in the (1) ; , 738, 739, 743 295 evidence against him with particular reference to the letter.
If the court had persisted in putting more questions with reference to that letter, perhaps, it may have been argued that the examination under section 342 of the Code of Criminal Procedure, was in the nature of a cross examination of the accused person, which is not permitted.
In our opinion, there is no substance in the contention that the petitioner had not been properly examined under section 342, Criminal Procedure Code, to explain the circumstances appearing in the evidence against him.
It follows from what has been said above, that there is no merit either in the appeal or in the petition.
They are, accordingly dismissed.
SUBBA RAO, J.
I have had the advantage of reading the judgment prepared by Sinha J., but I cannot persuade myself to agree with my learned brother.
The facts are fully stated in the judgment of my learned brother and therefore it would suffice if I restate briefly the facts strictly relevant to the question raised.
On June 11, 1957, the petitioner arrived at Bombay, later came to Delhi and from there he travelled to Amritsar by car in company with Mr. Leo Roy Frey.
On June 23, 1957, he reached Attari Road Land Customs Station and was arrested under section 173 of the (Act VIII of 1878) on suspicion of having committed an offence thereunder.
He was served with a notice by the Collector of Central Excise and Land Customs, New Delhi, on July 7, 1957, to show cause why penalty should not be imposed on him under section 167(8) of the (hereinafter called the Act) and section 7(2) of the , and why the goods should not be confiscated.
By order dated July 24, 1957, the petitioner was adjudged guilty under section 167(8) of the Act and currency of the value of over 9 lakhs, car worth Rs. 50,000, and other things were confiscated, and he was punished with personal penalty of Rs. 25,00,000.
The petitioner was again prosecuted on the same facts before the Additional District Magistrate, Amritsar, on charges under section 167(81) of the Act and sections 23 and 23B of the 296 Foreign Exchange Regulation Act. 'He was convicted on charges under section 23 read with section 23B of the Foreign Exchange Regulation Act, section 167(81) of the Act and section 120B of the Indian Penal Code and sentenced to imprisonments of 2 years, 6 months and 6 months respectively by 'the Additional District Magistrate, Amritsar.
The conviction and sentences were confirmed on appeal by the Additional Sessions Judge, and the revision filed in the High Court was dismissed.
The learned counsel for the petitioner contends that the Courts in punishing him violated the fundamental right conferred on him under article 20(2) of the Constitution as he hag been prosecuted and punished for the same offence by the Collector of Customs.
The learned Additional Solicitor General counters this argument by stating that the petitioner was not prosecuted earlier before a judicial tribunal and punished by such tribunal, and, in any view, the prosecution was not for the same offence with which he was charged before the Magistrate, and therefore this case does not fall within the Constitutional protection given under article 20(2).
Before addressing myself to the arguments advanced it would be convenient at this stage to steer clear of two decisions of this Court.
The first is Maqbool Hussain vs The State of Bombay (1).
There proceedings had been taken by the Sea Customs Authorities under section 167(8) of the Act and an order for confiscation of goods had been passed.
The person concerned was subsequently prosecuted before the Presidency Magistrate for an offence under section 23 of the Foreign Exchange Regulation Act in respect of the same act.
This Court held that the proceeding before the Sea Customs Authorities was not a prosecution and the order for confiscation was not a punishment inflicted by a Court or a judicial tribunal within the meaning of article 20(2) of the Constitution and the prosecution was not barred.
The important factor to be noticed in that case is that the Sea Customs Authorities did not proceed against the person concerned but only confiscated the goods found in his possession.
At page (1) ; 297 742 Bhagwati J. says " Confiscation is no doubt one of the penalties which the Customs Authorities can impose.
But that is more in the nature of proceedings in rem than proceedings in personal, the object being to confiscate the offending goods which have been dealt with contrary to the provisions of the law. .
Though the observations in the judgment cover a wider field.
I shall deal with them at a later stage the decision could be sustained on the simple ground that the previous proceedings were not against the person concerned and therefore he was not prosecuted and punished for the same offence for which he was subsequently proceeded against in the Criminal Court.
The second decision is Sewpujanrai Indrasanrai Ltd. vs The Collector of Customs (1).
There also the Customs Authorities confiscated the goods found in the possession of the appellant.
Under section 8(3) of the Foreign Exchange Act, a restriction imposed by notification made under that section is deemed to have been imposed under section 19 of the , and all the provisions of the shall have effect accordingly.
But the said deeming provision is subject to an important qualification contained in the words ' without prejudice to the provisions of section 23 of the former Act '.
It was argued that by reason of the provisions of section 8(3) of the Foreign Exchange Regulations Act, the appellant should have been proceeded against under section 23 of that Act and it was not open to the Customs Authorities to take action against the offender under section 167(8) of the .
This Court negatived that contention accepting the principle that confiscation of the goods under section 167(8) of the was an action in rem and not a proceeding in personal.
Das, J., who delivered the judgment of the Court made the following observations in repelling the said argument: 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 offence shall be liable to a penalty not exceeding (1) 298 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 rem 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.
" This decision also indicates that the confiscation of the goods is an action in rem and is not a proceeding in personam.
A combined effect of the aforesaid two decisions may be stated thus: Section 167(8) of the Act provides for the following two kinds of penalties when contraband goods are imported into or exported from India: (1) such goods shall be liable to confiscation; (2) any person concerned in any such offence shall be liable to a penalty.
If the authority concerned makes an.
order of confiscation it is only a proceeding in rem and the penalty is enforced against the goods.
On the other hand, if it imposes a penalty against the person concerned, it is a proceeding against the person and he is punished for committing the offence.
It follows that in the case of confiscation there is no prosecution against the person or imposition of a penalty on him.
If the premises be correct, the subsequent prosecution of the person con cerned cannot be affected by the principle of double jeopardy, as he was not prosecuted or punished in the earlier proceedings.
But the question that arises in this case is whether, when there was a proceeding in personam and a penalty was imposed upon the person concerned under section 167(8) of the Act, he could be prosecuted and punished in regard to the same act before another tribunal.
On the facts of this case it is manifest that the 299 petitioner was prosecuted before the Magistrate for the same act in respect of which a penalty of Rs. 25,00,000 had been imposed on him by the Collector of Customs under section 167(8) of the Act.
The question is whether the prosecution and punishment of the petitioner infringed his fundamental right under article 20(2) of the Constitution.
It reads: " No person shall be prosecuted and punished for the same offence more than once.
" The words of this Article are clear and unambiguous and their plain meaning is that there cannot be a second prosecution where the accused has been prosecuted and punished for the same offence previously.
The clause uses the three words of well known connotation: (1) Prosecution; (2) punishment; and (3) offence.
The word offence ' is defined in section 3(38) of the , to mean any act or omission made punishable by any law for the time being in force.
Under section 4 of the Code of Criminal Procedure, it means any act or omission made punishable by any law for the time being in force.
An offence is therefore an act committed against law or omitted where the law requires it.
Punishment is the penalty for the transgression of law.
The terms 'punishment ' and 'penalty ' are frequently used as synonyms of each other; and, indeed under cl.
(I)of article 20 of the Constitution the word penalty issued in the sense of punishment.
The punishments to which offenders are liable under the provisions of the Indian Penal Code are: (1) death; (2) imprisonment for life; (3) imprisonment, which is of two descriptions, viz., (1) rigorous, i.e., with hard labour; and (ii) simple; (4) for feature of property ; and (6) fine.
The word 'prosecuted ' is comprehensive enough to take in a prosecution before an authority other than a magisterial or a criminal Court.
Having regard to the historical background, a restricted meaning has been placed upon it by this Court in Maqbool Hussain vs The State of Bombay (1).
Bhagwati, J., in delivering the Judgment of the Court observed at page 742 thus: (I) ; 300 Even though the customs officers are invested with the power of adjudging confiscation, increased rates of duty or penalty, the highest penalty which can be inflicted is Rs. 1,000.
Confiscation is no doubt one of the penalties which the Customs Authorities can impose, but that is more in the nature of proceedings in rem than proceedings in personam, the object being to confiscate the offending goods which have been dealt with contrary to the provisions of the law and in respect of the confiscation also an option is given to the owner of the goods to pay in lieu of confiscation such fine as the officer thinks fit.
All this is for the enforcement of the levy of and safeguarding the recovery of the sea customs duties.
There is no procedure prescribed to be followed by the Customs Officer in the matter of such adjudication and the proceedings before the Customs Officers are not assimilated in any manner to the provisions of the Civil or the Criminal Procedure Code.
The Customs Officers are not required to act judicially on legal evidence tendered on oath and they are not authorised to administer oath to any witness.
The appeals, if any, lie before the Chief Customs Authority which is the Central Board of Revenue and the power of revision is given to the Central Government which certainly is not a judicial authority.
In the matter of the enforcement of the payment of penalty or increased rate of duty also the Customs Officer can only proceed against other goods of the party in the possession of the Customs Authorities.
But if such penalty or increased rate of duty cannot be realised therefrom the only thing which he can do is to notify the matter to the appropriate Magistrate who is the only person empowered to enforce payment as if such penalty or increased rate of duty had been a fine inflicted by himself.
The process of recovery can be issued only by the Magistrate and not by the Customs Authority.
All these provisions go to show that far from being authorities bound by any rules of evidence or procedure established by law and invested with power to enforce their own judgments or orders the Sea Customs Authorities are merely constituted administrative machinery for the purpose of 301 adjudging confiscation, increased rates of duty and Penalty prescribed in the Act.
" This Court therefore accepted the view that the earlier prosecution should have been before a Court of law or a judicial Tribunal, and that the Sea Customs Authorities when they entertained proceedings for the confiscation of gold did not act as a judicial Tribunal.
In my view the said decision unduly restricted the scope of the comprehensive terms in which the fundamental right is couched.
If res integral I would be inclined to hold that the prosecution before the Customs Authority for an offence created by the Act is prosecution within the meaning of Article 20, even though the Customs Authority is not a judicial Tribunal.
But I am bound by the decision of this Court in so far as it held that the earlier prosecution should have been held before a Court of law or a judicial Tribunal, and that the Customs Authority adjudging confiscation was not such a tribunal.
But the said observations must be confined to the adjudication of confiscation by the Customs Authority.
The outstanding question therefore is whether a Collector of Customs in adjudging on the question whether any person concerned in the importation or exportation of the prohibited goods committed an offence, and in imposing a penalty on him, acts as a judicial Tribunal.
There is a current of judicial opinion in support of the contention that under a particular Act an authority may act as a judicial Tribunal in discharge of certain duties and as an executive or administrative authority in discharge of other duties.
The question whether a particular authority in dis charging specified duties is a judicial tribunal or not falls to be decided on the facts of each case, having regard to the well settled characteristics of a judicial tribunal.
In 'Words and Phrases ', permanent edition, Vol. 23, Judicial Tribunal " has been defined thus: " It is a body who has the power and whose duty it is to ascertain and determine the rights and enforce the relative duties of contending parties.
" In I The Encyclopedia of Words and Phrases Legal Maxims ', 302 by Sanagan and Drynan, much to the same effect it is stated thus: " A 'judicial tribunal ' is one that dispenses justice, is concerned with legal rights and liabilities, which means rights and liabilities conferred or imposed by I law '.
These legal rights and liabilities are treated by a judicial tribunal as preexisting; such a tribunal professes merely to ascertain and give effect to them; it investigates the facts by hearing the 'evidence ' (as tested by long settled rules), and it investigates the law by consulting precedents.
A judicial tribunal looks for some law to guide it.
An administrative tribunal, within its province, is a law unto itself.
" In Cooper vs Wilson (1) the characteristics of a judicial decision are given as follows, at page 340: " A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites: (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) If the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence ; (3) If the dispute be.
tween them is a question of law, the submission of legal argument by the parties; and (4) A decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law.
" This passage has been approved by this Court in Maqbool Hussain 's Case (2).
In Venkataraman vs The Union of India (3) this Court considered the question whether article 20 protects an Officer against whom an enquiry was held under Public Servants Enquiries Act, 1850 (Act XXXVII of 1850) from being prosecuted again on the same facts before a Criminal (Court.
This Court held on a consideration of the provisions of that Act that the appellant was neither prosecuted nor punished (1) , 340, 341 (2) [1953] S C.R. 730.
(3) ; 303 for the same offence before a judicial tribunal.
But in coming to that conclusion the following criteria were applied to ascertain the character of the proceedings: (1) duty to investigate an offence and impose a punishment; (ii) prosecution must be in reference to the law which creates the offence and punishment must also be in accordance with what the law proscribes; (iii) there must be the trappings of a judicial tribunal and (iv) the decision must have both finality and authoritativeness, which are the essential tests of a judicial pronouncement.
Having regard to the aforesaid tests, I shall now proceed to consider the applicability of Article 20 to the present prosecution.
A fundamental right is transcendental in nature and it controls both the legislative and the executive acts.
Article 13 explicitly prohibits the State from making any law which takes away or abridges any fundamental right and declares the law to the extent of the contravention as void.
The law therefore must be carefully scrutinized to ascertain whether a fundamental right is infringed.
It is not the form but the substance that matters.
If the legislature in effect constitutes a judicial tribunal, but calls it ail authority, the tribunal does not become any the less a judicial tribunal.
Therefore the correct approach is first to ascertain with exactitude the content and scope of the fundamental right and then to scrutinize the provisions of the Act to decide whether in effect and substance, though not in form, the said right is violated or curtailed.
Otherwise the fundamental right will be lost or unduly restricted in our adherence to the form to the exclusion of the content.
The question therefore is whether the petitioner was in effect and in substance prosecuted and punished by a judicial tribunal for the same offence for which he is now prosecuted.
Section 167 of the Act opens with the following words: " 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." Chapter XVI of the Act deals with 'Offences and 304 Penalties '.
Section 167 provides for offences and penalties in a tabular form.
The first column gives the particulars of the offences; the second column gives the sections of the Act to which the offence has reference ; and the third column gives the penalties in respect of the relevant offences.
Apart from the fact that the statute itself, in clear terms, describes the acts detailed in the first column of section 167 as offences against particular laws, the acts described therein clearly fall within the definition of 'offences ' in the and the Indian Penal Code.
There cannot therefore be the slightest doubt in this case that the contravention of any of the provisions of the Act mentioned in section 167 is an offence.
The next question is whether the penalties prescribed for the various offences in the third column of section 167 are punishments within the meaning of article 20 of the Constitution.
A glance at the third column shows that the penalties mentioned therein include direction of payment of money, confiscation of goods and the receptacles wherein they are found, and imprisonment.
The penalties may be imposed by the Customs Officers or Magistrates as the case may be.
Where a person is convicted by a Magistrate and sentenced to imprisonment or payment of fine or where a penalty is imposed by a Customs Officer, in either case, the punishment is described as penalty in the third column of section 167.
Section 167 clearly indicates that penalty is punishment inflicted by law for its violation for doing or failing to do something that is the duty of the party to do.
Section 167 therefore defines a criminal act and fixes a penaltv or punishment for that act.
The two words penalty ' and 'punishment ' are interchangeable and they convey the same idea.
The more difficult question is whether a Customs Authority, when it functions under section 167 of the Act, is a judicial tribunal.
It is not, and cannot be, disputed that a magistrate, who convicts and punishes a person for the infringement of some of the provisions of section 167 of the Act, is a judicial tribunal.
Is it reasonable to assume that when another authority adjudges on similar offences under the same section, it is 305 functioning in a different capacity ? Section 182 defines the jurisdiction of the Customs Authority in respect of the offences mentioned in section 167 of the Act.
It says: " 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 or 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 : ".
Section 187 : " All offences against this Act, other than those cognizable under section 182 by officers of Customs, may be tried summarily by a Magistrate.
" It is therefore clear that some offences under section 167 are cognizable by the Customs Authorities and some offences by Magistrates.
Section 171A, inserted by the Sea Customs (Amendment) Act, 1955 (Act 21 of 1955), confers power on officers of Customs to summon any person to give evidence and produce documents; it reads: " 171A. (1) Any officer of Customs duly employed in the prevention of smuggling shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making in connection with the smuggling of any goods.
39 306 (2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.
(3) All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct;.
and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required: Provided that the exemption under section 132 of the Code of Civil Procedure, 1908, shall be applicable to any requisition for attendance under this section.
(4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code.
" Under this section, the Customs Authority, who makes an inquiry, is empowered in connection with that inquiry, to summon persons to give evidence and produce documents and the witnesses summoned are under a statutory duty to speak the truth.
The cir cumstance that under el.
(4) of the said section, an inquiry is deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, viz., for the purpose of punishment for giving false evidence and for contempt of Court, does not detract from the judicial characteristics conferred upon the authority by the other clauses of the section.
Clause (4) must have been enacted only by way of abundant caution to guard against the contention that the authority is not a Court ; and to bring in the inquiry made by the Customs Officer in regard to administrative matters other than those conferred upon him under section 167, within the fold of section 193 and section 228 of the Indian Penal Code.
Sections 188, 189, 190A and 191 provide a hierarchy of tribunals for deciding appeals and revisions.
The Chief Customs authority May, suo motu or otherwise exercise revisional powers in regard to the orders of the subordinate officers.
Power is also conferred on Government to 307 inter in matters in regard whereof no appeal is provided for.
It is true that no rules have been framed providing the manner in which the Customs collector should proceed with the inquiry in regard to offences committed under the Act of which he is authorized to take cognizance.
But the record discloses that a procedure analogous to that obtaining in criminal Courts is followed in regard to the said offences.
Charges are framed, evidence is taken, advocates are heard, decision is given on the question whether an offence is committed or not; and, if the offence is held to have been committed, the person concerned is con victed and a penalty is imposed.
When the statute empowers the officer to take cognizance of an offence, to adjudge upon the question whether the offence is committed or not and to impose a penalty for the offence, it is implied in the statute that the judicial procedure is to be followed.
The entire scheme of the Act as disclosed in the leaves no doubt in my mind that so far as offences mentioned in section 167 are concerned, the Customs Authority has to function as a Judicial Tribunal.
I have therefore no hesitation to hold that the Customs Officers in so far as they are adjudicating upon the offences mentioned under section 167 of the Act are functioning as judicial tribunals.
If the other view, viz., that an authority is not a judicial tribunal, be accepted, it will lead to an anomalous position, which could not have been contemplated by the legislature.
To illustrate, a Customs Collector may impose a penalty of Rs. 25,00,000 as in this case on his finding that a person has committed an offence under section 167 (8) of the Act, and the accused can be prosecuted again for the same offence before a Magistrate.
On the other hand, if the prosecution is first laid before a Magistrate for an offence under section 167(81) and he is convicted and sentenced to a fine of a few rupees, he cannot be prosecuted and punished again before a Magistrate.
Unless the provisions of the Constitution are clear, a construction which will lead to such an anomalous position should not be accepted, for, by accepting such a construction, the right itself is defeated.
308 It is then contended that the offence for which the petitioner was prosecuted by the Magistrate is different from that in regard whereof he was sentenced by the Customs Officer.
The petitioner was convicted under section 167(8) of the Act, whereas he was subsequently prosecuted and punished under section 167(81) of the Act.
Section 167(81) of the Act reads as follows : "If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harboring, keeping or concealing or in any manner dealing with any goods which have been unlawfully removed from a warehouse or which are chargeable with a duty which has not been paid or with respect to the importation or exportation of which any prohibition or restriction is for the time being in force as aforesaid ; or if any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any such prohibition or restriction as aforesaid or of any provision of this Act applicable to those goods, such person shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years, or to fine, or to both.
" It is contended that under section 167(81) knowledge or intention to defraud is an ingredient of the offence, whereas under section 167(8) they are not part of the offence, that offences under sections 167(8) and 167(81) are different, and that therefore the prosecution and punishment for an offence under the former sub section would not be a bar for prosecution and punishment under the latter sub section.
It is not necessary to consider the decisions cited in support of the contention that for the application of the principle of double ' jeopardy the offence for which a person is prosecuted and punished in a second proceeding should be the same in respect of which he has been prosecuted and 309 punished at an earlier stage.
That fact is self evident from article 20(2) of the Constitution itself.
If so, the only question is whether the petitioner was prosecuted before the Magistrate for the same offence in regard to which he was prosecuted before the Collector of customs.
It is true that the phraseology in section 167(8) is more comprehensive than that in sub section
(81) in that the offences under the former sub section take in acts committed without knowledge or intent to defraud.
But it does not exclude from its scope acts committed with knowledge or with intent to defraud.
For, a person who imports or exports prohibited goods with intent to defraud is also concerned in the offence of such importation or exportation.
The question of identity of offence is one to be determined on the facts and circumstances of a particular case.
One of the tests is whether an offence for which a person was earlier prosecuted takes in all the ingredients of the offence, the subject matter of the second prosecution.
The fact that he might have been prosecuted for a lesser offence is not a material circumstance.
The question therefore is not whether under section 167(8) a person can be found guilty of an offence even if there is no fraudulent intent or knowledge, but the question is whether the petitioner was prosecuted and punished on the same facts in regard to which he was subsequently prosecuted and punished before the Magistrate.
The record discloses that the petitioner was prosecuted before the Customs Authority as well as the Magistrate on the same facts, viz., that he, along with others, attempted to take out of India, Indian currency (as detailed in paragraphs 14 and 17 of the complaint of the Assistant Collector of Customs and Central Excise, Amritsar), in contravention of the law prohibiting such export.
It is not the case that the knowledge on the part of the petitioner of his illegal act is excluded from the first prosecution and included in the subsequent one.
In the circumstances, I cannot hold that the offence for which he was prosecuted by the Magistrate is different from that in regard to which he was prosecuted and punished by the Customs Authority.
In this view, the prosecution and punishment by the Magistrate 310 directly infringes the fundamental right under article 20 (2) of the Constitution.
No attempt has been made by the learned Solicitor General to contend that the offence under sections 23 and 23B of the Foreign Exchange Regulations Act for which the petitioner is convicted is an offence different from that for which he was prosecuted earlier under section 167(8) of the Act.
It is conceded that the decision in the writ petition covers the decision in the connected appeal also.
In the result, the writ petition and the appeal are allowed.
ORDER In view of the opinion of the majority, the Petition and the Appeal are dismissed.
| The respondent, the proprietor of an estate, derived income from the sale of trees growing in his forests and claimed that it was agricultural income as defined in section 2(1) of the Indian Income tax Act, 1922, and that it was exempt from payment of income tax under section 4(3)(viii).
The Appellate Tribunal found that the evidence to show that there was plantation by the estate authorities was meagre and unsubstantial, that the trees in question must have been of spontaneous growth and that the respondent had failed to establish facts on which he could claim exemption.
On reference, the High Court took the view that though trees in the forest had not been planted by the estate authorities, the latter had performed subsequent operations of a substantial character for the maintenance and improvement of the forest, and that the income was, therefore, agricultural income.
It also held that the onus was on the income tax authorities to prove that the income derived from the sale of trees was not agricultural income and that they had failed to show that the income fell outside the scope of the exemption mentioned in section 4(3)(viii) Of the Act.
Held, that the High Court erred in placing the burden on the income tax authorities to prove that the income sought to be taxed was not agricultural income.
The principle has been well established that where a person claims the benefit of an exemption under the provisions of the Act, he has to establish it.
177 Commissioner of Income tax vs Venkataswamy Naidu, [1956] 291.T.R. 529, followed.
The question whether the trees were of spontaneous growth or were products of plantation was essentially a question of fact and the finding of the Tribunal on this point was binding on the High Court in a reference under section 66(1) of the Act.
Held, further, that the income received by the respondent by the sale of trees in his forests was not agricultural income as the trees had not been planted by him, and that it was immaterial that he had maintained a large establishment for the purpose of preserving the forests and assisting in the growth of the trees.
The Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy; , , explained and followed.
|
Appeal No. 158 of 1953.
Appeal by special leave from the judgment and decree dated April 6, 1950, of the Calcutta High Court in appeal from original decree No. 166 of 1944 arising out of the decree dated June 30, 1943, of the Court of the Subordinate Judge, Asansol, in Title Suit No. 2 of 1942.
Ramanugrah Prasad and Mohan Beharilal, for the appellants.
H. J. Umrigar and section P. Varma, for respondents Nos. I and 2. 1957.
January 29.
The Judgment of the Court was delivered by section K. DAS J.
This is an appeal by special leave from the judgment and decree of the High Court of Calcutta, dated April 6, 1950, by which the said High Court affirmed the judgment and decree of the Subordinate Judge of Asansol dated June 30, 1943, in Title Suit No. 2 of 1942.
The suit was instituted by the four sons of one Ram Kishori Lal Sao, a resident of Asansol in Bengal, who died in September 1927.
The defendants were Sumitra Devi, widow of the late Ram Kishori Lal, (defendant No. 1) and Kamala Devi, daughter of the late Ram Kishori Lal (defendant No. 2).
The said defendants, I and 2, are the appellants before us.
The suit was instituted for a declaration that a deed of gift dated March 10, 1940, executed by Sumitra Devi in favour of her daughter Kamala Devi, was void and inoperative beyond the lifetime of Sumitra Devi and was not binding on the reversion.
The following genealogical table shows the relation inter se, between the parties: 455 Ram Kishori Lal 3rd wife 4th wife 5th wife Sumitra Devi (Deft. 1) Kalicharan(Plff.3) Rambandhu BachuLal Heman Lal died during pen: (plff. 4) (Plff.
1)(Plff. 2) dency of the suit Mst.
Ram Sakhi (Plff. 3 gha) Satyanarain HiralalGopal Lachmi Narain Kamala Devi (Plff.3 Ka) (Plff.3 Kha) (Plff 3 Ga) (died on I I 36) (Deft. 2) On his death, Ram Kishori Lal had left extensive properties worth several lakhs, including some houses in Asansol, two businesses at Howrah and Asansol, and large amounts of money deposited in Banks or invested in loans etc.
sons for partition of the properties left by her husband.
This suit was registered as Title Suit No. 664 of 1927 in the Court of the Subordinate Judge of Asansol.
A preliminary decree was passed in the suit on July 22, 1933, and a final decree on June 29, 1936.
This decree provided for payment of Rs. 10,000 as expenses for the marriage of the minor daughter Kamala, in addition to a maintenance allowance of Rs. 50 per month to her until she was married.
Lachmi Narain, it should be noted, died on January 1, 1936.
By the final decree ' each of the sons obtained one sixth share of the estate of Ram Kishori Lal.
By reason of the death of Lachmi Narain before the final decree, Sumitra Devi got one third share of the estate, one sixth in her capacity as widow and one sixth as the mother of her pre deceased son.
The allotment in favour of Sumitra Devi consisted mostly of house properties, and the four houses of her share with which we are concerned in this litigation were described in a schedule to the plaint and stood on Municipal Holding Nos. 116, 17, 26 and 27 of Circle 4 of the Asansol Municipality.
The value of these four houses was found by the Commissioner at the time of partition to be in the neighbourhood of Rs. 19,000 only.
59 456 The marriage of Kamala Devi was settled with one Bijoy Kumar Sao, son of Nand Lal Sao, a retired Deputy Postmaster, Patna General Post Office.
The case of the appellants was that the marriage was settled at Deoghar on Shivratri day in 1938 and the plaintiffs, respondents before us, had no concern with the negotiation ; it was alleged that the terms of the marriage settlement included a promise by Sumitra Devi of a gift of four houses at Asansol, worth about Rs. 20,000 as marriage dowry for Kamala.
The further case of the appellants was that at the time of the marriage itself, which was performed on May 10, 1938, Sumitra Devi made a "sankalpa" of the gift of four houses at Asansol, which was accepted by Nand Lal Sao on behalf of Kamala, and the gift was later confirmed on the occasion of the Dwiragaman (Gowna) ceremony which took place in December, 1938, and possession of the houses was also given to her; soon after the marriage, however, Sumitra Devi feel ill and the deed of gift was actually executed and registered on March 10, 1940, some two years after the marriage.
This was the deed of gift which was impugned by the plaintiffs respondents.
The case of the plaintiffs respondents was that the marriage negotiations took place at Asansol and did not contain any promise of the gift of four houses as marriage dowry.
The plaintiffs respondents alleged that the arrangements were that ornaments worth about Rs. 5,000 were to be given to Kamala Devi, a sum of Rs. 800 was to be paid as travelling expenses of the bridegroom 's party, and gifts of some moveable properties were to be made out of the balance of the sum of Rs. 10,000 which was set apart for the marriage expenses of Kamala Devi.
The plaintiffs respondents denied that there was any ante nuptial promise of a gift of four houses as marriage dowry or that there was any "sankalpa" at the time of marriage or any confirmation of the gift at the Dwiragaman ceremony.
They alleged that Sumitra Devi, under the evil advice of her father and son in law and to deprive the plaintiffs respondents of their right, made a gift of the four houses at Asansol in favour of Kamala Devi 457 on the 10th March, 1940, a gift which she was not competent under the law to make.
It was alleged that the gift was collusive, fraudulent and without consideration; and in any event, it could not be operative beyond the lifetime of Sumitra Devi and was not binding on the reversion, as she had only a life interest in the corpus of the property and there was no justifying legal necessity for the alienation made by her.
It wag also alleged that Sumitra Devi was not legally competent to make a gift, as marriage dowry of her daughter, of such a big and unreasonable portion of the estate left by her husband.
On the aforesaid pleadings of the parties, the principal issues were Issues Nos. 2 and 3 which were in these terms: "2.Is the defendant No. I competent to make any gift of the properties mentioned in the plaint beyond her lifetime to defendant No. 2 ? Is it void and inoperative against the plaintiffs beyond the lifetime of defendant No. I ?
3. Is the deed of gift executed by defendant No. I in favour of defendant No. 2 with the alleged collusive and fraudulent allegations binding on the plaintiffs on her death ?" It is necessary now to summarise the findings of the Courts below on these issues.
On the questions of fact involved in the two issues, the learned Subordinate Judge came to the following findings : (1) the marriage of Kamala Devi was settled at Deoghar as claimed by Mst.
Sumitra Devi and not At Asansol; (2) there was, however, no promise of any gift by her of four houses at Asansol either at the time of the settlement of the marriage terms at Deoghar or during the marriage ceremony; (3) the story of the delivery of possession of the houses to Kamala Devi was not supported by reliable evidence.
Basing his decision on the aforesaid findings of fact, the learned Subordinate Judge ' held that the interest created in favour of Sumitra Devi in respect of the properties allotted to her on partition was in the nature of an ordinary maintenance grant and she had no right to alienate the same in favour of her daughter.
Even if she had the limited right of 458 disposal, as in the case of a Hindu widow, she was not competent to execute any deed of gift, except with regard to a reasonable portion of the estate of her husband at the time of the marriage of Kamala Devi or on the occasion of the Gowna ceremony.
Though the learned Subordinate Judge found that the properties given to Kamala Devi constituted a reasonable portion of the estate, he held that the gift not having been made at the time of the marriage or on the occasion of the Gowna ceremony in accordance with the provi sions of section 123, Transfer of Property Act, was not binding on the plaintiffs respondents and could not operate beyond the lifetime of Sumitra Devi.
He accordingly decreed the suit.
The learned Judges of the High Court formulated five questions of fact, four of which are important for our purpose, and on a fresh consideration of the evidence on the record, came to the following findings thereon: (1) a final settlement of the terms of marriage was made at Deoghar and the terms which were settled between the parties were: (a) that Sumitra Devi would arrange for the gift of ornaments worth about Rs. 5,000, (b) a sum of Rs. 800 would be paid for meeting the expenses of travelling of the bridegroom 's party from Patna to Asansol, (e) a sum of Rs. 51 would be paid for the Tilak ceremony and (d) a gift of four houses at Asansol, worth about Rs. 20,000, would be made in favour of Kamala Devi, though the evidence led on behalf of the appellants did not make it absolutely clear or specific that the promise related to the four particular houses which were the subjectmatter of the subsequent gift; (2) the plaintiffs respondents had nothing to do either with the settlement of the terms of marriage or with any control or management of the marriage ceremony; (3) there was no reliable evidence that Sumitra Devi had made a " sankalpa " of the gift of the houses when the bride was given in marriage and the question of confirming such a gift at the Gowna ceremony did not therefore arise; (4) it was not proved by reliable evidence that the possession of the houses in question, was made over to Kamala Devi before the actual execution of 459 the deed of gift.
Relying on the decision in Debi Mangal Prasad Singh vs Mahadeo Prasad Singh (1), the learned Judges of the High Court pointed out that even in cases governed by the Mitakshara (the parties in this case are admittedly governed by the Benares school of Mitakshara law) the share allotted to Sumitra Devi on partition was not her stridhan but stood on the same footing as property inherited by her from her husband and that on her death the property would pass not to her stridhan heirs but to the sons or grandsons.
The learned Judges then referred to the decision in Churaman Sahu vs Go pi Sahu(2) and observed that though it was competent for a Hindu widow, governed by the Mitakshara, to make a valid gift of a reasonable portion of the immoveable property of her husband to her daughter subsequent to the marriage ceremony, the gift in Churaman Sahu 's case was made at the time of the Dwiragaman (Gowna) ceremony which was really a part of the marriage ceremony, while the gift in the present case was made some two years after the marriage.
They then said: "In the case now before us the marriage and the Gowna ceremony took place in 1938 and the document was executed in March 1940, the lapse of time between the two is too great to describe the gift to have been made on the occasion of either the marriage or the Gowna ceremony.
The ante nuptial promise cannot be regarded as a gift having been made on the occasion of the marriage.
In view of the strict provisions of the Transfer of Property Act we can only consider the gift to have been made at the time when the deed was executed and registered.
" On the question whether the gift in favour of Kamala Devi by Sumitra Devi (I) (1912) L.R. 39 I.A. 121.(2) Cal.1. 460 was of a reasonable portion of her husband 's properties, the learned Judges observed: " In the present case, the value of the houses gifted was just above Rs. 18,000 which was about a fourth of the value of each share allotted (viz., above Rs. 73,000).
Even if the provision of Rs. 10,000 made in the partition decree for meeting the marriage expenses be taken into account, we cannot say that the value of the gifted houses was disproportionate or unreasonable.
" In the result, the High Court affirmed the decision of the learned Subordinate Judge and dismissed the appeal preferred by the defendants who are the appellants here.
It is necessary to state now the contentions which have been urged before us on behalf of the appellants, and they may be put in two main categories (a) contentions with regard to the findings of fact, and (b) contentions of law.
Learned counsel for the appellants has impeached the concurrent finding of the Courts below that there was no " sankalpa " or promise of a gift of the four houses in question at the time of the marriage ceremony which, it was alleged, was followed by a confirmation of the gift at the Gowna ceremony.
The finding has been impeached on the ground of a serious error of record said to have been committed by the High Court and on the ground of non consideration of relevant evidence.
It has been argued before us that the proper finding should have been that Sumitra Devi made a "sankalpa " of the gift of the four houses in question after the Sampradan ceremony on the occasion of the marriage of Kamala Devi and that the gift was accepted by Nand Lal on behalf of his minor daughter in law and that such a gift was again confirmed at the Gowna ceremony.
The main contentions of law are three in number: firstly, it has been contended that even accepting the findings of the final Court of fact as correct, the gift being of a reasonable portion of the estate of Ram Kishori Lal Sao and in pursuance and fulfilment of an ante nuptial agreement made by Sumitra Devi at the time of the final settlement of the marriage negotiations at Deoghar, was for the spiritual 461 benefit of Ram Kishori Lal and valid in Hindu law; any such lapse of time as occurred in the execution and registration of the deed of gift was immaterial, if the deed of gift was in fulfilment of the moral obligation flowing from the ante nuptial agreement; secondly, it was suggested that Sumitra Devi got an absolute right in the properties given to her as her share on partition; thirdly, a reference was made to section 14 of the and it has been argued that in view of the said provisions the plaintiffs respondents were not entitled to the reliefs which they claimed.
It may be stated here that arguments in the case had concluded before the Court closed for the annual vacation in 1956 and during the vacation the , came into force on June 17, 1956.
On an application filed by the appellants, fresh arguments were heard with regard to the provisions of section 14 of the .
We proceed now to deal with the contentions in the order in which we have stated them.
First, we take up the contentions with regard to the findings of fact referred to above.
It has been pointed out to us that the learned Judges of the High Court made a serious error of record in dealing with the oral evidence as to the verbal gift said to have been made at the time of the marriage of Kamala Devi and the acceptance of ,such a gift by Nand Lal, father in law of Kamala Devi.
In dealing with the oral evidence on this question, the learned Judges have said: "If we leave out of account for the present the evidence of Sumitra Devi and Bijoy as also of Kamal, who has been contradicted on a very material point by the other witnesses and also Nand Lal, father of Bijoy, we are left with Parasuram and Rash Behary.
Parasuram, a tenant, happens to be present at the psychological moment only for a few minutes when the Sankalpa is being made.
" The High Court clearly made a mistake in dealing with the evidence of Parasuram Sharma and confused Parasuram Sharma (witness No. 16) with Pashupati Sarkar (witness No. 10).
Pashupathi Sarkar was a tenant of Sumitra Devi and it was his evidence that he went to 462 the place of marriage at about 12 midnight or 1 a.m. and stayed there for two minutes only and then came away.
Parasuram Sharma (witness No. 16) was not a tenant of Sumitra Devi.
He was the Head Master of the Indian H.E. School at Patna, a school where Bijoy, husband of Kamala, was a pupil for two years.
This Head Master said that he attended the marriage as a member of the bridegroom 's party and was present when from behind the purdah Sumitra Devi made a "sankalpa" of the gift of four houses; this was con veyed by Ganapati Sastri who recited "mantras" and was accepted by Nand Lal.
It is unfortunate that the High Court confused Parasuram Sharma (witness No. 16) with Pashupati Sarkar (witness No. 10), with the result that Parasuram Sharma 's evidence was not properly considered by the High Court.
This defect in the consideration of the evidence by the High Court is undoubtedly there.
The point for consideration is if this is a Sufficient ground for departure from the ordinary rule of this Court not to go behind the findings of fact arrived at by the Courts below.
Though the mistake made is unfortunate, we do not think that it is sufficient to disturb the finding of the Courts below or even to re open the finding at this stage.
It is worthy of note that the learned Subordinate Judge made no mistake about Pashupati and Parasuram.
He pointed out that the witnesses examined on behalf of the appellants with regard to the verbal gift at the time of the marriage and its acceptance by Nand Lal, were mostly interested witnesses and none of them were really independent.
Even Parasuram Sharma, whose evidence has been placed before us by learned counsel for the appellants, cannot be said to be completely independent.
He was invited to attend the marriage as a member of the bridegroom 's party and he said that he Overheard Sumitra Devi saying that she was making a "sankalpa" of the gift of four houses as promised evidence which is not of a very satisfactory nature.
There were many other criticisms of the evidence regarding the verbal gift at the time of the marriage; the learned Judges of the High Court have referred to these criticisms and they accepted some of them, One 463 of the criticisms which greatly weighed with the learned Subordinate Judge was the absence of any reference to the gift of four houses in contemporaneous Court proceedings with regard to the withdrawal of Rs. 10,000 by Sumitra Devi, the sum which was set apart by the partition decree for the marriage expenses of Kamala Devi.
This criticism was not, however, fully accepted by the learned Judges of the High Court who placed greater reliance on the evidence of Rai Saheb Jogendra Nath Roy (witness No. 14) who was the most respectable and reliable witness examined on behalf of the appellants.
The evidence of this witness supported the evidence of Sumitra Devi with regard to the promise made regarding the gift of four Asansol houses at the time of the settlement of marriage negotiations at Deoghar.
There can be no doubt that Rai Saheb Jogendra Nath Roy was a very respectable witness and had no reasons to tell lies.
Though he supported that part of the evidence of Sumitra Devi which related to the promise of a gift of four houses at Asansol at the time of the marriage negotiations at Deoghar, he made no statement about a verbal gift having been made at the time of the marriage itself.
The witness said that he went to Sumitra Devi 's house on the evening of the marriage and stayed for fifteen to twenty five minutes only.
He further said that he was not present at the time of the marriage ceremony.
It may, therefore, be that Rai Saheb Jogendra Nath Roy was not present at the time when the verbal gift was alleged to have been made.
By far and large, the learned Judges of the High Court did examine with care the oral evidence with regard to the alleged verbal gift at the time of the marriage and but for the unfortunate confusion between Parasuram Sharma and Pashupati Sarkar, we do not think that the considerstion of the oral evidence by the High Court is open to any other serious criticism.
The learned Judges rightly pointed out a serious discrepancy which existed between the evidence of Kamal Narayan Pandey (witness No. 8), who is said to have acted as the priest for the marriage, and the evidence of other witnesses with regard to the "lagan" or time 6o 60 464 of marriage.
Taking all these circumstances into con sideration, we do not think that we shall be justified in going behind the finding of the Courts below that )la the appellants had failed to prove by satisfactory evidence that Mst.Sumitra Devi made a verbal gift of the four houses in question at the time of the marriage of her daughter Kamala Devi and that such a gift was accepted by Nand Lal on behalf of his minor daughterin law.
In view of this finding, the question as to whether the gift was again confirmed at the time of the Gowna ceremony does not really arise.
There can be no confirmation of an act which did not itself take place.
As the appellants have impeached the finding of the Courts below with regard to the verbal gift said to have been made at the time of the marriage, the respondents have also impeached before us the finding of the High Court about an ante nuptial agreement said to have been made at Deoghar.
It has been contended by learned counsel for the respondents that there were no compelling reasons for the High Court, which was the appellate Court, to differ from the appreciation of the oral evidence by the learned Subordinate Judge, who had the advantage of seeing the witnesses, with regard to the question of the ante nuptial agreement said to have been made at Deoghar.
It is true that the learned Subordinate Judge did not accept the evidence of the witnesses who testified to the terms of settlement of the marriage negotiations at Deoghar.
What tipped the scale in favour of the finding arrived at by the High Court on this point was the evidence of Rai Sahib Jogendra Nath Roy (witness No. 14).
The learned Subordinate Judge gave certain reasons for not accepting the evidence of this witness.
The learned Judges of the High Court considered those reasons very carefully and rightly pointed out that there were no good grounds for thinking that Rai Saheb Jogendra Nath Roy had fallen a victim to lapse of memory or for holding that he was an interested witness.
The evidence of Rai Sabeb Jogendra Nath Roy was considered in the context of contemporaneous Court proceedings for the withdrawal of Rs. 10,000 and the learned Judges 465 of the High Court accepted the explanation which Rai Saheb Jogendra Nath Roy gave for not mentioning the promise of a gift of four houses in Asansol in the application which Sumitra Devi made for the withdrawal of the said sum of Rs. 10,000.
In our opinion, the finding of the High Court as to an ante nuptial agreement for the gift of four houses at Asansol, worth about Rs. 20,000, is not vitiated by any error of fact or law.
That finding must, therefore, be accepted as a correct finding, even though the learned Subordinate Judge came to a contrary conclusion with regard to it.
Having disposed of the contentions of fact urged before us, we proceed now to a consideration of the contentions of law.
It may be convenient to dispose of, first, the argument somewhat faintly advanced on behalf of the appellants that even prior to the enactment of the , Sumitra Devi had an absolute right of disposal in the share allotted to her on partition in 1933 36 under Mitakshara law.
The question whether the share allotted to a mother on partition is stridhan or not, according to the Benares school, was left open by their Lordships of the Privy Council in Bhugwandeen Doobey vs Myna Baee(1), the very case in which they held that property inherited by a woman was not stridhan according to the Mitakshara.
In Debi Mangal Prasad Singh vs Mahadeo Prasad Singh (2), the Allahabad High Court, after a review of all the authorities on the subject, held that it was stridhan ; but the Privy Council held that it stood on the same footing as property inherited by a woman and that it was not stridhan.
The actual point decided in Debi Mangal Prasad 's case was that there was no substantial difference in principle between a woman 's property acquired by inheritance and that acquired by partition.
It is worthy of note that the partition decree proceeded on the footing that Sumitra Devi would be entitled to the income from the properties allotted to her but should not be in a position to prejudice the reversioners by destroying the corpus.
The preliminary decree for partition stated: "The Commissioner is further directed to allot as little liquid (1) [1863] M.I.A.487,514.
(2) (1912) L. R. 39 I.A. 121.
466 cash to the share of plaintiff No. 2 (Sumitra Devi) as possible on partition and as a rule should allot such properties to her share of which she may receive income without trouble, but may not prejudice the reversioners by destroying the corpus ".
It follows, therefore, that under the Mitakshara law and also under the partition decree, Mst.
Sumitra Devi did not have an absolute right or interest in the share allotted to her on partition.
Under the decision in Debi Mangal Prasad Singh vs Mahadeo Prasad Singh (1), the property allotted to Mst.
Sumitra Devi on partition stood on the same footing as property inherited by her from her husband.
She had no absolute right of disposal of the property.
This brings us to a consideration of the principal point argued before us on behalf of the appellants, namely, whether Sumitra Devi was competent to make a gift of a reasonable portion of the estate of her husband to her daughter Kamala, Devi as a marriage dowry in pursuance and fulfilment of an ante nuptial agreement, even though the gift was made some two years after the marriage ceremony.
This point was urged before us, as we have already stated, prior to and irrespective of the enactment of the .
The argument of learned counsel for the appellants was that Sumitra Devi was competent to make such a gift under the Hindu law, even as it stood prior to the enactment of the .
We shall, therefore, deal with this point, irrespective of the provisions of section 14 of the .
It may be stated at the very outset that the concurrent finding of the Courts below was that the gift of four houses at Asansol, of a value of about Rs. 19,000, was not disproportionate or unreasonable if one had regard to the large extent of properties left by 'Rain Kishori Lal Sao on his death; this was so even taking into consideration the sum of Rs. 10,000 which was set apart for the marriage expenses of Kamala Devi and which was withdrawn by Sumitra Devi.
In our opinion, that finding is correct and must be accepted as such.
Therefore, the narrow question is if Sumitra Devi,was competent to make the gift of four houses at (1) (1912) L.R. 39 I.A. 121.
467 Asansol as marriage dowry to her daughter, some two years after the marriage, in pursuance and fulfilment of the ante nuptial agreement made at Deoghar.
There are a number of decisions bearing on the question, to which our attention has been drawn by learned counsel for the parties, and we propose now to examine some of them.
In Sardar Singh vs Kunj Behari Lal (1) it was observed: "There can be no doubt upon a review of the Hindu law, taken in conjunction with the decided cases, that the Hindu system recognises two sets of religious acts.
One is in connection with the actual obsequies of the deceased, and the periodical performance of the obsequial rites prescribed in the Hindu religious law, which are considered as essential for the salvation of the soul of the deceased.
The other relates to acts which although not essential or obligatory, are still pious observances which conduce to the bliss of the deceased 's soul.
In the later cases this distinction runs clearly through the views of the learned judges. . .
With reference to the first class of acts, the powers of the Hindu female who holds the property are wider than in respect of the acts which are simply pious and if performed are meritorious so far as they conduce to the spiritual benefit of the deceased.
In one case, if the income of the property, or the property itself, is not sufficient to cover the expenses, she is entitled to sell the whole of it.
In the other case, she can alienate a small portion of the property for the pious or charitable purpose she may have in view.
" In a very early decision, Cossi Naut Bysack vs Hurroo Soondry Dossee (2), which war, heard by the Supreme Court at Calcutta in 1819 and by the Judicial Committee in 1826 and quoted in Churaman Sahu vs Gopi Sahu (3), it was stated by Lord Gifford that a Hindu widow had " for certain purposes a clear authority to dispose of her husband 's property and might do it for religious purposes, including dowry to a daughter.
" There are several texts which lay down that it is the imperative religious duty and a moral obligation of a father, mother or other guardian to give a girl 'in marriage (1) (1922) L. R. 49 I.A. 383, 391.
(2) 2 Morley 's Digest 198.
(3) Cal.
468 before she attains puberty.
Some of these texts have been quoted in Churaman Sahu 's case(1) and Ram Sumran Prasad vs Gobind Das (2).
According to these texts, the marriage of a girl by her father is enjoined as a religious duty in order to prevent him from being degraded and visited with sin ; there is also direct spiritual benefit conferred upon him by such a marriage.
Marriage, according to the Sastras, is a religious act; a Sanskara for a man or woman.
According to Manu, Chapter 11, verse 67, the sacrament of marriage is to a female what initiation with the thread is to a male.
The Mitakshara also recognises marriage as a religious obligation for both male and female (Sundrabai Javji Dagdu Pardeshi vs Shivnarayana Ridkarna (3)).
The texts also recognise that gifts can be made at the time of or on the occasion of the marriage or any ceremonies connected therewith, and may also be made in fulfilment of a promise made in connection with the marriage; some decisions have gone to the extent of laying down that the moral obligation continues till it is discharged or fulfilled and such fulfilment may be subsequent to the marriage: see Mitakshara, Chapter 1, section VII, Placitum 5 to 14.
In Placitum 9 is quoted Manu 's text: "To the maiden sisters, let their brothers give portions out of their own allotments respectively; to each the fourth part of the appropriate share; and they, who refuse to give it shall be degraded.
Vengidusami Ayyar (4), it was observed with reference to the aforesaid passages in the Mitakshara, and also to certain passagein the Smriti Chandrika, wherein the texts of Manu Yajnavalkya and other Smriti writers dealing with the question of (1) Cal. 1, 7, (2) Pat. 646, 681.
(3) Bom.
(4) Mad.113, 114.
469 allotment to be made by brothers to their maiden sisters at the time of partition, were commented upon, that with regard to the true meaning of those texts commentators were divided: some of them held that all that the texts mean is that funds required for the marriage of sisters should be provided out of their father 's estate but other commentators, Vijnaneswara among them, laid down that inclusive of their marriage expenses sisters were entitled to a provision not exceeding a fourth of what they would have got had they been males.
It was further observed therein that it was not necessary to decide which of the two views was to be taken as law.
Subramania Ayyar J. then said: "Assuming that, as argued for the appellant, the view advocated by Vijnaneswara and his followers is not law, the fact that so high an authority as the author of the Mitakshara propounds a rule thus favourable to maiden daughters ought to make one hesitate to accept as sound the exceedingly limited construction which was insisted on on behalf of the appellant and which can scarcely be said to be in itself very reasonable, viz., that the texts justify a disbursement out of the estate of only the price of things required in connection with the celebration of the marriage.
In my opinion, the better and sounder view is, as contended for the respondents, that the authorities should be Understood to empower a qualified owner like Thaiyyu Ammal to do all acts proper and incidental to the marriage of a female according to the general practice of the community to which she belongs.
" It should be noted that the observations aforesaid were made in a case where a widow gave her daughter in marriage and at the time of the marriage made a gift of a portion of the lands inherited by her from her husband to ' her son in law, and the question was if the widow Thaiyyu Ammal, who was a Hindu qualified owner, had authority to make such a gift.
In Kudutamma vs Narasimha Charyulu (1), the brother, as managing member of the joint family, made a gift of a reasonable portion of the joint family Properties to his sisters.
The sisters were married in (1) , 531, 532.470 the father 's lifetime but were left for some reason or other without a marriage portion.
The gift was made after the father 's death and subsequent to the marriage.
It was held that the brother had authority to make the gift.
Miller J. observed: "If then a brother, finding that his sister, though married in his father 's lifetime, has been for any reason left without a marriage portion which she ought to have received, it is difficult to see how he can be held to have exceeded his powers if he makes good the deficiency out of the family property.
We are not required to hold that he is bound to do so; we are not required to hold that his father was bound in law to give his daughter anything at her marriage; it is only necessary for us to hold that the gift is not in excess of the powers of the brother and cannot therefore be recalled by him or avoided by his son.
" Wallis, J. who concurred in the judgment, observed: "In such a case there was, I think, a strong moral obligation on the joint family over the father as managing member to make a gift out of the joint family property on the occasion of the marriages either to the girls themselves or to their husbands as a provision for them, and the fact that the father maintained both the daughters and their husbands out of the joint family property until his death may be regarded as a continuing recognition of such moral obligation.
Mere neglect on the part of the joint family to fulfil a moral obligation at the time of the marriages cannot, in my opinion, be regarded as putting an end to it, and I think it continued until it was discharged by the deed of gift now sued on and executed after the father 's death by his son, the 1st defendant, who succeeded him as managing member of the joint family.
" In Churaman Sahu 's case (1), the gift was no doubt made on the occasion of the daughter 's gowna ceremony which took place some two years after, the marriage, and it was held that the gowns ceremony was a ceremony of importance, closely connected with the marriage, though it was not a ceremony necessary to complete the marriage.
The gift was upheld on that footing.
What is worthy of note, however, is (1) Cal.I. 7. 471 that in Churaman Sahu 's case(1), the decision in Kudutamma vs Narasimha Charyulu (2) was approved, and that was a decision in which the gift was made subsequent to the marriage and not on the occasion of any particular ceremony.
Sundararamayya vs Sitamma (3) is another decision of some importance.
There the marriage took place about forty years before the gift and there was no evidence that the father had any intention to give any property at the time of the marriage.
The question was if in those circumstances the gift was valid.
After referring to the decision in Churaman Sahu vs Gopi Sahu (1) and Ramasami Ayyar vs Vengidusami Ayyar (4), it was observed: "We see no reason to differ from these two decisions.
The father or the widow is not bound to giver any property.
There may be no legal but only a moral obligation.
But it is difficult to see why the moral obligation does not sustain a gift because it was not made to the daughter at the time of marriage but only some time later.
The moral obligation of the plaintiff 's father continued in force till it was discharged by the gift in 1899.
" The learned Judges referred with approval to the earlier decision in Kudutamma vs Narasimha Charyulu (2).
It was observed that no hard and fast rule could be laid down to define the extent and limit of the widow 's power of disposing of the property inherited by her for the marriage of her daughter.
The decision of the same case when it went up in Letters Patent appeal is reported as Bhagwati Shukul vs Ram Jatan Tewari (6).
The decision of the single judge was upheld on the (1) Cal.
(4) Mad. 113, 113.
(2) , 531, 532.
(5) A.I.R. 1922 All, 381.
(3) Mad.
628, 629 (6) All. 297.
61 472 ground that in order to get the girl married, it was " a sheer necessity " for the widow, to provide a dowry of Rs. 500 or its equivalent by the gift of the property.
The property was very small in value, being in the neighbourhood of Rs. 500 only, and where under the circumstances the marriage of the girl into a suitable Brahmin family, having regard to her blindness and infirmity, necessitated the spending of the equivalent in value of that property, then the alienation was a " sheer legal necessity.
What is reasonable must depend on the facts and circumstances of each case.
In Vettor Ammal vs Pooch Ammal (1), the gift was made some years after the marriage.
The gift was upheld and was held to be reasonable being about one sixth of the whole property.
In Sailabala vs Baikuntha Nath (2), a gift made by a widow of twelve annas share of her husband 's estate on the occasion of the marriage of her daughter was supported on the ground that it was impossible to define the extent and limit of the widow 's power of disposing of property inherited by her because it must depend upon the circumstances of the disposition whenever such disposition was made.
The gift was made in pursuance of an earlier promise and a verbal declaration made at the time of the Gantha Pakrai (catching hold of the skirt of the mother in law) performed during the marriage.
The only limitation placed upon this power of making a gift is that it should bear a reasonable proportion to the entire property of the deceased father and that it should be justifiable in the circumstances of the case in terms of the principle laid down in Cossi Naut Bysack vs Hurroosoondry Dossee (1) ".
In Sithamahalakshmamma vs kotayya (2), Mr. Justice Venkataramana Rao summarised the case law in the following words: " Thus it will be seen that it is competent to a Hindu father to make a gift of a reasonable portion of the ancestral imoveable property to his daughters without reference to the son; It is a power vested in the father under the Hindu law, which he can exercise subject to the restriction of limitations imposed on him by the said law.
The decided cases have held that the gift must be a reasonable one.
The question whether a particular gift is reasonable or not will have to be judged according to the state of the family at the time of the gift, the extent of the family immoveable property, the indebtedness of the family, and the paramount charges which the family was under an obligation to provide for; and after having regard to those circumstances if the gift can be held to be reasonable such a gift will be binding on the joint family members irrespective of the consent of the members of the family If under the law it is a moral obligation on the family to make a provision as and by way of a marriage portion and such obligation continues until it is fulfilled by a reasonable provision being made therefor, the fact that one of the sons has become indebted cannot take away the power of the father to make such a gift.
In Pratap Kunwar vs Raj Bahadur Singh (3)the marriage took (1) 2 Morley 's Digest 198.
(3) A.I.R. 1943 Oudh 316.
(2) A.L.R. , 827, 474 place.
in 1923 and the gift was made in 1926.
After held that examining the evidence the learned Judges Mst.
Raj Ruer, the widow in question, did not make any "sankalpa" of the gift of fifteen villages at the on behalf of the time of her daughter 's marriage.
On behalf of the plaintiff it was argued before them that a Hindu widow could make a gift of her husband 's immoveable property v at the time of her marriage.
The learned Judges repelled this contention and held that the gift made by Mst.
Raj Kuer in favour of her daughter and son in law was valid, even though she did not make a " sankalpa vs at the time of marriage.
In Abhesang Tirabhai vs Raisang(1) , it was held that gifts by a Hindu widow on the occasion of her daughter 's marriage are valid as they are understood in Hindu law to conduce to the spiritual benefit of the widow 's husband.
In Ramalinga annavi vs Narayana Annavi(2), a father a made a gift to his daughter of a sum of Rs. 5,000 and a usufructuary mortgage.
As against the very large number of decisions refered to above, the only decision which can be said to strike a dissentient note is the decision in ganga Bisheshar vs Pirthi Pal(3).
That was a case in which one Debi Prasad executed a deed of gift of a certain share in a certain village, being the ancestral property of his family, in favour of the defendant ganga Bisheshar, the father in law of his daughter, on April 25, 1872, about two years after the marriage of the daughter.
Mr. Justice Spankie observed as follows: "I understand the finding of both the lower Courts to be that the transfer was not made for any necessary purpose allowed by the Hindu law.
The deed of gift appears to have been made by the father in performance of a a dowry to his daughter.
L. R. 602.
(3) All. 635, 638.
475 tinder the Hindu law.
It was not necessary for the support of the daughter, it was not for any religious or pious work, nor was it a pressing necessity.
Daughters must be maintained until their marriage, and the expenses of their marriage must be paid.
But in this case the gift was not made at the time of the marriage.
It was not executed until two years after the marriage.
" There is no consideration, nor any discussion, of the texts bearing on the question, and the learned Judge did not consider the alienation from the point of view that the marriage of the daughter was a religious duty and the promise to make a gift to the daughter as her marriage portion created a moral or religious obligation in fulfilment of which it was competent for the father to execute a deed of gift in favour of the daughter of a reasonable portion of the estate.
On an examination of the decisions referred to above, the following principles clearly emerge: (1) It is the imperative, religious duty and a moral obligation of a father, mother or other guardian to give a girl in marriage to a suitable husband; it is a duty which must be fulfilled to prevent degradation, and direct spiritual benefit is conferred upon the father by such a marriage.
(2) A Hindu widow in, possession of the estate of her deceased husband can make an alienation for religious acts which are not essential or obligatory but are still pious observances which conduce to the bliss of the deceased husband 's soul.
(3) In the case of essential or obligatory acts, if the income of the property or the property itself is not sufficient to cover the expenses, she is entitled to sell the whole of it; but for acts which are pious and which conduce to the bliss of the deceased husband 's soul, she can alienate a reasonable portion of the property.
(4) Gifts 'by a widow of landed property to her daughter or son in law on the occasion of the marriage or any ceremonies connected with the marriage, are well recognised in Hindu law.
(5) If a promise is made of such a gift for or at the time of the marriage, that promise may be fulfilled afterwards and it is not essential to make a gift at the time of the marriage but it, may be made afterwards in fulfilment of the promise.
(6) Some decisions 476 go to the length of holding that there is a moral or religious obligation of giving a portion of the joint family property for the benefit of the daughter and the son in law, and a gift made long after the marriage may be supported upon the ground that the gift when made fulfils that moral or religious obligation.
In the case before us, it is not even necessary to go to the extent to which the decisions covered by the last item stated above (item 6) have gone.
The finding of the final Court of fact is that there was an antenuptial agreement by Sumitra Devi that she would give four houses at Asansol, of the value of Rs. 20,000, to her daughter as marriage dowry.
It was open to Sumitra Devi to fulfil that promise as a religious act which conferred spiritual benefit upon her deceased husband, irrespective of the consideration whether she made a " sankalpa " at the time of the marriage or not.
The learned Judges of the High Court referred to section 123 of the Transfer of Property Act which lays down that for the purpose of making a gift of immoveable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.
In one part of their judgment,, they said that but for the aforesaid provisions it might have been possible to consider the gift as having been made on the occasion of the marriage, the implementation of which was subsequent.
In our opinion the learned Judges of the High Court were in error with regard to the scope and effect of section 123 of the Transfer of Property Act.
Section 123 does not deal with nor does it affect the power of a Hindu widow to make an alienation of a reasonable portion of her husband 's estate in favour of the daughter as marriage dowry.
That right is governed by Hindu law and it is open to a widow to make an effective gift in favour of her daughter 477 subsequent to the marriage, if the conditions laid down ,by Hindu law are fulfilled.
For the reasons given above, we hold that the alienation made by Mst.
Sumitra Devi in favour of her daughter Kamala Devi on March 10, '1940, was valid and binding on the reversioners.
The decision of the High Court to the contrary was erroneous in law.
We now turn to the , which came into force on June 17, 1956.
Explanation.
In this sub section, I property ' includes both moveable and immoveable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the commencement of this Act.
(2) Nothing contained in sub section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property " There is no doubt that by reason of the use of the expression " whether acquired before or after the commencement of this Act " the section is retrospective in effect.
The Explanation to the section shows that "property " includes immoveable property acquired by a female Hindu at a partition or by gift from any person, whether a relative or not, before, at or after her marriage.
The argument of learned counsel for the appellants is two fold.
He has contended 478 'that the four houses in question are now in the possession of Kamala Devi and under section 14 Kamala Devi is a full owner of the houses; the plaintiffs respondents cannot therefore get the declaration which they have ,asked for.
Alternatively, he has contended that if Sumitra Devi is still in possession of the houses, she also becomes a full owner and in that event also the plaintiffs respondents are not entitled to the reliefs claimed.
Learned counsel for the respondents has relied on sub section (2) of B. 14 which says that nothing in sub section
(1) shall apply to any property acquired by way of gift, etc., where the terms of the instrument or decree, etc., prescribe a restricted estate in such property.
It is argued that Sumitra Devi got a restricted estate by the partition decree and sub section
(1) has no application to that estate.
It is further argued that Kamala Devi as donee could not get a larger estate than what the donlor had in the property, if the view of Hindu law, as contended for by learned counsel for the respondents, is accepted as correct; therefore, Kamal Devi is not entitled to the benefit of sub section(1) of section 14.
We do not think that it is necessary to decide this case on the rival contentions presented to us with regard to a. 14 of the .
We have already held that under Hindu law Mat.
Sumitra Devi could make a gift in favour of her daughter as marriage.
dowry, two" years after the marriage, in fulfilment of the ante nuptial promise made by her and that.
such a gift is binding on the reversioners.
That being the position, it is unnecessary to decide in this case the true scope and effect of section 14 of the .
For the reasons given above, we allow the appeal and set aside the judgment and decree of the Courts below.
The suit of the plaintiffs respondents must be dismissed and the appellants will be entitled to their costs throughout.
| These appeals by the State of Assam and some other parties from a number of judgments of the High Court of Assam, passed under article 226 of the Constitution, quashing certain orders of the Appellate Authority appointed by the Governor of Assam by a Notification under section 3(3) of the Assam Revenue Tribunal (Transfer of Powers) Act, 1948, dated July 5, 1955, raised the common question of the vires of that section and the validity of the Notification by which the Commissioner of Hills Division and Appeals was appointed the Appellate Authority.
in 1955 rival claimants applied for the grant of licenses and settlement of country spirit shops for the year 1956 57 and parties dissatisfied with the orders of the Deputy Commissioner and those of the 296 Excise Commissioner in appeals therefrom, appealed to the Appellate Authority whose orders were, as stated, quashed by the High Court.
under the Eastern Bengal and Assam Excise Act, 1910, the Board which was the final appellate authority meant the Provincial Government and ministers, who were necessarily members of the Legislature, functioned as the Board.
Section 296 of the Government of India Act, 1935, by sub section
(1) put it a ban on the members of the Legislature from functioning as the Board and by sub section
(2) empowered the Governor to constitute a tribunal to exercise the same jurisdiction until the Legislature made other provisions in that behalf.
The Government of Assam constituted a single member tribunal, called at first the Board and later on the Assam Revenue Tribunal, which functioned till the passing of the Assam Revenue Tribunal Act, 1946, empowering the Provincial Government to constitute the Assam Revenue Tribunal consisting of three members.
In 1948 the High Court of Assam was established and shortly thereafter was passed the Assam Revenue Tribunal (Transfer of Powers) Act, 1948, abolishing the Assam Revenue Tribunal and conferring its jurisdiction on the High Court and the authority to be appointed by the Provincial Government under section 3(3) Of the Act.
The High Court in disposing of the writ petitions took the view that section 296(2) Of the Government of India Act placed a mandate on the Provincial Legislature to constitute the tribunal which.
it failed to do and that section 3(3) of the Assam Revenue Tribunal (Transfer of Powers) Act, 1948, constituted an excessive delegation of the legislative power conferred on the Legislature by the Government of India Act, 1935, and that the said Notification was repugnant to section 9 of the Eastern Bengal and Assam Excise Act, 1910 and, there fore, section 3(3) of the impugned Act and the Notification were void and the Appellate Authority not having been lawfully constituted its orders were nullities.
Held that section 3(3) Of the Assam Revenue Tribunal (Transfer of Powers) Act, 1948, and the Notification issued by the Provincial Government thereunder were not void.
The purpose of section 296(2) Of the Government of India Act, 1935, simply was to authorise the Governors of certain provinces to constitute an appellate tribunal and to prescribe a time limit upto which such tribunal was to function and not to impose either an obligation on the Provincial Legislatures to set up one or to compel them to restrict their powers of legislation under the Act.
Even assuming that it did imposesuch an obligation, it must be held to have been insubstance fully discharged by the Assam Legislature by the enactnentof section 3(3)of the Assam Revenue Tribunal (Transfer of Powers) Act, 1948.
What the Assam Revenue Tribunal (Transfer of Powers) Act, 1948, intended to do was to transfer the powers and jurisdiction hitherto exercised by the Assam Revenue Tribunal 297 to the High Court and to the authority to be appointed by the Provincial Government, and the relevant provisions of the Act make it quite clear that the Assam Legislature had applied its mind and clearly determined that such powers and jurisdiction should be distributed between the two.
Sub section (3) Of section 3 of the Act, although not quite happily drafted,, leaves no doubt that the Legislature itself constituted the appellate authority mentioned therein and what was left to the Provincial Government was to select the personnel thereof, conformably to the usual practice of Indian Legislatures, and, consequently, it could not be said that there was an excessive delegation of legislative power to the Government : The word " appointed " does not necessarily mean already appointed, it may also mean " to be appointed " at any future time.
The impugned Act was in no way repugnant to the Eastern Bengal and Assam Excise Act, 1910, as modified by section 296 of the Government of India Act, 1935, and there was no impropriety in the Commissioner of Hills Division and Appeals, assuming that he was the same as the Commissioner of a Division, being appointed as the Authority to entertain appeals from the Excise Commissioner.
Nor could the possibility of an appeal from the decision of any other Commissioner of a Division coming up before him affect the validity of the Notification, and it could not be held to be repugnant to section 9(2) of that Act.
|
Appeal No. 15 of 1974.
From the Judgment and order dated 24.1.1973 of the Punjab and Haryana High Court in Civil Revision No. 147/72.
A.B. Rohtagi, A. Minocha and Mrs. V. Minocha for the Appellants in C.A. No. 15 of 1974 and Respondent in C.A. No. 1875 of 1974.
687 Rajinder Sachhar, K.B. Rohtagi, Praveen Jain, S.K. Dhingra and Baldev Atrey for the Respondents in C.A. No. 15/1974 and Appellant in C.A. No. 1875 of 1974.
R.B. Datar, Kailash Vasdev and Naunit Lal for Respondent No. 2 and 3.
The Judgment of the Court was delivered by KHALID, J.
These two appeals arise from the same suit and can be disposed of by a common Judgment.
The facts necessary to understand the question involved in the appeals can be briefly stated as follows: One Kalu Ram was the owner of 90 kanals of land.
He sold this land in favour of three brothers, Kewal Ram, Chet Ram and Kuldip Ram for a consideration of Rs.65,000 by a regis tered sale deed dated 1 8 1966.
Kewal Ram is residing in Village Badala in Jullunder District.
Chet Ram and Kuldip Ram were residing at 71, Windsor, Road, Forest Gate, London E 7. Smt.
Ram Lubhai, minor daughter of Kalu Ram, the vendor, filed a suit, from which these appeals arise, for possession of the land on the ground that she being the daughter of the vendor had superior fight of pre emption as against the vendees who were strangers.
Kewal Ram alone was served in the suit.
The other two were not served.
Substituted service was, therefore, taken for service on them by publication in a vernacular paper.
The suit was decreed on 31 7 1969 against all the three defendants, ex parte against Chet Ram and Kuldeep Ram.
Kewal Ram filed an appeal against this decree and Judgment.
He made his brothers Chet Ram and Kuldip Ram as proforma respondents giving their village address for service.
In the appeal also they were served by substituted service.
The appeal was heard on 5 1 1971 and was dismissed.
On 24 3 1971, Kuldip Ram and Chet Ram filed an applica tion under Order 9, Rule 13 of C.P.C. in the Trial Court for setting aside the ex parte decree against them on the ground that they were neither served in the Trial Court nor in the Appellate Court.
This application was resisted by the plain tiff on the ground that the application before the Trial Court was incompetent since the decree had merged in the appellate decree.
Evidence was taken and after hearing the parties the Trial Court set aside the entire decree.
The Trial Court held that 688 Kuldip Ram and Chet Ram were residing in England and no attempt was made to serve them personally.
That being so, the application was competent in the Trial Court as they were neither served in the Trial Court nor in the Appellate Court.
Against this order dated 10.1.
1972, the plaintiff filed a revision petition in the High Court of Punjab and Haryana as C.R.P. No. 147 of 1972.
The High Court felt that there was no error of jurisdiction in the order sought to be revised, but held that since Kewal Ram had contested the suit, there was no ground to set aside the decree against him.
On this ground, the petition was partly allowed.
The decree against Kewal Ram was allowed to stand but was set aside against the other two.
Not being satisfied with this order, the plaintiff filed an application for review on the ground that the decree for possession by way of pre emption was joint against all the defendants, that there was neither specification of the shares in the land for the three different vendees not specification of the purchase price paid by them and that as such the order setting aside the decree in part was bad.
For this purpose reliance was placed on a full Bench decision of the Lahore High Court, reported in AIR 1945 Lahore 184.
Reliance was also placed on the proviso to Order 9, Rule 13 C,P.C. This review petition was dismissed by the High Court by order dated May 30, 1973, relying upon the full Bench decision of the Punjab and Haryana High Court in the case of Kartar Singh vs Jagat Singh and Ors., ILR 1971 2 Pun.
& Har. 110.
Hence these appeals by special leave, the earlier (C.A. 15/74) by Kewal Ram and the other (C.A. 1875/74) by the plaintiff.
The learned counsel for the plaintiff contended that the two brothers of Kewal Ram were at all relevant times aware of the pendency of the suit and that the Courts below com mitted an error in setting aside the decree against them.
To reinforce this contention, he brought to our notice the fact that even in the appeal filed by Kewal Ram, the address given of his brothers was the village address.
He further submitted that the application under Order 9, Rule 13 made before the Trial Court was incompetent since the decree passed by the Trial Court had merged in the appellate de cree.
He feebly put forward a case of complicity between the two brothers to defeat the plaintiff.
Kewal Ram who is the appellant in the other appeal contended that the decree was a joint decree and it was impermissible to set aside the decree in part and keep the decree in tact in part.
According to him 689 when the decree was set aside against his two brothers it should have been set aside against him also.
Since the decree in question is one based on the right of preemption it would have been possible for us to get rid of it and dispose of the appeals by a short Judgment relying upon the Constitution Bench decision of this Court in Atam Prakash vs State of Haryana and Ors., ; by which decision the Punjab Pre emption Act, 1913 was struck down except to a small extent.
But that course is not open to us in view of the following observation by this Court in the above said Judgment: "We are told that in some cases suits are pending in various courts and, where decrees have been passed, appeals are pending in appellate courts.
Such suits and appeals will now be disposed of in accordance with the declaration granted by us.
We are told that there are a few cases where suits have been decreed and the decrees have become final, no appeals having been filed against those de crees.
The decrees will be binding inter partes and the declaration granted by us will be of no avail to the parties thereto.
" Since the decree has become final, the principle of the decision is not attracted in this case.
That takes us to the question, whether the application under Order IX, Rule 13 before the Trial Court, when the matter had been decided by the appellate court, is proper.
We proceed on the finding that neither Kuldip Ram nor Chet Ram was served either in the suit or in the appeal.
A feeble contention was put forward that fraud was practised upon these two persons in not getting service effected on them.
We do not propose to consider this aspect of the case since this case was not properly pleaded or proved.
For the purpose of this Judgment, we accept the conclusions arrived at by the court below that these two persons were not served either in the suit or in the appeal.
If so, what is the position.
It is well settled that when a decree of the Trial Court is either confirmed, modified or reversed by the Appellate decree, except when the decree is passed without notice to the parties, the Trial Court decree gets merged in the appellate decree.
But when the decree is passed without notice to a party, that decree will not, in law, be a decree to which he is a party.
Equally so in the case of an appel 690 late decree.
In this case these two persons were not served in the suit.
A decree was passed ex parte against them without giving them notice of the suit.
In law, therefore, there is no decree against them.
In the appeal also they were not served.
If they had been served in the appeal, things would have been different.
They could have put for ward their case in appeal and got appropriate orders passed.
But that is not the case here.
That being so, there is no bar for an application by them before the Trial Court under Order IX, Rule 13, to set aside the ex parte decree against them.
This is the only point that arises in the appeal filed by the plaintiff.
The appeal has to fail and is dismissed.
The appeal by Kewal Ram is based on the plea that the decree passed by the Trial Court and the Appellate Court, against him and his two brothers, was a joint and indivisi ble decree and as such the decree cannot be set aside in part, by allowing the application under Order IX, Rule 13.
He pressed into service a full Bench decision of the Lahore High Court, reported in 1945 Lahore 184.
We do not pause to consider the principle settled in that decision because it has no application to the facts of this case.
Here, the plaintiff has obtained a decree against Kewal Ram, based on the right of pre emption.
That decree has to stand, so far as Kewal Ram 's right in the property is concerned.
She will have to work out here remedies either in execution or by a partition suit to get her share in the properties.
There is no merit in Civil Appeal No. 15 of 1974 either.
This appeal is also dismissed.
The plaintiff will be entitled to get back two thirds share of the amount of consideration paid for the property, from Kuldip Ram and Chet Ram.
The parties are directed to bear their costs.
S.R. Appeals dismissed.
| The petitioner, who was employed as Deputy Chief Air Hostess in Air India, flied this petition under Article 32 of the Constitution, alleging that while the employees of Indian origin have to retire at 35 years with extension till 45, those of foreign origin can go beyond 45 years, which is discriminatory and violative of Articles 14 and 15 of the Constitution.
Accordingly, prayer was made to quash the letter sent to her retiring her on 28.2.1987, to declare Regulation 46(1)(c) of the Service Regulations ultra vires, to direct reconsideration of the decision in Air India vs Nargesh Meerza; , and to declare that the petitioner will retire only on her attaining the age of 58 years.
In the. counter affidavit it was alleged that Air India has not fixed any higher retirement age for Air Hostesses who are recruited outside India, that Air India has appoint ed a few Air Hostesses abroad who belong to different na tionalities and speak different European languages with a view to deal with passengers conversant only with 728 these languages, that Air India has been encouraging its Indian Air Hostesses to learn European languages and in view of this 'position Air India is in the process of phasing out Air Hostesses of foreign origin, that service conditions and terms of appointment of the Air Hostesses appointed abroad are different than the service conditions of Air Hostesses appointed in India and that no Air Hostess of foreign origin is promoted to the post of Deputy Chief Air Hostess, Addi tional Chief Air Hostess or Chief Air Hostess.
These promo tional avenues are available only to the Air Hostesses appointed in India.
Dismissing the Petition, HELD: (Per Khalid, J) 1.
Identical questions were raised and considered at length by this Court in Air India vs Nargesh Meerza (supra) and that decision is binding.
[730A B] 2.
Air India 's policy now is to phase out Air Hostesses recruited outside India and restore uniformity in their retirement age.
[731B C] 3.
The petitioner is an Air Hostess and does not belong to a separate class.
The duties and functions of Deputy Chief Air Hostess includes operation service as a regular line Air Hostess and she will be required to perform the same functions as that of other Air Hostesses.
[731F] 4.
Air Hostesses who are recruited outside India are not entitled to the benefits of promotion to which India Air Hostesses are entitled.
This should satisfy the petitioner in the instant case.
[731E] Per Oza, J.) 1.
Air India being a Corporation is for all purposes State within the meaning of Article 12 of the Constitution of India and it cannot follow a foreign Corporation in treating Indians differently and discriminate against them.
[732B C] Air India etc.
vs Nargesh Meerza & Others etc.
; , , referred to.
Air India in order to avoid committing an offence abroad cannot disregard Article 14 of the Indian Constitu tion.
An Indian citizen in such a situation should prefer to walk off from a State where he may 729 have to flout Indian Constitution to save himself from committing of an offence.
Air India should abide by the requirements of Article 14 rather than anything else.
[732F G] 3.
It has been conceded that in view of section 6(4) of the United Kingdom Sex Discrimination Act, 1975 it will not be a contravention of that law to have the same age of retirement for an Air Hostess recruited in U.K. as is provided for an Air Hostess recruited of Indian origin.
[733B C] 4.
In view of the policy of Air India that henceforth Air Hostesses recruited anywhere will be treated in the same manner as Air Hostesses recruited from India no interference is called for.
[733C D]
|
ON: Civil Appeal No. 3655 of 1989.
From the Judgment and Order dated 14.8.1989 of the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench, Bombay in Appeal No. CD(BOM)A.
No 322 of 1989 in Order No. 704 of 1989.
Anil B. Diwan, section Ganesh, R.K. Krishnamurthy, S.R. Narain and Sandeep Narain for the Appellant.
374 A.K. Ganguli, B. Parthasarthy, K. Swami and P. Parmesh waran for the Respondent.
The Judgment of the Court was delivered by RAY, J.
This appeal under Section 130 E(b) of the Cus toms Act, 1962 is directed against the judgment and order dated August 14, 1989 passed by the Customs, Excise & Gold (Control) Appellate Tribunal.
Bombay in CD(Bom) A. No. 322 of 1989.
The most vital question that comes up for consideration in this appeal is whether marble as mentioned in Tariff Item No. 25.15 in Appendix 1 B, Schedule I to the Import (Con trol) Order, 1955 mentioning "Marble, travertine, ecaussine and other calcareous monumental or building stone of an apparent specific gravity of 2.5 or more and Alabaster, whether or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape" is genus within which a11 other kinds of calcareous stones are included or whether marble is a dis tinct or different item which is one of the restricted item in the List of Restricted Items described in Appendix 2, Part B of Import and Export Policy for April 1988 March 1991.
The matrix of the case is that the Appellant has been carrying on business as sole proprietor under the name and style of M/s Interior Manufacturers at A 12, Yuwan Apart ments, 413/414, Mount Mary Road, Bandra, Bombay which is a small scale industry engaged in processing of stone slabs.
In the course of his manufacturing activity the Appellant utilises and requires as raw material polishable calcareous stones viz. marble, travertine, ecaussine, alabaster and other calcareous stones.
All these different types of stones are hard and capable of taking polish.
Marble is distin guished from other calcareous rocks, by the fact that it is a metamorphic rock formed from recrystallization of lime stones and has a visibly crystallined nature.
In order to import calcareous stones covered by the Open General Licence and with a view to ensuring that the same was not marble, the Appellant took the following precautions: (1) The appellant referred to the Indian Standards Specifi cation for Marble viz.
IS: 1130 1969 which defines marble as follows: 375 Para 0.2: "Marbles are metamorphic rocks capable of taking polish, formed from the re crystallization of limestones or dolomit ic limestones and are distinguised from limestone by even visibly crystallined nature and non flaggy stratification".
Para 0.7 of the said Specification provides that: "The Sectional Committee responsible for the preparation of this standard has taken into consideration the views of producers, consumers and technologists and has related the standard to the manufacturing and trade practices followed in the country in this field.
" (2) The Appellant obtained from the foreign exporters a sample tile of Botticino ', the calcareous rock proposed to be imported and had the same tested by a reputed Geologist, Dr. S.F. Sethna who tested the sample and by his report dated October 13, 1988 confirmed that the same was not marble.
His letter dated October 14, 1988 explains now the sample tested was limestone, different from marble.
The sample tile tested and attested by Dr. Sethna was submitted to the Customs Department vide their letter dated February 20, 1989.
(3) The appellant then referred to an Italian Book MARHI ITALTA wherein the index evidenced the fact that 'Botticino ' varieties were covered under polishable calcareous rocks ' and not under true marbles (re crystallised calcareous rocks).
(4) The appellant specifically placed an order for calcare ous stones (other than marble) and asked the Exporter to certify that the said goods were not marble.
The exporter Elle Marmi of Italy by a certificate dated December 6, 1988 certified that all the goods were calcareous stone slabs other than marble.
(5) The appellant also obtained the certificate dated Decem ber 6, 1988 from one Gianni C. Baigini, a Surveyor regis tered with the Chamber of Commerce, Carrara and a Specialist for stones.
Gianni C. Baigini after checking the said con signment loaded in the containers for import by the Appel lant in Italy certified that the slabs loaded in Container Nos.
LMCU 051315/8, 050082/3, 05 15 19/2, 05 1520/6 were calcareous stones other than marble since the same were not re crystallised calcareous rocks.
376 The appellant alter taking the aforesaid precautions placed an order with Elle Marmi of Italy for import of 3120.50 sq.
of slabs of calcareous stones having a thickness of 2 cms.
at a price of Italian Lira 4.22.56.000 i.e. Rs.4,93,000 approximateIy.
The said Elle Marmi issued an invoice dated December 2, 1988 for the said purpose.
The goods arrived in Bombay by the vessel 'Orient Tri umph ' on or about 19th January, 1989.
The appellant filed a Bill of Entry No. 007569 dated 19.1.
1989 for clearance of the goods for home consumption.
The goods were declared as slabs of calcareous stones (other than marble) and were imported under OGL Appendix 6, Item 1 of Import and Export Policy for April 1988 March 1991.
The goods were inspected by the Assistant Collector (Docks) who observed as follows: "These goods under import do not appear to be marble or granite and are not polished, they are roughly squared and are having smooth edges on all four sides but are having smooth edges on 2 or 3 sides due to sawing.
" The sample of the goods was sent by the Assistant Collector (Docks) to the Assistant Collector of Customs (Group I).
The Assistant Collector of Customs (Group I) issued a query memo dated February 6, 1989 on the alleged basis that 'calcareous stones are nothing but marble only ' and therefore, governed by Entry 62, Appendix 2, Part B of Import and Export Policy for March 1988 to April 1991.
The query was allegedly based upon explanatory notes contained in the "Harmonised Commodi ty Description and Coding System" (HSN) evolved by the International Customs Cooperation Council.
The appellant set out the correct position and informed the Department by several letters dated 7th February, 1989, 13th February, 1989, 16th February, 1989 and 20th February, 1989 that the said goods could not be regarded as 'marble ' in terms of the expression 'marble ' appearing in heading 25.15 in Schedule I, Appendix I B Customs Tariff Amendment Act, 1985.
The appellant also requested for release of part of the goods pending the technical test of the sample from imported goods.
Pending the technical test report, by a letter dated February 17, 1989 the appellant was permitted to clear 50% of the goods upon the appellant submitted 100% ITC bond for the whole backed by a bank 377 guarantee.
The balance 50% of the imported consignment was detained.
The appellant accordingly cleared 50% of the imported consignment.
The appellant, however, paid import duty on the full consignment.
The Assistant Collector of Customs (Group 1) sent the sealed samples of the imported goods for testing to the Deputy Director General Petrology Department, Geological Survey of India, Central Region, Nagpur.
The sealed cover containing the samples was sent through the appellant 's representative.
The appellant also by a letter dated Febru ary 25, 1989 sent a sample of the same consignment for testing to the Geological Survey of India.
The appellant addressed further letters dated March 7, 1989, March 8, 1989 to the Customs Department.
By a letter dated March 13, 1989 the appellant forwarded to the Customs Department a sealed envelope containing a test report given by the Geological Survey of India, Nagpur on the sample of tile imported goods.
The appellant on March 17, 1989 received a letter dated March 13, 1989 from the Geological Survey of India enclosing the test report on the sample of the imported goods submit ted by the appellant to the Geological Survey of India.
This test report categorically stated that the sample was "allo chemic (Pelmicritic) limestone.
It cannot be termed as a marble.
" It is pertinent to mention that the Geological Survey of India had tested two samples from the materials imported by the appellant, one sample forwarded by the Customs Department and the other by the appellant.
The report of the Geological Survey of India on the sample forwarded by the Customs Department was set out earlier and sent in a sealed cover to the Customs Department.
The Customs Department, however, did not release the goods inspite of the categorical report of the Geological Survey of India and instead issued a show cause notice dated March 17, 1989.
The Customs Department inter alia relied upon the opinion based on visual observation received from the Indian Bureau of Mines, Government of India, Udaipur and test reports based on technical test received from the Director of Mines & Geology Department, Udaipur and Geologi cal Survey of India, Nagpur.
The test report received by the respondent from the Geological Survey of India, Nagpur was kept back and not disclosed to the appellant.
None of the three reports/opinions were disclosed to the appellant at the time of issue of show cause notice.
On the basis of these reports/opinions it was alleged in the show cause 378 notice that the imported goods were marble allegedly as per the commercial definition of marble enunciated in the show cause notice.
The Department threatened to confiscate the goods and initiate the penal action against the appellant pursuant to Section 112 of the .
The appellant by a letter dated March 20, 1989 called upon the Customs De partment to set aside the show cause notice.
The Collector of Customs, New Customs House, Ballard Estate, Bombay passed an order that the goods imported are marble and thus require a specific import licence.
He also held that these goods are liable for classification as marble and the import of these goods under OGL is not admis sible and therefore in exercise of the powers conferred under Section 111(d) of the , the Collector of Customs ordered the confiscation of the imported goods and further ordered that the Bond be enforced towards a fine of Rs.4,93,199 imposed on the said goods in lieu of confis cation.
The Assistant Collector of Customs was directed to enforce the said Bond and the Bank Guarantee for realisation of this amount of fine.
However, the importer was given option to clear the said goods for home consumption on payment of fine of Rs.5,00,000 in lieu of confiscation under Section 125 of the , the option to be exercised within 60 days from the date of receipt of the said order.
He further held that since the importer contra vened the provisions of section 111(d) of the read with Section 3 of the Import and Export (Control) Act, 1947 rendering the said goods for confiscation, the importer is liable for penal action under provisions of Section 112 of the .
Accordingly, the penalty of Rs. 10,00,000 under Section 112 of the said Act was directed to be paid forthwith.
Against this order, the appellant filed a writ petition being Writ Petition No. 1398 of 1989 which was dismissed at the admission stage on the ground that it involves disputed questions of fact which were difficult to be decided in a writ jurisdiction.
However, the appellant was permitted to clear the goods on payment of redemption fine and furnishing full bank guarantee for the penalty amount.
Aggrieved by this order, an appeal being Appeal No. 6 18 of 1989 was filed in the High Court of Bombay.
The said appeal was dismissed with liberty to file a departmental appeal by Order dated June 15, 1989.
The appellant thereaf ter filed the said appeal before the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench, Bombay.
The said Appellate Tribunal after hearing the appel lant as well as the Revenue dismissed the appeal and con firmed the order of 379 the Collector of Customs but reduced the penalty amount from Rs. 10,00,000 to Rs.5,00,000.
Feeling aggrieved by the said order the appellant filed the instant appeal under Section 130 E(b) of the .
The entire controversy relates to the question whether the calcareous stone which has been imported by the appellant falling within the Tariff Item No. 25.15 of Sched ule I, Appendix I B commonly known as I.T. Schedule is marble as mentioned in Entry No. 62 of the List of Restrict ed Items, Annexure 2, Part B of the Import and Export Policy for April 1988 to March 1991 and as such the import of calcareous stone made by the appellant being not covered under OGL, is liable for confiscation and penalty for ille gal import without the specific import licence obtained from the respondent.
In Appendix I B, Schedule 1 of ITC Schedule, Entry No. 25.15 of Chapter 25 (Mineral Products) mentions: "Marble travertine, ecaussine and any other calcareous monumental or building stone of an apparent specific gravity of 2.5 or more and Alabaster, whether or not roughly trimmed or merely cut by sawing or otherwise, into blocks, of slabs of a rectangular (including square) shape.
" In the said Appendix I B, Schedule I states that each heading number in Column (1) corresponds to the respective Chapter and heading number of the first Schedule to the Customs, Tariff Amendment Act, 1985 as amended on 24.1.
1986 and each entry in Column (2) has the same scope and meaning as the corresponding Chapter and heading of the said first Schedule.
It is appropriate to refer to Appendix 6 of the Import and Export Policy for April 1988 to March, 1991 which men tions import of items under Open General Licence.
The cate gories of importers, the items allowed to be imported by them under Open General Licence and the conditions governing their importation have been set out therein: Items Category of eligible importers 1.
Raw materials components and consumables Actual Users (Non iron and steel items) other than (Industrial) those included in the Appendices 2, 3 Part A, 5 and 8 380 In Appendix II B, in the List of Restricted Items, Entry 6.2, of Import and Export Policy for March 1988 to April 1991 refers to marble/granite/onyx.
Mr. Diwan, learned counsel appearing on behalf of the appellant has submitted that for the purpose of understand ing the meaning of 'marble ' occurring in Appendix I B, Schedule I of the Imports (Control) Order, 1955 it is neces sary to refer to Mineral Products, in Chapter 25, Tariff Entry No. 25.15 which refers to Marble, Travertine, Ecaus sine and other calcareous monumental and building stone of an apparent specific gravity of 2.5 or more and Alabaster, whether or not roughly trimmed or merely cut by sawing or otherwise into blocks or slabs of a rectangular (including square) shape.
The term 'marble ' does not occur by itself or in isolation but as a inseverable part of a Tariff Entry which deals with five items referred to hereinbelow: (a) Marble (b) Travertine (c) Ecaussine (d) Other calcareous stone (e) Alabaster Each of these five items is a monumental or building stone which is hard and can be cut and sawed into the required sizes and can take polish.
The Tariff Entry draws a clear line of distinction between each of these five items and regards them as five distinct products.
The basic scheme of the Tariff Entry is important for the purposes of the present appeal.
The term 'marble ' has to be given a meaning which fits in and harmonises in the above mentioned statuto ry context, so that 'marble ' continues to remain distinct and different from the said other four items.
Thus whatever principle of interpretation or canon of construction is applied it cannot be said that the term 'marble ' include and takes within its fold any or more distinct items or goods mentioned in the said Tariff Entry, thereby rendering a part of the said Entry meaningless.
It has, therefore, been submitted on behalf of the appellant that the term 'marble ' has to be interpreted in a manner which is in consonance with the context and which does not militate against it.
It is appropriate to refer in this connection the following passage from Maxwell on Interpretation of Statutes, 12th Edition.
Page 294 set out hereunder: "The word 'land ' is generally understood as including build ing.
but if, after imposing a rate on houses, buildings, 381 works, tenements and hereditaments, an Act exempted 'land ', this word would be restricted to land unburdened with houses, buildings, or works which would otherwise have been unnecessarily enumerated.
" It has been secondly submitted on behalf of the appel lant that the general principle of interpretation of tariff entries occurring in a tax statute is that of commercial nomenclature or understanding in the trade.
It is also a settled legal position that the said doctrine of commercial nomenclature or trade understanding can and should be de parted from in a case where the statutory context in which the tariff item appears, requires such a departure.
If the application of the commercial meaning or trade nomenclature runs counter to the statutory context then the said princi ple of interpretation cannot and should not be applied.
Commercial nomenclature or trade understanding is merely a general principle of interpretation, It is well settled that the principles of interpretation are never embodied rules and the same must always yield to the context of the partic ular statute which comes up for interpretation.
It has also been submitted in this connection that the trade meaning or commercial nomenclature would be applicable if a particular product description occurs by itself in a Tariff Entry, and there is no competition between that Tariff Entry and any other tariff entry, nor is there any need to reconcile and harmonise that tariff entry with any other.
It has been submitted in this respect that the reading of the Tariff Entry No. 25.15 in Appendix I B of Imports (Control) Order, 1955 which refers to Marble, Ecaussine, Travertine and other calcareous monumental or building stones as well as Entry No. 62 in Appendix 2 B of Import and Export Policy, April 1988 March 1991 refer only to marble/granite/onyx as re stricted items of import in such a way that such interpreta tion does not exclude or render redundant any of the items included in Tariff Entry No. 25.15.
It has next been con tended that the end use of the particular product is irrele vant and of no consequence for determining its classifica tion.
In support of this proposition several decisions have been cited.
It has been further submitted that each of the five distinct items referred to in Chapter Heading 25.15 of Appendix I B of Imports (Control) Order, 1955 is a hard stone capable of being cut into the required size and of taking polish.
If, therefore, the term marble is to be given the said commercial meaning as relied upon by the Customs Authorities then the inevitable consequence would be that the term 'marble ' in Chapter Heading 25.15 would automati cally include within it the other four items thereby render ing the rest of the Tariff Entry, otiose, redundant and meaningless.
On this ground alone, it has been submit 382 ted that the test of commercial meaning or trade understand ing necessarily has to be rejected and the same cannot be applied in the present case.
It has also been contended on behalf of the appellant that from the language of the Tariff Entry itself it is only the technical meaning which can be applied for interpreting Chapter Heading 25.15.
The expres sions calcareous, travertine, ecaussine, and alabaster are all technical expressions known to the science of Geology which are found defined in dictionaries of Geology.
These are not terms of trade or expressions which businessmen use in the ordinary use to describe a product they deal in.
Moreover, the reference to the requirement of specific gravity of 2.5 or more is also more or less a technical requirement which evinces that the principle of trade nomen clature or commercial understanding is not applicable to the Tariff Item.
Valuable guidance can also be obtained from the notes which are part of the Harmonised System of Nomencla ture (HSN) with which the present Customs Tariff as amended in 1986, has been fully aligned.
The HSN Explanatory Notes specifically state that ecaussine, on being fractured, shows a granular surface, similar to granite and is, therefore, known sometimes as Belgian granite, Flanders Granite and Petiti granite.
It needs to be understood that, therefore, even though ecaussine may be known in the market as a spe cies of granite and may be dealt with and treated as a type of granite, the same is, nevertheless not classified as granite under Chapter Heading 25.16.
This is only because the technical nature of ecaussine has been taken into con sideration and applied by HSN as opposed to the trade nomen clature or commercial understanding.
It has also been submitted that the said HSN also con tains specific note regarding serpentine rocks to the effect that the same are sometimes called 'Marble ', but the same is excluded from Chapter Heading 25.15.
This clearly shows that according to HSN, Chapter Heading 25.15 must be construed according to its technical meaning.
Technically, serpentine does not fall under Heading 25.15 and the same is according ly excluded therefrom by the HSN.
If, on the other hand, the commercial meaning is to be applied, then, serpentine would definitely have to be classified under Chapter Heading 25.15 in as much as it is sometimes called marble.
The HSN Explan atory notes, therefore, clearly and conclusively establish that Chapter Heading 25.15 must necessarily be construed by its technical meaning and not by applying the commercial nomenclature test.
If the commercial nomenclature test is applied, then, as explained hereinabove, two fundamental principles of interpretation are infringed: (a) the princi ple that no part of a statute may be construed as to render it redundant 383 and otiose, and (b) that a tariff item is not to be classi fied on the basis end use in other words an item cannot be considered to be marble merely because it is a hard rock which is capable of being cut and polished and being put to same use as marble.
It has, therefore, been submitted that the findings arrived at by the Customs, Excise and Gold (Control) Appellate Tribunal that the calcareous stone slab imported by the appellant is marble as understood in the commercial or trade nomenclature and as such the import of the said slab being without a licence, is subject to the liability of confiscation and imposition of penalty and wholly unwarranted.
Mr. Ganguli, learned counsel appearing on behalf of the Revenue has submitted that in interpreting the word 'marble ' as mentioned in Tariff Item No.25.15 in Appendix 1 B, Sched ule 1 to the Import (Control) Order, 1955, the test in commercial and trade parlance has to be applied i.e. how the said product came to be commercially known by the trading people.
It is further submitted that it is not a scientific or technical word and as such it does not require to be interpreted in its scientific and technical sense.
He fur ther submitted that the general principle of expression of Tariff Entries in a text statute is that of commercial nomenclature or understanding in the trade.
The word 'mar ble ' if so interpreted will include calcareous stone of 2.5 or more specific gravity.
He has cited certain decisions in support of his above contention.
Mr. Ganguli also submitted referring to the said Tariff Entry 25.15 that it includes calcareous stones of specific gravity of 2.5 or more which are capable of polish.
Marble is the genus and all other four items of stone mentioned in the said Entry which are of apparent specific gravity of 2.5 are included within marble as they are commercially and in trade parlance known as marble.
He further submitted that the ISI specification for marble as referred to in IS: 1130 1969, item No. 0.2 which defines marble as metamorphic rocks can not be applied in the instant case especially in view of the note to the said item that sometimes rocks, such as serpentine are also polished and used in trade as marble.
Mr. Ganguli further submits that taking into consideration this note, calcareous stone imported by the appellant falls within marble which is one of the restricted 'items in the list of restricted items as mentioned in Appendix 2, Part B of the Import and Export Policy, April 1988 March 1991.
Mr. Ganguli further submitted that the word marble cannot be taken in its Geological or Petrological sense in as much as the whole purpose of put ting the marble stone slabs in the list of restricted items for import is to restrict the outflow of foreign exchange from the country.
Mr. Ganguli next submitted that the end use of the product i.e. marble and calcareous 384 stone mentioned in Item No. 25.15 of Appendix 1 B of the Import and Export Policy April 1988 March 1991 has to be taken into consideration in the determination of the other items of stones mentioned in that Entry.
Viewed from this angle, the said calcareous stone being capable of polish and used for monumental or building purposes has to be taken to be marble as has been done by the Revenue and it being one of the restricted items, a licence for import of the same is mandatory.
It has also been submitted in this connection by Mr. Ganguli that the word 'marble ' has not been defined in the Tariff Act and as such the meaning of the said word has to be given as understood by the trading communities as is known in trade parlance.
Mr. Ganguli, therefore submitted that there is no infirmity in the findings and conclusions of the Appellate Tribunal and as such the calcareous stone slabs imported by the appellant being marble, one of the restricted items, the order of confiscation of the said stone slabs and in lieu thereof the imposition of the cus toms duty and the penalty is quite in accordance with law.
The sole question to be considered in this appeal is whether the word calcareous monumental or building stones of more than 2.5 or more specific gravity as mentioned in Tariff Item No. 25.15 in Appendix 1 B, Schedule 1, commonly known as ITC Schedule to the Imports (Control) Order, 1955 comes within the purview of the restricted items mentioned in Item 62, Appendix 2, Part B of the Import and Export Policy April 1988 March 1991.
In Entry No. 62, the re stricted item is described as 'Marble/granite/onyx '.
Marble has not been defined either in the ITC Schedule or in Appen dix 2, Part B of Import and Export Policy dealing with the list of restricted items.
It is convenient to refer in this connection to para 64 of the Hand Book of Procedures, April 1988 March 1991 which is in the following terms: "Classification of Items 64.
(1) The Schedule I to the Imports (Control) Order, 1955, reproduced in Appendix 1 B to this Book, commonly known as the I.T.C. Schedule,.
contains the classification of all the articles that enter into the import trade.
(2) With effect from 1st April, 1988 the Schedule 1 to the Imports (Control) Order, 1955 reproduced in Appendix I B to this Book has been revised in alignment with the First Schedule of the Customs Tariff (Amendment) Act, 1985.
The Revised ITC Schedule contains 21 Sections subdivided into 99 Chapters.
" 385 It is also convenient to refer to the note.
to the Appendix 1 B, Schedule I to the Imports (Control) Order, 1955 which is to the following effect: Note: Each heading number in Column (1) corresponds to the respective Chapter and heading number of this first Schedule to the Customs Tariff Amendment Act, 1985 as amend ed on 24.1.1986 and each entry in Column (2) has the same scope and meaning as the corresponding Chapter and heading of the said first Schedule.
It is also appropriate to set out hereunder the relevant portion of Appendix 6 of the Import and Export Policy for April 1988 March 1991: Items Categories of eligible Importers Raw materials, components and Actual Users consumables (Non iron and steel items) (Industrial) other than those included in the Appendices 2, 3 Part A, 5 and 8.
Section 3(1) of the Imports and Exports (Control) Act, 1947 as amended upto 30th April, 1979 provides that: "The Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restrict ing or otherwise controlling in all cases or in specified classes of cases and subject to such exceptions if any, as may be made by or under the order . . . . " Chapter 25 of Schedule I, Appendix i B of the ITC Sched ule mentions mineral products which can be imported under O.G.L. Entry No. 25.15 refers to marble which is as under: "Marble, travertine, ecaussine and other calcareous monumen tal or building stone of an apparent specific gravity of 2.5 or more and Alabaster, whether or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape." 386 Appendix 2, Part B of the Import and Export Policy for April 1988 March 1991 enumerates the restricted items.
Item No. 62 deals with marble which is to the following effect 'Marble/granite/onyx '.
In the instant case, admittedly the appellant on behalf of his firm which is a small scale industry engaged in processing of stone slabs placed an order for calcareous stone (other than marble) with the exporter Elle Marmi of Italy asking the exporter to certify that the said goods were not marble.
The exporter, Elle Marmi of Italy issued a certificate dated December 6, 1988 certifying that all the goods in question were calcareous stone slabs other than marble.
The appellant also obtained from the foreign export er a sample tile of 'Botticino ' the calcareous rock proposed to be imported and had the same tested by a reputed Geolo gist, Dr. S.F. Sethna who submitted his report dated October 13, 1988 confirming that the same sample was not marble.
It has been stated in the said report that the sample is a limestone and thus differs from the marble in being of sedimentary origin and has not undergone any metamorphism to be considered under metamorphic rocks to be described as a marble.
If the rock would have shown any slightest amount of metamorphism the recrystallization of carbonate crystals would make the individual crystals distinctly visible under the microscopic examination.
The appellant also referred to an Italian Book MARMI ITALTA wherein the index evidenced the fact that "Botticino" varieties were covered under "Polishable Calcareous Rocks" and not under 'True Marbles ' (Re crystallised Calcareous Rocks).
The appellant also while placing order asked the exporter to send a certificate about the calcareous stones for which order was placed for importation.
The exporter, Elle Marmi of Italy issued a certificate dated December 6, 1988 certifying that all the rough slabs loaded are 'calcar eous stone slabs other than marble '.
The appellant also obtained a certificate from one Gianni C. Baigini, a survey or registered with the Chamber of Commerce, Carrara and a specialist for control of marble, calcareous stones (other than Marble) and Granite.
The said expert after checking the said consignment loaded in the containers for import by the appellant in Italy certified that all rough slabs are cal careous stone slabs of good quality.
He also certified that these are calcareous stones other than marble because they are not recrystallized calcareous rocks and that the calcar eous stone slabs in the above consignment are not marble.
In Indian Standard Specification for Marble, IS: 1130 1969, 387 Entry No. 0.2 marbles have been described as metamorphic rocks capable of taking polish, formed from the re crystal lization of limestones or dolomitic limestones and are distinguished from limestone by even visible crystallined nature and non flaggy stratification.
Note to the said Entry states that sometimes rocks, such as serpentine are also polished and used in trade as marble.
The Director, Regional Petrology Laboratory where the appellant sent a sample of the rocks ordered of importation, for examination has also forwarded a technical report on study of sample by Dr. H.M. Ramachandra, a Geologist, which states: "The rock is an allochemic (Pelmicritic) limestone, it cannot be termed as a marble.
" The Indian Bureau of Mines in its letter dated March 3, 1982 has mentioned that: "Technical Definition: Geologically (petrologically) marble is recrystallised (metamorphosed) limestone.
Ordinary limestone is a sedimen tary rock but once it is metamorphosed i.e. once it has undergone recrystallisation, it is turned to marble.
So marble is metamorphosed limestone which consist essentially the minerals calcite, dolomite or a combination of the two. " "The specimen has been examined and it is observed that the rock is cryptocrystalline, fine grained, mildly metamor phosed with few bigger grains of calcite.
The specimen is hard and compact and is capable of being cut into slabs/ blocks of desired size and can take a good polish." Thus, according to all these reports as well as the ISI specification the slabs of rocks that have been imported by the appellant and claimed to be calcareous stones are not 'marble ' in the scientific and technical sense of the term marble.
As we have already stated hereinbefore that Tariff Item No. 25.15 mentions five kinds of rocks such as Marble, Travertine, Ecaussine, Alabaster and other calcareous monu mental or building stone of a specific gravity of 2.5 or more whereas in the List of Restricted Items Item No. 62 only mentions Marble/ granite/onyx are mentioned.
In the absence of any definition of the term 'marble ' it is to be decided what is the scope and meaning of the word marble and whether it includes within it the other kinds of 388 calcareous stones such as travertine, ecaussine, alabaster and other calcareous monumental or building stone of a specific gravity of 2.5 or more in order to saddle the importer with the burden of obtaining a licence for import ing the said restricted item.
It has been submitted on behalf of the appellant that as the word marble has not been defined and the tariff item refers to calcareous stone of an apparent specific gravity of 2.5 or more, it has to be taken to be used in a technical and scientific sense and as such the same cannot be interpreted in the popular commercial sense or as understood in trade parlance by persons dealing with the ' said stones.
In deciding this question the first thing that requires to be noted is that Entry No. 25.15 refers specifically not only to marble but also to other calcareous stones whereas Entry No. 62 refers to the restricted item marble only.
It does not refer to any other stones such as ecaussine, tra vertine or other calcareous monumental or building stone of a certain specific gravity.
Therefore.
on a plain reading of these two Entries it is apparent that travertine, ecaussine and other calcareous monumental or building stones are not intended to be included in 'marble ' as referred to in Entry No. 62 of Appendix 2 as a restricted item.
Moreover, the calcareous stone as mentioned in ITC Schedule has to be taken in scientific and technical sense as therein the said stone has been described as of an apparent specific gravity of 2.5 or more.
Therefore, the word 'marble ' has to be interpreted, in our considered opinion, in the scientific or technical sense and not in the sense as commercially under stood or as meant in the trade parlance.
There is no doubt that the general principle of interpretation of Tariff Entries occurring in a text statute is of a commercial nomenclature and understanding between persons in the trade but it is also a settled legal position that the said doc trine of commercial nomenclature or trade understanding should be departed from in a case where the statutory con tent in which the Tariff Entry appears, requires such a departure.
In other words, in cases where the application of commercial meaning or trade nomenclature runs counter to the statutory context in which the said word was used then the said principle of interpretation should not be applied.
Trade meaning or commercial nomenclature would be applicable if a particular product description occurs by itself in a Tariff Entry and there is no conflict between the Tariff Entry and any other Entry requiring to reconcile and harmo nise that Tariff Entry with any other Entry.
In Union of India vs Delhi Cloth & General Mills, [1963] Supp.
(1) SCR 586 the question arose as to how the term "refined oil" 389 occurring in the Tariff was to be construed.
There was no competition between that Tariff Entry with any other, nor was there any need to reconcile and harmonise the said entry with any other provision of the tariff.
This Court, there fore, considered the term "refined oil" by applying the commercial meaning or trade nomenclature test and held that only deodorised oil can be considered to be refined oil.
This Court also referred to the specification of "refined oil" by the Indian Standards Institution and held that: "This specification bY the Indian Standards Institution furnishes very strong and indeed almost incontrovertible support for Dr. Nanji 's (respondent 's) view and the respond ent 's contention that without deodorisation the oil is not "refined oil" as is known to the consumers and the commer cial community." In Dunlop India Ltd. vs Union of India and Ors., [1963] Supp. 1 SCR 586 the question arose whether the product known as V.P. Latex which was imported by the appellant can be considered to be 'rubber raw ' within the meaning of Tariff Entry No. 87 of the Indian Tariff Act, 1934.
The choice was between classifying V.P. Latex as 'rubber raw ' and the general residuary entry at the end of the Tariff (a general catch) all entry which was described as "the orphanage of the residuary clause".
In these circumstances, this Court applied the commercial meaning or nomenclature test.
In the case of Commissioner of Sales Tax, M.P. vs Jas want Singh Charan Singh; , the respondent was a dealer in firewood and charcoal.
In a proceeding for assessment of sales tax under the M.P. General Sales Tax Act, the respondent claimed that charcoal was 'coal ' within the meaning of Entry 1 of Part III of the Schedule II to the Act and therefore was taxable at the 'rate of 2%.
The Sales Tax Authorities however, held that charcoal was not 'coal ' and was taxable at 4% as it fell under the residuary Entry 1 of Part VI of Schedule II.
The Board of Revenue and the High Court held in favour of the respondent relying on the dic tionary meaning of the word 'coal '.
The Commissioner of Sales tax appealed.
It was held by this Court that in inter preting items in statutes like the Sales Tax Acts resort should be had not to the scientific or technical meaning of the terms used but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, in their commercial sense.
Viewed from this angle, both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in 390 these sense as ordinarily understood and would include 'charcoal ' in the term 'coal ' It may be pointed out that this Court has clearly and unequivocally laid down that it is not permissible but in fact it is absolutely necessary to depart from the trade meaning or commercial nomenclature test where the trade or commercial meaning does not fit into the scheme of the commercial statements.
This Court referring to the observa tions of Pullock B. in Grenfell vs Inland Revenue Commis sioner, ,248, observed: "that if a statute contains language which is capable of being construed in a popular sense such statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning of course, by the words 'popular sense ', that sense which people conversant with the subject matter with which the statute is dealing would attribute to it.
" But "if a word in its popular sense and read in an ordinary way is capable of two constructions, it is wise to adopt such a construction as is based on the assumption that Parliament merely intended to give so much power as was necessary for carrying out the objects of the Act and not to give any unnecessary powers.
In other words, the construction of the words is to be adapted to the fit ness of the matter of the statute.
" The Court has also referred to the observations of Fry, J in Holt & Co. vs Coilyet, , 720.
The observation is: "If it is a word which is of a technical or scientic character then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning." Referring to the above decisions this Court held that: "While construing the word 'coal ' in Entry 1 of Part III of Schedule II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word.
A sales tax statute is being one levying a tax on goods must in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance.
" 391 This Court in K.V. Varkey vs Agricultural Income Tax and Rural Sales Tax Officer, [1954] 5 STC 384 specifically declined to apply the popular or commercial meaning of 'Tea ' occurring in the sales tax statute holding that the context of the statute required that the technical meaning of 'a product of plant life ' required to be applied and therefore green tea leaves were tea even though they might not be tea was known in the market.
In Cannanore Spinning and Weaving Mills Ltd. vs Collec tor of Customs and Central Excise Cochin and Ors., ; this Court held that the word 'hank ' occurring in a Central Excise Notification could not be interpreted accord ing to the well settled commercial meaning of that term which was accepted by all persons in the trade in as much as the said commercial meaning would militate against the statutory context of the said exemption Notification issued in June, 1962.
The word 'hank ' as used in the Notification meant a 'coil of yarn ' and nothing more.
In Collector of Central Excise, Kanpur vs Krishna Carbon Paper Co., ; it has been observed by this Court that it is a well settled principle of construction that where the word has a scientific or technical meaning and also in ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature.
It has also been observed that whether the general principle of interpreta tion was applicable or not depended on the statutory con text.
If special type of goods is subject matter of a fiscal entry then that entry must be understood in the context of that particular trade, bearing in mind and particular word.
The trade meaning is one which is prevalent in that particu lar trade where that goods is known or traded.
Where, howev er, there is no evidence either way then the definition given and the meaning flowing from particular statute at particular time would be the decisive test.
It has further been observed by this Court in this case that: "Where no definition is provided in the statute itself, as in this case, for ascertaining the correct mean ing of a fiscal entry reference to a dictionary is not always safe.
The correct guide, it appears in such a case, is the context and the trade meaning.
In this connection reference has been made to the observations of this Court in CST vs M/s.
S.N. Brothers, Kanpur, ; 392 In Collector of Customs, Bombay vs Hargovindas & Co., the import policy restricted the import of milk powder.
The importer had imported skimmed milk powder and relied upon the principle of commercial nomenclature or trade understanding in order to contend that there was a settled and accepted distinction between milk powder and skimmed milk powder which was specifically recognised and accepted by this Court in Healthways Dairy vs State of Haryana.
The Special Bench of the Tribunal negatived that contention and held that: "unlike the central excise tariff the import schedule itself provided a statutory basis of interpretation.
The controver sy before us relates to a period during which the Imports (Control) Order, 1955, issued under the Imports and Exports (Control) Act, 1947, had a separate import schedule annexed to it.
This import schedule was aligned with the import schedule of the .
The import sched ule under the Import (Control) Order itself did not contain any rules of interpretation, section notes and chapter notes.
However, a statutory Note at the beginning of the import schedule stated that the scope of various terms and headings in it was to be the same as in the import tariff schedule in the .
Thus the elaborate statutory scheme of the customs tariff import schedule got applied to the import schedule as well.
It is by now well known that the customs tariff import schedule hardly left any scope to go in for trade parlance or common parlance because it statutorily defined almost everything with the help of rules of interpretation and explanatory notes.
In such a scheme, the statutory definitions must prevail over the trade parlance or any other aides to interpretation.
" In Collector of Customs, BOmbay vs Swastic Woollens (P) Ltd. and Ors., [1988] Supp.
SCC 796 this Court has observed that the expression 'wool wastes ' which has not been defined in the or in the relevant Notifica tion is not an expression of article It may be understood, as in most of financial measures where the expressions are not defined not in a technical or pre conceived basis but on the basis of trade understanding of those who deal with these goods.
When no statutory definition is provided in respect of an item in the or the Central Excises Act, the trade understanding, meaning thereby the understanding in the opinion of those who 393 deal with the goods in question, is the safest guide.
It has also been observed therein that the Tribunal has not ignored the Technical Committee 's observation nor the Board 's Tariff Advice.
On a conspectus of all these decisions mentioned herein before the position thus emerges is that when the expression 'marble ' has not been defined in the as well as in the or in the relevant Notification regarding the restriction on import of Marble in the List of Restricted Articles, it is necessary to decide the signifi cance and true meaning of the word 'marble ' as used in the ITC Schedule as well as in the List of Restricted Items, and the not in its popular sense i.e. people who are dealing with this trade meant the same or what that term is commercially known in trade par lance but it has to be given a meaning in the context in which this word has been used in the ITC Schedule as well as in the List of Restricted items of Import.
It is also neces sary to decide whether the word 'marble ' as stated in the ITC Schedule refers to only marble or includes travertine, ecaussine, alabaster and other calcareous monumental or building stones and can be termed as marble in the commer cial sense or in trade nomenclature so as to bring the same within the restricted Item No. 62 of Appendix 2 of the Import and Export Policy for April 1988 March 1991.
We have already stated hereinbefore that in the List of Restricted Items under item No. 62 only marble has been mentioned and not the other stones including calcareous stone used for building or monumental purposes which have been left out.
Therefore, per se it may be difficult to say that marble includes the other calcareous stones mentioned in the ITC Schedule.
It is pertinent to mention in this connection to the Report of Dr. S.F. Sethna of the Department of Geology, St. Xaviers College, Bombay to whom a sample of the said calcareous slab of stone intended to be imported has been sent.
Dr. Sethna, a noted Geologist after examination of the sample specifically stated that the sample under investiga tion is a sedimentary rock which does not show any sign of metamorphic recrystallization and thus cannot be considered as a marble.
The report sent by the exporters of Italy, Elle Marmi and Andree Muciani dated December 6, 1988 also states that all the rough slabs loaded are calcareous stone slabs other than marble.
Furthermore, Gianni C. Baigini, a Survey or registered with the Chamber of Commerce of Carrara and a Specialist for control of Marble, Calcareous Stones (other than marble) and Granite sent a certificate on inspection of the sample that all rough slabs stuffed are calcareous stone slabs of good quality.
These are calcareous stones other than marble because they are not recrystallized calcareous rocks.
He 394 further certified that the calcareous stone slabs in above consignment are not marble.
One Shri S.V. Chaudhary, Direc tor, Regional Petrology Laboratory, Geological Survey of India after examination of the sample sent a report dated March 13, 1989 under the signatures of Dr. H.M. Ramachandra, Geologist to the appellant.
The said report states that, 'the rock is a allochemic (Palmicritic) limestone, it cannot be termed as a marble '.
In Invoice No. 126 88 a certificate has been given by the exporter to the following effect: "We certify that merchandise is of Italian origin.
Contents are true and authentic, prices correct and current and that it is the only invoice for the goods described therein.
" In the said invoice the goods has been described as slabs of calcareous stone of 2 Cms thick quantity.
Thus it appears from all the aforesaid reports and certificates that the slabs of stone which have been imported from Italy are nothing but calcareous stones and the same cannot be termed as marble.
Even according to item No. 0.2 of Indian Standard Specification for Marble (Blocks, Slabs and Tiles) the stone slabs imported by the appellant being not re crystallized and even being not metamorphosed cannot be considered as marble.
Of course, the Revenue has tried to contend relying on the Note to the same wherein it has been stated that sometimes rocks, such as serpentine are also polished and used in trade as marble that the slabs of calcareous stone imported are used as marble in trade.
In Harmonised System of Nomenclature (H,S.N.) marble has been defined as a hard calcareous stone, homogeneous and finegrained, often crystallie and either opaque or translu cent, Marble is usually variously tinted by the presence of mineral oxides (coloured veined marble, onyx marble, etc.), but there are pure white varieties.
The Revenue Authorities sent the sample of the calcareous stone imported by the appellant to the Department of Mines, Indian Bureau Mines.
A report has been sent by them to the Superintendent, Central Excise and Customs Division, Udaipur after testing of the sample of March 3, 1989.
The said report gives the ' Technical and Commercial definition of marble as: Technical definition: "(Geologically (Petrologically) marble is recrystallised (Metamorphosed) limestone.
Ordinary limestone is a sedi 395 mentary rock but once it is metamorphosed i.e. once it has undergone recrystallisation, it is turned to marble.
So marble is metamorphosed limestone which consist essentially the minerals calcite, dolomite or a combination of the two.
" Commercial Definition: "The usage of the term 'marble ' has a much vider applica tion.
In the commercial circle, any limestone which is sufficiently hard and coherent to take a good polish and which can be cut into desired sizes (into blocks) free of cracks can be called marble.
" It has also been stated therein that commercial marble refer to a crystalline rock composed of predominantly of one or more of following minerals; calcite, dolomite or serpentine and capable of taking a polish.
It has been further stated under the said report that the specimen has been examined and it is observed that the rock is cryptocrystalline, fine grained, mildly metamorphosed with few bigger grains of calcite.
The specimen is hard and compact and is capable of being cut into slabs/blocks of desired size and can take a good polish.
Keeping above visual observations into view, it has been concluded that the specimen under reference is marble as per commercial definition.
The Director of Mines, and Geology Department, Udaipur also sent a report to the Assistant Collector of Customs.
It has been stated in the said report that the sample is of a fine grained off white rock.
It gives very good effervescence with dilute hydro chloric acid and its hardness indicates that it is a fine grained carbonate rock.
It takes good polish and can be used as marble.
Regarding the microscopic characters it states that the rock is mainly composed of very fine grained cherty calcitic mass and iron oxides.
No polygonal crystals are present.
Recrystallization has not taken place.
The rock sample has been identified as 'fine grained cherty lime stone '.
It has also been stated that technically marble is a product of thermal metamorphism of limestone (impure lime stone) in which recrystallisation takes place and silicate minerals are also produced.
Commercially the term 'marble ' has been applied to any stone, other than those known in trade as granite, that has a pleasing appearance and will take a polish.
Thus, the term 'marble ' adopted in the trade is based on the general properties and use of the stone.
It has been further stated that the definition of marble given in IBM publication 'Marble in India ' 1983, Government of India is as under: 396 "Marble: Petrologically marble is recrystallised (Metamorphosed) limestone.
But in commercial parlance the term marble has a much wider application.
Commercial marble is any crystalline rock composed predominantly of calcite, dolomite or serpentine that is capable of taking polish.
" In Webster Comprehensive Dictionary, International Edition, the word 'Marble ' has been defined as "A compact, granular, partly crystallized limestone, occuring in many colours, valuable for building or ornamental purposes.
" In Shorter Oxford English Dictionary, the word 'Marble ' has been defined as "Limestone in a crystalline (or, less strictly, also a granular) state and capable of taking a polish, occurring in many Varieties; much used in sculpture and architecture.
" The Appellate Tribunal after considering various reports referred to hereinbefore observed that the term 'marble ' cannot be construed on geological and petrological consider ation, but has to be construed in commercial parlance.
It has also been observed that the Tribunal is unable to place reliance on these reports.
In Commercial circle any lime stone which is sufficiently hard and coherent to take good polish and which can be cut into desired sizes free of cracks can be called as marble as per the opinion given by the Indian Bureau of Mines.
The Tribunal also observed that the Tribunal has found that the specimen could be termed as 'marble ' as per the commercial definition but not technical ly referring to the report of the Director, Mines and Geolo gy Department, Udaipur.
It has also been observed by the Tribunal that in the sample re crystallization has not taken place.
The Tribunal has also held that it was not necessary to go into any other aspects in term 's of the ISI or techni cal and scientific definition and held that the impugned goods do fall under marble in trade understanding and as such the same comes within the List of Restricted Items in Item No. 62, of Appendix 2.
This finding cannot be sustained in as much as all the above reports referred to hereinbefore clearly lay down that any stone to be termed as marble falling within Entry No. 62 of the List of restricted Items in Appendix 2, has to be recrystallised.
The Indian Stand ards Institution has also given a similar definition of marble as recrystallization of limestones or dolomitic limestones.
Furthermore, Petrologically and Geologically the slabs of stones which have been imported are allochemic (pelmicritic) limestone and it cannot be termed as marble.
The Indian Bureau of Mines also observed 397 on testing the sample of rock that it is cryptocrystalline, fine grained, mildly metamorphosed with few bigger grains of calcite and identified the same as very fine grained cherry calcitic limestone.
It is apparent from all these reports that the calcare ous stone of specific gravity of 2.5% is not marble techni cally and scientifically.
The finding of the Appellate Tribunal is, therefore, not sustainable.
it is, of course, well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the Tariff Entry and any other Entry in the Tariff Schedule.
In the instant case, in the Tariff Entry No. 25.15 in the ITC Schedule, Appendix 1 B, Marble, Travertine, Ecaussine, Alabaster and other calcareous stones of an apparent specif ic gravity of 2.5 or more have been mentioned whereas in Entry No. 62 only the word marble has been mentioned as a restricted item for import, the other calcareous stones such as travertine, ecaussine, alabaster etc.
have not been mentioned in Entry No. 62.
In these circumstances, some significance has to be attached to the omission of the words travertine, ecaussine and other calcareous monumental or building stones of an apparent specific gravity of 2.5 or more and Alabaster from the ITC Schedule in Entry No. 62 of Part B, Appendix 2 of Import and Export Policy for April 1988 March 1991.
The only natural meaning that follows from this is that Entry 62 is confined only to marble as it is understood in a petrological or geological sense and as defined by the Indian Standard Institute and not as men tioned in the opinion given by the Indian Bureau of Mines on visual observation and it does not extend to or apply to other calcareous stones mentioned in the ITC Schedule.
Moreover, the commercial nomenclature or trade meaning cannot be given to marble in as much as such a meaning if given will render otiose, redundant the terms travertine, ecaussine, alabaster and other calcareous monumental or building stone of an apparent specific gravity of 2.5% or more whether or not roughly trimmed or merely cut by sawing.
Moreover, in Appendix 6 i.e. Import of items under Open General Licence, Item No. t refers to Raw Materials, compo nents, and consumables (Non iron and steel items other than those in Appendices 2, 3, Part A, 5 and so the other calcar eous stones excluding marble which is a restricted item of import fall within import items under Open General Licence.
Although much stress has been laid on the note to Item No. 0.2 of Indian Standards Specification for Marble (Blocks, Slabs and Tiles) wherein it has been stated that some 398 times rocks, such as serpentine are also polished and used in trade as marble but it cannot be taken into consideration in coming to the finding that marble is the genus and all the other calcareous stones referred to in Tariff Entry No. 25.15 in ITC Schedule, Appendix I B are included in it.
Moreover, the onus heavily lays upon the Revenue Authorities to prove by adducing cogent evidence that limestone without Metamorphism and recrystallisation not being opaque or translucent will fall within the category of stone called 'marble ' in Entry No. 62 of Appendix 2 as one of the re stricted items.
The appellant before placing the order took considerable precaution in ascertaining from the exporter that the calcareous stone to be imported from Italy is calcareous stone and not marble.
Moreover, he referred the sample of the calcareous stone to be imported to the Depart ment of Geology, Bombay and to the Regional Petrology Labo ratory of the Geological Survey of India to ascertain wheth er calcareous stone in question is marble or not in order to enable him to import the same under open general licence.
He also asked his exporter to send a certificate whether the calcareous stone for which order is placed is marble or not.
The exporter sent a certificate alongwith the report of the expert stating that the slabs of calcareous stones contained in the containers sent by the exporter are calcareous stones and not marble.
No tangible evidence has been produced nor even affidavits of persons attached to this trade to the effect that the slabs of calcareous stone imported by the appellant are marble as defined within Entry No. 62 of the List of Restricted Items have been filed.
The Revenue has not taken any steps to ascertain whether the calcareous stones imported are marble not by any scientific, geological or petrological test.
Considering all these reports we are of the opinion that since the term marble has not been defined in the Imports Control Order as well as in the ITC Schedule, it has to be taken in a scientific and technical sense as well as in the context the word has been used and the slabs of calcareous stones imported by the appellant from Italy cannot be held to be marble as they have not been recrystallised and meta morphosed in the geological and petrological sense of the term.
It is pertinent to refer in this connection the fol lowing passage of Maxwell on the Interpretation of Statutes, Twelfth Edition by P. St. J. Langan: "The word "land" is generally understood as including build ings, but if, after imposing a rate of houses, buildings, works, tenements and hereditaments, an Act exempted "land", this word would be restricted to land unburdened with houses, buildings or works which would ,otherwise have been unnecessarily enumerated.
" 399 As regards the submission that the end use of a particu lar item has to be taken into consideration in interpreting a product is of no relevance in determining its classifica tion as we have stated hereinbefore that in interpreting a term appearing in the Tariff Item which has not been defined either in the Tariff Schedule or in the Import Control Order, the same is to be interpreted in such a way which is in consonance with the Items specified in the ITC Schedule without leaving out any part of the Items mentioned therein.
In other words, a harmonised interpretation has to be given to each of the calcareous stones mentioned in the said Tariff Item in ITC Schedule and nothing should be left out or made redundant in giving the interpretation.
The commer cial nomenclature or understanding in the trade which is generally given in tax statute can not be taken recourse to in the instant case in as much as the statutory context in which the Tariff Item appears requires departure in the instant case.
In the Tariff.
Item the calcareous stones used for monumental or building purposes and of a specific gravi ty of 2,5% or more is used in the scientific or technical sense and as such the commercial nomenclature or understand ing in the trade should not be taken recourse to in inter preting the word 'marble '.
The reference to the requirement of gravity of 2.5% or more is also a purely technical crite ria or requirement which shows that the principle of trade nomenclature or commercial understanding is not applicable to that Tariff Item.
Moreover, the said Harmonised System of Nomenclature (HSN) contains a specific note regarding ser pentine rocks to the effect that the same are some times called marble, but the same is excluded from Chapter Heading 25.15.
This again clearly shows that according to HSN, Chapter Heading 25.15 has to be construed according to its technical meaning.
Technically, serpentine does not fall under Heading 25.15 and the same is accordingly excluded therefrom by the HSN.
If commercial meaning is to be applied then serpentine would have to be classified under Item 25.15 in as much as is sometimes called marble in the trade.
The HSN Explanatory Notes, therefore, establish that Chapter Heading 25.15% must be construed by its technical sense and not by applying a commercial nomenclature test.
Considering all these aspects, there is no other alter native but to conclude that the slabs of calcareous stone imported by the appellant are not marble as mentioned in Entry No. 62 of Appendix 2 of the Import and Export Policy for April 1988 March 1991 and so it is covered by open general licence.
The imported goods cannot be confiscated by the Government under section 111(d) of the Customs Act, 1961 nor the appellant can be given the option to clear the said goods 400 for home consumption on payment of fine of Rs. Five lakhs in lieu of confiscation under Section 125 of the .
The appellant cannot be said to have imported calcare ous stones without an import licence and as such there being no violation of the Import Control Policy the imposition of penalty of Rs.
Ten lakhs under section of the is also unwarranted and not sustainable.
Before we conclude it is relevant to mention in this connection that even if it is taken for arguments sake that the imported article is marble falling within Entry 62 of Appendix 2, the burden lies on the Customs Department to show that the appellant has acted dishonestly or contuma ciously or with the deliberate or distinct object of breach ing the law.
In the present case, the Tribunal has itself specifical ly stated that the appellant has acted on the basis of bona fide behalf that the goods were importable under OGL and that, therefore, the Appellant deserves lenient treatment.
It is, therefore, to be considered whether in the light of this specific finding of the Customs, Excise & Gold (Con trol) Appellate Tribunal, the penalty and fine in lieu of confiscation require to be set aside and quashed.
Moreover, the quantum of penalty and fine in lieu of confiscation are extremely harsh, excessive and unreasonable bearing in mind the bona fides of the Appellant, as specifically found by the Appellate Tribunal.
We refer in this connection the decision in Merck Spares vs Collector of Central Excise & Customs, New Delhi, ; Shama Engine Valves Ltd. Bombay vs Collector of Customs, Bombay,[1984] and Madhusudan Gordhandas & Co. vs Collector of Customs, Bombay, wherein it has been held that in imposing penalty the requi site mens rea has to be established.
It has also been ob served in Hindustan Steel Ltd. vs State of Orissa, [1970]1 SCR 753 by this Court that: "The discretion to impose a penalty must be exercised judi cially.
A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct, or acts in conscious disregard of its obligation; but not, in cases where there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.
" 401 In the instant case, even if it is assumed for arguments sake that the stone slabs imported for home consumption are marble still in view of the binding arrived at by the Appel late Tribunal that the said product was imported on a bona fide belief that it was not marble, the imposition of such a heavy fine is not at all warranted and justifiable.
In the premises aforesaid, we allow the appeal and set aside the judgment and order passed by the Appellate Tribu nal and direct the Tribunal to release the goods to the appellant forthwith.
We also direct the Tribunal to release the personal bond given by the Appellant for a sum of Rs.2,50,000 on the basis of which one container wasreleased as per order of this Court dated October 25, 1989 and also to release the appellant from payment of detention charges and demurrage for retaining the goods.
In the facts and circumstances of the case there will be no order as to costs.
R.S.S. Appeal allowed.
| The land in dispute was agreed to be sold in favour of the appellant under an agreement.
Subsequently, a third party in execution of a decree got the property attached.
The sale deed was executed thereafter.
A question arose as to the validity of the sale.
The High Court held that the sale would be subject to attachment.
Allowing the appeal by special leave, the Court, HELD: The agreement for sale creates an obligation attached to the ownership of the property.
The attaching creditor is entitled to attach only the right, title and interest of the judgment debtor.
Hence, if an agreement for sale is entered into before attachment, the attachment cannot be free from the obligation so incurred, and the attaching creditor will not get any right higher than the judgment debtor had on the date of the attachment.
He cannot ignore that obligation and proceed to bring the property to sale as if it remained the absolute property of the judgment debtor.
[835C, 834F, 835E] Accordingly, though section 64 CPC is intended to protect the attaching creditor, but if the subsequent conveyance is in pursuance of an agreement for sale which was entered into before the attachment, the contractual obligation arising therefrom must be allowed to prevail over the rights of the attaching creditor.
The rights of the attaching creditor shall not be allowed to override the contractual obligation arising from the antecedent agreement for sale of the at tached property.
[835D E] Paparaju Veeraraghavayya vs Killaru Kamala Devi & Ors., AIR 1935 Mad. 193; Veerappa Thevar & Ors.
C.S. Venkataram ma Aiyar & Ors.
, AIR 1935 Mad. 872; Angu Pillai vs
M.S.M. Kasiviswanathan Chettiar, ; Puma Chandra Basak vs Daulat Ali Mollah, AIR 1973 Cal. 432; Rango Rama chandra vs Gurlingappa 833 Chinnappa, AIR 1941 Bom.
198; Yashvant Shankar Dunakhe vs Prayarji Nurji Tamboli, AIR 1943 Bom.
145 and Kochuponchi Varughese vs Quseph Lonan, AIR 1952 Travancore Cochin 467, approved.
Mohinder Singh & Anr.
vs Nanak Singh & Anr., AIR 1971 Pb. & Haryana 381, overruled.
The sale in the instant case would not thus be subject to the attachment.
The purchaser would get good title de spite attachment.
[833F, 834D]
|
Nos. 232,233, 286, 309, 320, 351, 319, 350, 354 and 490 of 1951.
Applications under article 32 of the Constitution for writs to enforce the fundamental rights of the petitioners.
C. K. Daphtar (R. M. Hajarnavis, with him) for the petitioner in Petition No. 232.
M. C. Setalvad (G. N. Joshi and B. M. Hajarnavis, with him) for the petitioner: in Petition No. 233.
B. M. Hajarnavis for the petitioners in Petitions Nos. 286, 309 and 320.
V. N. Swami for the petitioners in Petitions Nos., 350 and 351.
N. section Bindra (B. section Narula with him) for the petitioners in Petitions Nos. '319, 354 and 490.
T. L. Shivde, Advocate General of Madhya Pradesh, for the respondent in all the petitions, the State of Madhya Pradesh.
December 22.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
These are petitions under article 32 of the Constitution of India for directions or orders or writs to enforce the fundaments rights, of the petitioners to property by prohibiting, the respondent, the State of Madhya Pradesh, from enforcing their alleged rights under the Madhya Pradesh Abolition of Proprietary Rights Act, 1950.
The several petitioners entered into contracts and agreements with the previous proprietors of certain estates and mahals in the State under which it is said they acquired the rights to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac and to cut and carry away teak and timber and miscellaneous special of trees called hardwood and 478 bamboos.
The contracts and agreements are in 'writing some of them are registered.
There is no dispute about their genuineness, and it has not been alleged that they are 'collusive or fraudulent transactions.
Their dates and the several sums of money paid as consideration are set out in the petitions.
The petitioners allege that they have spent large sums of money in the exercise of their rights, and his fact too is not controverted.
Petitions Nos. 232, 233, 286, 309 and 320 of 1951 relate to tendu leaves which grow in shrub jungles and which are used in the manufacture of beedis or country made cigarettes, a very extensive and competitive business carried on by some of the petitioners involving an outlay of one to two lakhs of rupees in some cases.
For instance, 406 contracts are involved in Petition No. 232 of 1951 ; the consideration paid comes to Rs. 1,65,385 and the expenses are alleged to be in the region of Rs. 1,90,000.
In Petition No. 233 of 1951 there are 785 contracts; the purchase money is Rs. 1,10,605 and the outlay byway of 'expenses is said to be Rs. 50,000.
Petition No. 319 of 1951 relates to the culture and cultivation of lac, and there are several lease deeds of different dates enuring for different periods; two of them go up to the years 1966 and 1967.
Teak,, timber and hardwood form the subject matter of the rights involved in Petition No. 350 of 1951 and the registered lease deed is dated 8th October, 1949, and it is for a term of ten years.
Petition No. 351 of 1952 involves tendu leaves and miscellaneous forest produce and timber.
Petition No. 354 of 1951 relates to bamboo forests, and Petition No. 490 of 1951 to hardwood and bamboo.
The contentions of the petitioners are mainly three in number.
They say that the rights acquired by them under these contracts and agreements were got before the passing of the Madhya Pradesh Abolition 479 of Proprietary Rights Act, 1950, and that the legislation therefore does not affect them.
It is urged next that they are not proprietors within the meaning of the Act and consequently the Act does not apply to them.
Lastly, the question is raised that the Act itself is ultra vires, as many of its material provisions offend their fundamental rights guaranteed under the Constitution.
The full title of the Act is the " Madhya Pradesh, Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 ", and it is Madhya Pradesh Act I of 1951.
It came into force on 26th January, 1951.
On the very next day, there was a notification under section 3 of the Act putting an end to all proprietary rights in estates, mahals and alienated villages and vesting the same in the State for the purposes of the State free of all encumbrances with effect from 31st March, 1952.
The validity of the Act was questioned by the affected proprietors in Visheshwar Rao vs The State of Madhya Pradesh (1) before this Court, and the Act was held to be valid.
The petitioners are concluded.
We have to consider only the other two points raised on behalf of the petitioners.
It is clear from the provisions in the impugned Act that only those rights of the proprietor vest in the State which the proprietor had on the specified date.
Section 3 provides that on and from a date to be specified by a notification by the State Government, all proprietary rights in an estate or mahal vesting in a proprietor shall pass from him to and vest in the State.
The consequences of vesting are given in section 4 of the Act, and it is provided that the vesting will take place, notwithstanding anything.
contained in any contract, grant or document or in any other law for the time being in force and save as otherwise provided in this Act.
But this again deals only with the rights existing on the date of the notification the section is not retrospective.
(1) 480 Clause (a) speaks of all rights,title and interest vesting in the proprietor or any person having interest in such propreitory right through the proprietor.
Clause (b) is to this effect "all grants and confirmation Of title of or to land in the property so vesting Or Of or, to any right or privilege in respect of such property orland revenue in respect thereof shall, whether liable to resumption or not, determine;" The right or privilege referred to is the right or privilege of the proprietor or any person having interest in the proprietary right through the proprietor.
Clause (c) is quite clear on the subject; it runs thus: "all rents and cossesi in respect of any holding in the property so vesting for any period after the date of vesting and which.
but for the vesting, would be payable to the proprietor shall vest in and be payable to the State Government. ." The words " after the date of vesting " are important.
Sub section (3) of section 4 says Nothing contained in subsection (1) shall operate as a bar to the recovery by the outgoing proprietor of any sum which becomes due to him before the date of vesting by virtue of his proprietary rights and any such sum shall be recoverable by him by any process of law which but for this Act would be available to him.
" If the outgoing proprietor is entitled to, recover any sums as quid pro quo for what he has parted with under the transfer, it can only be on the basis that the transfer is a good and valid transaction unaffected by the Act.
Section 6 is very material, and it is in these terms ' (1) Except as provided in sub section (2), the transfer of any right in the property 'Which is liable 481 to vest in the state under this Act made by the proprietor at any time after the 16th March, 1950, shall,.
as from the date of vesting, be void.
(2) Where on the.
application of the transferor or the transferee, the Deputy Commissioner is satisfied that any transfer of property referred to in subsection (1) was made by a proprietor in good faith and in the ordinary course of village management, he may declare that the transfer shall, not be void* after the date of vesting.
" The date, 16th March, 1950, is probably the date when legislation on these lines was actively thought of, and sub section (1) hits at transfers made after this date.
This means that transfers before that date are not to be regarded as void.
Even in the case of transfers after the said date, sub section (2).
provides that the Deputy Commissioner may declare that they .are not void after the date of vesting, provided they were made in good faith and in the ordinary course of management.
, The scheme of the Act as can be gathered from the provisions referred to above makes it reasonably clear that whatever was done before 16th March, 1950, by the proprietors by way of transfer of rights is not to, be disturbed or affected, and that what vests in the State is what the proprietors had oil the vesting date.
If the proprietor had any rights after the date of vesting which he could enforce against the transferee such as a lessee or a licensee, those rights would no doubt vest in the State.
In all these petitions, the several contracts and, agreements were before the date of vesting, and many of them were prior even to the 16th March, 1950.
The petitioners had taken possession of the subject matter of the contracts, namely, tendu leaves, lac palsadies, teak, timber and hardwood, bamboos and miscellaneous forest produce.
Under the Indian Sale of Goods Act, "goods" include growing crops, grass and things attached to or forming part of the land, which are agreed to be severed before sale or under the contract of sale 482 notwithstanding the definition of "immovable property " in section 3 (25) of the General Clauses Act of 1897.
In Petition No. 232 of 1951 two sample agreements relating to tendu leaves are given as annexures A and B to the petitions.
They may be quoted in extenso for a clear understanding of the nature of the right created.
Exhibit A dated 16th November, 1950, is in these terms: " Receipt written in favour of Seth Chhotabhai Jethbai Patel Company shop Gondia, and written by Shri Madhavrao Gangadhar Rao Chitnavis shop Itan receipt is written that we are owners of forests of Tendu leaves of Monza Sawarla 0 12 0 Mauza Khatkheda 0 5 0 Mouza Nati Kheda 0 16 0 and Monza Welwa 0 16 0.
We have given contract (Theka) of cutting Tendu leaves from these four villages for one year that is till the end of June for Rs. 2,500 out of this we had received Rs. 300 on 21st September, 1950, at Bhandara and the balance Rs. 2,200 was received from your Bhandara shop through Balubhai.
Nothing remains to be paid to us.
You have a right to coppice the trees.
" The terms of Exhibit B dated 12th July, 1948, Emitting unnecessary portions are as follows: In the year 1948 A.D. theka patra is executed that in consideration of the amount received as detailed above I had given the full tendu leaves jungle for taking out tendu leaves for five years from 1949 A.D. to 1053 A.D.
I have immediately given possession.
Now you can take tendu leaves of the tendu leaves forests described above every year for five years till the end of June, 1953.
You may coppice the plants and take leaves.
At the end of June, 1953, you should return my jungle without damage or loss to me.
After the end of the period it depends upon my will whether or not I give you the forests on theka (again).
If any one obstructs you in coppicing or taking away leaves, I will be responsible for the damages.
Hence I have executed 483 this theka pathi for five years for consideration after reading and understanding.
I agree with it.
Dated 12th July, 1948, by pen of Waman Sadeshic Amte Petition Writer Bhandara.
" The contracts and agreements appear to be in essence and effect licenses granted to the transferees to cut, gather and carry away the produce in the shape of tendu leaves, or lac, or timber, or wood.
A similar agreement came up for consideration by the Judicial Committee of the Privy Council in Mohanlal Hargovind of Jubbulpore vs Commissioner of Income tax, Central Provinces and Berar, Nagpur (1) in connection with a question arising out of the Income tax Act.
Some of the observations contained in the judgment dealing with the nature of such an agreement are useful and may be quoted here : " The contracts grant no interest in land and no interest in the trees or plants themselves.
They are simply and solely contracts giving to the grantees the right to pick and carry away leaves, which, of course, implies the right to appropriate them as their own property.
The small right of cultivation given in the first of the two contracts is merely ancillary and is of no more significance than would be e.g., a right to spray a fruit tree en to the person who has bought the crop of apples.
The contracts are short term contracts.
The picking of the leaves under them has to start at once or practically at once and to proceed continuously.
" There is nothing in the Act to affect the validity of the several contracts and agreements.
The petitioner are neither proprietors within the meaning of the Act nor persons having any interest in the proprietary right through the proprietors.
There is no provision in the Act which extinguishes their rights in favour of the State. 'What exactly is meant by a ,proprietary right " under the revenue laws has been (1).I.L.R. , 63 484 pointed out at page 217 of Volume I of Baden Powell 's Land Systems of British India, where he says: The first thing that will strike the student is the .use of the term ' proprietary right ' in these pages and in Indian Revenue Books generally.
It does not occur in text books on English law or jurisprudence.
I presume that the use of such a phrase is due to the ad feeling that we rarely acknowledge anything like a complete unfettered right vested in any one person.
The interest in the soil has come to be virtually shared between two or even more grades, the cause of which we just now discussed.
It is true that, in many cases, only one person is called ' landlord ' or ' actual proprietor ' but his right is limited; the rest of the right, so to speak, is in the hands of the other grades, even though they are called 'tenants ' or by some vague title such as ' tenure holders. ' In many cases, as we have seen, this division of right is accentuated by the use of terms like sub proprietor ' or proprietor.
of his holding '.
The 'proprietary right seems then a natural expression for the interest held by a landlord, when that interest is not the entire 'bundle of rights ' (which in the aggregate make up an absolute or complete estate) but only some of them, the re mainder being enjoyed by other persons.
" The definitions given in the Act do not abrogate or vary this meaning.
The respondent State cannot invoke in its aid section 3, sub clause (1) of the Act which speaks of the vestina of proprietary rights free of all encumbrances, because the rights of the petitioners either as buyers or lessees or licensees are not encumbrances as ordinarily understood.
The last part of clause (a) of section 4 (1) indicates that mortgage debts and charges on the proprietary right are meant by encumbrances.
In this view, it becomes unnecessary to consider the question as to when title in the property passes to the transferee.
Section 4, sub section (3) of the Indian Sale of Goods Act which lays down that in the case of sale of future goods the contract amounts 485 only to an agreement to sell does not seem to be applicable to the contracts and agreements here, as the goods are not " future goods " as defined in subclause (6) of the Act which states that they mean goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.
Benjamin says in his treatise on Sale (8th Edition) at page 136: " Things not yet existing which may be sold (that is to say, a right to which may be immediately granted) are those which are said to have a potential existence, that is, things which are the natural produce, or expected increase of some thing already owned or possessed by the seller.
A man may sell the crop of hay to be grown in his field, the wool to be clipped from his sheep at a future time, the milk that his cows will yield in the coming month, and similar things.
Of such things there could be, according to the authorities, an immediate grant or assignment, whereas there could only be an agreement to sell where the subject of the contract is something to be afterwards acquired; as the wool of any sheep, or the milk of any cows, which the seller might buy within the year, or any goods to which he might obtain title within the next six months.
" The goods covered by the present petitions are goods which have a potential existence, and according to the decisions discussed by the learned author, there can be a sale of a present right to the goods as soon as they come into existence.
Whether title passes on the date of the contract itself or later is really dependent on the intention of the parties, and as already stated, in these petitions the stipulated consideration has passed from the transferees to the proprietors, and possession also has been taken.
We hold that the respondent has no right to interfere with the rights of the several petitioners under the contracts and agreements in their favour set out in their petitions, and we hereby issue a writ prohibiting the State from interfering in any manner whatsoever with the enjoyment of those rights by the 486 petitioners.
In cases where the periods under the contracts have expired, or where the proprietors have ill to recover anything from the transferees after he date of vesting, the State will be at perfect liberty to assert and enforce its rights standing in the shoes of the proprietors.
The respondent will pay the petitioners their respective costs.
Petition allowed.
Agent for the petitioners in Petitions Nos.
232, 233, 286, 309 and 320 : Bajinder Narain.
Agent for the petitioners in Petitions Nos. 360 and 351: M. section H. Sastri.
Agent for the petitioners in Petitions Nos. 319, 354 and 490: Harbans Singh.
Agent for the respondents in all petitions: G. H. Rajadhyaksha.
| Certain persons were prosecuted but acquitted of a charge of having damaged a canal.
Thereafter the canal officers levied special canal charges on the appellants on the basis of the conclusion that the villagers were responsible for a cut in the canal.
The High Court is missed the appellants petition under articles 226 and 227 of the Constitution on the ground that the case was covered by the case of Mukundi Ram vs The Executive Engineer, decided by the High Court (LPA/FAO NO. 58 of 1954), On appeal by special leave the appellants contended that sections 3, and 4 Of the Pepsu Sirhind Canal and Western jamuna Canal Rules (Enforcement and validation) Act (No. IV of 1954) are unconstitutional being in contravention of article 20(1) of the Constitution inasmuch as they have been 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.
Held, that the use of water by the appellants was not an "offence" and the levy of special rates under Rules 32 and 33 of the Sirhind Canal Rules read with section 31 of the Northern India Canal and Drainage Act, i873, for such use was not the imposition of a "penalty" for an offence as contemplated under article 20(1) of the Constitution.
Maqbool Hussain 's case; , , referred to.
|
Appeal No. 248 of 1953.
Appeal under Article 132(1) of the Constitution of India from the Judgment and Order dated the 1st October, 1953, of the High Court of Judicature at Allahabad in Civil Miscellaneous Writ No. 379 of 1953.
N.C. Chatterjee (P.K. Chatterjee, with him) for the appellant.
C. K. Daphtary, Solicitor General for India, K. L. Misra, Advocate General of Uttar Pradesh (C. P. Lal, with them) for respondent No. 1.
C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for respondent No. 2. 1954.
March 30.
The Judgment of the Court was delivered by DAS J.
This appeal arises out of an application made by the appellant to the High Court of Allahabad under, article 226 of the Constitution praying for an appropriate writ quashing the order made by the President of India on the 17th April, 1953, ordering the compulsory retirement of the appellant who had completed 25 years ' qualifying service.
The High Court by its judgment dated the 1st October, 1953, dismissed the application but, as the case involved a substantial question of the interpretation of the Constitution, the High Court granted leave to the appellant to appeal to this Court.
The material facts may be shortly stated as follows: The appellant passed his Civil Engineering degree examinaion from the Thomason College.
Roorkee, in 1922.
He stood first in order of merit and carried away the Gold Medal and other prizes awarded to the best student of that year.
He was appointed by the Secretary of State for India in Council to the Indian Service of Engineers as an Assistant Executive Engineer with effect from the 20th October, 1923.
The conditions governing the appellant 's terms of appointment, promotion, leave, pension, etc., will be found recorded in 28 a letter issued from India Office, London, on the 13th February, 1924.
A copy of that letter is annexed to the Petition filed under article 226.
He was posted in ,the United Provinces.
In 1944 the appellant was promoted to the rank of officiating Superintending Engineer.
After the attainment of independence by India a fresh agreement was entered into by and between the appellant the Governor of the United Provinces and the Governor General of India on the 16th September, 1948 confirming the appellant 's terms of appointment contained in the letter of the 13th February, 1924.
At or about this time the appellant along with several other officers was recommended by the Chief Engineer for confirmation as Superintending Engineer. 'The appellant, however, was not confirmed but continued to officiate as Superintending Engineer until the time hereinafter stated.
On the 4th January, 1950, the Public Works Department of the U.P. Government addressed a letter to the Chief Engineer, Irrigation Branch U.P. requesting him to communicate the letter enclosed therewith to the appellant and to ask him to submit as early as possible whatever explanation he might desire to give.
The enclosed letter called upon the appellant to show cause within three weeks why he should not be compulsorily retired under the provisions of article 465 A, Civil Service Regulations,as it appeared (1) that he had been making systematic and gross overpayments apparently for no other reason than to benefit the contractors concerned and (2) that he had spent large ' amounts of public money for his own personal convenience and (3) that he had taken recourse to devious and unscrupulous methods.
No less than, six instances on which these charges were based.
were them set out.
The covering letter concluded with the following remarks: "Under the rules Government reserve the right to compulsorily retire any officer whose retention in service they consider not to be in the public interest.
This is not, therefore, a formal enquiry under the Classification.
Control and Appeal Rules but before taking the action indicated above Government were pleased to and an opportunity to Shri Shyam Lal, I.S.E., 29 to show cause why he should not be compulsorily retired.
" A copy of the letter of the 4th January, 1950, together with a copy of the enclosure was sent to the appellant with the request that his explanation might be forwarded,.
within the period mentioned by the Government.
The appellant submitted his explanations which, together with the Chief Engineer 's comments thereon, were placed before the Union Public Service Commission.
The Commission came to the conclusion that five out of the six charges had been proved and submitted their report accordingly.
On the 17th April, 1953, the President, after considering the case and the recommendations of the Commission, decided that the appellant should retire forthwith from service under Note I to article 465 A of the Civil Service Regulations.
Before this order could be served on him the appellant on the 24th April, 1953, filed before the Allahabad High Court a petition under article 226 of the Constitution praying that the order made by the President on the 17th April, 1953, be quashed on the ground, inter alia, that the order was illegal and void in that it was made without affording him any opportunity to show cause against the action proposed to be taken in regard to him.
As already stated, the High Court dismissed the application on, the 1st October, 1953.
The present appeal is directed against that order of dismissal.
The order of the President which is imppgned by the appellant shows that action was purported to be taken in regard to the appellant under Note 1 to article 465 A of the Civil Service Regulations.
Chapter XVIII of the Civil Service Regulations deals with Conditions of Grant of Pension.
Article 465 A appears in that Chapter under section V the heading of which is " Retiring Pension.
" There are two notes appended to the article of which the first one is important for our present purpose.
The relevant part of article 465 A and Note 1 thereto are set out below: " 465 A. For officers mentioned in article 349 A, the rule for the grant of retiring pension is as follows: 30 (1). . . . . . . . . . (2) A retiring pension is also granted to an officer who is required by Government to retire after completing twenty five years ' qualifying service or more.
Note I. Government retains an absolute right to retire any officer after he has completed twenty five years ' qualifying service without giving any reasons, and no claim to special compensation on this account will be entertained.
This right will not be exercised except when it is in the public interest to dispense with the further services of an officer.
" Officers of the Indian Service of Engineers are included amongst 'the officers mentioned in article 349 A of the Civil Service Regulations.
The contentions urged before us are that the President 's Order of the 17th April, 1953, is invalid and inoperative for the following reasons : (1)that article 465 A of the Civil Service Regulations is not applicable to or binding on the appellant; (ii)that compulsory retirement is nothing but removal from service and the provisions of article 311 of the Constitution apply to the case of compulsory retirement; (iii)that Note I to article 465 A of the Civil Service Regulations, in so far as it confers on the Government an absolute right to retire an officer, who has completed twenty five years ' qualifying service without giving any 'reason, is repugnant to article 311 of the Constitution.
It will be necessary to deal with the above points seriatim.
It will be remembered that the appellant was employed by the Secretary of State in Council in October, 1923, that is to say, after the Government of India Act, 1919, came into operation.
Sub section (4) of section 96B of that Act provided, for removal of doubts, that all rules in operation at the time of the passing of that Act, whether made by the Secretary of State in Council or by any other authority, relating to 31 the Civil Service of the Crown in India, were duly made in accordance with the powers in that behalf and it confirmed the same.
But it is urged that as there is nothing to show that article 465 A of the Civil Service Regulations was in operation at the time of the passing of the Government of India Act, 1919, and that as all that has been shown is only that the article in question was amended and brought.
up to its present form in 1922 it cannot be said to have been validated by subsection (4) of section 96B.
Reference is then made to sub section (2) of that section which empowered the Secretary of State in Council to make rules for regula ting the classification of the Civil Services in India, the methods of their recruitment, their conditions, of service, pay and allowances, and discipline and conduct and, by such rules, to delegate the power of making rules to the Governor General in Council or to local Governments or to authorise the Indian Legislature or local Legislatures to make laws regulating the public services.
It is pointed out that sub section (2) did not empower the Secretary of State in Council to delegate the power to make rules concerning pensions to any authority in India.
Our attention is next drawn to sub section (3) of section 96B which specially safeguarded the interests of the civil servants employed by the Secretary of State in Council by providing that their right to pensions and the scale and conditions ,of pensions should be regulated in accordance with the rules in force at the time of the passing of that Act and that, although such rules might be varied or added to by the Secretary of State in Council, such variations or additions should not adversely affect the pension of any member of the service appointed before the date thereof It is urged that not only has article 465 A not been shown to have been in force at the time of the passing of the Government of India Act, 1919, it has also not been shown to have been made by the Secretary of State in Council.
In the premises, it is contended that article 465 A which is set out in section V of Chapter XVIII of the Civil Service Regulations and deals with retiring pensions and has presumably been made by the Governor General in Council cannot be 32 supported as a valid rule under sub sections (2), (3) or (4) of section 96B and can have no application to the appellant who was appointed by the Secretary of State in Council and consequently the order of the President made in accordance with Note I to that article is illegal and void.
The above line of reasoning found favour with the High Court but nevertheless the High Court repelled the conclusions sought to be established by it on the ground that rule 7 of the Civil Services (Classification, Control and Appeal) Rules read with rule 26 of those Rules impressed the stamp of validity upon article 465 A of the Civil Service Regulations and made it applicable to the All India Services.
Learned counsel for the appellant challenges the correctness of the decision of the High Court in so far.
as it is founded on a construction of rules 7 and 26 of the Civil Services (Classification, Control and Appeal) Rules which were first made in December, 1920, and were again pub lished in 1930 with subsequent amendments.
While agreeing with learned counsel that there is some force in his contention that the construction put upon rule 7 may not be quite cogent or convincing we do not consider it necessary to express any final opinion on that matter, for, in our judgment, the major, premise assumed by the High Court that Note 1 to article 465 A has no application to the appellant cannot be supported or sustained.
it appears that by Resolution No. 1085 E.A. passed on the 15th November, 1919, and published in the gazette of India on the same date the Government: of India, Finanance Department with the approval of the Secretary of State for India, announced certain new rules relating to retiring pensions of the officers (other than military officers or members of the Indian Civil Service) and the 'services specified therein.
The services so specified included the Public Works Department.
The new rules were,, by rule 1, made to apply only to officers joining the above services after the 29th August, 1919, And to those existing officers who elected in writing to come under their provisions,.
The appellant was, employed in October, 1923, and 33 consequently these new rules applied to him.
The material I part of rule 4 of these new rules was as follows : "Government will have an absolute right to retire any officer after he has completed twenty five years ' service, without necessity to give reasons and without any claim for compensation in addition to pension, and in that event. . . " These rules which came into force on their publication in the Official Gazette of the 15th November, 1919, were, therefore, in operation on the 23rd December, 1919, when the Government of India Act, 1919, was passed and were accordingly validated and confirmed by sub section (4) of section 96B of that Act to which reference has already been made.
The rules thus confirmed by section 96B(4) became applicable to the appellant on his employment by the Secretary of State in October, 1923.
In Resolution No. 714 C.S.R. dated the 10th May, 1920, it was announced that with a view to the exact scope of the new pension rules published in Resolution No. 1085 E.A. dated the 15th November, 1919, being made clear the Government of India intended to publish those rules in the form of amendments to the Civil Service Regulations.
Accordingly Resolution No. 1003 C.S.R. dated the 18th June, 1920, along with certain amendments to the Civil Service Regulations were published in the Gazette of India of the 19th June, 1920, for general information.
The amendments so published provided for the insertion in the Civil Service Regulations of a new article 349 A stating that the rules in certain articles including article 465 A would apply to officers in the services specified therein.
The services so specified included the Public Works Department.
The amendments also provided for the insertion in the Civil Service Regulations, amongst others, of a new rule as article 465 A with two notes appended thereto.
Omitting clause (1) and note (2) which are not relevant for our present purpose that article read as follows: "465 A. For officers mentioned in article 349 A the rule for the grant of retiring pension is as follows: 5 34 (1) . . . . . . . . . . . (2) A retiring pension is also granted to an officer who is required by Government to retire after completing twenty five years ' service or more.
Note I. Government retains an absolute right to retire any officer after he has completed twenty five years ' service without giving any reasons and no claim to special compensation on this account will be entertained.
It will be noticed that clause (2) and Note I quoted above are word for word the same as clause (2) and Note 1 of article 465 A as we find it now except that the last sentence in Note 1 in the present rule was not in article 465 A Note I when it was published in 1920.
It seems that this addition was subsequently made by amendment in 1922 as referred to in the High Court judgment under appeal.
It is contended by learned counsel for the appellant that article 465 A and Note I thereto came into force only in June, 1920, that is to say, after the Government of India Act, 1919, had been passed and therefore cannot be said to have been confirmed by section 96B (4) and being a pension rule made after the date of that Act but not being a rule made by the Secretary of State in Council it cannot under section 96B (3) apply to the appellant who was employed by the Secretary of State.
We are unable to accept this argument as sound.
As already stated, the new rules were announced by Resolution No. 1085 E. A. passed and published on the 15th November, 1919, and were in force on the 23rd December, 1919, when the Government of India Act, 1919, was passed and consequently acquired statutory force by virtue of section 96B (4) of,that Act.
The subsequent Resolution No. 714 C.S.R. dated the 10th May, 1920, and Resolution No. 1003 C.S.R. referred to above did not and could not affect the validity or force of the new rules announced on the 15th November, 1919.
The purpose of publishing the new rules in the form of amendments to the Civil Service Regulations, as Resolution No. 714 C.S.R. itself stated expressly, was only to clarify the exact scope of those new rules and not, 35 As suggested by learned counsel for the appellant, to bring them into force for the first time.
The new rules came into operation ex proprio vigore on their publication in the Official Gazette on the 15th November, 1919, and their subsequent publication for general information in the form if amendment to the Civil Service Regulations only served to make their exact scope clear.
The real purpose of the incorporation of these rules in the ' Civil Service Regulations was not to make any now rule at the date of such incorporation but to distribute and post up the rules announced in November, 1919, at appropriate places in the Civil Service Regulations for ready reference.
A comparison of the language used, in Note 1 to article 465 A with that employed in new rule 4 announced by Resolution No. 1085 E.A. dated the 15th November, 1919, will also make it clear beyond doubt that the purpose of Note I is not to confer on the Government any new right to compulsorily retire an officer on completion by him of twenty five years", service but that it is intended to serve as a reminder that the Government already has such right which it, means to "retain".
One "retains" only what one already possesses and the word "retain" is wholly inappropriate for the purpose of conferring a fresh right.
The last sentence of Note I is only an administrative direction, as to when the existing right of the Government is to; be exercised.
Indeed, article I in.
Chapter I of the: Civil Service Regulations clearly provides that the regulations therein are intended only to regulate salaries, leave, pension and other allowances and that they do not deal otherwise than indirectly with matters relating to recruitment, promotion, official duties, discipline or the like.
In short, the language of ' Note I to article 465 A makes it abundantly clear that the Government 's right to compulsorily retire an officer is not derived from Note 1.
Note I only assumes its existence aliunde and indicates when that existing right is to be, exercised and what consequences are to follow if that right is exercised.
That right is obviously derived from new rule 4 which was announced by Resolution No. 1085 E.A. on the 15th November, 1919.
Being in operation at the date of the passing of the Government of 36 India Act, 1919, that rule, by virtue of sub section (4) of section 96B of that Act, became binding on the appellant although he was employed by the Secretary of State for India.
We, therefore, agree with the High Court, though on different grounds, that the first question raised by the appellant must be answered against him.
It is unfortunate that the Gazette of India notifications of the several earlier resolutions referred to above were not made available to the High Court.
(ii) and (iii).
It will be convenient to deal with these two questions together.
Learned counsel for the appellant urges that even assuming that rule 4 announced by Resolution No. 1085 E.A. and on which Note I to article 465 A of the Civil Service Regulations was based had, on the passing of the Government of India Act, 1919, become binding on the appellants it nevertheless became void on the coming into operation of the Constitution of India by reason of its being repugnant to the provisions of article 31 1 of the Constitution.
The argument is that a compulsory retirement of an officer was nothing but his removal from service within the meaning of article 311 and as rule 4 as well as Note I to article 465 A of the Civil Service Regulations sanctioned compulsory retirement without assigning any reason which, in substance, meant without giving him any opportunity to show cause against such action being taken in regard to him, it became repugnant to article 311 of the Constitution and, therefore, became void.
The argument, although plausible and attractive, was nevertheless rejected by the High Court and we think it rightly did so.
A brief study of the history and development of the rule now embodied in article 311 and a consideration of the language of that article and the relevant rules will amply confirm the correctness of this conclusion.
In England the rule was well established from very early times that public offices were held at the pleasure of the Crown.
The English constitutional theory was that the King could do no wrong and accordingly the services of a civil servant could be terminated without assigning any reason and no action could be maintained in the King 's Courts for damages for wrongful 37 dismissal.
This principle appears to have been applied even to the servants of the East India Company and certainly to the civil servants after the British Crown took over the territories and the administration thereof from the East India Company.
This state of affairs continued until 1919 when section 96B of the Government of India Act, 1910, while maintaining that the tenure was during His Majesty 's pleasure, introduced a minor restriction on this power of dismissal.
The relevant portion of sub section (1) of that section was in the terms following : " 96B. (1) Subject to the provisions of this Act and of rules made thereunder, every person in the civil service of the Crown in India holds office during His Majesty 's pleasure, and may be employed in any manner required by a proper authority within the scope of his duty, but no person in that service may be dismissed by any, authority subordinate to that by which he was appointed, and the Secretary of State in Council may (except so far as he may provide by rules to the contrary) reinstate any person in that service who has, been dismissed.
The rest of the sub section need not be quoted.
As already stated, sub section (4) of this section validated and confirmed the then existing rules and sub section (2) gave power to the Secretary of State for India in Council to make rules for regulating the classification of the civil services in India, the methods of their recruitment, their conditions of service, pay and allowances,, and discipline and conduct.
In exercise of this power the Secretary of State for India in Council framed certain rules in December, 1920, which with subsequent modifications were published on the 27th May, 1930, as "The Civil Services (Classification, Control arid Appeal) Rules.
" Rule 49 provides: " 49.
The following penalties may, for good and sufficient reason and as hereinafter provided, be imposed upon members of the services, comprised in any of the classes (1) to (5) specified in rule 14, namely: (i) Censure.
38 (ii)Withholding of increments or promotion, including stoppage at an efficiency bar.
(iii)Reduction to a lower post or time scale, or to a lower stage in a time scale.
(iv) Recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders.
(v) Suspension.
(vi) Removal from the civil service of the Crown, which does not disqualify from future employment.
(vii) Dismissal from the civil service of the Crown, which ordinarily disqualifies from future employment.
Explanation.
The termination of employment(a) of a person appointed on probation during or at the end of the period of probation, in accordance with the terms of the appointment and the rules governing the probationary service; or (b) of a temporary Government servant appointed otherwise than under contract, in accordance with rule 5 of the Central Civil Services (Temporary Service) Rules, 1949; or (c) of a person engaged under a contract, in accordance with the terms his contract does not amount to removal or dismissal within the meaning of this rule or of rule 55].
The, relevant portion of rule 55 runs thus " 55.
Without prejudice to the provisions of the Public Servants Inquiries Act, 1850, no order of dismissal, removal or reduction shall be passed on a member of a service (other than an order based on facts which had led to his conviction in a criminal Court or by a Court martial) unless he has been informed in writing of the grounds on which it is proposed to take action, and has been afforded an adequate opportunity of defending himself . . . . . . .
The rest of this rule which lays down the details of procedure to be followed need not be quoted for our present purpose.
Under article 353 of the Civil Service Regulations, no pension may be granted to an officer dismissed or removed for misconduct, insolvency or 39 inefficiency, but to officers so dismissed or removed compassionate allowances may be granted when they are deserving of special consideration, provided that such allowance shall not exceed two thirds of the pension which would have been admissible to him if he had retired on medical certificate.
It will be noticed that the rules just referred to con template and provide for both dismissal and removal from service.
As regards pension both dismissal and removal stand on the same footing, namely, that both of them entail loss of pension and even when a compassionate allowance is granted in either case such ' allowance is much less than the pension that had been earned.
The only difference between dismissal and removal is that while dismissal ordinarily disqualifies the officer from future employment, removal does not.
It may also be mentioned here that although the power of dismissal at pleasure was " subject to the provisions of this Act and of the rules made thereunder " the Judicial Committee held in Rangachari vs Secretary of State(1) and in Venkatarao vs Secretary of State(2) that those opening words of section 96B(1) did not qualify the unfettered discretion of the Crown to dismiss a servant at pleasure and that the remedy of the servant for the violation of the rules was not by a law suit but by 'an appeal of an official or political kind.
Then came the Government of India Act, 1935.
Section 240 is important for our purpose.
The relevant portions of that section were as follows: " 240.
(1) Except as expressly provided by this Act, every person who is a member of a civil service of the Crown in India, or holds any civil post under the Crown in India, holds office during His Majesty 's pleasure.
(2) No such person as aforesaid shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed.
(3) No such person as aforesaid shall be dismissed or reduced in rank until he has been given a reasonable (1) L.R. 64 I.A. 40; A.I.R. 1937 P.C. 27.
(2) L.R. 64 I.A. 55; A.1,R. , 40 opportunity of showing cause against the action proposed to be taken in regard to him.
" The rest of the section is not material for the present discussion.
In short, sub section (1) reiterated the English constitutional theory, sub section (2) reproduced the restriction introduced by section 96B (1) of the 1919 Act and sub section (3) gave statutory protection to the rights conferred by rule 55 of the Civil Service,% (Classification, Control and Appeal) Rules but which, prior to this Act of 1935, had been held by the Privy Council in the two last cited cases to be ineffective against the Crown 's plenary power of dismissal.
It will, however, be noticed that in sub section (3) the word " removed " was not used, although that word occurred in rule 55 and the other rules quoted above.
It was, however, held in I. M. Lal 's case(1) that removal was within section 240(3), which conclusion implies that removal is comprised within dismissals The position, therefore, is that both under the rules and according to the last mentioned decision of the Judicial Committee there is no distinction between a dismissal and a removal except that the former disqualifies from future employment while the latter does not.
Finally, we have our new Constitution.
Article 3 10(1) reiterates the constitutional theory of the tenure of office being during the pleasure of the President, the Governor or Rajpramukh as the case may be.
Article 311(1) reproduces the provisions of section 240(2) of the Government of India Act, 1935.
Clause (2) of article 311, leaving out the proviso, runs thus: "(2).
No such person aforesaid shall be dismissed, removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him.
" The word " removal " which is used in the rules is also used in this clause and it may safely be taken, for reasons stated above, that under the Constitution removal and dismissal stand on the same footing except as to future employment.
In this sense removal is but a species of dismissal.
Indeed, in our recent decision (1) L.R 75 I,A. 225; A.I.R. 1948 P.C. 121. 41 in Satischandra Anand vs The Union of India(1) it has been ' said that these terms have been used in the same sense in article 31 1.
Removal, like dismissal, no doubt brings about.
a termination of service but every termination of service does not amount to dismissal or removal. ' A reference to the Explanation to rule 49 quoted above will show that several kinds of termination of service do not amount to removal or dismissal.
Our recent decision in Satishchandra Anand vs The Union of India (supra) fully supports the conclusion that article 311 does not apply to all cases of.
termination of service.
That was a case of a contract for temporary service being terminated by notice under one of the clauses of the contract itself and fell within clause (c) of the Explanation to rule 49 and article 311 was held by this Court not to have any application to the case.
The question then is whether a termination of service brought about by compulsory retirement is tantamount to a dismissal or removal from service so as to attract the provisions of article 311 of the Constitution.
The answer to the question will depend on whether the nature and incidents of the action resulting in dismissal or removal are to be found in the action of compulsory retirement.
There can be no doubt that,removal I am using the term synonymously with dismissal generally implies that the officer is regarded as in some manner blameworthy or deficient, that is to say, that he has been guilty of some misconduct or is lacking in ability or capacity or the will to discharge his duties as he should do.
The action of removal taken against him in such circumstances is thus founded and justified on some ground personal to the officer.
Such grounds, therefore, involve the levelling of some imputation or charge against the officer which may conceivably be controverted or explained by the officer.
There is no such element of charge or imputation in the case of compulsory retirement.
The two requirements for compulsory retirement are that the officer has completed twenty five years ' service and that it is in the public interest to dispense with his further services It is true that (1) ; at p. 659.
42 this power of compulsory retirement may be used when the authority exercising this power cannot substantiate the misconduct which may be the real cause for taking the action but what is important to note is that the directions in the last sentence in Note 1 to article 465 A make it abundantly clear that an imputation or charge is not in terms made a condition for the exercise of the power.
In other words, a compulsory retirement has no stigma or implication of misbebaviour or incapacity.
in the present case there was no doubt some imputation against the appellant which he was called upon to explain but it was made perfectly clear by the letter of the 4th January, 1950, that the Government was not holding any formal enquiry under rule 55 of the Civil Services (Classification, Control and Appeal) Rules and that before taking action for his compulsory retirement the Government desired to give him an opportunity to show cause why that action should not be taken.
In other words, the enquiry was to help the Government to make up its mind as to whether it was in the public interest to dispense with his services.
It follows, therefore, that one of the principal tests for determining whether a termination of service amounts to dismissal or removal is absent in the case of compulsory retirement.
Finally, rule 49 of the Civil Services (Classification, Control and Appeal) Rules clearly indicates that dismissal or removal is a punishment.
This is imposed on an officer as a Penalty.
It involves loss of benefit already earned.
the officer dismissed or removed does not get pension which he has earned.
He may be granted a compassionate allowance but that, under article 353 of the Civil Service Regulations, is always less than the pension actually earned and is even less than the pension which he would have got had he retired medical certificate.
But an officer who is compulsorily retired does not lose any part of the benefit that he has earned.
On compulsory retirement he will be entitled to the pension etc.
that he has actually earned.
There is no diminution of the accrued benefit It is said that compulsory retirement, like dismissal or removal, deprives the officer of the chance of serving 43 and getting his pay till he attains the age of superan nuation and thereafter to get an enhanced pension and that is certainly a punishment.
It is true that in that wide sense the officer may consider himself punished but there is a clear distinction between the loss of benefit already earned and the loss of prospect of earning something more.
In the first case it is a present and certain loss and is certainly a punishment but the loss of future prospect is too uncertain, for the officer may die or be otherwise incapacitated from serving a day longer and cannot, therefore,, be regarded in the eye of the law as a punishment.
The more important thing is to see whether b y compulsory retirement the officer loses the benefit he has earned as he does by dismissal or removal.
The answer is clearly in the negative.
The second element for determining whether a termination of service amounts to dismissal or removal is, therefore, also absent in the case of termination of service brought about by compulsory retirement.
The foregoing discussion necessarily leads us.
to the conclusion that a compulsory retirement does not amount to dismissal or removal and, therefore, does not attract the provisions of article 311 of the Constitution or of rule 55 and that, therefore, the order of the President cannot be challenged on the ground that the appellant had not been afforded full opportunity of 'showing cause against the action sought to be taken in regard to him ' Both the questions under consideration must also be answered against the appellant.
The result, therefore.
, is that this appeal fails and must stand dismissed.
In the circumstances of this case we make no order as to costs.
Appeal dismissed.
| The principal activity of the assessee was investment of its capitals in shares and stocks.
It changed its investments by sale of its shares and stocks from time to time.
The assessee 's income was primarily derived from dividends on shares and interest derived by it on the investments.
The assessee purchased the shares of a company when their prices were falling by taking loan at interest and the return on investment was not at all substantial.
The assessee 's explanation that the shares were, in fact, being held as investment and were sold simply because the control of the company went out of the hands of the Directors of the assessee.
was not accepted by the Tribunal.
HELD: The income derived by the assessee.
from the sale of these shares was revenue receipt and as such taxable under the, Income tax Act.
From the evidence about the course of dealings and conduct of the assessee the conclusion followed that the purchases of the shares were not for the purpose of keeping controlling interest in that company, or for investment, but shares were being purchased and sold for earning profit, so that the transactions were an adventure in the nature of trade in these shares.
[359 A B] The acceptance by the Revenue, in the earlier years, that the acquisitions and sales of shares were in the nature of investments, was not binding in the proceeding for assessment during subsequent years.
[356 B C] Bengal and Assam Investors Ltd. vs Commissioner of income tax,West Bengal, and Commissioner of Income tax vs
Bai Shrinbai K. Kooka, , referred to.
Ram Narain Sons (P) Ltd. vs Commissioner of Income tax, Bombay. , held inapplicable.
|
il Appeals Nos.
83 85 of .1965.
Appeals by special leave from the judgment and decree dated February 9, 1962 of the Andhra Pradesh: High Court in Tr.
Appeal No. 558 of 1957 and A. section Nos. 89 and 157 of 1957 respectively.
P. Ram Reddy, A. V. V. Nair, B. Parthasarathy, and 0.
C. Mathur, for the appellant (in all the appeals).
C. R. Pattabhiraman and R. Ganapathy Iyer, for the respon dents (in C.As.
Nos. 83 and 84 of 1965) and respondents Nos. 15 (in C.A. No. 85 of 1965).
The Judgment of the Court was delivered by Bachawat, J.
One Venkatacharyulu was the Karta of a joint family consisting of himself and his four sons.
The appellant was his concubine since 1945 until his death on February 22, 1949.
By two registered deeds purporting to be sale deeds dated April 15, 1946, (Exbts.
A 1 and A 2), he transferred to the appellant certain properties belonging to the joint family.
In 1947 after the execution of exhibit A 1 and A 2 there was a disruption of the joint family and a severance of the joint status between Venkatacharyulu and his sons.
In 1954 his widow and sons instituted O.S. No. 12 of 1954 against the appellant for recovery of possession of the properties alleging that the documents dated April 15, 1946, were executed without consideration or for immoral purposes, and were void.
The appellant instituted against his widow and sons O.S. No. 63 of 1954, asking for general partition of the joint family properties and for allotment to her of the properties conveyed by the two deeds.
She also instituted O.S. No. 62 of 1954 against one of his sons and another person asking for damages and mesne profits for wrongful trespass on the properties.
The trial court dis missed O.S. No. 12 of 1954 and O.S. No. 62 of 1954 and decreed O.S. No. 63 of 1954.
From these decrees appeals were preferred in the High Court of Andhra Pradesh.
The High Court confirmed the decree in O.S. No. 62/54, allowed the two other appeals, dismissed O.S. No. 63/54 and decreed O.S. No. 12/54, the decree for possession in respect of the properties covered by exhibit A 1 being conditional on payment by the respondents of the value of improvements made by the appellant to the properties.
From the decrees passed by the High Court, the present appeals have been filed by special leave.
The High Court found that the transfers under exhibit A 1 and exhibit A 2 were not supported by any consideration by way of cash or delivery of jewels.
This finding is not challenged before us.
The High Court held that the transfers were made by Venkatacharyulu in favour of the appellant in view of past illicit cohabitation 45 with her, such past cohabitation was the motive and not the consideration for the transfers and the two deeds though ostensibly sale deeds, were in reality gift deeds.
It held that Venkatacharyulu had no power to make a gift of the joint family properties, the two deeds were invalid and the subsequent severance of joint status in 1947 could not validate them.
In this Court, it is common case that future illicit cohabitation was not the object or the consideration for the transfers under exhibit A 1 and exhibit A 2.
The appellant contends that Venkatacharyulu agreed to make the transfers in consideration of past cohabitation, having regard to section 2(d) of the , her past service was a valuable consideration and Venkatacharyulu was competent to alienate for value his undivided interest in the coparcenary properties.
The respondents contend that the transfers were by way of gifts and not in consideration of the past cohabitation, and Venkatacbaryulu was not competent to make a gift of the coparcenary properties.
In the alternative, the respondents contend that assuming that the transfers were made in consideration of past cohabitation, they were hit by Sec. 6(h) of the .
Our findings are as follows: Venkatacharyulu and the appellant were parties to an illicit intercourse.
The two agreed to cohabit.
Pursuant to the agreement each rendered services to the other.
Her services were given in exchange for his promise under which she obtained similar services.
In lieu of her services, he promised to give his services only and not his properties.
Having once operated as the consideration for his earlier promise, her past services could not be treated under section 2(d) of the as a subsisting consideration for his subsequent promise to transfer the properties to her.
The past cohabitation was the motive and not the consideration for the transfers under exhibit A 1 and A 2.
The transfers were without consideration and were by way of gifts.
The gifts were not hit by sec.
6(h) of the , by reason of the fact that they were motivated by a desire to compensate the concubine for her past services.
In Balo vs Parbati(1) the Court held that the assignment of mortgagee 's rights to a woman in consideration of past cohabitation was not hit by sec.
6(h) of the and, was valid.
Properly speaking, the past cohabitation was the motive and not the consideration for the assignment.
The assignment was without consideration by way of gift and as such was not bit by section 6(h).
(1) I.L.R. [1940] All.
370. 46 In Istak Kamu Musalman vs Ranchhod Zipru Bhate(1) the court rightly held that past cohabitation was the motive for the gift under Exhibit 186, and the gift was valid but in holding that the promises to make the gifts under other exhibits were made in consideration of past illicit cohabitation and consequently those gifts were invalid, the Court seems to have too readily assumed that past cohabitation was the consideration for the subsequent promises.
Venkatacharyulu was free to make a gift of his own property to his concubine.
The gifts,, under Exs.
Al 'and A 2 were not hit ' by section 6(h) of the .
But the properties gifted under exhibit A 1 and A 2 were coparcenary properties.
Under the Madras school of Mitakshara law by which Venkatacharyulu was governed, he had no power to make a gift of even his undivided interest in the coparcenary properties to his concubine.
The gifts were therefore invalid.
The invalid gifts were not validated by the disruption of the joint family in 1947.
After the disruption of the joint family, Venkatacharyulu was free to make a gift of his divided interest in the coparcenary properties to the appellant, but he did not make any such gift.
The transfers under Exs.
A 1 and A 2 were and are invalid.
We find no ground for interfering with the decrees passed by the High Court.
In the result, the appeals are dismissed.
There will be one set of costs and one hearing fee.
Y. P. Appeals dismissed.
(1) I.L.R. , 217.
| Clause (a) of sub section
(1) of s 8 of the Hindu Law Women 's Rights Act 1933, provided that at a partition of joint family property between a person and his son or sons, those entitled to share with them would be his mother his unmarried daughters, and the widows and unmarried daughters of his predeceased undivided sons and brothers who had no male issue.
Clause (b) provided that when the partition was between brothers, those entitled to share with them would be their mother, their unmarried sisters, and the widows and unmarried daughters of their predeceased undivided brothers who had left no male issue.
According to cl.
(c) clauses (a) and (b) would apply, mutatis mutandis, to a partition among other coparceners in a joint family.
Clause (d) laid down that when a joint family property passed to a single coparcener by survivorship it would so pass subject to the right to share of the classes of females enumerated in the earlier clauses.
Sub s.(2) of section 8 fixed the shares of the aforesaid relatives.
Sub s.(3), inter alia, defined the term 'mother ' as including whether there were both a mother and a step mother, all of them jointly, and the term 'son ' as including a step son, a grandson and a great grandson.
It also provided that the Provisions of the section relating to the mother would be applicable, mutatis mutandis, to the paternal grandmother and great grandmother.
M died in 1951.
The plaintiff respondent was one of his widows and the appellant was his sole surviving grandson.
In a suit for her share filed by the respondent the question was whether in the terms of cl.
(d) of sub section
(1) of section 8 of the aforesaid Act, the respondents was entitled to a share.
The trial court decreed the suit and the High Court upheld the decree.
The appellant came to this Court by certifi cate.
It was contended on behalf of the appellant that cl.
(d) pre supposed a partition between the penultimate and the sole surviving coparceners and that therefore all the femalies in cl.
(a), (b) and (c) could not be said to be entitled to a share.
Held:Per Bachawat and Bhargava, JJ.
When determining the scope of the right under cl.
(d) there is no need to envisage an assumed partition and there is no justification for holding that cl.
(d) must be interpreted on the basis of an assumed partition between the sole surviving member of the family and the co oparcener who immediately pre deceased and as a result of whose death the property passed to the sole survivor.
[127].
The object of cl.
(d) is to give to all females entitled to maintenance from the coparcenary property a right to claim a share in the .joint family property instead of a right to maintenance and that is why reference is made in it to all the females enumerated, in cls.
(a), 125 (b)and (c), Clauses (a) and (b) refer to four classes of females viz. the mother, the widow, the unmarried daughter and the unmarried sister.
All these four classes of females are within el.
[129B C].
Sub section
(3) of section 8 lays down that the provisions of the who lie section relating to the mother are to apply mutatis mutandis to the paternal grandmother and great grandmother.
Consequently when the classes of females entitled to shares under el.
(d) are to be ascertained and it is to be found out whether a mother mentioned in el.
(a) of (b).
is entitled to share, the persons included in the expression 'mother ' would be a 'step mother ' and further, the provision conferring the right on the mother would also confer the right on paternal 'grandmother and great grandmother, because cls.(a) and (b), which relate to a mother are to be applicable mutatis muttandis to paternal grandmother and great grandmother also.
On this interpretation of el.
(d) read with cls.
(a), (b) and (c) and sub section
(3) of s.8.
, the respondent must be held entitled to a share.
As the widow of M a coparcener, she was entitled to a one fourth share.
[ 124D G].
Venkatachaliah vs Ramalingiah, 49 Mysore H.C.R. 456, Dakshinamurthy vs Subbamma, and Kolla Natrasinha Setty vs Nanjamma, approved.
Venkatagowda vs Sivanna, , referred to.
Per Shelat J. (dissenting).
There can be a right to a share only if there is a partition and not otherwise.
There is a distinct difference between cases falling under el.
(a) (b) or (c) when a share vests in the female relatives enumerated therein when actual partition takes place and cl.(d) where no partition can occur.
A partition, has therefore to be assumed because it is only on such assumption that females on whom a right to share is conferred can be ascertained.
The question as to who are those females entitled to such a share depends upon which of the cls.
(a) (b) or (c) applies to such a theoretical partition.
In the present case in view of the definition of a 'son ' in sub section
(3) the assumed partition would be between a 'lather and a son under el.
Under that clause the respondent would have no right to a share either as the wife of M or as the grandmother of the appellant.
The extended meaning given to the word 'mother ' in s.8(3) would include the grandmother of M and not of the appellant.
[138E G: 139A 0].
Venkatapathiah vs Saraswathana, , Narasimha Setty vs Nagamma, , Nagendradasa vs Ramakrishnan, , Dakshnaimurthy vs Subbamma, , Venkatachaliah vs Ramalingiah.
and Venkatagowda vs Sivanna, [1960] My. L.J. 85, referred to.
|
ON: Civil Appeal No. 2876 of 1986.
From the Judgment and Order dated 14.5.1986 of the Delhi High Court in Civil Writ No. 1422 of 1985.
Soli J. Sorabji, Attorney General, Ashok Desai, Solici tor General, Vinod Bobade, M.C. Bhandare, M.K. Ramamurthy, R.K. Garg, Mrs. Shyamala Pappu, P.P. Rao, Mrs. J. Wad, Mrs. Aruna Mathur, Ms. A. Subhashini.
P. Parmeshwaran, D.K. Garg, A.K. Sil, G. Joshi, S.K. Gupta, B.R. Sabharwal, Mrs. Seita Vidyalingam, S.K. Bisaria (NP), Salman Kurshid, Irshad Ahmad, V.D. Phadke, A. Sharan, Lalit Bhasin, Ms. Nina Gupta, Vineet Kumar, R.C. Bhatia, P.C. Kapur (NP), B.S. Charya (NP), Vijay K. Verma, C.M. Nayar, H.S. Munjral and A.V.S.L. Somayajulu (NP) for the appearing parties.
Satnam Singh appellant in person in C.A. No. 1115 of 1976.
The Judgments of the Court were delivered by SABYASACHI MUKHARJI, CJ.
These civil appeals, special leave petitions and civil miscellaneous petitions deal with the question of constitutional validity of the right of the employer to terminate the 175 services of permanent employees without holding any inquiry in certain circumstances by reasonable notice or pay in lieu of notice.
The facts involved in these matters are diverse but the central question involved in all these is one, i.e. whether the clauses permitting the employers or the authori ties concerned to terminate the employment of the employees by giving reasonable notice or pay in lieu of notice but without holding any inquiry, are constitutionally valid and, if not, what would be the consequences of termination by virtue of such clauses or powers, and further whether such powers and clauses could be so read with such conditions which would make such powers constitutionally and legally valid? In order to appreciate the question the factual matrix of these cases so far as these are relevant for the ' determination of the aforesaid questions, will have to be borne in mind in the light of the actual legal provisions involved in the respective cases.
It will, therefore, be proper and appropriate to deal with the relevant facts in civil appeal No. 2876 of 1986 first.
The appellant herein the Delhi Transport Corpora tion, is a statutory body formed and established under Section 3 of the Delhi Road Transport Act, 1950 read with Delhi Road Transport (Amendment) Act, 1971 (hereinafter called 'the Act ').
The appellant carries out the objects of vital public utility, according to the appellant, i.e. transport of passengers in the Union Territory of Delhi and other areas.
Respondent No. 2, Sri Ishwar Singh was appoint ed as conductor therein on probation for a period of 1 year in 1970.
The probation period was extended thereafter for a further period of one year and thereafter he was regularised in service of the appellant.
Similarly, respondent No. 3 Sri Ram Phal was appointed as Assistant Traffic Incharge and after the probation period he was regularised in serv ice.
Respondent No. 4 Sri Vir Bhan was appointed as driver and after completing the probation period he was also regu larised in service.
It is stated that respondents Nos. 2 to 4 became, according to the appellant, inefficient in their work and started inciting other staff members not to perform their duties.
They were served with termination notices on 4th June, 1985 under Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment & Service) Regulations, 1952.
On 11th June, 1985 respondents Nos. 2 to 4 and their Union being respondent No. I DTC Mazdoor Con gress, filed writ petition No. 1422/85 in Delhi High Court, challenging the constitutional validity of Regulation 9(b) of the Delhi Road Transport Act.
On 11th May, 1986 the division bench of the High Court of Delhi allowed the said writ petition and struck down Regulation 9(b) of the said Regulations, and directed the appellant to 176 pay back respondents ' wages and benefits within 3 months from the date of the said judgment.
This is an appeal, therefrom, by special leave.
The question, therefore, is, was the High Court justified in the view it took? It may be mentioned that regulations 9(a) & (b) were framed in exer cise of the powers conferred u/s 53 of the said Act, which enables the formulation of Regulations.
Regulation 9 of the said regulations, which is material for the present contro versy, reads as follows: "9.
Termination of service: (a) Except as otherwise speci fied in the appointment orders, the services of an employee of the authority may be terminated without any notice or pay in lieu of notice: (i) During the period of probation and without assigning any reason thereof.
(ii) For misconduct, (iii) On the completion of specific period of appointment.
(iv) In the case of employees engaged on contract for a specific period, on the expiration of such period in accord ance with the terms of appointment.
(b) Where the termination is made due to reduction of estab lishment or in circumstances other than those mentioned at (a) above, one month notice or pay in lieu thereof will be given to all categories of employees.
(c) Where a regular/temporary employee wishes to resign from his post under the authority he shall give three/one month 's notice in writing or pay in lieu thereof to the Authority provided that in special cases, the General Manager may relax, at his discretion, the conditions regarding the period of notice of resignation or pay in lieu thereof." The said Regulation, as set out hereinbefore, deals with termination of services.
Four contingencies are contemplated vide clause (a) of Regulation 9, whereupon the services of employees may be terminated without any notice or pay in lieu thereof except as otherwise provided in the appointment order.
Apart from these four contingencies where termination is made due to reduction of establishment 177 or in circumstances other than those mentioned in clause (a) above, one month 's notice of pay in lieu thereof is required to be given to all categories of employees.
Therefore, except in the said four cases, if there is reduction of establishment or there is any termination uncovered by these four contingencies referred to in clause (a) the same shall be by giving one month 's notice or pay in lieu thereof to all categories of employees.
Clause (c) postulates when a regular or temporary employee wishes to resign from his post under the authority then in such a situation one month 's notice in writing or pay in lieu thereof to the authority may be provided.
The High Court in the judgment under appeal noted that since the filing of this petition the notices issued by D.T.C. to its various employees have been withdrawn and all these persons have been reinstated, therefore, the court was not concerned with the validity of clause (a) of Regulation 9 but respondents Nos. 2 to 4 against whom action had been taken by the appellant by issuing notices of termination under Regulation 9(b) had not been reinstated and the court considered the validity of Regulation 9(b).
It was held by the court that the said provision gave absolute, unbridled and arbitrary powers to the Management to terminate the services of any permanent or temporary employee.
It was contended that such power was violative of Article 14 of the Constitution.
In support of this contention, reliance had been placed, on which the High Court also relied upon, on the decision of this Court in Workmen of Hindustan Steel Ltd. & Anr.
vs Hindustan Steel Ltd. & Ors., ; In that case, Standing Order 31 of M/s. Hindustan Steel Ltd., a public sector undertaking, had prescribed for a detailed procedure for dealing with cases of misconduct; and for imposing major penalty, the employer had to draw up a chargesheet and give an opportunity to the delinquent workman to make his repre sentation within 7 days.
If the allegations were controvert ed, an enquiry had to be held by an officer to be nominated by the management and in such an enquiry reasonable opportu nity of explaining and defending the alleged misconduct had to be given to the workman.
Suspension of the delinquent workman pending enquiry was also permitted.
At the end of the enquiry, if the charges were proved, and it was provi sionally decided to impose any major penalty, the delinquent workman had to be afforded a further reasonable opportunity to represent why the penalty should not be imposed on him.
Standing Order 32 provided for a special procedure in case a workman was convicted for a criminal offence in a court of law or where the General 178 Manager was satisfied for reasons to be recorded in writing that it was inexpedient or against the interests of security to continue to employ the workmen ' viz. the workman could be removed or dismissed from service without following the procedure laid down in Standing Order No. 31.
There the appellant was an Assistant in the respondent 's undertaking, who was removed from service on the ground that it was no longer expedient to employ him.
The management dispensed with the departmental enquiry, after looking into the secret report of one of their officers that the appellant therein had misbehaved with the wife of an employee and that a complaint in respect thereof had been lodged with the po lice.
In the reference to the Industrial Tribunal, the Tribunal held that as the employer dispensed with the disci plinary enquiry in exercise of the power conferred by Stand ing Order 32, it could not be said that the dismissal was unjustified, and that if there were allegations of miscon duct, the employer was quite competent to pass an order of removal from service without holding any enquiry in view of the provisions contained in Standing Order 32, and rejected the reference.
There was an appeal to this Court.
This Court held that the reasons for dispensing with the enquiry do not spell out what was the nature of the misconduct alleged to have been committed by the appellant and what prompted the General Manager to dispense with the enquiry.
As there was no justification for dispensing with the enquiry, imposition of penalty of dismissal without the disciplinary enquiry as contemplated by Standing Order 31 was illegal and invalid.
It was directed that the respondent should recall and cancel the order dated 24th August, 1970 removing the appellant from service, and reinstate him and on the same day the appellant was directed to tender resignation of his post which should be accepted by the respondent.
The respondent should pay as and by way of back wages and future wages, a sum of Rs.1.5 lakhs to the appellant within 2 months which should be spread over from year to year commencing from the date of removal from service.
It was reiterated that where an order casts a stigma or affected livelihood, before making the order, principles of natural justice of a reason able opportunity to present one 's case and controvert the adverse evidence must have full play.
Even under the Consti tution which permits dispensing with the inquiry under Article 311(2) a safeguard is introduced that the concerned authority must specify reasons for its decision why it was not reasonably practicable to hold the inquiry.
Standing Order 32 nowhere obligates the General Manager to record reasons for dispensing with the inquiry as prescribed by Standing Order 31.
On the contrary, it was held that the language of Standing Order 32 enjoins a duty upon the Gener al Manager to record reasons for his satisfaction why it was inexpedient 179 or against the interest of the security of the State to continue to employ the workman.
Reasons for dispensing with the enquiry and reasons for not continuing to employ the workman, stand wholly apart from each other.
This Court finally observed that it was time for the public sector undertaking to recast Standing Order, and to bring it in tune with the philosophy of the Constitution failing which the vires of the said Standing Order ,would have to be examined in an appropriate proceeding.
Reliance was also placed before this Hon 'ble Court on the decision of this Court in the case of West Bengal State Electricity Board and Others vs Desh Bandhu Ghosh and Oth ers, [1985] 3 SCC 116, where this Court was concerned with regulations 33 and 34 of the West Bengal State Electricity Board.
The said regulations 33(1) and 34 were as follows: "33(1) Unless otherwise specified in the appointment order in any particular case, the services of a permanent employee of the Board may be terminated without notice (i) on his attaining the age of retirement or by reason of a declaration by the competent medical authority that he is unfit for further service; or (ii) as a result of disciplinary action; (iii) if he remains absent from duty, on leave or otherwise, for a continuous period exceeding 2 years.
In case of a permanent employee, his services may be terminated by serving three months ' notice or on payment of salary for the corresponding period in lieu thereof.
" The High Court had come to the conclusion in that case that Regulation 34 was arbitrary in nature and suffered from the vice of enabling discrimination.
The High Court, there fore, struck down the first paragraph of Regulation 34 and as a consequence quashed the order terminating the services of the first respondent therein.
It was contended before this court on appeal that the Regulation 34 did not offend Article 14 of the Constitution, that Sections 18 A and 19 of the Electricity Supply Act laid down sufficient guidelines for the exercise of the power under Regulation 34 and in any case the power to terminate the services of any permanent employee was vested in high ranking officials who might be expected to exercise the same in a 180 reasonable way.
This Court was unable to accept that argu ment.
This Court was of the view that the regulation was totally arbitrary and conferred on the Board a power which was capable of vicious discrimination.
This Court was of the view that it was naked 'hire and fire ' rule, the time for banishing which, according to this Court in the said deci sion, altogether from employer employee relationship was fast approaching.
It is only parallel, this Court was of the view, to the Henry VIII clause so familiar to administrative lawyers.
Reference was made to the decision of this Court in Moti Ram Deka vs North East Frontier Railway, , where Rules 148(3) and 149(3) of the Indian Railway Estab lishment Code had been challenged on the ground that these Rules were contrary to Article 311(2) of the Constitution.
The challenge was upheld though no opinion was expressed on the question whether the rule offended Article 14 of the Constitution or not since then Article 14 has been inter preted in several decisions of this Court and conferment and exercise of arbitrary power on and by the State or its instrumentalities have been frowned upon and struck down by this Court as offending Article 14 of the Constitution.
Indeed, it was noted in S.S. Muley vs J.R.D. Tara, by this Court that, Justice Sawant, of Bombay High Court had considered at great length Regulation 48(a) of the Air India Employees ' Service Regulations which conferred similar power on the Corporation as Regulation 34 confers on the Board in the present case.
The learned Judge therein (Sawant, J.) had struck down that Regulation.
Reli ance had also been placed on another decision of the Bombay High Court in the case of Manohar P. Kharkhar vs Raghuraj.
This Court found it difficult to accept the reasoning therein.
In that view of the matter the appeal was dismissed.
Reference in this connection may also be made to the decision of this Court in Central Inland Water Transport Corporation Limited and Anr.
vs Brojo Nath Ganguly and Anr., There the appellant Corporation was a Government company incorporated under the Companies Act.
The majority shares of the Corporation were held by the States of West Bengal and Assam.
Article 51 of the Articles of Association of the Corporation conferred upon the President of India power to issue directions/instructions regarding affairs and conduct of the business of the Corporation or of the Directors thereof as also regarding exercise and per formance of its functions pertaining to national security and public interest.
Article 51 A of the 181 said articles entitled the President to call for returns, accounts etc.
of the Corporation.
Articles 14, 15, 16, 17 and 37 conferred on the President power to appoint and remove Chairman and the Board of Directors of the Corpora tion.
Articles 41 and 42 were regarding the ' President 's control over the working of the Corporation.
Article 47 provided for appointment of the auditors of the Corporation to be made by the Central Government on the advice of the Comptroller ' and Auditor General of India and the nature of control to be exercised by the Comptroller and Auditor General in the matter of audit and accounts.
Since another company namely the Rivers Steam Navigation Co. Ltd. was carrying on the same business as the Corporation was doing, a Scheme of Arrangement was entered into between the Corpo ration and that Company for dissolution of the latter and taking over of its business and liabilities by the former.
The Scheme, inter alia, stipulated that the Corporation shall take as many of the existing staff or labour as were possible and that those who could not be taken over shall be paid by the transferor company all moneys due to them under the law and all legitimate and legal compensations payable to them either under Industrial Disputes Act or otherwise legally admissible and that such moneys shall be provided by the Government of India to the transferor Company who would pay these dues.
The Calcutta High Court approved the Scheme.
Each of the respondents therein were in the service of the said company.
Their services were taken over by the Corpora tion after the High Court 's sanction to the Scheme of Ar rangement.
While the respondent Ganguly therein was appoint ed as the Deputy Chief Accounts Officer and was later pro moted as Manager (Finance), the respondent Sengupta was appointed as Chief Engineer (River Services) and was later promoted as General Manager (River Services) Their appoint ment letters were in stereotype forms under which the Corpo ration could without any previous notice terminate their services, if the Corporation was satisfied that the employee was unfit medically or if he was guilty of any insubordina tion, intemperance or other misconduct, or of any breach of any rules pertaining to this service or conduct or non performance of his duties.
The letters of appointment fur ther stipulated that they would have been subject to the rules and regulations of Corporation.
Rule 9(i) of the Corporation 's Service, Discipline and Appeal Rules of 1979 had provided that the services of permanent employee could be terminated on three months ' pay plus DA to the employee or on deduction of a like amount from his salary as the case might be in lieu of the notice.
By confidential letter the respondent Ganguly was asked to reply within 24 hours to the allegations of negligence made against him.
After having his representation and detailed reply, a notice under 182 Rule 9(i) was served on him terminating his services with immediate effect by paying three months ' pay.
Similarly a charge sheet was issued to the respondent Sengupta intimat ing that a disciplinary inquiry was proposed against him under the Rules and calling upon him to file his written statement of defence.
Sengupta denied the charges made against him and asked for inspection of documents and copies of statements of witnesses mentioned in the said charge sheet.
But a notice was serviced on him under Rule 9(i) terminating his services with immediate effect of paying three months ' salary.
Both Ganguly and Sengupta filed Writ Petitions before High Court.
A Division Bench of that Court allowed the same.
The Corporation filed appeals before this Court.
The main questions for determination therein were (i) whether the appellant Corporation was an instrumentality of the State as to be covered by Article 12 and 36 of the Constitution and (ii) whether an unconscionable term in a contract of employment entered into with the Corporation was void under Section 23 of the Contract Act and violative of Article 14 of the Constitution and as such whether Rule 19(i) which formed part of the contract of employment be tween the Corporation and its employees to whom the said Rules applied, was void? This Court confirmed the judgment of the High Court with modification in the declaration made and dismissed the Corporation 's appeal to this Court.
This Court held that the appellant was State within the meaning of Article 12 of the Constitution.
This Court further held that an unconscionable bargain or contract is one which is irreconcilable with what is right or reasonable or the terms of which are so unfair and unreasonable that they shock the conscience of the Court.
This Court was of the view that the doctrine of distributive justice is another jurisprudential concept which has affected the law of contracts.
According to that doctrine, distributive fairness and justice in the possession of wealth and property could be achieved not only by taxation and regulatory control of private and contractu al transactions even though this might involve some sacri fice of individual liberty.
This Court referred to articles 38 and 39 of the Constitution so far as the test of reasona bleness was concerned.
The test of reasonableness or fair ness of a clause in a contract where there was inequality of bargaining power is another theory recognised in the sphere of law of contacts.
It was reiterated in that decision that the Courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or a clause in the contract.
Reference was made to the observa tions of Lord Diplock in A. Schroeder Music Publishing Co. Ltd. vs Macaulay (formerly Instone), [1974] i W.L.R. 1308 and that test was: 183 "Whether the restrictions are both reasonably necessary for the protection of the legitimate interests of the promisee and commensurate with the benefits secured to the promiser under the contract? For the purpose of this test all the provisions of the contract must be taken into consideration." Justice Madon of this Court in the said decision found that this was in consonance with right and reason, intended to secure social and economic justice and conformed to the mandate of the equality clause in Article 14 of the Consti tution.
It was further recognised that there might be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power.
These cases can neither be enumer ated nor fully illustrated.
The Court must judge each case on its own facts and circumstances.
The above principle would apply, this Court reiterated, where the inequality of bargaining power is the result of the disparity in the economic strength of the contracting parties or where the inequality is the result of circumstances, whether of the creation of the parties or not or where the weaker party is in a position in which he could obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them or where a man had no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in pre scribed or standard form or to accept a set of rules as part of the contract, however, unfair, unreasonable and uncon scionable clause in that contract or form or rules might be.
This Court, however, reiterated that this principle would not apply where the bargaining power of the contracting parties is equal or almost equal.
This principle would not apply where both parties are businessmen and the contract is a commercial transaction.
The contracts of this type to which the principle formulated above applied were not con tracts which were tainted with illegality but were contracts which contained terms which were so unfair and unreasonable that they shock the conscience of the Court.
In the vast majority of cases such contracts are entered into by the weaker party under pressure of circumstances, generally economic, which results in inequality of bargaining power.
Such contracts will not fall within the four corners of the definition of "undue influence" given in Section 16(1) of the Contract Act, even though at times they are between parties one of whom holds a real or apparent authority over the other.
Contracts in prescribed or standard forms or which embody a set of rules as part of the contract are entered into by the party with superior bargaining power with large number of persons or 184 a group of persons, if they are unconscionable, unfair and unreasonable, are injurious to the public interest, should be adjudged void according to Justice Madon, under Section 23 of the Contract Act on the ground of being opposed to public policy.
Public policy, it was reiterated, is not the policy of any particular Government.
It connotes some matter which concerns the public good and the public interest.
The principles governing public policy must be and are capable on proper occasion, of expansion or modification.
If there is no head of public policy which covers a case, then the Court must in consonance with public conscience and in keeping with public goods and public interest declare such practice to be opposed to public policy.
In any case which is not covered by authority, courts should be guided by the Preamble to the Constitution and the principles underlying the Fundamental Rights and the Directive Principles.
Rule 9(i) can aptly be called 'the Henry VIII Clause" this Court opined therein.
It confers an absolute, arbitrary and un guided power upon the Corporation to exercise that power.
This Court was concerned with the "Central Inland Water Transport Corporation Ltd. Service Discipline and Appeal Rules" framed by the Corporation.
The relevant provisions of the said Rule 9 relating to permanent employees therein were as follows: "9.
Termination of employment for Acts other than misdemea nour (i) The employment of a permanent employee shall be subject to termination on three months ' notice on either side.
The notice shall be in writing on either side.
The Company may pay the equivalent of three months basic pay and dearness allowances, if any, in lieu of notice or may deduct a like amount when the employee has failed to give due notice.
(ii) The services of a permanent employee can be terminated on the grounds of "services no longer required in the inter est of the Company" without assigning any reason.
A perma nent employee whose services are terminated under this clause shall be paid 15 days ' basic pay and dearness allow ance for each completed year of continuous service in the Company as compensation.
In addition he will be entitled to encashment of leave to his credit." This Court found that Rule 9(i) can be called 'the Henry VIII 185 Clause '.
It confers an absolute, arbitrary and unguided power upon the Corporation.
It does not even say who on behalf of the Corporation was to exercise that power.
While the Rules provided for four different modes in which the services of a permanent employee could be terminated earlier than his attaining the age of superannuation, namely, Rules 9(i), 9(ii), 36(iv)(b) read with 38 and 37, Rule 9(i) is the only rule which does not state in what circumstances the power conferred by that rule is to be exercised.
Thus even where the Corporation could proceed under a regular disci plinary inquiry, it is free to resort instead to Rule 9(i) in order to avoid the trouble of an inquiry.
No opportunity of a hearing was at all intended to be afforded to the permanent employee whose service was being terminated in the exercise of that power.
It violated audi alteram partem rule of natural justice also which was implicit in Article 14 of the Constitution.
It is not covered by any of the situations which would justify the total exclusion of the audi alteram parterm rule.
The view that the Board of Directors would not exercise this power arbitrarily or capriciously as it con sisted of responsible and highly placed persons ignored, it was held, the fact that however highly placed a person might be, he must necessarily possess human frailties and "power tends to corrupt, and absolute power corrupts absolutely.
" It was, however, held that Rule 9(i) was also discriminatory for the Corporation was given power to discriminate between employee and employee.
It was stated that it could back up one employee and apply to him Rule 9(i).
It could pick up another employee and apply to him Rule 9(ii).
It was further reiterated that the Corporation was a large organisation.
The said Rules formed part of the contract of employment between the Corporation and its employees who were not workmen.
These employees had no powerful Union to support them.
They had no voice in the framing of the said Rules.
They had no choice but to accept the said Rules as part of their contract of employment.
There was gross disparity between the Corporation and its employees, whether they be workmen or officers.
The Corporation could afford to dis pense with the services of an officer and will find many others to take his place but an officer cannot afford to lose his job because if he does so, there are not many jobs waiting for him.
It was, therefore, held that clause 9(i) of the said regulation was against right and reasons and it was wholly unconscionable.
It had been entered into between parties between whom there was gross inequality of bargain ing power.
Rule 9(i) was a term of the contract between the Corporation and all its officers, it was noted.
It affected a large number of persons and it squarely fell within the principle stated earlier.
The Government and its agen cies and instrumentalities constitute the largest employer in the country.
A 186 clause such as Rule 9(i) in a contract of employment, it was noted, affecting large sections of the public was harmful and injurious to the public interest for it tended to create a sense of insecurity in the minds of those to whom it applied and consequently against public good.
Such a clause, therefore, was opposed to public policy and as such it is void under Section 23 of the Contract Act, it was held.
It was further held that it was not possible to accept the contention that this was a contract entered into by the Corporation like any other contract entered into by it in the course of its trading activities and the Court, there fore, ought not to interfere with it.
The employees could not be equated with goods which could be bought and sold, nor could a contract of employment be equated with a mercan tile transaction between two businessmen much less when the contract of employment was between a powerful employer and a weak employee.
Although it was reiterated that the aforesaid rule 9(i) was supported by mutuality inasmuch as it con ferred an equal right upon both the parties but considering the unequal position of the Corporation and its employees, there was no real mutuality, this Court opined.
It was reiterated that the Corporation being covered by Article 12, its actions must also be in accordance with the Directive Principles prescribed by Part IV of the Constitution.
Refer ence may be made to paragraph 39 of the aforesaid decision where this Court noted that in the working of the Constitu tion, it was found that some of the provisions of the Con stitution were not adequate for the needs of the country or for ushering in a Welfare State and the constituent body empowered in that behalf amended the Constitution several times.
By the very first amendment made in the Constitution, namely, by the Constitution (First Amendment) Act, 1951 clause (6) of Article 19 was amended with retrospectitive effect.
Under this amemdment, sub clause (g) of Article 19(1) which guarantees to all citizens the right to carry on occupation, trade or business, was not to prevent the State from making any law relating to the carrying on by the State, or by a Corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial of citizens or otherwise.
This amendment also validated the operation of all existing laws insofar as these had made similar provisions.
Article 298 of the Constitution, as originally enacted, provided that the executive power of the Union and of each State was to extend, subject to any law made by the appropriate legis lature, to the grant, sale, disposition or mortgage of any property held for the purposes of the Union or of such State as the case may be, and to the purchase or acquisition of property for those purposes respectively, and to the making of contracts.
and it further provided that all property acquired for the purposes of the Union or of 187 State was to vest in the Union or in such State, as the case might be.
This Court referred to the decision of this Court in Sukhdev vs Bhagatrarn Sardar Singh Raghuvanshi, ; , "the Governing power wherever located must be subject to the fundamental constitutional limitations.
" The High Court in the judgment under appeal was unable to accept the plea of alternative remedy and allowed the Writ Petition and declared regulation 9(b) of the Regula tions to be illegal and ultra vires and as a consequence thereof the orders terminating the services of respondents Nos. 1 to 4 were quashed and these respondents were deemed to be in the service of DTC and back wages and all other benefits by way of annual increments were directed to be paid.
Learned Solicitor General of India contended before us that in the facts and the circumstances of this case, there was sufficient guideline in the Regulation 9(b) and the power of termination, properly read, would not be arbitrary or violative of Article 14 of the Constitution.
It may be mentioned that under the general law of contract of employ ment, which was commonly known as the 'law of master and servant ', which is not termed as law of employer and employ ee, whether the contract of service is for a fixed period or not, if it contained a provision for its termination by notice, it could be so terminated.
If there was no provision for giving notice and the contract was not for a fixed period, the law implied an obligation to give a reasonable notice.
Where no notice in the first case or no reasonable notice in the second case was given and the contract was wrongfully terminated, such wrongful termination would give rise to a claim for damages.
In this connection, reference may be made to the observations of this Court in the five judge bench decision in Union of India & Anr.
vs Tulsi Ram Patel, [1985] Supp.
2 SCR 131 at p. 166.
This is also the position at common law.
See Chitty on Contract; 26th Edition Vol.
II, p. 808 or 25th Edition Vol.
II p. 712, paragraph 3490.
In this connection, reliance may also be placed at paragraphs 607 and 608 of Volume No. 16, 4th Edition of Halsbury 's Law of England.
Under the Industrial Law, subject to the relevant statu tory provision, the services of an employee could be termi nated by reasonable notice.
In such a case it was always open to the Industrial Tribunal to examine whether the power of termination by reasonable notice was exercised bona fide or mala fide.
If, however, the industrial Court was satis fied that the order of discharge was punitive, that it was mala fide, or that it amounted to victimisation or unfair labour practice, the 188 industrial court was competent to set aside the order and in proper cases, direct the reinstatement of the employee.
Reference may also be made to the observations of this Court in Tata Oil Mills Co. Ltd. vs Workmen & Anr., ; at 130.
If, however, the exercise of such power was challenged on the ground of being colourable or mala fide or on account of victimisation or unfair labour practice, the employer must disclose to the Court the ground of his im pugned action, so that the same may be tested judicially.
See the observations of this Court in L. Michael & Anr.
vs M/s Johnston Pumps India Ltd.; , at 498.
The relationship between a statutory corporation and its employees is normally governed by the relevant rules, regu lations and standing orders.
A statutory Corporation is "State" within the meaning of Article 12 of the Constitution and its action is subject to judicial review in certain cases and certain circumstances.
In the facts and circum stances of these cases, we have proceeded on that basis and we are of the opinion that it is the correct basis.
The exercise of such power under regulations similar to the one impugned which has been upheld in various types of cases are instructive in their variety.
It may be mentioned that the exercise of power under the very same Regulation 9(b) was upheld by the Court in a matter, wherein in an action by the employee of D.T.C., this Court in Delhi Transport Corpora tion Undertaking vs Balbir Saran Goel, ; at 764 held that even if the employees of the respondent thought that he was a cantankerous man and it was not de sirable to retain him in service it was open to them to terminate his services in terms of Regulation 9(b) and it was not necessary to dismiss by way of punishment for mis conduct.
Reliance was placed on this decision by the High Court in the Judgment under appeal.
The High Court in our opinion rightly pointed out, however, that the decision was on a different basis and could not be availed of in deciding controversy involved in the present determination.
In Air India Corporation, Bombay vs V.A. Rebellow & Anr., ; , this Court dealing with the power of the Air India to terminate the services of a person who was alleged to have misbehaved with air hostesses, observed on page 6 16 of the report that the anxiety of the Legislature to effective ly achieve the object of duly protecting the workmen against victimisation of unfair labour practice consistently with the preservation of the employer 's bona fide right to main tain discipline and efficiency in the industry for securing the maximum production in peaceful, harmonious atmosphere is obvious from the 189 overall scheme of these sections.
This Court on page 620 of the report observed that the record merely disclosed that the appellant had suspicion about the complainant 's suit ability for the job in which he was employed and this led to loss of confidence in him with the result that his services were terminated under Regulation 48.
Loss of confidence in such circumstances could not be considered to be mala fide, it was held.
Similarly in Municipal Corporation of Greater Bombay vs P.S. Malvenkar & Ors., ; at page 1006, where it was alleged that the services of an employee of Bombay Municipal Corporation were unsatisfactory, this Court held that the powers of dismissal after an inquiry and the powers of simpliciter termination are to distinct and independent powers and as far as possible neither should be construed so as to emasculate the other or to render it ineffective.
One is the power to punish an employee for misconduct while the other is the power to terminate sim pliciter the service of an employee without any other ad verse consequence.
It may be mentioned that the case of civil servants is, however, governed by their special constitutional position which accords them status; the legal relationship (between the Government and its servants) is something entirely different, something in the nature of status.
It is much more than a purely contractual relationship voluntarily entered into between the parties.
The duties of state are fixed by the law and in the enforcement of these duties society has an interest.
In the language of jurisprudence status is a condition of membership of a group of which powers and duties are exclusively determined by law and not by agreement between the parties concerned.
See the observa tions of this Court in Roshan Lal Tandon vs Union of India, ; at 195 D E.
But even then the services of a temporary civil servant (although entitled to the protection of Article 311 of the Constitution) is subject to termina tion by notice.
But beside the above, the government may find it necessary to terminate the services of a temporary servant if it is not satisfied with his conduct or his suitability for the job and/or his work.
See the observa tions of this Court in Champak Lal Chiman Lal Shah vs The Union of India, at 204.
The services of a temporary government servant, further.
may be terminated on one month 's notice whenever the government thinks it neces sary or expedient to do so for administrative reasons.
It is impossible, this Court observed, to define before hand all the circumstances in which the discretion can be exercised.
The discretion was necessarily left to the Government.
See observations of this Court in Ram Gopal Chaturvedi vs State of M. P., ; at 475. 190 The aforesaid position of a government servant has been analysed in depth by the decision of this Court in Union of India vs Tulsi Ram Patel, (supra), where it was reiterated that the doctrine of pleasure is not a relic of the feudal ages or based upon any special prerogative of the Crown but is based on public interest and for the public good because it is as much in public interest and for public good that government servants who are inefficient, dishonest or cor rupt or have become a security risk should not continue in service and that the protection afforded to them by the Acts and the Rules made under Article 309 and by Article 311 of the Constitution be not abused by them to the detriment of the public interest and public good.
It was reiterated on page 190 of the report that if in a situation as envisaged in one of the three clauses of the second proviso to Clause (2) of Article 311 arises and the relevant clause is proper ly applied and the disciplinary inquiry dispensed with, the concerned government servant cannot be heard to complain that he is deprived of his livelihood.
This Court reiterated that the livelihood of an individual is a matter of great concern to him and his family but his livelihood is a matter of his private interest where such livelihood is provided by the public exchequer and the taking away of such livelihood is in the public interest and for the public good, and the former must yield to the latter public policy, it was reit erated, requires, public interest needs and public good demands that there should be such a doctrine.
It was further reiterated that the rules of natural justice are not immuta ble but flexible.
These rules can be adopted and modified by statutes and statutory rules and also by the constitution of the Tribunal which has to decide a particular matter and the rules by which such Tribunal is governed.
Not only, can the principles of natural justice be modified but in exceptional cases they can even be excluded.
See the observations of this Court at page 237 G of the aforesaid report.
Reference was also made to the observations of this Court at pages 214 215 of the aforesaid report.
Thus, the Constitution Bench laid down that even where a government servant enjoys constitutional status there can be exclusion of inquiry in the cases prescribed for termination of employment.
It must, however, be borne in mind that in some recent cases this Court has taken the view that a regulation pro viding for the termination of the service of an employee of the public corporation by notice only or pay in lieu thereof is invalid under Article 14 of the Constitution.
We have referred to the decisions of the Workmen of Hindustan Steel 's case (supra); West Bengal State Electricity Board 's case (supra) and Central Inland Water Transport Corpora tion 's case (supra).
Mr. 191 Ashok Desai, learned Solicitor General of India submitted that the decisions in the West Bengal State Electricity Board 's (supra) and Central Inland Water Transport Corpora tion 's case (supra) were incorrectly decided and the deci sion proceeded on the theory of unconscionable bargains and that termination by notice is against public policy.
He, however, drew our attention to Gheru Lal Parekh vs Mahadeo das Maiya & Others, [1959] Supp.
2 SCR 406 and 440 where it was held that though theoretically it may be permissible to evolve a new head under exceptional circumstances in a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads of avoidance of such clauses in these days.
Furthermore, as stated above, learned Solicitor General submitted that in the ordinary law of contract termination of employment by reasonable notice on either side has never been regarded as unconscionable.
Therefore, the learned Solicitor General submitted that this part of the above judgments was errone ous and should be overruled.
It must, however, be noted that in a later judgment of this Court, which followed this line of reasoning, it was recognised that a public corporation requires protection from employees who are inefficient or those who lacked probity or even made faulty policy decisions.
Reference was made to the decision of this Court in O.P. Bhandari vs 1.
T.D.C. & Ors.
, ; where this Court held that so far as some of the higher placed employees are concerned (described as 'gold collar ' employees) public sector under takings may be exposed to irreversible damage on account of faulty policy decisions or on account of lack of efficiency or probity of such employees and its very existence might be endangered beyond recall.
A public corporation may not be able to cut the dead wood and get rid of a managerial cadre employee in case he is considered to be wanting in perform ance or integrity.
Reference may be made to page 343 para graph 5 (supra) of the report.
It may be mentioned that in Moti Ram Deka 's case (supra) at p. 707 of the said report, a similar rule was considered by seven learned Judges in the context of government servants in Railway.
The majority judgment did not express opinion on the question of the Railway rule being bad on the ground of unguided and uncana lised power.
In his judgment, Mr. Justice Das Gupta held that the rule gave no guidance and was, therefore, violative of Article 14.
(See page 769 of the report).
On this point Mr. Justice Shah, as the learned Chief Justice then was, in his judgment observed at page 799 800 of the aforesaid report: "In considering the validity of an order an assumption that the power may be exercised mala fide and on that ground 192 discrimination may be practised is wholly out of place.
Because of the absence of specific directions in Rule 148 governing the exercise of authority conferred thereby, the power to terminate employment cannot be regarded as an arbitrary power exercisable at the sweet will of the author ity, when having regard to the nature of the employment and the service to be rendered, the importance of the efficient functioning of the rail transport in the scheme of our public economy, and the status of the authority invested with the exercise of power would appropriately be exercised for the protection of public interest on grounds of adminis trative convenience.
Power to exercise discretion is not necessarily to be assumed to be a power which will invali date the conferment of power.
Conferment of power has neces sarily to be coupled with the duty to exercise it bona fide and for effectuating the purpose and policy underlying the rules which provide for the exercise of the power.
If in the scheme of the rule, a clear policy relating to the circum stances in which the power is to be exercised is discerni ble, the conferment of power must be regarded as being made in furtherance of the scheme, and is not open to attack as infringing the ' equality clause.
It may be remembered that the rules relating to termination of employment of temporary servants and those on probation, and even those relating to compulsory retirement generally do not lay down any specific directions governing the exercise of the powers conferred thereby.
The reason is obvious: the appointing authority must in all these cases be left with discretion to determine employment having regard to the exigencies of the service, suitability of the employee for absorption or continuance in the cadre, and the larger.
interest of the public being served by retaining the public servant concerned in service.
" Learned Solicitor General submitted that the question is whether it is the very existence of power which is bad or the exercise is bad in any specific case.
It was submitted that the Court would be entitled to obtain guidance from the preamble, the policy and the purpose of the Act and the power conferred under it and to see that the power is exer cised only for that purpose.
It was submitted that even if a statute makes no clarification Court would ascertain if the statute laid down any principle or policy.
In such a case, the statute will be upheld although a given exercise may be struck down in particular cases.
See 193 the observations of this Court in Shri Ram Krishna Dalmia vs Justice Tandolkar; , at 299.
The guidance in the statute for the exercise of discretion may be found from the preamble read in the light of surrounding circumstances or even from the policy or the purpose of the enactment or generally from the object sought to be achieved.
See the observations of this Court in Jyoti Prasad vs The Adminis trator for the Union Territory of Delhi; , at 139.
Even a term like 'public interest ' can be sufficient guidance in the matter of retirement of a government employ ee.
See the observations of this Court in Union of India vs Col. J.N. Sinha & Anr., at 461 and such a provision can be read into a statute even when it is not otherwise expressly there.
Learned Solicitor General draw our attention to the observations of this Court in N.C. Dalwadi vs State of Gujarat, paragraphs 9 and 10 at page 619.
It is well settled and the learned Solicitor General made a point of it that the Court will sustain the presumption of constitutionality by considering matters of common knowledge and to assume every state of facts which can be conceived and can even read down the section, it was submitted, if it becomes necessary to uphold the validity of the provision.
Reliance was placed on the decision of this Court in Commissioner of Sales Tax, M.P., Indore & Ors.
vs Radhakrishan & Ors.
, ; at 257.
In the case of Olga Tellis & Ors.
vs Bombay Munici pal Corporation & Ors., [1985] Suppl.
2 SCR 51 at 89 this Court has held that considering the scheme of the act, a section which enabled the Commissioner to remove encroach ment without notice must be read to mean that notice would be given unless circumstances are such that it is not rea sonably practicable to give it.
This Court further held that the discretion is to be exercised in a reasonable manner so as to comply with the constitutional mandate that the proce dure accompanying the performance of a public act must be fair and reasonable.
We must lean in favour of that inter pretation because it helps to sustain the validity of the law.
Learned Solicitor General submitted that the appeal involved herein the power of Delhi Transport Corporation (a statutory corporation) regarding termination of service simpliciter under Regulation 9(b).
These Regulations were framed as mentioned under Section 53 of the Delhi Road Transport Authority Act, 1950.
The said Act was replaced by the Delhi Municipal Corporation Act, 1957 but the regula tions have been saved and even though in 1971 a new Corpora tion, viz. the Delhi Transport Corporation (the appellant), was constituted 194 under the Road Transport Corporation Act, 1950, the regula tions have been continued.
The guidelines for the exercise of such power, according to the Solicitor General, could be found in the statutory provisions of the 1950 Act under which the regulations have been framed, the preamble; Sections 19 and 20 (equivalent to Sections 18 and 19 of the Road Transport Corporation Act, 1950); Section 53 (equivalent to 45 of the Road Transport Corporation Act, 1950); the context of Regulation 9(b) read with 9(a) and 15.
Even for the exercise of this power, reasons could be recorded although they need not be communi cated.
This will ensure according to the Solicitor General, a check on the arbitrary exercise of power and effective judicial review in a given case.
The present regulations are parallel, to but not identical with, the exceptions carved out under Article 311(2) proviso.
It was submitted that even the power of termination simpliciter under Regulation 9(b) can only be exercised in circumstances other than those in Regulation 9(a), i.e., not where the foundation of the order is 'misconduct '.
The exercise of such power can only be for purposes germane and relevant to the statute.
It was submit ted by the learned Solicitor General that these would in clude several cases which have been held by Courts to give rise to termination simpliciter including where the employee shows such incompetence or unsuitability as to make his continuance in employment detrimental in the interest of the Corporation, where the continuance of the employee is a grave security risk making his continuance detrimental in the interest of the Corporation, if there is a justifiable lack of confidence which makes it necessary in the interest of the Corporation to immediately terminate the services.
These are illustrative and not exhaustive.
It was submitted by the learned Solicitor General that the above guidelines of recording reasons and confining action under Regulation 9(b) for purposes germane and rele vant to the statute would prevent arbitrary action by the Corporation while enabling it to run its services efficient ly and in public interest.
Thus, there is no vice of arbi trariness in the regulation.
The judgment of the High Court, therefore, cannot and should not be upheld according to the learned Solicitor General.
In Civil Appeal No. 2876 of 1986, the learned Attorney General urged that the settled rule judicially evolved in matters of constitutional adjudication is that in order to sustain the constitutionality of legislation, the words of a statute may be qualified, its operation limited and condi tions, limitations and obligations may be implied or 195 read into the statute in order to make it conform to consti tutional requirements.
The underlying rationale, according to the learned Attorney General, of this rule of interpreta tion, or the doctrine of reading down of a statute is that when a legislature, whose powers are not unlimited, enacts a statute, it is aware of its limitations, and in the absence of express intention or clear language to the contrary, it must be presumed to have implied into the statute the requi site limitations and conditions to immunise it from the virus of unconstitutionality.
From what the learned Attorney General submitted and what appears to be the correct that every legislature intends to act within its powers.
There fore, in a limited Government, the legislature attempts to function within its limited powers.
It would not, therefore, be expected to have intended to transgress its limits.
In Re The Hindu Women 's Rights to Property Act, , the question before the Federal Court was about the meaning of the word 'property ' in the Act.
The Court limited the opera tion of the word 'property ' to property other than agricul tural land because otherwise the Central Legislature would have had no competence to enact the statute.
The Court observed at pages 26 and 27 of the Report as follows: "No doubt if the Act does affect agricultural land in the Governors ' Provinces, it was beyond the competence of the Legislature to enact it: and whether or not it does so much depend upon the meaning which is to be given to the word 'property ' in the Act.
If that word necessarily and inevita bly comprises all forms of property, including agricultural land, then clearly the Act went beyond the powers of the Legislature; but when a Legislature with limited and re stricted powers makes use of a word of such wide and general import, the presumption must surely be that it is using it with reference to that kind of property with respect to which it is competent to legislate and to no other.
The question is thus one of construction, and unless the Act is to be regarded as wholly meaningless and ineffective, the Court is bound to construe the word 'property ' as referring only to those forms of property with respect to which the Legislature which enacted the Act was competent to legis late; that is to say, the property other than agricultural land . " See also the observations of Chief Justice Gwyer at pages 27 to 29 of the Report on how legislations of legisla ture with limited powers should be construed.
See also the observations of this Court in R.M.D. 196 Chamarbaugwalla vs Union of India, ; , at p. 935 and 938.
There section 2(d) of defined 'prize competition ' as meaning any competition in which prizes are offered for the solution of any puzzle.
As defined, the statute covered not only competition in which success depended on chance but also those which involved substantial degree of skill.
It was conceded that the Act would be violative of Article 19(1)(g) of the Constitution if competitions which involved substantial degree of skill were included in the statutory definition.
See the observa tions of this Court at p. 935 of the report.
This Court rejected the argument of the petitioners therein that since the language of the definition of prize competition was wide and unqualified, it was not open to the Court to read into it a limitation which was not there.
This principle was reiterated and applied by this Court in the case of Kedar Nath Singh vs State of Bihar, [1962] Supp.
(2) SCR 769.
The question before this Court was about the validity of section 124A of the Indian Penal Code.
This Court in order to sustain the validity of the section on the touch stone of Article 19(1)(a) of the Constitution of India, limited its applica tion only to acts involving intention or tendency to create disorder, or disturbance of law and order, or incitement to violence.
This Court held that it was well settled that if certain provisions of law construed in one way would make them consistent with the Constitution, and another interpre tation would render them unconstitutional, the Court would lean in favour of the former construction.
The provisions of the sections read as a whole, along with the explanations, make it reasonably clear that the sections aim at rendering penal only such activities as would be intended, or have a tendency, to create disorder or disturbance of public peace by resort to violence.
Reference may also be made to the decision of this Court in R.L. Arora vs State of Uttar Pradesh, ; where the question was about the Constitutionality of sec tion 41(aa) of the .
This Court upheld the validity of the section following the principle of interpreting the said rule in a way which would be consistent with the Constitution.
See the observations of this Court at p. 797 of the said report.
The technique of reading down has been adopted in numer ous cases to sustain the validity of the provision.
For example, in Jagdish Pandey vs The Chancellor, University of Bihar & Anr., ; 1, at pages 236 37, this Court made resort to section 4 of the Bihar State Universities Act, 1962.
It was observed that section 4 so read literally it did appear to give uncanalised powers to the Chancellor to 197 do what he liked on the recommendation of the Commission with respect to teachers covered by it.
But this Court was of the opinion that the legislature did not intend to give such an arbitrary power to the Chancellor and was of the opinion that section 4 should be read down and if it is read down, there was no reason to hold that the legislature was conferring a naked arbitrary power on the Chancellor and that power cannot be struck down ,as discriminatory under Article 14 of the Constitution.
See the observations of this Court in Sunil Batra vs Delhi Administration & Ors., ; There the constitutionality of section 30, sub section (2) and section 56 of the was in question.
Krishna Iyer, J, speaking for this Court at p. 511, para 34, of the report observed that the Court does not 'rush in ' to demolish provisions where judicial endeavour, amelioratively interpretational, may achieve both constitutionality and compassionate resurrection.
This salutary strategy, the learned Judge observed, of sustaining the validity of the law and softening its application was of lovely dexterity.
The semantic technique of updating the living sense of a dated legislation is, in our view, perfectly legitimate.
Semantic readjustments are necessary to obviate alegicidal sequel and a validation oriented approach becomes the phi losophy of statutory construction sometimes.
Similar obser vations were made in N.C. Dalwadi vs State of Gujarat, (supra).
In Tinsukhia Electric Supply Co. Ltd. vs State of Assam & Ors., ; , this Court upheld the valid ity of sections 9 and 10 of the Act by reading in several matters by necessary implication in order to sustain the validity of the sections.
In Charan Lal Sahu & Ors.
vs Union of India, [1989] Supp.
SCALE 1, at pages 53 and 54, paras 101 as well as p. 61, para 114, it was observed that this principle of reading down has been adopted in U.S. Supreme Court in several cases.
See also United States of America vs Edward A. Rumely, 97 Lawyers Edition 770 at 775.
The princi ple as enunciated in Rumely 's case (supra) has been approved by this Court in Shah & Co. vs State of Maharashtra, ; at 477 78.
This principle of reading down or placing limited construction has been adopted by courts in England in deciding the validity of bye laws and regula tions.
See Reg.
vs Sadlers Co., ; , at 460 and 463 and Faramus vs Film Artists Association, at 542.
The courts must iron out the creases, as said Lord Denning in Seaford Court Estates, This Court has also on numerous occasions followed this practice.
See the observations of this Court in M. Pentiah and Ors.
vs Veera Mallappa and Ors., ; ; Bangalore Water Supply and Sewerage Board etc.
vs A. Rajappa & Ors., ; See also H.M. Seervai 's 'Constitutional Law of India ', 3rd Edn.
I, pages 119 120.
In the background of this, the learned Attorney General also 198 drew our attention that the present regulation, as mentioned hereinbefore, should be read and construed in the said manner and the reasons and conditions of its exercise can be spelt out and it may be so construed.
He submitted that it should be spelt out that the regulation requires reasons to be there, reasons which are germane and relevant.
The principles of natural justice or holding of an enquiry is neither a universal principle of justice nor inflexible dogma.
The principles of natural justice are not incapable of exclusion in a given situation.
For example, Article 311(2) of the Constitution which essentially em bodies the concept of natural justice, itself contemplates that there may be situations which warrant or permit the non applicability of the principles underlying Article 311(2) of the Constitution.
Reference may be made to the second proviso to Article 311 of the Constitution.
This court has also recognised that the rule of audi alteram partera can be excluded where having regard to the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provision, fairness in action does not demand its application and even warrants its exclusion.
If importing the right to be heard has the effect promptitude or the urgency of the situation so demands, natural justice could be avoided.
See the observations of this Court in Maneka Gandhi 's case at p. 681 of the report (supra).
This Court in Tulsi Ram Patel 's case (supra) had in terms ruled that not only, therefore, can the principles of natural justice be modified but in exceptional cases they can even be excluded.
But the principles of natural justice must not be displaced save in exceptional cases.
Consequent ly, the learned Attorney General submitted that the words "where it is not reasonably practicable to hold an enquiry" may be imported into the regulations.
It was submitted by the learned Attorney General that the exclusion of audi alteram partera rule in circumstances which are circum scribed and coupled with the safeguard of recording of reasons which are germane and relevant, the termination in such a situation would not render the regulation unreasona ble or arbitrary.
Then it could not be said that the power was uncanalised or unguided if the regulation is construed and read down in the manner indicated above, according to the learned Attorney General.
The reading down, the learned Attorney General conceded cannot, however, be done where there was no valid reason and where it would be contrary to proclaimed purpose.
See the observations of this Court in Minerva Mills Ltd. & Ors.
vs Union of India & Ors.
, ; , at p. 239 and 259.
On behalf of the workmen of the respondent DTC, Shri 199 Ramamurthi, submitted that the Constitutional questions of great public importance arising in the present appeal, have to be examined in the light of the law laid down by the Full Court in the case of R.C. Cooper vs Union of India, ; at 577 and by larger Constitution Benches in the cases of Maneka Gandhi vs Union of India (supra), Moti Ram Deka vs Union of India (supra), State of West Bengal vs Union of India, (supra) and the Constitution Bench decisions in the cases of Olga Tellis and Others vs Bombay Municipal Corporation and Others, (supra), Fertilizer Corporation Kamgar Union (Regd.) Sindri and Others vs Union of India and Others, [1981] 2 SCR at 60 61, Union of India vs Tulsiram Patel and Others (supra), Sukhdev Singh & Others vs Bhagat Ram Sardar Singh Raghuvanshi and Another (supra) and Ajay Hasia etc.
vs Khalid Mujib Sehravardi & Ors. etc.; , at 100 102.
According to Shri Ramamurthi these deci sions are authority for the following propositions: (a) The declarations in the provisions contained in the Fundamental Rights Chapter involve an obligation imposed not merely upon the "State" but upon all persons to respect the rights declared, unless the context indicates otherwise, against every person or agency seeking to infringe them.
See the observations of this Court in State of West Bengal vs Union of India, [1964] 1 SCR 371 at page 438: (b) Part III of the Constitution weaves a pattern of guarantee on the texture of basic human rights.
The guaran tees delimit the protection of those rights in their allot ted field.
They do not attempt to enunciate distinct right.
[See R.C. Cooper 's case (supra( at p. 577 of the report].
The extent of protection against impairment of a fundamental right is determined not by the object of the Legislature nor 2by the form of the action, but by its direct operation upon the individual 's rights.
(c) Any person who is deprived of his right to live lihood except according to just and fair procedure estab lished by law can challenge the deprivation as offending the right to life, conferred by Article 21.
See the observations of this Court in Olga Tellis 's case (supra( at 80 81 and 85 of the report.
Therefore, the holding to the contrary in A.V. Nachane & Anr.
vs Union of India & Anr., ; is no longer good law.
In any event Counsel is right that the observations made at p. 259 of the report (supra) were in a different context and the challenge 200 based on Articles 19(1)(g) and 31 does not appear to have any substance in resolving the present controversy before us.
Mr. Ramamurthi submitted that provision of any Rule that service shall be liable to termination on notice for the period prescribed therein contravenes Article 14 of the Constitution as arbitrary and uncontrolled power is left in the authority to select at its will any person against whom action will be taken.
See the observations of this Court in Moti Ram Deka 's case (supra) at p. 770 and 751 of the re port.
It was submitted that Articles 14, 19 and 21 of the Constitution are inter related and the law must, therefore, now be taken to be well settled that Article 21 does not exclude Article 19 and even if there is a law providing a procedure for depriving a person of personal liberty (this will equally apply to life) and there is, consequently, no infringement of fundamental right conferred by Article 21, such law in so far as it abridges or takes away any funda mental right under Article 19 would have to meet the chal lenge of the Article.
See the observations of this Court in Maneka Gandhi 's case (supra).
Article 19(1)(g), it was urged, confers a broad and general right which is available to all persons to do work of any particular kind and of their choice.
See the observations in Fertilizer Corporation Kamgar Union 's case (supra) at p. 60 61 of the report.
According to Mr. Ramamurthi, there is a distinction between Public Employment or service and "pure master and servant cases".
He referred to the observations of this Court in India Tobacco Co. Ltd. vs The Commercial Tax Offi cer, Bhavanipore & Ors., at 657; followed in A.L. Kalra vs The Project and Equipment Corporation of India Ltd., ; at 664; Whenever, therefore, according to Shri Ramamurthi, there is arbitrariness in State Action whether it be of the Legislature or of the Executive or of an authority under Article 12, article 14 immediately springs into action and strikes down such State action.
In fact, the concept of reasonableness and non/arbitrariness pervades the entire constitutional scheme and is a golden thread which runs through the whole of the fabric of the Constitution.
See the observations of this Court in Bandhua Mukti Morcha vs Union of India & Ors., at 101.
A violation of a principle of natu ral justice by State action is a violation of Article 14 of the Constitution, which can be excluded only in exceptional circumstances.
See the observations of this Court in Tulsi Ram Patel 's case (supra) at 229, and at 233 of the report.
It was, therefore, submitted that a clause authorising the ?201 employer to terminate the services of an employee whose contract of service is for an indefinite period or till the age of retirement, by serving notice violates the fundamen tal rights guaranteed under Articles 14, 19(1) (g) and 21 of the Constitution for Article 21 is violated when right to livelihood is taken away by termination of service of a person; employed for an indefinite period or till the age of retirement except for proved misconduct.
Assuming, it was argued, that in such a case right to livelihood can be taken away by termination of service by giving notice, nonetheless it could be validly done only, according to Shri Ramamurthi, if: (i) There is a fair and just procedure by way of (1) recording of reasons and (2) notice to show cause; (ii) And the right to terminate is restricted to exceptional grounds.
When the service of a person employed for an indefinite period or till the age of retirement is terminated, Shri Ramamurthi assets, then Article 14 is violated when there is no guidance for the exercise of power and reasons are not required to be recorded and principles of natural justice are abrogated.
Similarly Article 19(1)(g) is violated, according to him, for the reasons that there is no guidance, no requirement of reasons to be recorded and there is viola tion of the principles of natural justice.
Shri Ramamurthi reminded us that before India became independent in 1947, the was ap plicable only to British India on its own force.
By Merged State Laws Act, 1949 it was extended to the new provinces and merged States to the States of Manipur, Tripura by Vindhya Pradesh by Union territories Law Act 1950.
It was also extended to the States merged in the States of Bombay and Punjab by Bombay Act 4 of 1950 and Punjab Act 5 of 1950.
With the promulgation of the Constitution, the Indian Con tract Act 1872 extends to the whole of India except the State of Jammu & Kashmir.
Shri Ramamurthi asserted the what ever might have been the position in regard to the provinces comprised in British India before independence, as far as other areas, forming part of the Union of India under the Constitution are concerned, only the is applicable.
By article 372 of the Constitution, this Act has been continued in operation even after the Constitu tion came into force, subject to the other provisions of the Constitution.
202 A contract of service, according to Shri Ramamurthi is a species of contract and will, therefore, be governed by the provisions of the .
This Act has been held to be an Amending as well as a Consolidating Act.
Therefore, there can be no question of common law of Eng land, as made applicable in India during the British Rule, being the basis for deciding any question relating to con tract of employment after 1950.
In any event any provisions of either the , or of the English Common Law Applicable in British India before the Constitu tion came into force would be void by reason of Article 13 of the Constitution if it infringed any of the fundamental rights contained in Part III of the Constitution, pleaded Mr. Ramamurthi before us.
Under Section 2(h) of the an agreement (including an agreement of service) becomes a contract only when it is enforceable by law.
If it is not enforceable in law, it would be void by reason of section 2(g) of the Contract Act.
The question for consideration would, therefore, be whether a clause in an agreement of service when it is for an indefinite period or till the age of retirement providing for termination by giving notice would be enforceable? It was submitted by the workers ' union that it would not be enforceable if it vio lates the fundamental rights guaranteed by Articles 14, 19(1)(g) and 21 of the Constitution.
See the observations of this Court in Moti Ram Deka 's case (supra) at 709 of the Report.
It was submitted that the broader submission was that under our Constitution there can be no contract of employment providing for termination of service by an em ployer of an employee by giving notice, when the employment is for indefinite period or till the age of retirement.
In any event, such a clause cannot find a place either in the contract of service or in the statutory provisions governing the conditions of service in the case of public employment under the 'state ' as defined in Article 12 of the Constitu tion.
Shri Ramamurthi urged that the observations contained in the judgment of this Court in Tulsiram Patel 's case (supra) at 166 of the report, regarding the ordinary law of master and servant cannot be construed as laying down the proposi tion that under the Indian law, even if a contract of serv ice is for an indefinite period or till the age of retire ment, it can still be terminated by giving reasonable period of notice.
In any event, even in the Common Law of England, a distinction is made between public employment and "pure master and servant cases" [See the observations of this Court in Sukhdev Singh 's case (supra) at page 657 of the report.
Mr. Ramamurthi submitted that the doctrine of pleasure 203 advanced by the learned Solicitor General of India was confined to employment under the Union of India and States dealt with under Part XIV, Chapter I of the Constitution and cannot and do not extend to employment under local or other authorities referred to under Article 12 of the Constitu tion.
There cannot be any pleasure by such authority in respect of employment of the permanent employee.
It was submitted by Shri Ramamurthi further that even in cases of employment under the Union and the States, the pleasure doctrine is limited by the express provisions of Article 311 of the Constitution.
For that reason, according to him, it has lost some of its majesty and power.
He referred us to the observations of this Court in Moti Ram Deka 's case (supra) at p. 704 and Tulsi Ram Patels 's case (supra) at page 196.
In dealing with the question of validity of rules autho rising the Government to terminate the services of temporary servants as upheld by this court in Champaklal Chimanlal Shah 's case (supra) and Ram Gopal Chaturvedi 's case (supra) it was submitted that it is important to note that the validity of the rules was challenged on the ground of denial of equality of opportunity in employment under the State guaranteed by Article 16 of the Constitution.
In that con text this Court observed at p. 20 1 (supra) of the report that there can also be no doubt, if such a class of tempo rary servants could be recruited, there could be nothing discriminatory or violative of equal opportunity if the conditions of service of such servants are different from those of permanent employees.
It is thus apparent that this Court, it was submitted, had no occasion to consider the reasonableness of a provision for termination of service on giving notice under Article 14 of the Constitution and, therefore, this decision can be of no assistance to the appellants.
Shri Ramamurthi submitted that since, audi alteram partem is a requirement of Article 14, in view of recent decisions of this Court, and conferment of arbitrary power itself is contrary to Article 14, the rule in question can, according to Shri Ramamurthi, no larger be sustained as valid.
As far as the decision in Ram Gopal Chaturvedi 's case (supra) was concerned, Shri Ramamurthi submitted that the reasons given for rejecting the argument that the rule confers an arbitrary and unguided power are not valid for in Moti Ram Deka ' case (supra), where the view of two learned judges of this Court who had held similar power to be arbi trary had not ever been noticed.
The observation that it is impossible to define before hand all the circumstances in which the discretion can be exercised and the discretion had necessarily to be left to the Government, has not taken into consideration the circumstance 204 that the denial of audi alteram parlem which is a require ment of Article 14, can be only in exceptional circumstances and, therefore, such circumstances have necessarily to be spelt out.
This Court had no occasion, according to Shri Ramamurthi, to consider the cumulative impact of the funda mental rights guaranteed by Article 14, 19(1)(g) and 21 of the Constitution.
Shri Ramamurthi sought to urge before us that industrial law recognises the right of the employer to exercise, bona fide, the power to terminate the services of workman by giving notice, except in case of misconduct, which is unlike the law of master and servant.
Shri Ramamurthi urged that it is important to note that in all cases under industrial law, decisions have been rendered by industrial tribunal when disputes had been raised by workmen challenging the action of the employer terminating their services by giving notice, under the terms of the contract of service or the Certified Standing Orders.
The question was never raised, nor could it be raised, before the Tribunals that the very term in the contract of service or in Standing Orders would have to stand the test of Articles 14, 19(1)(g) and 21 of the Con stitution.
Further a constitution bench of this Court had rejected the contention that Industrial Tribunals should make a distinction between public sector and private sector industries.
Reliance was placed on the observations of this Court in Hindustan Antibiotics Ltd. vs The Workmen & Ors., at 669.
On the consideration of the rele vant material placed before us, we are asked to come to the conclusion that the same principles evolved by industrial adjudication in regard to private sector undertakings will govern those in the public sector undertakings having a distinct corporate existence.
Therefore, all the decisions referred to by the appellant, it was argued, and interven ers, were all concerned with applying the industrial law even though some Of them dealt with employees, working in statutory corporations or public sector undertakings.
It was, therefore, submitted by Shri Ramamurthi that these decisions could afford no assistance to the Court, in decid ing the issues raised in the present case, where the validi ty of a term of employment, permitting the employer to terminate the services of a permanent employee by simply giving notice, is challenged on the ground that such a term violates fundamental rights guaranteed by Articles 14, 19(1)(g) and 21 of the Constitution.
It was submitted fur ther that the constitutional guarantees under Articles 14 and 21 of the Constitution are for all persons and there can be no basis for making a distinction between 'workmen ' to whom the Industrial Disputes Act and other industrial laws apply and those who are outside their purview.
The laws applicable to the former 205 can only add to and not detract from the rights guaranteed by Part III of the Constitution.
It was important to note that all the decisions so far rendered by this Court striking down rules and regulations or a provision in the contract of service, authorising termination of service of permanent employees by giving notice relate to cases of non workman and we were referred to the decisions in West Bengal State Electricity Board 's case (supra), Central Inland Water Transport Corporation Ltd. 's case (supra) and O.P. Bhandari 's case (supra).
There is the theory that possibility of abuse of power is no ground for striking down the law.
Attention may be drawn to the observations of this Court in The Collector of Customs, Madras vs Nathella Sampathu Chetty, ; at 825 and Commissioner of Sales Tax, Madhya Pradesh vs Radhakri shan & Ors.
(supra).
However, these decisions, it was sub mitted on behalf of the respondents, would have no relevance for the present case because the power to terminate the services of a person employed to serve indefinitely or till the age of retirement can be exercised only in cases of proved misconduct or exceptional circumstances having regard to the Constitutional guarantee available under Articles 14, 19(1)(g) and 21 of the Constitution.
Unless the exceptional circumstances are spelt out the power to terminate the services would cover both permissible and impermissible grounds rendering it wholly invalid, it was urged.
This was particularly so because the requirement of audi alteram partem which is a part of the guarantee of Article 14 is sought to be excluded.
There can be no guidance available in the body of the law itself because the purpose for which an undertaking is established and the provisions dealing with the same in the law can provide no guidance regarding excep tional circumstances under which alone the power can be exercised.
The question involved, Shri Ramamurthi empha sised, in these cases is not the exercise of power which an employer possesses to terminate the services of his employee but the extent of that power.
Shri Ramamurthi drew our attention to the award and referred to paragraph 5.6 of the Shastri Award and other provisions of the award defining misconduct and also para graph 522 of the Award dealing with the procedure for termi nation of employment and 523 onwards.
Mr. Ramamurthi further submitted that provisions of Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952 cannot be rendered constitutional by reading the requirement of recording reasons and confin ing it to cases where it is not reasonably practicable to hold an enquiry 206 and reading it down further as being applicable to only exceptional cases would not be permissible construction and proper.
Shri Ramamurthi drew our attention to the true scope of Regulation 9(b) of the aforesaid Regulations in the light of the judgment of this Court in Balbir Saran Goel 's case (supra).
This rule, it has to be borne in mind, according to him, has been interpreted as applicable to all cases of termination including termination for misconduct as defined in the Standing Orders.
In the aforesaid decision, at p. 761 of the report.
this Court observed that: "Regulation 9(b) clearly provides for termination of serv ices in two modes: the first is where the services may be terminated without any notice or pay in lieu of notice.
This can be done among other reasons for misconduct.
The second mode is of terminating the services owning to reduction of establishment or in circumstances other than those mentioned in clause (a) which relate to termination without notice.
When termination is made under clause (b) one month 's notice or pay in lieu thereof is to be given to the employee.
Thus it is clear that if the employer chooses to terminate the services in accordance with clause (b) after giving one month 's notice or pay in lieu thereof it cannot amount to termination of service for misconduct within the meaning of clause (a).
It is only when some punishment is inflicted of the nature specified in Regulation 15 for misconduct that the procedure laid down therein for an enquiry etc.
becomes applicable.
" If this was the true scope of the Regulation, Shri Ramamurthi contended, then it was obvious that it leaves the choice entirely to the DTC Management either to proceed against the person for misconduct by holding an enquiry or for the same misconduct terminate his services by giving one month 's notice.
It is the conferment of such a power that has been held to be unguided and arbitrary in all decisions from Moti Ram Deka 's case (supra) to the more recent deci sions of this Court such as West Bengal Electricity Board 's case (supra), etc.
Therefore, it was submitted that the argument based on the assumption that Regulation 9(b) was confined to cases under than misconduct really overlooked the interpretation placed upon this Regulation by this Court.
Shri Ramamurthi further submitted that if regulation 9(b) con 207 fers this arbitrary power of leaving it to the DTC manage ment to pick and choose then it is plain that there is nothing in the provisions of the Act or the regulations from which the DTC management can find any guidance.
It was, therefore, the submission of the respondents that in order to conform to the Constitutional guarantees contained in Articles 14, 19(1)(g) and 21 of the Constitution as inter preted by this Court, the first and foremost the regulation will have to make a distinction between cases where services are sought to be terminated for misconduct and cases of termination on grounds other than what would constitute misconduct.
As far as termination or dismissal on ground of misconduct is concerned, ordinarily the detailed procedure for establishing misconduct had to be followed.
In cases where it is not possible to follow the detailed procedure, then at least the minimum procedure of issuing a show cause notice should be followed after recording reasons why it is not practicable to hold a full fledged enquiry.
In cases where even this requirement of the elementary principles of natural justice is not to be followed, then the regulation must itself indicate those cases in which principles of natural justice can be totally abrogated after recording reasons.
As far as termination of service of a permanent employee on grounds which do not constitute misconduct is concerned, assuming that this is held to be permissible, it can be only in very exceptional cases and that too after observing at least the elementary principle of natural justice of asking for explanation before terminating the services and also recording reasons.
Shri Ramamurthi urged that to read all this into the regulations would literally mean re writing the regulations which is not permissible under any of the decisions or the law.
As one of the cases cover termination under The Punjab Civil Services Rules, 1952, Shri Ramamurthi drew our atten tion to some of the provisions of these rules.
He drew our attention to rule 3.12 which provides that unless in any case it be otherwise provided in those rules, a Government employee on substantive appointment to any permanent post acquired a lien on that post and ceased to hold any lien previously acquired on any other post.
He also drew our attention to rule 3.15(a) which provided that except as provided in clause (b) and (c) of that rule and in note under rule 3.13, a Government employee 's lien on a post may, in no circumstances, be terminated, even with his consent, if the result would be to leave him without a lien or a suspended lien upon a permanent post.
Clause (b) of rule 3.15 provided that notwithstanding the provisions of rule 3.14(a), the lien of a Govern 208 ment employee holding substantively a permanent post shall be terminated while on refused leave granted after the date of compulsory retirement under rule 6.21; or on his appoint ment substantively to the post of Chief Engineer of the Public Works Department.
And clause (c) of this rule provid ed that a Government employee 's lien on a permanent post, shall stand terminated on his acquiring a lien on a perma nent post (whether under the Central Government or a State Government) outside the cadre on which he is borne.
Note under rule 3.13 speaks about a Government employee holding substantially the post of a Chief Engineer of the Public Works Department, taking leave immediately on vacating his post he then shall during the leave be left without a lien on any permanent post.
The expression 'vacate ' used in the note refers only to vacation as a result of completion of tenure of attainment of superannuation.
Mr. R.K. Garg, appearing for the respondents in C.A. No. 4073 of 1986 stated that the Attorney General had rightly pointed out that employee 's services were terminated under Para 522 of the Shastri Award merely because he had failed to mention a loan of Rs. 1.5 lakhs taken from another Branch of the Bank.
Mr. Garg pointed out that the loan had been repaid.
The failure to mention this loan had deprived the appellant of his livelihood.
The use of this power claimed under Para 522 of the Shastri Award was not defended by the Attorney General in this case.
We had fairly conceded that he might not support this termination when the case is heard on merits.
But, that does not derogate from the wide ampli tude of this uncontrolled, arbitrary power claimed by the management under Para 522 of the Shastri Award.
Powers claimed under Para 522 must, therefore, be examined in the background of the facts and circumstances of this Appeal.
It was submitted that this Court must hold that nothing in Para 522 of the Shastri Award confers on the management power so far as they can get rid of permanent employees of the Banks merely after service of notice on the imaginary belief that they were doing so for "efficient Management" of the Banks.
Mr. Garg reminded us that it is common knowledge that all despots act as tyrants in the firm belief that the intolera ble indignities and atrocities they inflict, were necessary in public interest and to save the Society.
Mr. Garg submit ted that the rule of law cannot be preserved if absolute, uncontrolled powers are tolerated and fundamental rights or Directive Principles are allowed to be reduced to a "dead letter".
Mr. Garg urged that the fundamental requirements of natural justice are not dispensible luxury.
The express language of Para 522 of 209 the Shastri Award is totally destructive of this require ment.
The express language as mentioned hereinbefore of Para 522 of the Shastri Award provides: "(1) In cases not involving disciplinary action for miscon duct and subject to clause (6) below.
The employment of a permanent employee may be terminated by three months ' notice or on payment of three months ' pay and allowances in lieu of notice.
The services of a probationer may be terminated by one month 's notice or on payment of a month 's pay and allow ances in lieu of notice." Rule 148(3) reads: "(3) Other (non pensionable) railway servants shall be liable to termination on notice on either side for the periods shown below.
Such notice is not, however, required in cases of dismissal or removal as a disciplinary measure after compliance with the provisions of Clause (2) of Arti cle 311 of the Constitution, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity.
" "Note: The appointing authorities are empowered to reduce or waive, at their discretion, the stipulated period of notice to be given by an employee, but the reason justifying their action should be recorded.
" Rule 348(4) reads: "In lieu of the notice prescribed in this rule, it shall be permissible on the part of the Railway Administration to terminate the service of a railway servant by paying him the pay for the period of notice." Rule 149(3) reads: "Other railway servants: The services of other railway servants shall be liable to termination on notice on either side for the periods shown below.
Such notice is not howev er, required in cases of dismissal or removal as a discipli nary measure after compliance with the provisions 210 of clause (2) of Article 311 of the Constitution, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity.
" It was urged by Mr. Garg that the services of a perma nent bank employee cannot be terminated without charge of 'misconduct ' and without an enquiry and the aforesaid para graph gives no indication as to on what conditions this arbitrary uncontrolled power can be used to get rid of one or more permanent employees for "efficient management of Banks" on subjective opinions or suspicion not tested in enquiry into facts.
It was further urged that this provision provides for "insecurity of tenure" for lakhs of permanent employees, Articles 14, 19(1)(g) and 21 of the Constitution and the integrated protection of these Fundamental Rights excludes the "doctrine of pleasure" and insists on security of tenure "during good behaviour".
The right to livelihood cannot be rendered precarious or reduced to a glorious uncertainty", it was urged by Mr. Garg.
Mr. Garg submitted that the right to "hire and fire" was the prerogative claimed by the employer in the days of uncontrolled "laissez faire.
" This was the "doctrine of pleasure of the Crown" in case of Government servants, who held office during the pleasure of the King who had absolute powers over his sub jects.
Articles 14, 19(1)(g) and 21 secure the rights of the citizen and act as limits on the powers of the "State" in Democratic Republic of India.
Unjust, arbitrary, uncon trolled power of "premature" termination of services of permanent employees should not be tolerated according to Mr. Garg by the Constitution of free India.
In case of Government servants, Articles 311(1) and 311(2) of the Constitution expressly restrict the "doctrine of pleasure" contained in Article 310.
Article 14 also insists on natural justice as was provided in Article 311(2), in order to prevent arbitrary use of power of termi nation.
Articles 19(1)(g) and 21 read together require just, fair and reasonable procedure for termination of services for good cause.
Without these safeguards, employees are reduced to the status of slaves of their masters.
Employers are no longer masters as in the days of slavery of feudal relations, Mr. Garg tried to emphasise.
He submitted that Article 14 of the Constitution did not permit permanent railway employees to be exposed to termination of their services on notice without charge of misconduct or a reason able opportunity to answer the charge.
Rules 148 and 149 of the Railway Establishment Code which have been set only hereinbefore have the same effect, as is the effect of para 522 of the Shastry Award, and both these Rules were declared unconstitutional in Moti Ram Deka 's case (supra) by a seven 211 Judges ' Bench, according to Mr. Garg.
Rules 148 and 149 were found violative of Article 14 for two reasons, it was submitted: (i) Railway servants in the matter of termination of service could not form a separate Class from other Govern ment servants (As per majority view, in the Judgment of Justice Gajendragadkar, in Moti Ram Deka '5 case ; ,729 731).
(ii) Rule 148 conferred unguided, uncontrolled power of termination and, therefore, was hit by Article 14.
(As per Justice Subba Rao and Justice Das Gupta, in Moti Ram Deka 's case (supra).
Mr. Garg sought to urge that this binding decision of seven Judges ' Bench in Moti Ram Deka 's (supra) was applied in Gurdev Singh Sidhu vs State of Punjab & Anr., ; at 592 593 by the Constitution Bench of five Judges to strike down a Service Rule which permitted compulsory retirement on completion of 10 years ' services on the ground of 'inefficiency ' etc.
This Court held that Compulsory retirement could not be tolerated even after 10 years of service in view Of such retirement being not based on rele vant considerations, including expected longivity of life of the employees in India.
If the power of removal by way of compulsory retirement even after ten years was held uncon stitutional in Gurdev Singh 's case (supra) para 522 of the Shastri Award was far more arbitrary, unjust and unreasona ble, it was urged before us.
It was reiterated before us that in view of the binding decision of seven Judges in Moti Ram Deka 's Case and its application by five Judges in Case of compulsory retirement after 10 years in Gurdev Singh 's Case (supra), it is not open to the employees to submit that similar powers claimed under paragraph 522 of the Shastri Award, even without 10 years ' service for removal without charge of 'misconduct ' and without enquiry, can be upheld as constitutional on any grounds whatsoever.
It cannot be upheld as constitutional on any grounds whatsoever.
It cannot be done without over ruling Moti Ram Deka 's case or without an express constitu tional provision like second Proviso (a), (b) or (C) to Article 311(2), which was adopted.by the Constituent Assem bly, not by a court of law, it was reiterated before us.
212 It was submitted that no principle of interpretation permits reading down a provision so as to make it into a different provision altogether different from what was intended by the legislature or its delegate.
(R. M.D.C. 's case (supra).
It was urged that it was established law that on reading down a provision, Court cannot preserve a power for a pur pose which is just the opposite of what the legislature had intended.
Para 522 of the Shastri Award was not at all intended to be used within limits expressed or implied.
The Court must not legislate conditions such as were adopted by the Constituent Assembly in case of second Proviso to Arti cle 311(2) in the Constitution of India.
Even Parliament could not graft such limitations on Article 311(2), if second Proviso to Article 311 was not there in the Constitu tion.
This Court cannot and ought.
it was submitted not to arrogate powers to legislate what was patently outside even the competence of Parliament of India.
It was submitted that in Tulsi Ram Patel 's Case, the majority decision could not hold second Proviso to Article 311(2) unconstitutional.
In order to give effect to the express language of second Proviso to Article 311(2), Court denied the protection of Article 14 to permit the President to terminate the services without following principles of natural justice ' in cases covered by the said Proviso.
In every other case, natural justice is the command of Article 311(2) of the Constitution was submitted.
The operation of Articles 14, 19(1)(g) and 311(2) of the Constitution does not permit Courts to lay down essential legislative policy, such as was laid down by the Constituent Assembly to over ride 311(2) of the Constitution.
Mr. Garg, therefore, submitted that the requirement of defining 'misconduct ' in the Standing Orders and providing by meticulous provisions for a just, fair and reasonable enquiry into charges of 'misconduct ' are the mandatory requirement of Industrial Employment Standing Orders Act.
(U. P State Electricity Board vs Hari Shankar Jain, Shri Garg urged that the I.L.O. Conventions, accepted by India.
required all employers to frame Standing Orders.
He further urged that the demands of natural justice, which form part of Article 14 of the Constitution have been raised to the status of 'public policy ' controlling section 23 of the .
On that basis, clauses in 213 contract of employment which provide for removal from serv ice on the will of the employer have been condemned as 'The Henry VIII Clause ' (see the observations of this Court in Central Inland Water Transports case (supra) against the ethos of the Constitution of Socialist Democratic Republic of India.
In this connection, reference was made to the decision of this Court in Central Inland Water Transport 's case (supra) and Maneka Gandhi 's case (supra).
In India, Shri Garg submitted.
workers have a right to participate in the management.
The participation in the management cannot exclude the 'power to be heard ' and thus participate in a decision to remove a permanent employee.
Government alone has power to refer to the industrial tribunal, Shri Garg submitted.
He was against any reading down which is contrary to the principles of interpretation.
He referred to the observations of the Privy Council in Nazir Ahmed 's case [AIR 1936 PC 253].
He submitted that if two provisions exist, firstly, to remove from service after holding an enquiry on a charge of a 'misconduct '; and secondly without serving a charge sheet or holding an enquiry all provisions for hold ing enquiry will be rendered otiose and will be reduced to a mere redundancy.
Such an interpretation will expose workers to harsher treatment than those guilty of misconduct, who will enjoy greater protection than those who have committed no misconduct.
Such powers are patently discriminatory.
Reference under section 10 of the Industrial Disputes Act would serve no purpose, submitted Mr. Garg.
Court has a duty, according to him.
to correct wrongs even if orders have been made which are later found to be violative of any fundamental right and to recall its orders to avoid injus tice.
He referred to the decision of this Court in A.R. Antulay vs R.S. Nayak and Anr., ; He remind ed us that no draft had been submitted by the Attorney General or the Solicitor General, which could be added as a proviso to para 522 of the Shastri Award by this Court as a piece of judicial legislation to amend the impugned para 522.
Substantive provision of para 522 could not be con trolled or curtailed effectively so that its operation could be confined within narrow constitutional limits.
Mr. Garg reminded us that it is not the duty of the court to condone the constitutional delinquencies of those limited by the Constitution if they arrogate uncontrolled unconstitutional powers, which are neither necessary nor germane for supposed efficiency of services in the Banks as a business enter prise.
Mr. Garg submitted that in a system governed by rule of law, discretion when conferred upon executive authorities must be confined within clearly defined limits.
The rule of law from this point means that decisions should be made by the application of known 214 principles and rules and.
in general, such decisions should be predictable and the citizen should know where he is.
Law can only reach its finest moments when it has freed man from the unlimited discretion of ruler.
He referred to the obser vations of this Court in S.C. Jaisinhhani vs Union of India and Ors., ; at p. 718 19.
On behalf of the Interveners in Civil Appeal No. 2876, Mr. P.P. Rao submitted that the aforesaid decision in Tulsi Ram Patel 's case (supra) was an authority for the proposi tion that but for clause (b) of the second proviso to Arti cle 311(2) of the Constitution, the principles of natural justice could not have been excluded from the scope of Article 14 of the Constitution.
It was urged by him that the said second proviso to Article 311(2) being itself a consti tutional provision, such exclusion was upheld by this Court in the said Tulsi Ram Patel 's case (supra).
page 237 and at last para to p. 242.
Mr. Rao drew our attention to the well settled rule of interpretation and submitted that where two interpretations are possible, one of which would pre serve and gave the constitutionality of the particular statutory provision while the other would render it uncon stitutional and void, the one which saves and preserves its constitutionality should be adopted and the other should be rejected.
Fie, further, submitted that unless the provision of the Constitution itself excludes the principles of natu ral justice, they continue to be applicable as an integral part of the right to equality guaranteed by the Constitu tion.
It was further reiterated that as the employees of the DTC were not Government employees, Article 311(2) of the Constitution was not applicable.
Consequently, the second proviso thereof was also not applicable, with the result that Article 14 of the Constitution fully applied to them and it included the principles of natural justice as held in Tulsi Ram Patel 's (supra) itself at p. 233, last paragraph.
Mr. Rao submitted that it is not permissible to read down statutory provisions when the avowed purpose is to confer power on an authority without any limitation whatever.
That would be reading down contrary to the expressed or manifest intention of the legislature.
He drew our attention to the observations of this Court in Minerva Mills Limited vs Union of India & Ors., ; at 261.
Therein, at p. 259 of the report, it was reiterated that the principles of reading down could not be distorted even when words of width are used inadvertently.
In the instant case, Mr. Rao submit ted, reading down would amount to distortion of the right to equality conferred by Article 14, which was regarded as a basic feature of the Constitution.
Nothing short of an amendment of the Constitution could cut down the scope of the basic 215 principle of equality, submitted Mr. Rao then referred to us Kesavananda Bharati vs State of Kerala, [1973] Supp. 1 S.C.R. 1 and submitted that any constitutional amendment which impairs the doctrine of equality would be liable to be declared unconstitutional on the ground of violation of the basic structure of the Constitution.
In the instant case, Mr. Rao submitted, regulation 9(b) deliberately conferred wide power of termination of service without giving a reasonable opportunity to an employee even if he is a regular or permanent employee, in addition to regulation 15 which provided for dismissal or removal after a disciplinary enquiry.
Therefore, the intention of the regulation making authority was clear and unambiguous.
The provision is not capable of two interpretations.
Consequent ly, the question of reading down did not arise.
Mr. Rao drew our attention to the observations of the Supreme Court of America in Elliott Ashton Welsh, II vs United States, 26 Lawyers ' Edition 2nd, 308 at 327.
Mr. Rao submitted that the decisions referred to by the learned Attorney General were not applicable to the instant case.
He submitted that the decision of the Federal Court in Re The Hindu Women 's Rights to Property Act 's case (supra) involved the interpretation of a single word in the context of legislative competence.
That was not the context of the present controversy, submit ted Mr. Rao.
Mr. Rao submitted that R.M.D. Chamarbaughwal la 's case (supra) was a case on severability.
That was a case where the word 'competition ' was interpreted.
In the present case, the suggested reading down involves, according to Mr. Rao, not interpretation of any single word in regula tion 9(b) but adding a whole clause to it which amounted to rewriting the provisions.
Courts have refused to rewrite legislation to make up for the omissions of the legislature.
Reliance was placed by Mr. Rao on Nalinakhya Bysack vs Shyam Sunder Halder & Ors., ; , at p. 544 545.
Mr Rao referred to the observations of this Court in Kedar Nath Singh vs State of Bihar, (supra) involving the interpreta tion of section 124A IPC in the context of Article 19(1)(a) of the Constitution.
The content of Article 19(1)(a) was not cut down.
In the present case, the suggested reading down would inevitably drain out Article 14 of its vitality.
Shri Rao drew our attention to the decision of this Court in R.L. Arora vs State of Uttar Pradesh, (supra) and submitted that the said decision did not involve cutting down the scope of a fundamental right.
He also drew our attention to the decision of this Court in Jagdish Pandey vs The Chancellor, University of Bihar (supra) which did not involve reading down so as to sacrifice the principle of natural justice 216 which are considered an essential part of the rule of law.
In Municipal Committee, Amritsar & Anr.
vs State of Punjab & Ors.
, ; , this Court was concerned with the intention of the legislature and interpreted the Act con sistent with the said intention.
In the instant case.
the intention was to confer power of termination of services of all categories of employees without any further enquiry.
Sunil Batra vs Delhi Administration (supra) was again a decision where this Court found that the intention of the legislature was not to confer arbitrary power.
In the in stant case, the intention was different.
N.C. Dalwadi vs State of Gujarat.
(supra) was a case of giving reasonable interpretation to a provision which was capable of such an interpretation.
In the scheme of DTC Regulations.
regulation 9(b) was not susceptable to two interpretations.
submitted Mr. Rao.
According to Mr. Rao, the principle of reading down was not applicable where the intention of the law maker was to confer too wide a power intended to be exercised without giving an opportunity to the affected party to be heard.
It was, therefore, submitted that the principle of reading down was not applicable and if applied would amount to cutting down the scope of Article 14 and subjecting permanent em ployees of the DTC to a tremendous sense of insecurity which is against the philosophy and scheme of the Constitution.
Mr Nayar, appearing in Civil Appeal No. 1115 of 1976 (Shri Samara Singh vs Zila Parishad Ferozepure) for the respondent, drew our attention to the fact that the appellant, Shri Satnam Singh was appointed by the respondent vide letter of appointment dated 9th March.
1961 the appel lant ceased to work for the respondent, when his services were terminated simpliciter vide Resolution dated 26th November, 1965.
He, therefore, had worked for the respondent only for a short period of less than four years.
The serv ices of the appellant ceased on the basis of the contract.
the terms of which were mutually agreed between the parties.
In case he had continued to work, he would have reached the age of superannuation in the year 1984.
His total emoluments with effect from 1st November, 1964 to 30th September, 1984 would have been approximately Rs.2,46,464.
Mr. Nayar filed a detailed statement and stated that the appellant ceased to work for the respondent with effect from 26th November, 1964 when he was discharged from service.
In this case, it is necessary to bear in mind that the appellant, Shri Satnam Singh was appointed by the respond ent, Zila Parishad, Ferozepure by letter of appointments dated 9th March.
The Board approved his terms of appointment and the same were duly 217 accepted by the appellant.
The 'relevant clause of Contract between the parties for present purposes was clause 4 which was as follows: "His services will be terminated on one month 's notice on either side provided it will be open to pay him his salary for the period by which the notice falls short of one month.
Similarly, if he wishes to resign he may do so by depositing with the District Board his salary for the period by which the notice given by him fails short of one month.
" The appellant, however, was continued to be governed by the Statutory Rules, known as District Board Rules, 1926.
According to the respondent, the appellant did not cooperate inasmuch as he was not available in the Headquarters and presumably left without permission and without handing over important record and documents of the District Board, etc.
But the appellant 's version, as stated in the grounds of appeal, was entirely different.
He urged that it was on account of vindictive attitude on the part of some of the employees of the respondent, which had produced his termina tion order without enquiry.
The District Board resolved that in terms of condition 4 of the terms of appointment, his services should be terminated on one month 's notice or pay in lieu thereof.
Mr. Nayar submitted that rule 1(i) of District Board Rules, 1926, Part V also gave right to both the parties to terminate the contract of employment on one month 's notice, etc.
The said rule reads as follows: "In the absence of a written contract to the contrary every officer or servant employed by a District Board shall be entitled to one month 's notice before discharge or to one month 's wages in lieu thereof, unless he is discharged during the period of probation or for misconduct or was engaged for a specified term and discharged at the end of it.
" The services of the appellant were terminated vide Resolution dated 26th November, 1964 of the Board and he was discharged by allowing him one month 's salary in lieu of notice.
The termination order was dated 14th December, 1964.
The appellant, Shri Satnam Singh filed a suit for declara tion in the Court of Senior Sub Judge, Ferozepure, challeng ing the order of termination dated 14th December, 1964 as illegal, void, ultra vires, etc.
The Senior Sub Judge, Ferozepure, vide judgment and decree dated 9th January, 1969 held 218 that the discharge of the appellant amounted to dismissal and as clearly no enquiry was held against him, the termina tion simpliciter was bad in law.
The respondent, Zila Pari shad filed an appeal in the Court of 3rd Additional District Judge, Ferozepure, who vide order dated 22nd December, 1969 affirmed the decision of the trial Judge and dismissed the appeal of the respondent.
The respondent filed regular appeal in the High Court of Punjab and Haryana at Chandi garh, inter alia, pleading that the appellant was validly discharged in terms of his appointment order and rule 1(i), Part V A of the District Board Rules, 1926.
The learned Single Judge of the High Court considered the matter in detail and referred to various judgments of this Court and held that it could not be said that the action of termination prima facie amounted to an order of dismissal even though the appellant was at the time a con firmed employee of the respondent.
The learned Single Judge found that the respondent had a contractual right to termi nate the services of the appellant by giving a month 's notice or a month 's salary in lieu of notice.
According to Shri Garg, the removal of the appellant from service was in accordance with the terms governing his appointment.
Merely because on the 7th of November, 1964, the respondent re solved to charge sheet the appellant for acts of omission and commission and ordered an enquiry, and such an enquiry never commenced, would certainly not be enough reason to hold that the termination of the appellant 's services, was ordered by way of punishment and therefore, amounted to his dismissal, argued Mr. Nayar.
It was submitted by Mr. Nayar that the appellant had conceded that condition No. 4 was legally good but he had argued that it was not meant to be effective after the appellant had been confirmed.
Aggrieved by the order mentioned above, the appellant had filed Letters Patent Appeal before the Division Bench of the High Court.
The Division Bench of the High Court by an order dated 13th September, 1972 referred the question of law for the decision of the full bench.
The full bench of the High Court refrained the question of law as under: "Whether, the termination of services of a permanent Dis trict Board Employee by giving him one month 's notice or pay in lieu thereof in terms of the conditions of his appoint ment and/or rule 1 in part V A of the District Board Rules, 1926, is bad in law and cannot be made? 219 The majority of the learned Judges, inter alia, held that the appellant not being a government servant cannot have the protection of Article 311 of the Constitution as he was not a civil servant under the Central Government of the State Government.
He was an employee of the District Board and his tenure of appointment was governed by the provisions of the District Board 's Act, 1883 and the rules flamed thereunder as well as by the terms and conditions of his appointment.
The condition No. 4 gave mutual right to the District Board as well as to the appellant to terminate the service by giving one month 's notice or pay in lieu of notice, etc.
The condition in the appointment letter shall not be deemed to have been abrogated by the Punjab Civil Services Rules.
The Court held further that the condition stated in the letter of appointment of the appellant contin ued to bind the parties even after the appellant 's confirma tion and his services could be terminated by an order of discharge simpliciter in accordance with the condition No. 4 thereof as this condition was almost in the same terms as Rule I in Part V A of the Rules.
It was further held by the full bench of the High Court that the Punjab Civil Service Rules had no over riding effect and these rules were to apply in respect of matters for which no provision had been made anywhere else because of the phrase used "so far as may be".
Rule 8.1 of the Business Rules reads as under: "In all matters relating to the conditions of service of its employees the Board shall so far as may be follow the rules from time to time in force for servants of the Punjab Gov ernment.
" The finding of the Letters Patent Bench in this regard was as under: "According to Rule 8.1 ibid, the Punjab Civil Services Rules were to apply in respect of matters for which no provision had been made anywhere else because of the phrase used "so far as may be".
Naturally, if a provision was made anywhere else, which went counter to the Punjab Civil Services Rules, the application of the latter rules It thus follows that the Punjab Civil Services Rules were not to apply to the appel lant in respect of matters for which specific provision was made in his letter of appointment, which constituted the contract of service between him and the District Board, as he joined 220 service on those terms.after accepting the same.
" The learned Chief Justice of Punjab & Haryana High Court, however, dissented.
The answer to the question, therefore, was given in the negative vide order dated 3rd April, 1974.
The Division Bench of the High Court which heard the matter after the question of law was answered by the Full Bench, dismissed the appeal of the appellant vide order dated 28th October, 1974 and this appeal to this Court arises from this order.
The appellant in Civil Appeal No. 1115/76, who appeared in person before us reiterated the relevant facts and urged that his removal was bad and the rule under which he was removed may be quashed.
It may be mentioned that as regards letter of Shri Kuldip Singh Virk to the Senior Superintend ent of Police, Ferozepure regarding the charges of corrup tion against the appellant, a case under section 5(2) of the Prevention of Corruption Act was registered.
The appellant was tried for the said alleged offence and acquitted of the charges by the Special Judge Ferozepure.
A further case was registered under sections 381/ 409 of IPC against the appellant.
Accordingly, the appellant was tried by the Judicial Magis trate Ferozepure.
The charge was framed by the Judicial Magistrate against the appellant.
Against the aforesaid, the appellant filed a petition in the High Court and the charge and the proceedings in question were thereupon quashed by the High Court in July/August, 1967.
There were three more cases tried by the Special Judge, Ferozepure and acquitted.
The appellant filed a document in this Court claiming the monetary claim on the basis that his termination was wrongful.
According to the appellant, he was entitled to recover Rs.4,83,061.90 paise.
However.
according to the statement filed by Shri Nayar, learned counsel for the respondents in this case, the appellant was entitled to withdraw from the District Board Rs.2,46,464.46 paise, in case he would have been in service before his date of super annuation, i.e., 30th September, 1984.
There is no evidence from either side as to whether the appellant had worked somewhere else though the appellant did not work with the respondent because of his suspension.
The appellant had, however, stated that he did not so work.
In that view of the matter, if the contentions or ' the appellant are accepted that the clause under which the terms of employment of the appellant was agreed and under which the termination was effected without any enquiry and further in view of the fact that the learned trial Judge before whom the appellant had filed the suit first and decreed the suit declaring the 221 appellant to be entitled to be in service, the appellant, in our opinion.
should rightly be granted a monetary claim for Rs.4,83,061.90 paise and further interest at 6% from 30th September, 1984.
This would be in consonance with justice and equity in the facts and the circumstances of this case.
This order, however, will have to be passed if we accept the contention on behalf of the appellant herein on the con struction of the clause.
In the matter of M/s Indian Airlines, which is the subject matter of the Application for Intervention No. 1 of 1990:in Civil Appeal No. 2846 of 1986, Mr. Lalit Bhasin, on behalf of the interveners contended that there has been distinction between the discharge simpliciter and dismissal from service by way of punishment.
According to Mr. Bhasin the effect of the judgments of this Court in the Central Inland Water 's case (supra) and West Bengal 's (supra) was to take away the right of the employer to terminate the serv ices of an employee by way of discharge simpliciter.
Accord ing to Mr. Bhasin, this Court had recognised the existence of the inherent right of an employer to terminate the serv ices of an employee in terms of the contract of employment and also under the various labour enactments.
Attention of this Court was invited to the provisions of the , which applies to all industrial establishments whether in the public or private sector.
Under and as a part of the said Act, model standing ' orders are set out and Standing Order No. 13 provides for simple termination of employment by giving one month 's notice etc.
Similarly, there are provi sions under various Shops and Establishments Acts of differ ent States providing for termination of employment of perma nent employee after giving one month 's notice or pay in lieu of notice.
Attention of this Court was invited to section 30 of Delhi Shops and Establishments Act.
The Industrial Disputes Act itself makes distinction between discharge and dismissal and attention of this Court was invited to section 2(00) of the Industrial Disputes Act, which defines 'retrenchment '.
This section expressly ex cludes termination of services as a result of nonrenewal of contract of employment.
Section 2(s) of the Industrial Disputes Act defines 'workman ' to include any person who has been dismissed, discharged or retrenched.
Section 2A distin guishes discharge, dismissal and retrenchment.
It is pertinent to point out that the Original Regula tion 13 of Indian Airlines Employees Service Regulations was set out as under: 222 "13.
The services of an employee are terminable at 30 days on either side or basic pay in lieu: Provided however, the Corporation will be at liberty to refuse to accept the termination of his service by an em ployee where such termination is sought in order to avoid disciplinary action contemplated or taken by the Management.
" After the decisions of this Court in Central Inland Water 's case (supra), Indian Airlines initiated steps to amend its Regulation 13 and bring it in line with Article 311(2) of the Constitution as directed by this Court in Hindustan Steels Lid ' case (supra).
It appears that the Board of Directors of Indian Airlines had accordingly ap proved of the amendments to Regulation 13 and the amended Regulation reads as under: "(a) The services of an employee may be terminated without assigning any reasons to him/her and without any prior notice but only on the following grounds not amounting to misconduct under the Standing Orders, namely: (i) If he/she is, in the opinion of the Corporation (the Board of Directors of Indian Airlines) incompetent and unsuitable for continued employment with the Corporation and such incompetence and unsuitability is such as to make his/her continuance in employment detrimental to the inter est of the Corporation; OR If his/her continuance in employment constitutes, in the opinion of the Corporation (the Board of Directors of Indian Airlines), a grave security risk making his/her continuance in a service detrimental to the interests of the Corporat ion; OR if in the opinion of the Corporation (the Board of Directors of Indian Airlines) there is such a justifiable lack of confidence which, having regard to the nature of duties performed, would make it necessary in the interest of the Corporation, to immediately terminate his/her services.
223 (b) The employee can seek termination of his/her employment by giving 30 days notice or basic pay in lieu: Provided however the Corporation will be at liberty to refuse to accept the termination of his/her service by an employee where such termination is sought in order to avoid disciplinary action contemplated or taken by the Management." According to Mr. Bhasin, in the amended Regulation 13, Indian Airlines had taken care to set out the circumstances in which the services of an employee can be terminated by way of discharge and without holding enquiry.
Mr Bhasin urged that these are eventualities which do not constitute misconduct and yet retention of an employee in the service by the management for any one of the grounds mentioned in the aforesaid Regulation might be considered as detrimental for the management or against public interest.
Mr. Bhasin submitted that the power has been vested with the Board of Directors and not with any individual.
According to Mr. Bhasin, plain reading of Regulation 13, as amended, would clearly establish that the vice.
if any, or arbitrariness is completely removed and sufficient guidelines are made avail able to the highest functionary, namely, the Board of Direc tors to exercise the restricted and limited power now avail able to the employer under these Regulations.
Similar submissions have been made on behalf of Air India, who are interveners.
Submissions made hereinbefore were alternative submissions.
The original Regulation 48 of Air India Employees Service Regulations was as follows: "Termination . ' The services of an employee may be terminated without as signing any reason, as under: (a) of a permanent employee by giving him 30 day 's notice in writing or pay in lieu of notice; (b) of any employee on probation by giving him 7 days ' notice in writing or pay in lieu of notice: (c) of a temporary employee by giving him 24 hours ' notice in writing or pay in lieu of notice.
224 Explanation. ' For the purposes of the regulation, the word "pay" shall include all emoluments which would be admissible if he were on Privilege leave.
" After the decisions of this Court declaring the afore said Regulation as void in Civil Appeal No. 19 of 1982 in the Case of Manohar P. Kharkar & Anr. vs Kaghu Raj & Anr., Air India amended the aforesaid Regulation, which now reads as under: "(a) The services of a permanent employee may be terminated without assigning any reasons to him/her and without any prior notice but only to the following grounds not amounting to misconduct under Service Regulation 42, namely: (i) if he/she is, in the opinion of the Corporation (the Board of Directors of Air India) incompetent and unsuitable for continued employment with the Corporation and such incompetence and unsuitability is such as to make his/her continuance in employment detrimental to the interests of the Corporation; OR If his/her continuance in employment constitutes, in the opinion of the Corporation (the Board of Directors of Air India), a/grave security risk making his/her continuance in service detrimental) to the interests of the Corporation; OR If, in the opinion of the Corporation (the Board of Direc tors of Air India), there is such a justifiable lack of confidence which, having regard to the nature of duties performed, would make it necessary, in the interest of the Corporation, to immediately terminate his/her services.
(b) The services of an employee on probation may be termi nated without assigning any reason to him/her but on giving 30 days notice in writing or pay in lieu thereof.
(c) The services of a temporary employee may be terminated without assigning any reason to him/her but on giving 15 days notice in writing or pay in lieu thereof.
225 Explanation For the purpose of this Regulation the word "pay" shall include all emoluments which would be admissible if he were on privilege leave.
" The question regarding justification of the action taken by the management was touched by this Court, but since the action was based on the old Regulation 48, it had to be quashed.
It was submitted on behalf of the Air India that care had been taken to suit the circumstances in which the services of an employee could be terminated by way of dis charge simpliciter and without holding enquiry.
These are eventualities which do not constitute misconduct and yet retention of an employee in the service of the management for any one of the grounds mentioned in the said Regulation might be considered as detrimental for the management or against public interest.
It was submitted that the said regulation 48 has to be read with Regulation 44(A) which reads as under: "44(A)(i) Notwithstanding anything contained in these Regu lations and if, in the opinion of the Corporation (the Board of Directors of Air India), it is not possible or practica ble to hold an enquiry under the relevant provisions of these Regulations, the Corporation may, if satisfied that the employee has been guilty of any misconduct, any one of the punishment mentioned in Regulation 43 on the employee concerned.
Provided that before exercising his extra ordinary power, the Board shall give 30 days prior notice to the employee concerned of the act of misconduct that the reasons why it is not possible or practicable to hold an enquiry into such misconduct, and the punishment proposed by the Board and the employee shall be entitled to make a full written represen tation to the Board in response to such notice.
(ii) No action shall be taken under the Regulation until the Board has taken into consideration the representation made by the concerned employee under the proviso to Section (i) within the notice period.
" The original regulation 44 was also modified.
According to the interveners, the cumulative reading of regulation 48, as amended, and regulation 44, as amended, would clearly establish that the vice, if any, of arbitrariness is com pletely removed and sufficient guidelines are 226 made available to the Board of Directors to exercise the restricted and limited power now available to the employer under these Regulations.
In C.M.P. No. 30309 of 1988, on behalf of the New India Assurance Co., the intervention application was filed.
It was stated that in the courts below the writ petition No. 835 of 1975 was filed by the employee challenging his termi nation and the appeal filed thereon were decided on grounds available to the petitioner at that time.
A special leave petition was filed by the employee concerned which has now become C.A. No. 655 of 1984.
After the judgment in the Central Inland Water 's case (supra), an additional ground is now being taken to contend that a contract entered into way back in the sixties when the employee concerned was an employee of the Orissa Cooperative Insurance Society Ltd., Cuttack could not be enforced now and the same ought to be declared void in view of the Central Inland Water 's case (supra).
The intervention was allowed on 24th January, 1990 and Smt.
Shyamla Pappu, Senior Advocate submitted written sub missions.
It was submitted that adjudication on the merits and the consideration of the facts and circumstances of the case may be left to the Bench hearing the matter after the decision of the question of law referred to the Constitution Bench.
In this connection, it may, however, be noted that the General Insurance was nationaIised under the provisions of the General Insurance Provisions (Nationalisation) Act, 1972 and the said Act came into force on 20th September, 1972.
Prior to this, was passed under the provisions of which Act all under takings of all Insurers vested in the Central Government with effect from I3th May, 1971.
This was pending nationali sation which took place in 1972 as aforesaid.
Section 7(1) of the said Act which provided for the takeover of former employees reads as under: "Every whole time officer or other employee of an existing Insurer other than an Indian Insurance Company, who was employed by that insurer, wholly or mainly with his general insurance business immediately before the appointed day, shall, on the appointed day, become an officer or other employee, as the case may be, of the Insurance Company, in which the Undertaking to which the service of the officer 227 or other employee relates has vested and shall hold his office or service on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if there had been no such vesting and shall continue to do so until his employment in the Indian Insurance Company in which the undertaking or part has vested, is terminated or until his remuneration, terms and conditions are duly altered by that Indian Insur ance Company.
" The original terms and conditions had not been altered and the employees like the appellant in C.A. No. 855/84 continued to be governed by the original terms and condi tions of the contract at the time of termination.
The origi nal terms and conditions of employment, therefore, continued in force.
The contract of service was entered into when the appellant joined the Orissa Cooperative Insurance Society Ltd. way back in 196 1 and at the time of take over by the Central Government was the Divisional Manager of the said society.
After the take over by the Central Government of general insurance in 1972, a great deal of reorganisation had to be effected in order to tone up the system of general insurance which had become unwieldy due to the mushroom growth of societies with no control whatsoever when insur ance was in private hands.
It was submitted by Smt.
Shyamla Pappu that there are many such cases where action was taken soon after nationali sation of general insurance in 1972.
If such orders are set aside today, Smt.
Shyamla Pappu posed the question, what would be the result? Would the order set aside, at this stage give the employee a right to be reinstated '? If the answer to the above is in the affirmative, would it be conducive to efficiency in the conduct of a public utility such as general insurance, Smt.
Pappu raised the question.
Would it not hamper the Company 's business considering that the reduction/reorganisation of staff was essential for the effective functioning of the public service? Smt.
Pappu asked the question would the public service not be saddled with unnecessary and/or incompetent staff, thus, burdening the public utility/service with unmanageable costs and staff that is ineffective '? It was urged that the New India Assur ance Company had a clause, in the contract at the relevant time, which was as follows: "in the event of the society not having any further need of any employees services, whether permanent or temporary, which shall be decided by the board, the Principal Officer 228 shall give 30 days notice in writing for termination of his services or in lieu thereof pay such employee a sum equiva lent to one month pay including allowance upto the period of notice.
" The above clause covered cases of retrenchment, aboli tion of posts and other situations which had been adjudicat ed upon by this Court.
If, however, the Central Inland Water 's case (supra) is applied, Smt.
Shyamla Pappu submit ted, then the management of the Intervene r Company will be powerless even in a case of abolition of posts or retrench ment or any other allied situation.
It is seen that the power to terminate an employee is co existent with the power to appoint.
Shyamla Pappu relied on the General Clauses Act and submitted that the Central Inland Water 's case (supra) was erroneous in so far as it made a complete nega tion of this power.
Then, it was submitted by her that in case of an employer who had made all the necessary investi gation and the employee concerned has been fully heard before the order 01 ' termination and if the decision of Central Inland Water 's case was applied, then even such a case would be a case of illegal termination, considering that there would be no power to terminate.
It was submitted that the Central Inland Water 's case had to be read down because paras 77, 92 and 93 of the report take in even private employment.
The sweep of the judgment cannot hold good and had to be curtailed.
According to Smt.
Pappu, what then was the position of terminations effected when the law was different? It cannot be said that they are entitled to relief now.
It should be clarified that the judgment of this Court would apply pro spectively, it was submitted.
Past cases might be treated as concluded in view of the law prevailing at that time and also in view of the contentions urged by the parties in the courts below at various stages.
In the event, this Court comes to the conclusion that even old cases would be covered by the judgment now rendered, the orders already passed may be upheld and a post decisional hearing might be directed so that the management concerned has the opportunity of showing that there existed good reasons for termination though the same were not communicated to the employee concerned because the law then existing did not require such a communication.
In the interest of justice, we should allow such a course.
In the light of the provisions and in the facts and the circumstances of the case, it is, therefore, necessary to consider the validity of the power of termination of employ ment by the employers or authorities of the employees with out holding any enquiry in the circum 229 stances noted in the several civil appeals and applications herein.
In these civil appeals.
the question of actual user of power is not the main issue.
but the validity of clauses or regulations containing the aforesaid power.
The instances of actual user of power, however, are not wholly irrelevant on the question of the validity or extent of the power because these explain the extent and content of power and/or occa sion for such user.
Firstly.
we have to.
in view of the facts and the circumstances of the Civil Appeal No. 2876 of 1986, consider the amplitude of the power under clause (b) of Regulation 9 of the Regulations concerned.
We have noted the contents of that Regulation.
We have also noted the amplitude of the expression of that power as was canvassed before the High Court in the matter under appeal and as noticed by the decision of this Court in Delhi Transport Undertaking vs Balbir Saran Goel 's case (supra).
A survey of the several authorities of law and the development of law from time to time would lead one to the conclusion that the philosophy of the Indian Constitution, as it has evolved, from precedent to precedent.
has broaden the horizons of the right of the employees and they have been assured security of tenures and ensured protection against arbitrariness and discrimination in discharge or termination of his employ ment.
This is the basic concept of the evolution from the different angles of law of master and servant or in the evolution of employer and employee relationship.
It is true that.
the law has travelled in different channels, govern ment servants or servants or employees having status have to be differentiated from those whose relationships are guided by contractual obligations.
But it has to be borne in mind that we are concerned in these matters with the employees either of semi Government or statutory corporations or public undertakings who enjoy the rights.
privileges.
limitations and inhibitions of institutions who come within the ambit of Article 12 of the Constitution.
It is in the background of these parameters that we must consider the question essentially and basically posed in these matters.
The basic and the fundamental ques tion to be judged is.
in what manner and to what extent, the employees of these bodies or corporations or institutions could be affected in their security of tenure by the employ ers consistent with the rights evolved over the years and rights emanating from the philosophy of the Constitution as at present understood and accepted.
We have noted the exhaustive and the learned analysis of the background of the diverse facts projected in the several cases and appeals before us.
230 Efficiency of the administration of these undertakings is very relevant consideration.
Production must continue, services must be maintained and run.
Efficacy of the serv ices can be manned by the disciplined employees or workers.
Discipline, decency and order will have to be maintained.
Employees should have sense of participation and involvement and necessarily sense of security in semi permanent or quasi permanent or permanent employment.
There must be scope for encouragement for good work.
In what manner and in what measure.
this should be planned and ensured within the framework of the Constitution and, power mingled with obli gations, and duties enjoined with rights, are matters of constitutional adjustment at any particular evolved stage of the philosophy of our Constitution.
We have noted several decisions, numerous as these are, and the diverse facts, as we have found.
We have noted that in some cases arbitrary action or whimsical action or dis criminatory action can flow or follow by the preponderance of these powers.
The fact that the power so entrusted with a high ranking authority or body is not always a safe or sound insurance against misuse.
At least, it does not always ensure against erosion of credibility in the exercise of the power in particular contingency.
Yet, discipline has to be maintained, efficiency of the institution has to be ensured.
It has to be recognised that quick actions are very often necessary in running of an institution or public service or public utility and public concern.
It is not always possible to have enquiry because disclosure is difficult; evidence is hesitant and difficult, often impossible.
In those circum stances, what should be the approach to the location of power and what should be the content and extent of power, possession and exercise of which is essential for efficient running of the industries or services '? It has to be a matter both of balancing and adjustment on which one can wager the salvation of rights and liberties of the employees concerned and the future of the industries or the services involved.
Bearing in mind the aforesaid principles and objects, it appears to us that the power to terminate the employment of permanent employment must be there.
Efficiency and expedien cy and the necessity of running an industry or service make it imperative to have these powers.
Power must, therefore,.
with authorities to take decision quickly, objectively and independently.
Power must be assumed with certain conditions of duty.
The preamble, the policy, purpose of the enacting provision delimit the occasions or the contingencies for the need for the exercise of the power and these should limit the occasions 231 of exercise of such powers.
The manner in which such exer cise of power should be made should ensure fairness, avoid arbitrariness and mala fide and create credibility in the decisions arrived at or by exercise of the power.
All these are essential to ensure that power is fairly exercised and there is fair play in action.
Reasons, good and sound, must control the exercise of power.
We have noted the rival submissions.
Learned Attorney General of India and the learned Solicitor General and others appearing those who sought for sustaining the power by the employers or the authorities, contend that for effi ciency of the industry, for the attainment of the very purpose for which institutions are created, there should be power to terminate the employment of undesirable, ineffi cient, corrupt, indolent, disobedient employees in those cases where holding of enquiry or prolonging these employees for that purpose would be detrimental, difficult and frus trating.
It is in this context that we should examine the power under the aforesaid Regulation 9(b).
The power must be there, the power must be utilised by person or authority, high ranking enough or senior enough who can be trusted or who can be presumed to be able to act fairly, objectively and independently.
The occasion for the exercise of the power must be delimited with precision, clarity or objectiv ity.
And those occasions must be correlated to the purpose for which the powers are sought to be exercised.
In concrete terms, for the running of the industry or the service, efficiently, quickly and in a better manner or to avoid deadlocks or inefficiency or friction, the vesting of the power in circumstances must be such that will evoke credita bility and confidence.
Reasons must be there, reasons must be perspectable, reasons must be relevant and the reasons must be of authority independently, fairly and objectively arrived at.
Notice of hearing may or may not be given, opportunity in the form of an enquiry may or not be given, yet arbi trariness and discrimination and acting whimsically must be avoided.
These power must, therefore, be so read that the powers can be exercised on reasons, reasons should be re corded, reasons need not always be communicated, must be by authorities who are competent and are expected to act fair ly, objectively and independently.
The occasion for the use of power must be clearly circumscribed in the above limits.
These must also circumscribe that the need for exercise of those power without holding a detailed or prolonged enquiry is there.
As we have noted, a good deal of controversy was that these 232 inhibitions or limitations or conditions are not there in the amplitude or the extent of the power enumerated or stated in Regulation 9(b) of the aforesaid Regulations concerned or of similar provisions that we have examined in these cases.
We have noted the argument, learned and interesting, on the question of judicial law making imputing to the legisla tures what these have not articulated.
Should the courts say or can say what the legislatures have not said '? We have noted the controversy of how should legislation of limited legislatures, Parliaments or rule making bodies, who are not expected or enjoined to make rules or laws contrary to or in derogation or the constitutional prohibitions and inhibi tions be read.
We have been tempted to read down in the path of judicial law making on the plea that legislature could not have intended to give powers to the authorities or employers which would be violative of fundamental rights of the persons involved in the exercise of those powers and, therefore, should be attributed those powers on conditions which will only make these legal or valid.
Our law making bodies are not law into themselves and cannot create or make all laws.
They can only confer powers or make laws for the conferment of powers on authorities which are legal and valid.
Such powers conferred must conform to the consitu tional inhibitions.
The question, therefore, is is it possible or desirable to read down the power conferred under Regulation 9(b) or similar regulations permitting employer or the authority to terminate the employment of the employ ees by giving reasonable notice or pay in lieu of notice without holding enquiry with the conditions indicated or mentioned hereinbefore? Will it or will it not amount to making laws of stating which the legislature or the law making body has not stated? We have been reminded that judges should not make laws.
But the question is can the judges articulate what is inarticulate and what can be reasonably and plainly found to be inherent on the presumption that a legislature or a law making body with the limited authority would act only within limitations so as to make the legislation or law valid and the legislature must be presumed to act with certain amount of knowledge and fairness protecting the rights of people concerned and aiming at fairness in action? We have noted the rival contentions.
We have noted the submission that Mr. Garg, Mr. Ramamurthi and others invited us not to read down and against legislating positively with conditions.
But the question is are those conditions which we are invited to attribute to 233 the legislature or the law making bodies contrary to or against the manifest intention of the legislature? Legislation, both statutory and constitutional, is enacted, it is true, from experience of evils.
But its general language should not, therefore, necessarily be confined to the form that evil had taken.
Time works changes, brings into existence new conditions and purposes and new awareness of limitations.
Therefore, a principle to be valid must be capable of wider application than the mischief which gave it birth.
This is particularly true of the constitutional constructions.
Constitutions are not ephemeral enactments designed to meet passing occasions.
These are, to use the words of Chief Justice Marshall, "designed to approach immortality as nearly as human insti tutions can approach it . . ".
In the application of a Constitutional limitation or inhibition, our interpretation cannot be only of 'what has been ' but of 'what may be '.
See the observations of this Court in Sunil Batra vs Delhi Administration (supra).
Where, therefore, in the interpreta tion of the provisions of an Act, two constructions are possible, one which leads towards constitutionality of the legislation would be preferred to that which has the effect of destroying it.
If we do not read the conferment of the power in the manner we have envisaged before, the power is liable to be struck down as bad.
This, we say in spite of the argument by many including learned Solicitor General of India and Smt.
Shyamla Pappu that in contractual obligations while institutions or organisations or authorities, who come within the arebit of Article 12 of the Constitution are free to contract on the basis of 'hire and fire ' and the theory of the concept of unequal bargain and the power conferred subject to constitutional limitations would not be applica ble.
We are not impressed and not agreeable to accept that proposition at this stage of the evolution of the constitu tional philosophy of master and servant framework or if you would like to call it employer or employee relationship.
Therefore, these conferments of the powers on the employer must be judged on the constitutional peg and so judged without the limitations indicated aforesaid, the power is liable to be considered as arbitrary and struck down.
Whenever a statute comes up for consideration, it must be remembered that it is not within human powers to ,foresee the manifold sets of facts which may arise, and, even if it were, it is not possible to provide for them in terms free from all ambiguity.
The English language, and for that matter any language in use today, is not an instrument of mathematical precision.
It has been said that our literature would have been much the poorer if it were.
Leaving, how 234 ever.
the question of richness or poverty of our literature apart, we must proceed on the assumption that human mind cannot foresee everything.
It has, therefore, been said that when a question arises whether the power has been properly conferred and even if so, the extent of it.
Lord Denning has opined that a Judge in such a situation cannot simply fold his hand and blame the draftsmen and look for new enactment.
Lord Denning invites us to set to work on the construction task of finding the intention of the Parliament or the law making body and we must.
however.
do this not only from the language of the statute.
because.
as we have seen.
language is an imperfect medium and very often thoughts are perpetu ally in search of 'broken language '.
But the judge must also do it from a consideration of the social conditions which give rise to it, and o[ the mischief which it was intended to remedy and also in the light of the constitutional inhi bitions and then supplant the written words and add to it end give 'force and life ' to the intention and purpose of the legislature or the law making authority.
A judge must not alter the material of which a law or an instrument is woven, but he can and should iron out the creases and if one may venture to say, make articulate the inarticulate premise but make articulate only which follow from necessary compul sions of the situations and the constitutional position.
See in this connection the observations of Lord Denning in "The Discipline of Law" at p. 12.
It is true that judicial jealously of legislature in law making has long been outdrawn, but the strict construction remains still an established rule.
It is generally accepted principle that judges in interpreting statutes, should give effect to the legislators ' intent.
By doing so.
the courts do recognise their subordinate position and their obligation to help the legislature to achieve its purpose.
But in that effort.
creativity is essential.
There have been differences of opinion on the practices that the courts may employ in attempting to discover the legislative intent.
In the begin ning, conventional practice was only to look to the words of the statutes.
Now the entire spectrum has to be examined.
It has been said that judges are not unfettered glossators.
is true that there is no actual expression used ena bling the legislation or the statute in question indicating the limitations or conditions as aforesaid.
But it must proceed on the premise that the law making authority intend ed to make a valid law to confer power validly or which will be valid.
The freedom, therefore, to search the spirit of the enactment or what is intended to obtain or to find the intention of the Parliament gives the Court the power to supplant and supplement the expressions used to say what was left unsaid.
This is a power which 235 is an important branch of judicial power, the concession of which if taken to the extreme is dangerous, but denial of that power would be ruinous and this is not contrary to the expressed intention of the legislature or the implied pur pose of the legislation.
It was not as Shri Ramamurthi tried to argue that legislature wanted to give an uncontrolled and absolute power to discharge employees on the part of the employers without any enquiry in all circumstances.
That cannot be and that was not intended to be as can be implied from all the circumstances.
In the aforesaid view of the matter, I would sustain the constitutionality of this conferment of power by reading that the power must be exercised on reasons relevant for the efficient running of the services or performing of the job by the societies or the bodies.
It should be done objective ly, the reasons should be recorded, it should record this and the basis that it is not feasible or possible reasonably to hold any enquiry without disclosing the evidence which in the circumstances of the case would be hampering the running of the institution.
The reasons should be recorded, it need not be communicated and only for the purpose of the running of the institution, there should be factors which hamper the running of the institution without the termination of the employment of the employee concerned at that particular time either because he is a surplus, inefficient, disobedient and dangerous.
Construction or interpretation of legislative or rule provisions proceeds on the assumption that courts must seek to discover and translate the intention of the legislature or the rule making body.
This is one of the legal fictions upon the hypothesis of which the framework of adjudication of the intention of a piece of legislation or rule proceeds.
But these are fictional myths to a large extent as experi ence should tell us.
In most of the cases legislature, that is to say, vast majority of the people who are supposed to represent the views and opinions of the people, do not have any intention, even if they have, they cannot and do not articulate those intentions.
On most of these issues their is no comprehension or understanding.
Reality would reveal that it is only those who are able to exert their view points, in a common parliamentary jargon, the power lobby, gets what it wants, and the machinery is of a bureaucratic set up who draft the legislation or rule or law.
So, there fore, what is passed on very often as the will of the people in a particular enactment is the handy work of a bureaucrat ic machine produced at the behest of a power lobby control ling the corridors of power in a particular situation.
This takes the mythetical 236 shape of the 'intention of the people ' in the form of legis lation.
Again, very often, the bureaucratic machine is not able to correctly and properly transmute what was intended to be conveyed.
In such a situation, is it or is it not better, one would ponder to ask, whether the courts should attribute to the law making body the knowledge of the values and limitations of the Constitution, and knowledge of the evils that should be remedied at a particular time and in a situation that should be met by a particular piece of legis lation, and the court with the experience and knowledge of law, with the assistance of lawyers trained in this behalf, should endeavour to find out what will be the correct and appropriate solution, and construe the rule of the legisla tion within the ambit of constitutional limitations and upon reasonable judgment of what should have been expressed.
In reality, that happens in most of the cases.
Can it be con demned as judicial usurpation of law making functions of the legislature thereby depriving the people of their right to express their will? This is a practical dilemma which Judges must always, in cases of interpretation and construction, face and a question which they must answer.
I have noted the guidelines for the exercise of the power, preamble, relevant sections from which the reasons should be inferred and recorded, although they need not be communicate.
These should be recorded in order to ensure effective judicial review in a given case.
Termination simpliciter under Regulation 9(b) or similar powers can be exercised only in circumstances other than those in regula tion 9(a).
The exercise of such powers can only be for purposes germane and relevant to the statute.
There are several illustrations of that, namely, the employee is incompetent or unsuitable so as to make his continuance in the employment detrimental to the interest of the institu tion, where the continuance of the employee is a grave security risk making his continuance detrimental to the interest of the Corporation and where because of the conduct of the employee, there is lack of confidence in the employee which makes it necessary in the interest of the Corporation to immediately terminate the services of the employee.
These, however, are illustrative and not exhaustive.
There fore, each case of the conferment of the power involved should be decided on the aforesaid basis.
I am conscious that clear intention as indicated in a legislation cannot be permitted to be defeated by means of construction.
It has been said that if the legislature has manifested a clear intention to exercise an unlimited power, it is impermissible to read down the amplitude of that power so as to make it limited.
I do not agree.
Our 237 legislatures are limited by the constitutional inhibitions and it is time, in my opinion, that we should read their Acts and enactments with the attribute that they know their limits and could not have intended to violate the Constitu tion.
It is true that where there are clear, unambiguous and positive terms in a legislation, the Court should be loath to read down.
It should proceed with a straight forward method of striking down such legislations.
But where the statute is silent or not expressive or inarticulate, the Court must read down in the silence of the statute and in the inarticulation of its provisions, the constitutional inhibitions and transmute the major inarticulate premise into a reality and read down the statute accordingly.
It is true perhaps, as has been said, that in the history of constitutional law, statutes are seldom read down to mean what they say and intend.
It is begging the question.
If the statutes are seldom read down to mean what they say and intend.
It is begging the question.
If the statute does not specifically say, in such circumstances, as to how do we find the intention to transgress the constitutional limita tions.
At least, the relevant provisions of the relevant statutes and the rules, mentioned hereinbefore, are, in my opinion, on these points, not expressive enough to betray an intention transgress constitutional limitations.
I am afraid that reference to Elliott Ashton Welsh, II vs United States, ; ; is inept in the background of the principles we are confronted with.
The plain thrust of legislative enactment has to be found out in the inarticu late expressions and in the silence of the legislation.
In doing so, to say what the legislature did not specifically say, is not distortion to avert any constitutional colli sion, In the language of the relevant provisions with which we are confronted, I do not find that intention of the legislature to flout the constitutional limitations.
I am also unable to accept the contention of Mr. Garg as well as Mr. Ramamurthi that it is clear as a result of the constitutional position of the security of tenure of the employees as well as the expressed language of the provi sions of several enactments that there is no valid power of the termination of employment of the permanent employees without holding an enquiry or giving an opportunity to the employees to rebut the charges on the grounds of termination in all circumstances.
It was contended, as I have noted, by Shri R.K. Garg that no principle of interpretation permitted reading down a provision so as to make it into a different provision altogether different from what was intended by the legislature or its delegate.
Reference was made to the decision of this Court in R.M.D.C. 's case (supra).
I am unable to accept this contention.
It is not that the reading down is used for a purpose which is just the opposite which the legislature had intended.
238 Legislature had not intended arbitrary or uncontrolled or whimsical power.
Indeed it considered.
This is not the proper way to read that power in the said Regulation 9(b).
Para 522 of the Shastri Award, read properly, must be cir cumscribed with the conditions indicated above as a neces sary corollary or consequence of that power.
It is also not reading to the legislature conditions which were not there in the second proviso Article 311(2) of the Constitution.
In view of the ratio of the five judge Bench decision of this Court in Tulsiram 's case (supra), which had examined all the relevant decisions, I am unable to accept the submission of Shri R.K. Garg and Mr. Ramamurthi.
Absolute powers, it is true, cannot be regulated without essential legislative policy, but here properly read, absolute power was not there.
Power that was only constitutionally valid, that power can be presumed to have been given and if that pre sumption is made, conditions indicated above inevitably attach.
We are not concerned with the concept of industrial democracy sought to be propounded by Mr. Garg in this case.
The validity and the propriety of having industrial democra cy is not in issue.
What is in issue is demonstrable fair play and justice, as sought for by Mr. Garg, in the exercise of the power which must be conceded as an essential at tribute for proper functioning of the institution.
It is true that no drafts as such have been submitted by the learned Attorney General or by the learned Solicitor General nor by any counsel appearing for the management.
But these conditions, which we have noted, are necessary corol lary flowing from the conferment of the power of termination in a constitutional manner for the smooth, proper and effi cient running of the industry.
In the aforesaid view of the matter, 1 am unable to accept the submissions of Mr. Garg and Mr. Ramamurthi.
The power must be there, the power must be read down in the manner and to the extent indicated above, in my opinion, of terminating the services of permanent employees without holding any enquiry in the stated contingencies and this would be by either virtue of the silence of the provision indicating the contingencies of termination or by virtue of constitutional inhibitions.
That reading would not violate the theory that judges should not make laws.
In the aforesaid view of the matter, I direct that whenever question of exercise of the power of termination of permanent employees by reasonable notice without holding any enquiry arises, the extent of 239 the power should be read in the manner indicated above and we reiterate that such powers can be exercised for the purposes of the Act which will be determinable by the pream ble and by relevant enacting provisions and the contingen cies for the exercise of the power must be specified and powers should be exercised by authority competent and inde pendent enough and should be articulated by reasons stated even if not communicated.
These are the limitations inherent and latent in the framework of our Constitution and the power with these limitations is valid.
Having regard to the aforesaid view, I will have to dispose of the appeals in terms of the aforesaid principles.
Next the question arises what would be the position of the rights and liabilities determined as anterior to or before our reading these powers to be conditioned as afore said.
Having regard to the finality of the position of law and having regard to the theory that parties have adjusted their rights on the understanding of the law as it was, in our opinion, justice of the situation would be met if we declare and hold that pending litigations should be examined in the light of the aforesaid principles and dispose of in the aforesaid light, namely, where issues of damages or consequences of termination by virtue of exercise of the power are still pending adjudication in any forum and have not been finally adjudicated, these should be re examined by the appropriate authorities before whom these issues are pending in the light of these principles, that is say, the exercise of the power should be judged on these conditions and in the light of those conditions.
If in the light of these conditions, the exercise of the power is valid, the termination should be held to be valid, if on the other hand, there was exercise without compliance with these conditions, the termination would be invalid and conse quences in law of damages or reinstatement or others will follow.
But previous terminations where the lis is no longer pending before any authority will not be reopened.
To that extent.
I will declare this to be the law prospectively.
I had, after circulating the draft judgment herein, the advantage of the views of my learned brothers.
They do not agree with me.
With respect.
I am definitely of the opinion that time has come for the judicial interpretation to play far more active, creative and purposeful role in deciding what is "according to law".
Law as evolved in India today, in my opinion, makes the limitations on user of power quite clear and distinct, in this branch.
These are constitutional limitations.
Therefore, every provision in any legislation by limited legislatures, in 240 my opinion, should be judged bearing in mind that the legis lature and the law making authorities were aware and are bound by these constitutional limitations.
These inhibitions must be read into these provisions so that law becomes effective, purposeful and legal.
In that view of the matter, I am of the opinion that we should approach the question of constitutional limitations or inhibitions in our interpreta tion in deciding in each individual cases by not 'what has been ' but 'what may be '.
This is the role and purpose of constitutional interpretation by the apex Court of the country.
I know that this view of mine is not shared in this decision by my learned brothers.
I respect their views, but I would like to hope that one day or the other this Court would be mature enough to fulfil what is purposeful and I believe to be the true role and purpose of the Court in interpretation in the light of constitutional inhibitions.
Having had the advantage of the views of my learned broth ers, I regret, with respect, I cannot join them in their views.
I am the loser for the same, but I will fondly hope only for the time being.
I believe that we must do away with 'the childish fic tion ' that law is not made by the judiciary.
Austin in his Jurisprudent at page 65, 4th edn.
has described the BIack stone 's principle of finding the law as 'the childish fic tion '.
Chief Justice K. Subba Rao in I.C. Golak Nath & Ors.
vs State of Punjab & Ant '.
, ; at p. 811 has referred to these observations.
This Court under Article 14 1 of the Constitution is enjoined to declare law.
The ex pression 'declared ' is wider than the words 'found or made '.
To declare is to announce opinion.
Indeed, the latter in volves the process, while the former expresses result.
Interpretation, ascertainment and evolution are parts of the process, while that interpreted, ascertained or evolved is declared as law.
The law declared by this Court is the law of the land.
To deny this power to this Court on the basis of some outmoded theory that the Court only finds law but does not make it, is to make ineffective the powerful in strument of justice placed in the hands of the highest judiciary of this country.
See the observations of Chief Justice K. Subba Rao in 1.
C. Golak Nath & Ors '.
vs State of Punjab & Anr.
, (supra at pp.
813/14).
I would, therefore, plead for a more active and creative role for the courts in declaring what the law is.
In the aforesaid light, in Civil Appeal No. 2876 of 1986, having regard to the facts and the circumstances and the attitude taken by the Delhi Transport Corporation, I do not interfere with the order of the High Court.
The appeal shall, therefore, fail.
241 Having regard to the facts and the circumstances and the observations above.
Civil Appeal No. 655 of 1984 (M.L. Kamra vs Chairman cum Managing Director, New India Assurance Co. ) will be placed before a division bench of this Court to be disposed of in accordance with law and the light of the observations made herein.
For the reasons that I have indicated above, in Civil Appeal No. 1115 of 1976 (Satnam Singh vs Zilla Parishad Ferozepur & Anr., ), with the facts herein where apparently no reasons were recorded, the appeal of Satnam Singh suc ceeds and in the interest of justice, the monetary relief should be given to the appellant which is quantified at Rs.4,83,061.90 paise (Rupees four lakhs eighty three thou sand and sixty one and ninety paise).
I have indicated before the basis on which this quantification has been made.
For the same reasons, Civil Appeal No. 4073(NL) of 1986 (Mahesh Kumar Giroti vs Regional Manager, Region 11, Region al Office, State Bank of India, Bareilly & Ors.), Civil Appeal No. 331 of 1987 (The Delhi Transport Corporation & Anr.
vs Shri Hans Raj), Civil Appeal No. 328 of 1987 (The Delhi Transport Corporation & Anr.
vs Shri Rohtash Singh), Special Leave Petition No. 75 12 of 1987 (Delhi Transport Corporation vs Shri Mohinder Singh & Anr.), and Civil Appeal No. 330 of 1987 (The Delhi Transport Corporation & Anr.
vs Shri Prem Singh) should be placed before the divi sion bench of this Court to be disposed of in accordance with the observations made herein and in accordance with law.
The appeals I would dispose of accordingly.
Intervention of the parties are allowed and the C.M.Ps.
are disposed of in the aforesaid terms.
RAY, J. I have had the privilege of deciphering the judgment rendered by the learned Chief Justice.
As the question involved in these groups of appeals for decision is very important, it is deemed necessary to express my views on this important matter.
The pivotal question which arises for consideration is whether Regulation 9(b) of the Regulations framed under section 53 of the Delhi Road Transport Act, 1950 which provides for termination of services of permanent employees on giving simply one month 's notice or pay in lieu thereof without recording any reason therefore in the order of termination is arbitrary, illegal, discriminatory and viola tive of Audi Alteram Partern Rule and so constitutionaly invalid and void.
It is 242 also necessary to consider in this respect whether the said Rule 9(b) can be interpreted and read down in such a manner to hold that it was not discriminatory nor arbitrary nor does it confer unbridled and uncanalised power on the trans port authority to, terminate, however, the services of any employee including permanent employee without any reason whatsoever by the Delhi State Transport Authority.
It is also necessary to consider whether such a power can be exercised without conforming to the fundamental right em bodied in the Article 14 as interpreted by this Court in E.P. Royappa 's case that arbitrariness is the anti thesis of equality enshrined in Article 14 of the Constitution.
In other words, whether such a regulation has to comply with the observance of fundamental rights guaranteed by Part III of the Constitution and whether such a power is to be exer cised in furtherance of and in consonance with the Directive Principles embodied in Article 38 and 39 of the Constitu tion.
It is convenient to set out the relevant provisions of Regulation 9(b) framed by the Delhi Road Transport Authority under the 1950 Act.
9(b) Termination of services (b) Whether the termination is made due to reduction of establishment or in circumstances other than those mentioned in (a) one month 's notice or pay in lieu thereof will be given to all categories of employees.
On a plain reading of this Regulation it is apparent that the authority has been conferred the power to terminate the services of any employee whether permanent or temporary by giving the month 's notice or pay in lieu thereof without recording any reason whatsoever in the purported order of termination of services.
Thus a regular, temporary or perma nent employee of the State Transport Authority can be dis missed or removed from service at the whims and caprices of the concerned authority without any reason whatsoever and undoubtedly this evidence that such unbridled, indiscrimi nate and uncanalised power to terminate the services even of a permanent employee without assigning any reason and with out giving any opportunity of hearing as far play and jus tice demands a reasonable procedure is per se, arbitrary and discriminatory.
It has been contended by the Attorney Gener al, appearing on behalf of the State that such a power is not uncanalised or unbridled and arbitrary in as much as firstly such power has been conferred on the responsible authority namely D.T.C. 243 for public purposes and secondly, the Regulation 9(b) is to be read down so as to make it constitutionally valid.
It will be seen that there is guidance for exercise of this power in the regulation itself.
It has also been submitted in this connection by the learned Attorney General that a provision of the Constitution has to be presumed to be valid unless it is proved by the other side challenging the con stitutional validity of such a provision that the same is arbitrary and so void.
Several authorities have been cited at the Bar on this point.
It is profitable to refer to the earlier pronouncements of this Court on this crucial question.
Rules 148(3) and 149(3) in contravention of the provision of Article 14 of the Constitution were challenged before this Court in the case Moti Ram Deka etc.
vs General Manager, N.E.F. Railways, Maligaon, Pandu, etc.
; , Rule 148(3) of the Railways Establishment Code is set out here under: "148(3) "Other (non pensionable) railway servants: The service of other (non pensionable) railway servants shall be liable to termination on notice on either side for the periods shown below.
Such notice is not however required in cases of dismissal or removal as a disciplinary measure after compliance with the provisions of clause (2) of Arti cle 311 of the Constitution, retirement on attaining the age of superannuation and termination of service due to mental or physical incapacity.
" In this case the service of Moti Ram Deka, a peon em ployed by the Railway and Sudhir Kumar Das a confirmed clerk, whose services have been terminated under Rule 148(3) of the said Rules challenged the termination of their serv ices before the Assam High Court which rejected the same and ultimately it came up to this Court on Special Leave.
It was held by the Majority that Rules 148(3) and 149(3) are in valid in as such as they are inconsistent with the provi sions of article 311(2), as they purport to removal from serv ice of permanent servants without compliance with the proce dure prescribed by Article 311(2).
It was also held that the Rule 148(3) contravenes article 14 as it does not give any guidance for exercise of the discretion by the authority concerned and hence it is invalid.
It is necessary to refer in this connection to the pronouncement of this Court in the case of Parshotam Lal Dhingra vs Union of India, ; where it has been held that protection of Article 311 is 244 available only where dismissal, removal or reduction in rank is sought to be inflicted by way of punishment and not otherwise.
Thus even the probationer or temporary employee if removed from service or dismissed from service as a penal measure having civil consequences has to conform to the procedure prescribed by Article 311(2) of the Constitution.
Even a probationer who has no right to the post cannot be removed from service as a penal measure without complying with Article 311(2) of the Constitution.
In the case of Shyam Lal vs The State of Uttar Pradesh and Anr., ; it was held by this Court that a compulsory retirement from service under the Civil Services (Classification, Control and Appeal) Rules does not amount to dismissal or removal within the meaning of Article 311 of the Constitution and therefore does not fall within the provision of the said Act.
In the case of Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar & Others, ; the constitutionali ty of the Commission of Enquiry Act, 1952 was challenged.
It was held that the Act was valid and intra vires and that the notification was also valid excepting the words "as and by way of securing redress or punishment" in CI.
10 thereof which went beyond the Act.
It has been further held that it is now well settled that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legis lation.
Thus, to pass the test of permissible classification two conditions must be fulfilled, namely, that (i) That the classification must be rounded on an intelligible differen tia which distinguishes persons or things that are grouped together from others left out of the group and, (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question.
It has also been held that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds.
This Court observed in Jyoti Pershad vs The Administra tor For the Union Territory of Delhi; , while holding that Section 19 of the , was not obnoxious to the equal protec tion of laws guaranteed by Art, 14 of the Constitution, there was enough guidance to the competent 245 authority in the use of his discretion under Section 19(1) of the Act.
The restrictions imposed by Section 19 of the Act could not be said to be unreasonable.
It has been further observed that (1) If the statute itself or the rule made under it applies unequally to per sons or things similarly situated, it would be an instance of a direct violation of the Constitutional Guarantee and the provision of the statute or the rule in question would have to be struck down.
(2) The enactment or the rule might not in terms enact a discriminatory rule of law but might enable an unequal or discriminatory treatment to be accorded to persons or things similarly situated.
This would happen when the legislature vests a discretion in an authority, be it the Government or an administrative official acting either as an executive officer or even in a quasi judicial capacity by a legisla tion which does not lay down any policy or disclose any tangible or intelligible purpose, thus clothing the authori ty with unguided and arbitrary powers enabling it to dis criminate.
In State of Orissa vs Dr. (Miss) Binapani Dei & Ors., ; the respondent joined service of the State Government in 1938.
In the service record certain date of birth was recorded.
In 196 1 Government held enquiry as to date of birth and she was asked to show cause why a certain date of birth should not be taken as a date of birth.
The enquiry report was not disclosed to her and she was not given any opportunity to meet the evidence.
The Government refixed her date of birth and ordered that she will be compulsorily retired.
It was held that such a enquiry and decision were contrary to the basis concept of justice and cannot have any value.
It is true that the order is adminis trative in character, but even an administrative order which involves civil consequences as already stated, must be made consistently with the rules of natural justice after inform ing the first respondent of the case of State, the evidence in support thereof and after giving an opportunity to the first respondent of being heard and meeting or explaining the evidence.
No such steps were admittedly taken; the High Court was, in our judgment, right in setting aside the order of the State.
In A.K. Kraipak and Others vs Union of India and Others, it has been held at page 268 269 Paragraph 13: "The dividing line between an administrative power and a 246 quasi judicial power 'is quite thin and is being gradually obliterated.
For determining whether a power is an adminis trative power or a quasi judicial power one has to look to the nature of the power conferred, the person or persons on whom it is conferred, the framework of the law conferring that power, the consequences ensuing from the exercise of that power and the manner in which that power is expected to be exercised.
Under our Constitution the rule of law per vades over the entire field of administration.
Every organ of the State under our Constitution is regulated and con trolled by the rule of law.
In a welfare State like ours it is inevitable that the jurisdiction of the administrative bodies is increasing at a rapid rate.
The concept of rule of law would lose its vitality if the instrumentalities of the State are not charged with the duty of discharging their functions in a fair and just manner.
The requirement of acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously.
The procedures which are considered inherent in the exercise of a judicial power are merely those which facilitate if not ensure a just and fair decision . .
What was considered as an administrative power some years back is now being considered as a quasi 'judicial power. ' ' In the case of Union of India vs Col. J.N. Sinha and Anr., 1.
J.N. Sinha was compulsorily retired by an order of the President of India dated 13.8.69 under Section 56(j) of the Fundamental Rules from Government service without assigning any reason in the order.
The High Court on a writ petition against the impugned order held that there was violation of principles of natural justice.
On an appeal on Special Leave this Court held: "Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights.
As observed by this Court in Kraipak and Ors.
vs Union of India "the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice.
These rules can operate only in areas not covered by any law validly made.
If a statutory provision can be read consist ently with the principles of natural justice, the courts should do so because it must be presumed that the legisla 247 ture and the statutory authorities intend to act in accord ance with the principles of natural justice.
But on the other hand a statutory provision either specifically or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the legislature or the statutory authority and read into the concerned provision the princi ples of natural justice.
Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the ex press words of the provisions conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of that power.
" It was held that Fundamental Rule 56(j) does not in term require that any opportunity should be given to the con cerned servant to show cause against the compulsory retire ment.
The order of the President is, therefore, not bad as the authority bona fide forms that opinion.
In the case of Air India Corporation vs V.A. Rebello & Anr., ; the service of the respondent was terminated under Regulation 48 of the Air India Employees ' Service Regulations.
The said Regulation 48 reads as under: CHAPTER VIII Cessation of Service X X X X X X X X X X X X X X X X X X 48.
Termination: The service of an employee may be terminat ed without assigning any reason, as under: (a) of a permanent employee by giving him 30 days ' notice in writing or pay in lieu of notice; (b) of an employee on probation by giving him 7 days ' notice in writing or pay in lieu of notice; (c) of a temporary employee by giving him 24 hours ' notice in writing or pay in lieu of notice.
In this case the complainant, V.A. Rebello was dismissed from service under Regulation 48 by paying salary of 30 days in lieu of notice.
The order does not suggest any misconduct on behalf of the 248 complainant and it is not possible to hold that the order was passed on any misconduct.
This has been challenged by the complainant by filing a complaint before the National Industrial Tribunal.
Under Section 33 A of the the order was challenged as amounting to dismissal from service.
The Tribunal held in its award that the discharge of the respondent is not a discharge simplic iter but in breach of section 33 A of and as such directed the complaint to be considered on the merits.
On appeal by Special Leave this Court while considering the purpose and scope of Section 33(1) and 33(2) of the , held following its decision in The Workmen of Sudder Office Cinnamara vs The Management, as follows: "That if the termination of service is a colourable exercise of the power vested in the management or as a result of victimisation or unfair labour practice, the Industrial Tribunal would have jurisdiction to intervene and set aside such a termination.
In order to find out whether the order of termination is one of termination simpliciter under the provisions of contract or of standing orders, the Tribunal has ample jurisdiction to go into all the circumstances which led to the termination simpliciter.
The form of the order of termination, is not conclusive of the true nature of the order, for it is possible that the form may be merely a camouflage for an order of dismissal for misconduct.
It is, therefore, open to the Tribunal to go behind the form of the order and look at the substance.
If the Tribunal comes to the conclusion that though in form the order amounts to termination simpliciter but in reality cloaks a dismissal for misconduct, it will be open to it to set aside the orders as a colourable exercise of power by the management.
" The same principles have also been reiterated in the later decision of this Court in Tara Oil Mills Co. Ltd. vs Workmen & Anr., ; It has been observed in this case: "That the position of the industrial workman is different from that of a Government servant because an industrial employer cannot "hire and fire" his workmen on the basis of an unfettered right under the contract of employment, that right now being subject to industrial adjudication; and there is also on the other hand no provision of the Consti tution like articles 3 10 and 311 requiring consideration in the 249 case of industrial workmen.
" It has been further observed: "That Regulation 48 which has been set out earlier as its plain language shows does not lay down or contemplate any defined essential pre requisite for invoking its operation.
Action under this Regulation can be validly taken by the employer at his sweet will without assigning any reason.
He is not bound to disclose why he does not want to continue in service the employee concerned.
It may be conceded that an employer must always.
have some reason for terminating the services of his employee.
Such reasons apart from misconduct may, inter alia, by want of full satisfaction with his overall suitability in the fact that the employer is not fully satisfied with the overall result of the performance of his duties by his employee does not necessarily imply misconduct on his part." In the case of Maneka Gandhi vs Union of India, 1.
The petitioner was issued a passport on June 1, 1976 under the Passport Act, 1967.
On the 4th July, 1977, the petitioner received a letter dated 2nd July, 1977, from the Regional Passport Officer, Delhi, intimating to her that it was decided by the Government of India to impound her passport under section 10(3)(c) of the Act "in public interest.
" The petitioner was required to surrender her passport within 7 days from the receipt of that letter.
The petitioner immediately addressed a letter to the Regional Passport Officer requesting him to furnish a copy of the statement of reasons for making the order as provided in Section 10(5), reply was sent by the Government of India, Ministry of External Affairs on 6th July 1977 stating inter alia that the Government decided "in the interest of the general public" not to furnish her copy of the statement of reasons for the making of the order.
The petitioner challenges the action of the Government in impounding her passport by a writ petition.
Sub section (1) of Section 10 empowers the Passport Authority to vary or cancel the endorsement on a passport or travel document or to vary or cancel it on the conditions subject to which a passport or travel document has been issued having regard to, inter alia, the provisions of section 6(1) or any notification under Section 19.
Sub section (2) confers powers on the Passport Authority to vary or cancel the conditions of the passport or travel document on the application of the holder of the passport or travel document and with the previous approval of the Central Government, Sub section (3) pro 250 vides that the Passport Authority may impound or cause to be impounded or revoke a passport or travel document on the grounds set out in cl.(a) to (h).
The order impounding the passport in the present case was made by the Central Govern ment under cl.
(c) which reads as follows: "(c) If the passport authority deems it necessary so to do in the interest of the sovereignty and integrity of India, the security of India, friendly relations of India with the foreign country, or in the interest of the general public.
" It was held that the right to travel and go outside the country is included in the right to Personal Liberty.
In order to apply the test contained in articles 14 and 19 of the Constitution we have to consider the objects for which the exercise of inherent rights recognised by article 21 of the Constitution are restricted as well as the procedure by which these restrictions are sought to be imposed, both substantive and procedural laws and actions taken under them will have to pass the test imposed by articles 14 and 19, whenever facts justifying the invocation of either of these Articles may be disclosed.
Violation for both articles 21 and 19(1)(g) may be put forward making it necessary for the authorities concerned to justify the restriction imposed by showing satisfaction of tests of validity contemplated by each of these two Articles.
The tests of reason and justice cannot be abstract.
They cannot be divorced from the needs of the nation.
The tests have to be pragmatic otherwise they would cease to be rea sonable.
The discretion left to the authority to impound a passport in public interest cannot invalidate the law it self.
The orders under Section 10(3) must be based upon some material even if the material concerns in some cases of reasonable suspicion arising from certain credible asser tions made by reliable individual.
In an emergent situation, the impounding of a passport may become necessary without even giving an opportunity to be heard against such a step which could be reversed after an opportunity is given to the holder of the passport to show why the step was unnecessary.
It is well settled that even if there is no specific provision in a statute or rules made thereunder for showing cause against action proposed to be taken against an indi vidual, which affects the right of 251 that individual the duty to give reasonable opportunity to be heard will be implied from the nature of the function to be performed by the authority which has the power to take punitive or damaging action.
An order impounding a passport must be made quasi judi cially.
This was not done in the present case.
It cannot be said that a good enough reason has been shown to exist for impounding the passport of the petitioner.
The petitioner had no opportunity of showing that the ground for impounding it given in this Court either does not exist or has no bearing on public interest or that the public interest can be better served in some other manner.
The order should be quashed and the respondent should be directed to give an opportunity to the petitioner to show cause against any proposed action on such grounds as may be available.
Even executive authorities when taking administrative action which involves any deprivation of or restriction on inherent fundamental rights of citizens must take care to see that justice is not only done but manifestly appears to be done.
They have a duty to proceed in a way which is free from even the appearance of arbitrariness, unreasonableness or unfairness.
They have to act in a manner which is patent ly impartial and meets the requirements of natural justice.
It is also pertinent to refer in this connection the pronouncement of this Court in the case of E.P. Royappa vs State of Tamil Nadu and Anr., ; "Equality and arbitrariness are sworn enemies, one belongs to the rule of law in a public while the other to the whim and caprice of an absolute monarch.
Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment.
The principle of reasonableness which legally as well as philosophically, is an essential element of equality or non arbitrariness pervades Article 14 like a brooding omni presence and the procedure contemplated by Article 21 must answer the test of reasonableness in order to be in conformity with Article 14, it must be right and just and fair and not arbitrary, fanciful or oppressive.
" In the case of Municipal Corporation of Greater Bombay vs Malvenkar and Ors., ; the services of respondent No. 2, a permanent clerk in the Bombay Electric Supply and Transport Undertaking, which is run by the appel lant were terminated from the 252 close of work on January 23, ' 1968 as her record of service was unsatisfactory.
The order of termination stated that the respondent No. 2 should be paid one month 's wages in lieu of notice and would also be eligible for all the benefits as might be admissible under the Standing Orders and Service Regulations of the Undertaking.
The respondent No. 2 made an application before the Labour Court under Section 42(4) of the Bombay Industrial Relations Act contending that the order terminating her services was invalid as it was not passed by the competent authority as envisaged by the Stand ing Order and that the so called Executive Assistant to the General Manager had no authority to terminate her services because no validly sanctioned post of that designation existed on 20th or 23rd January, 1968.
It was also contended that the aforesaid oders besides being mala fide was viola tive of the principles of natural justice in as much as the same was passed without holding any enquiry.
The Labour Court dismissed the application.
The respondent 's appeal before the President of the Industrial Court was however allowed.
The Industrial Court held that the impugned orders bore only the initials of the Central Manager and therefore it was passed by an authority which was lacking in authori ty, the wording "unsatisfactory service record" cast a stigma and was patently punitive attracting the non observ ance of Standing Order No. 26 which did not create an abso lute right in the management to terminate the services of an employee for misconduct without holding an enquiry or giving her a fair opportunity of being heard.
A Writ application filed by the appellant was dismissed holding inter alia that the appellant was dismissed holding inter alia that the fact that Standing Order 26 required reasons to be mentioned in the order terminating the services of an employee did not mean that an order of dismissal on the ground of misconduct could be converted into an order of discharge simpliciter by mentioning therein the nature of misconduct.
While allowing the appeal on Special Leave it was held by this Court that under Standing Order 26 powers have been given to the Management in a particular case and this ques tion has to be determined having regard to the substance of the matter and not its form.
One is the power of holding disciplinary enquiry under clause (3) of Standing Order 231 read with standing Order 23 and the other is the power to terminate the services of an employee by one calendar month 's written notice or pay in lieu thereof under Standing Order 26.
The question is as to which power has been exer cised by the Management in a particular case and this ques tion has to be determined having regard to the substance of the matter and not its form.
There are two distinct and independent powers and as far as possible, neither should 253 be construed so as to emasculate the other or to render it ineffective.
One is the power to punish an employee for misconduct while the other is the power to terminate sim pliciter the service of an employee without any other ad verse consequences.
Proviso (i) to clause (1) of Standing Order 26 requires that the reason for termination of the employment should be given in writing to the employee when exercising the power of termination of services of the employee under Standing Order 26.
The Management is required to articulate the reason which operated in its mind for terminating the services of the employee.
But merely because the reason must obviously not be arbitrary.
capricious or irrelevant, it would not necessarily in every case make the order of termination punitive in character so as to require compliance with the requirements of clause (2) of Standing Order 21 read with Standing Order 23.
It was further held that the service of the respondent was not satisfactory was undoubtedly based on past incidents set out in the record but for each of these incidents punishment is one form or another had already been meted out to her and it was not by way of punishment for any of these incidents, but because as gathered from these incidents, her record of service was unsatisfactory that her service was terminated by the man agement under Standing Order 26.
The appellant produced satisfactory evidence to show that the impugned order termi nating the service of the respondent was justified and hence the impugned order must be sustained despite its having been passed without complying with the requirements of clause (2) of Standing Order 21 read with Standing Order 23.
This decision has been made in the special facts and circum stances in that particular case.
In the case of Manohar P. Kharkhar And Anr.
vs Raghuraj & Anr., the petitioners challenged the order of termination of services dated 29.4.
1981, under Regulation 48 of Air India Employees ' Service Regulations.
The petitioner No. 1 was The Director of Engineering and the Head of the Engineering Department while the petitioner No. 2 was Deputy Director of Engineering (Maintenance) and the Head of the Maintenance Division of the Air India Corpora tion.
The Chairman and Managing Director of the said Corpo ration lost confidence in their ability and suitability to hold such important posts of Head of Departments which were reasonable for maintenance of the Air Crafts, safety of the Air Crafts and safety of the passengers carried therein and the order of termination were based on the note of The Chairman dated 29.4.
Loss of confidence was the result of the negligence and failure to discharge their duty culmi nating in the admitted sabotage in the case of Makalu, an air craft 254 for the flight of VVIP.
On this occasion the petitioners services were terminated on April 29, 1981 by the Chairman who recorded in its record the ground of loss of confidence.
This order was challenged as arbitrary and capricious and Regulation 48 was violative of Article 14 of the Constitu tion as it contained to guidelines for choosing between employees and employees, occasion to occasion for the con templated action.
In negativing the contentions, it was held after exhaus tively analysing the note dated 29.4.1981, that sheer un suitability and unfitness to hold office is not a misconduct in its generic sense or in its artificial meaning under Regulation 42.
Regulations 42 to 44 have no application.
Confidence in the petitioners ' suitability was lost due to such overall inefficiency of the departments under the petitioners.
Conclusions could not be different even if it assumed that the note contemplated finding of the petition ers guilty of gross inefficiency and negligence.
Inefficien cy by itself did not amount to misconduct in its generic sense.
It was further held that the petitioners have no right to the post and do not possess any security of tenure.
It was also held that if the Corporation choose to act under Regulation 48 and the action is not mala fide, arbitrary or capricious the question of its having acted in colourable exercise of its power could not arise.
It was further held that the power conferred under Regulation 48 to terminate the services of permanent employees on 30 days notice with out assigning any reason is not violative of Article 14 of the Constitution.
Accordingly the writ petition was dis missed and the rule was discharged.
This decision however has not duly considered the ratio of the decision made by this Court in L. Michael & Anr.
vs Johnaton Pumps India Ltd., ; and also in the case of Air India Corporation vs V.A. Rebello, (supra) as well as the ratio of the decision in the case of Sukhdev Singh & Ors.
vs Bhagat Ram Sardar Singh Raghuvanshi & Anr., [1975] 1 SCC421.
In the case of S.S. Muley vs J.R.D. Tata & Ors., constitutionality came up for consideration and this Court held the said Regulation 48 to be discriminatory and void as it gives unrestricted and unguided power on the Authority concerned to terminate the services of a permanent employee by issuing a notice or pay in lieu thereof without giving any opportunity of hearing to the employee concerned and thereby violating the principles of natural justice and also Article 14 of the Constitution.
255 In West Bengal State Electricity Board & Ors.
vs Desh Bandhu Ghosh and Others, [1985] 3 SCC 116 the first respond ent, a permanent employee of the West Bengal State Electric ity Board, filed the writ petition out of which the appeal arises in the Calcutta High Court to quash an order dated March 22, 1984 of the Secretary, West Bengal State Electric ity Board terminating his services as Deputy Secretary with immediate effect on payment of three months ' salary in lieu of three months ' notice.
The order was made under Regulation 34 of the Board 's Regulations which enables the Board to terminate the services of any permanent employee 'by serving three months ' notice or on payment of salary for the corre sponding period in lieu thereof.
" The Regulation 34 reads as follows: "34.
In case of a permanent employee, his services may be terminated by serving three months ' notice or on payment of salary for the corresponding period in lieu thereof.
" This order of termination was challenged on the ground that Regulation 34 was arbitrary in nature and it was pat ently discriminatory.
The High Court struck down the first paragraph of Regulation 34 and quashed the order of termina tion of service of the first respondent.
In the case of Workmen of Hindustan Steel Ltd. and Anr.
vs Hindustan Steel Ltd. and Ors., ; Standing Order 32 which provided for conferment of power in the General Manager to terminate the services of an employee if satisfied for reasons recorded in writing that it was inex pedient or against the order of security to employ the workman, the workman could be removed or dismissed from service without following the procedure laid down in Stand ing Order 31.
Special Procedure in certain cases.
Where a workman has been convicted for a criminal offence in a Court of law or where the General Manager is satisfied, for reasons to be recorded in writing, that it is inexpedi ent or against the interests of security to continue to employ the workman, the workman may be removed or dismissed from service without following the procedure laid down in Standing Order 31." The appellant, an Assistant in the 1st Respondent under taking was removed from service on the ground that it was 'no longer expe 256 dient ' to employ him.
The management dispensed with the departmental enquiry, after looking into the secret report of one of their officers that the appellant had misbehaved with the wife of an employee and that a complaint in respect thereof had been lodged with the police.
The Tribunal held that as the employer dispensed with the disciplinary enquiry in exercise of the power conferred by Standing Order 32, it could not be said that the dismissal from service was not justified and the respondent was quite competent to dismiss him from service without holding any enquiry.
It was held that the reasons for dispensing with the enquiry do not spell out what was the nature of the miscon duct alleged to have been committed by the appellant and what prompted the General Manager to dispense with the enquiry.
As there was no justification for dispensing with the enquiry imposition of penalty of dismissal without the disciplinary enquiry as contemplated by Standing Order 31 is illegal and invalid.
It was further held that : "A Standing Order which confers such arbitrary.
uncanalised and drastic power to dismiss an employee by merely stating that it is inexpedient or against the interest of the security to continue to employ the workman is violative of the basic requirement of natural justice inasmuch as that the General Manager can impose penalty of such a drastic nature as to affect the livelihood and put a stigma on the character of the workman without recording reasons why disciplinary inquiry is dis pensed with and what was the misconduct alleged against the employees.
It is time for such a public sector undertaking as Hindustan Steel Ltd. to recast S.O. 32 and to bring it in tune with the philosophy of the Constitution failing which it being other authority and therefore a State under article 12 in an appropriate proceeding, the vires of S.O. 32 will have to be examined.
It is not necessary to do so in the present case because even on the terms of S.O. 32, the order made by the General Manager is unsustainable.
" In the case of Tata Oil Mills Co. Ltd. vs Workmen & Anr., (supra) the service of Mr. Banerjee, an employee of the appellant, was terminated on the ground that the appel lant had lost confidence in him and in lieu of notice he was paid one month 's salary.
The Union to which Mr. Banerjee belonged took up his cause and on the failure of 'he par ties to reach a settlement the matter was referred to the Industrial Tribunal by the Government.
It was contended before the Tribunal by the appellant that the order of termination of services of Mr. 257 Banerjee was an order of discharge which it was competent to make under R. 40(1) of the Service Rules, whereas the re spondent contended that the termination was not a discharge simpliciter but was in substance dismissal and that the Tribunal was entitled to consider the propriety of the appellant 's action.
The Tribunal held that it had jurisdiction to look into the reasons behind the discharge of an employee.
On the examination of the evidence the Tribunal found that no mala fides on the part of the employer had been proved and that the termination of service did not amount to victimisation or unfair labour practice.
Even so it held that the dis charge was not justified and directed the reinstatement of Mr. Banerjee.
This Court held that in the matter of an order of dis charge of an employee the form of the order is not decisive.
An Industrial Tribunal has jurisdiction to examine the substance of the matter and decide whether the termination is, in fact, discharge simpliciter or it amounts to dismiss al which has put on the cloak of discharge simpliciter.
The test always has to be whether the act of the employer is bona fide or whether it is a mala fide and colourable exer cise of the powers conferred by the terms of contract or by the standing orders.
In O.P. Bhandari vs Indian Tourism Development Corpora tion Ltd. and Others, ; The question of constitutionality of Rule 31(v) of the Indian Tourist Devel opment Corporation Rules came up for consideration before this Court in this case.
Rule 31 is quoted below: "31.
Termination of services The services of an employee may be terminated by giving such notice or notice pay as may be prescribed in the contract of service in the following manner: (v) of an employee who has completed his probationary period and who has been confirmed or deemed to be confirmed by giving him 90 days ' notice or pay in lieu thereof.
" It has been observed by this Court: "This rule cannot co exist with Articles 14 and 16(1) of the Constitution of India.
The said rule must therefore die, so that the fundamental rights guaranteed by the aforesaid 258 constitutional provisions remain alive.
For otherwise.
the guarantee enshrined in Articles 14 and 16 of the Constitu tion can be set at naught simply by framing a rule authoriz ing termination of an employee by merely giving a notice.
In order of uphold the validity of the rule in question it will have to be held that the tenure of service of a citizen who takes up employment with the State will depend on the pleas ure or whim of the competent authority unguided by any principle or policy.
And that the services of an employee can be terminated though there is no rational ground for doing so.
even arbitrarily or capriciously.
To uphold this right is to accord a "magna carta" to the authorities in vested with these powers to practice uncontrolled discrimi nation at their pleasure and caprice on considerations not necessarily based on the welfare of the organisation but possibly based on personal likes and dislikes, personal preferences and prejudices.
An employee may be retained solely on the ground that he is asycophancy and indulges in flattery, whereas the services of one who is meritorious (but who is wanting in the art of sycophancy and tempermen tally incapable of indulging in flattery) may be terminated.
The power may be exercised even on the unarticulated ground that the former belongs to the same religious faith or is the disciple of the same religious teacher or holds opinions congenial to him.
The power may be exercised depending on whether or not the concerned employee belongs to the same region.
or to the same caste as that of the authority exer cising the power, of course without saying so.
Such power may be exercised even in order to make way for another employee who is favourite of the concerned authority.
Pro vincialism, casteism, nepotism, religious fanaticism, and several other obnoxious factors may in that case freely operate in the mind of the competent authority on deciding whom to retain and whom to get rid of.
And these dangers are not imaginary ones.
They are very much real in organisations where there is a confluence of employees streaming in from different States.
Such a rule is capable of robbing an employee of his dignity, and making him a supine person whose destiny is at the mercy of the concerned authority (whom he must humour) notwithstanding the constitutional guarantee enshrined in Articles 14 and 16 of the Constitu tion of India.
To hold otherwise is to hold that the funda 259 mental right embedded in Articles 14 and 16(1) is a mere paper tiger and that is so ethereal that it can be nullified or eschewed by a simple device of framing a rule which authorizes termination of the service of an employee by merely giving a notice of termination.
Under the circum stances the rule in question must be held to be unconstitu tional and void.
" This decision followed the observations of this Court in Central Inland Water Transport Corporation Limited And Another vs Brojo Nath Gangtdy and Another and West Bengal State Electricity Board vs Desh Bandhu Ghosh and Ors., (Supra).
In Central Inland Water Transport Corporation Limited and Another vs Brojo Nath Ganguly and Another, the appellant Corporation is a Government Company incor porated under the Companies Act.
The Majority shares of the Corporation are held by the Union of India and the remaining shares are held by the State of West Bengal and Assam.
Article 47 provided for appointment and reappointment of the auditors of the Corporation to be made by the Central Gov ernment on the advice of the Comptroller and AuditorGeneral of India and the nature of control to be exercised by the Comptroller and Auditor General in the matter of audit and accounts.
Article 51 A entitled the President to call for returns, accounts etc.
of the Corporation.
The respondents in the two appeals were in the service of the said company.
Their appointment letters were in a stereotype form under which the Corporation could without any previous notice terminate their services.
A Scheme of Arrangement was en tered into between the Corporation and that company for dissolution of the latter and takeover of its business and liabilities by the former.
The Scheme inter alia stipulated that the Corporation shall take as many of the existing staff or labour as possible and that those who could not be taken over shall be paid by the concerned company all moneys due to them under the law and all legitimate and legal compensations payable to them either under Industrial Dis putes Act or otherwise legally admissible and that such moneys shall be provided by the Government of India to the transferor Company who would pay these dues.
The two re spondents were in the service of the said company and their services were taken over by the Corporation after the Scheme of Arrangement was sanctioned by the High Court.
The re spondent Ganguly was appointed as the Deputy Chief Accounts Officer and was later promoted as Manager (Finance), the respondent Sengupta was appointed as Chief Engineer (River Services) and was 260 later promoted as General Manager (River Services).
Rule 9(i) of the Corporation 's Service, Discipline and Appeal Rules of 1979 provided that the services of a perma nent employee could be terminated on three months ' notice on either side or on payment of three months ' pay plus DA to the employee or on deduction of a like amount from his salary as the case may be in lieu of the notice.
A notice under Rule 9(i) was served on him terminating his services with immediate effect by paying three months ' pay.
Both Ganguly and Sengupta filed writ petition before High Court and a Division Bench of that Court allowed the same.
The Corporation filed appeals before Supreme Court.
The impugned questions for determination were (i) whether the appellant Corporation was an instrumentality of the State so as to be covered by Articles 12 and 36 of the Constitution and (ii) whether an unconscionable term in a contract of employment entered into with the Corporation was void under Section 23 of the Contract Act and violative of Article 14 and as such whether Rule 9(i) which formed a part of the contract of employment between the Corporation and its employees to whom the said Rules applied, was void? This Court held that it being a Government Company within the meaning of Article 12 of the Constitution has to comply with the rights embodied in Part III of the Constitution and the Directive Principles in Part IV of the Constitution.
It was further held that by extending the executive power of the Union and each of the States to the carrying on any trade or business.
Article 298 does not convert either the Union of India or any of the States which collectively form the Union into a merchant buying and selling goods or carrying on either trading or business activity, for the executive power of the Union and the States, whether in the field of trade or business or in any other field, is always subject to constitutional limitations and particularly the provisions relating to Fundamental Rights in Part III and is exercisa ble in accordance with and for the furtherance of the Direc tive Principles of State Policy.
Rule 9(i) can aptly be called the 'Henry VIII Clause '.
It confers an absolute.
arbitrary and unguided power upon the Corporation.
It does not even state who on behalf of the Corporation is to exercise that power.
While the Rules provide for four different modes in which the services of a permanent employee can be terminated earlier than his at taining the age of superannuation, namely, Rules 9(i), 9(ii).
36(iv)(b) read with Rules 38 and 37.
Rule 9(i) is the only rule which does not state in what circumstances the power conferred by the rule is 261 to be exercised.
Thus even where the Corporation could proceed under Rule 36 and dismiss an employee on the ground of misconduct after holding a regular disciplinary inquiry, it is free to resort instead to Rule 9(i) in order to avoid the hassle of an inquiry.
No opportunity of a hearing is at all to be afforded to the permanent employee whose service is being terminated in the exercise of this power.
It thus violates audi alteram partent rule of natural justice also which is implicit in Article 14.
It is not covered by any of the situations which would justify the total exclusion of the audi alteram partem rule.
The view that the Board of Directors would not exercise this power arbitrarily or capriciously as it consists of responsible and highly placed persons ignores the fact that however highly placed a person may be he must necessarily possess human frailties and "power tends to corrupt, and absolute power corrupts abso lutely." Rule 9(i)is also discriminatory for it enables the Corporation to discriminate between employee and employee.
It can pick up one employee and apply to him Rule 9(i).
It can pick up another employee and apply to him Rule 9(ii).
It can pick up yet another employee and apply to him Rule 36(iv)(b) read with Rule 38 and to yet another employee it can apply Rule 37.
All this the Corporation can do when the same circumstances exist as would justify the Corporation in holding under Rule 38 a regular disciplinary inquiry into the alleged misconduct of the employee.
This court in Delhi Transport Undertaking vs Balbir Saran Goel, ; considered the question whether the services of a permanent employee under Delhi Transport Undertaking could be terminated under Regulation 9(b) of the Regulation without complying with the procedure prescribed by Regulation 15 and (ii) whether although the order was made in perfectly harmless and innocuous terms purporting to be within Regulation 9(b) it was a mere camouflage for inflicting punishment for breach of Standing Order 17.
as the respondent approached the High Court without exhausting the Departmental remedies and held that the order was not proved to be made mala tide on the part of the authority terminating the service nor the question of mala fide was gone into by the Courts below.
Regulation 9(b) empowered the authorities to terminate the service after giving one month 's notice or pay in lieu thereof.
The order was held to have been made unequivocally in terms of the Regulation 9(h) as the employee was a con tankerous person and it was desirable to retain him in service.
The order was upheld.
The question 262 whether Regulation 9(b) was illegal and void as it conferred arbitrary and uncanalised power to terminate the service of a permanent employee without recording any reason and with out giving any opportunity of hearing before passing the purported order as required under Article 14 of the Consti tution was neither raised nor considered in this case.
In L. Michael & Anr.
vs M/s Johnston Pumps India Ltd., (supra) the services of the appellant, an employee of the respondent, were terminated by the latter giving him one month 's notice as per.
the standing orders without assigning any reasons for the termination.
An industrial dispute was referred to the Labour Court.
The management alleged that the employee misused his position by passing an important and secret information about affairs of the company to certain outsiders, that even after he was transferred to another section he made attempts to elicit information from the section with a view to pass it on to outsiders, and that therefore, the management lost confidence in the employee and terminated his services by a bona fide order.
The Labour Court confirmed the order.
On appeal this Court set aside the order holding that the Labour Court has misled itself on the law.
This Court directed reinstatement of the employee with all back wages.
The manner of dressing up an order does not matter.
The Court will lift the veil to view the reality or substance of the order.
The Tribunal has the power and indeed the duty to X ray the order and discover its true nature, if the object and effect, if the attendant circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated.
But if the management, to cover up the ina bility to establish by an inquiry, illegitimately but inge niously passes an innocent looking order of termination simpliciter, such action is bad and is liable to be set aside.
Loss of confidence is no new armour for the manage ment; otherwise security of tenure, ensured by the new industrial jurisprudence and authenticated by a catend of cases of this Court can be subverted by this neo formula Loss of Confidence in the law will be the consequence of the Loss of Confidence doctrine.
An employer who believes and suspects that his employee particularly one holding a position of confidence, has betrayed that confidence, can, if the conditions and terms of employment permit 263 terminate his employment and discharge him without any stigma attaching to the discharge.
But such belief or suspi cion or ' the employer should not be a mere whim or fancy.
It should be bona fide and reasonable.
It must rest on some tangible basis and the power has to be exercised by the employer objectively ', in good faith.
which means honestly and with due care and prudence.
If the exercise of such power is challenged on the ground of being colourable or mala fide or an act of victimisation or unfair labour prac tice.
the employer must disclose to the Court the grounds of his impugned action so that the same may be tested judicial ly.
This Court in the case of workmen of Hindustan Steel Ltd. and Ant.
vs Hindustan Steel Ltd. and Ors.
, (supra) while considering the constitutionality of Standing Order 32 of the Hindustan Steel Ltd. which conferred power on the General Manager to remove or dismiss a workman without following the procedure for holding a disciplinary enquiry laid down in Standing Order 31 observed that: "It is time for such a public sector undertaking as Hindu stan Steel Ltd. to recast S.O. 32 and to bring it in tune with the philosophy of the Constitution failing which it being other authority and therefore a State under Article 12 in an appropriate proceeding, the views of S.O. 32 will have to be examined.
" It is convenient to refer in this context relevant passage in paragraph 4 in Chitty on Contracts, 25th Edition, Volume 1: "These ideas have to a large extent lost their appeal today. 'Freedom of contract ', it has been said, 'is a reasonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed, and no injury is done to the economic interest of the community at large. ' Freedom of contract is of little value when one party has no alternative between accepting a set of terms proposed by the other or doing without the goods or services offered.
Many contracts entered into by public utility undertakings and others take the form of a set of terms fixed in advance by one party and not open to discussion by the other.
These are called 'contracts d 'adhesion ' by French lawyers.
Traders frequently contract, not on individually negotiated terms, but on those contained in a standard form of contract settled by a trade association.
And the 264 terms of an employee 's contract of employment may be deter mined by agreement between his trade union and his employer, or by a statutory scheme of employment.
Such transactions are nevertheless contracts notwithstanding that freedom of contract is to a great extent lacking.
" This Court has observed in Central Inland Water Trans port Corporation Ltd. and Anr.
vs Brojo Nath Ganguly and Anr. (supra)as under: .
Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws.
The principle deducible from the above discus sions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article 14.
This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreason able clause in a contract.
entered into between parties who arc not equal in bargaining power . .
It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them." The Court has.
therefore, the jurisdiction and power to strike or set aside the unfavourable terms in a contract of employment which purports to give effect to unconscienable bargain violating article 14 of the Constitution Thus on a conspectus of the catena of cases decided by this Court the only conclusion follows is that Regulation 9(b) which confers powers on the authority to terminate the services of a permanent and confirmed employee by issuing a notice terminating the services or by making payment in lieu of notice without assigning any reasons in the order and without giving any opportunity of hearing to the employee before passing the impugned order is wholly arbitrary, uncanalised and unrestricted violating principles of natural justice as well as Article 14 of the Constitution.
It has also been held consistently by this Court that the Govern ment carries on various trades and business activity through the instrumentality of the State such as Government Company or Public Corporations.
Such Government Company or 265 Public Corporation being State 'instrumentalities are State within the meaning of Article 12 of the Constitution and as such they are subject to the observance of fundamental rights embodied in Part III as well as to conform to the directive principles in Part IV of the Constitution.
In other words the Service Regulations or Rules framed by them are to be tested by the touchstone of Article 14 of Consti tution.
Furthermore, the procedure prescribed by their Rules or Regulations must be reasonable, fair and just and not arbitrary, fanciful and unjust.
Regulation 9(b), therefore, confers unbridled, uncanalised and arbitrary power on the authority to terminate the services of a permanent employee without recording any reasons and without conforming to the principles of natural justice.
There is no guideline in the Regulations or in the Act, as to when or in which cases and circumstances this power of termination by giving notice or pay in lieu of notice can be exercised.
It is now well settled that the 'audi alteram partem ' rule which is es sence, enforces the equality clause in Article 14 of the Constitution is applicable not only to quasi judicial orders but to administrative orders affecting prejudicially the party in question unless the application of the rule has been expressly excluded by the Act or Regulation or Rule which is not the case here.
Rules of natural justice do not supplant but supplement the Rules and Regulations.
Moreover, the Rule of Law which permeates our Constitution demands that it has to be observed both substantially and procedure ly.
Considering from all aspects Regulation 9(b) is illegal and void as it is arbitrary, discriminatory and without any guidelines for exercise of the power.
Rule of law posits that the power to be exercised in a manner which is just, fair and reasonable and not in an unreasonable, capricious or arbitrary manner leaving room for discrimination.
Regula tion 9(b) does not expressly exclude the application of the 'audi alteram partern ' rule and as such the order of termi nation of service of a permanent employee cannot be passed by simply issuing a month 's notice under Regulation 9(b) or pay in lieu thereof without recording any reason in the order and without giving any hearing to the employee to controvert the allegation on the basis of which the purport ed order is made.
It will be profitable to refer in this connection the observations of this Court in the case of Union of India and Anr.
vs Tulsiram Patel and Ors., [1985] Supp.
(2) SCR 131 where the constitutionality of provisions of article 311 par ticularly the 2nd proviso to clause (2) of 'the said Article came up for consideration.
This Court referred to the find ings in Roshan Lal Tandon vs Union of India, ; wherein it was held that though the origin of a Govern ment service is contractual 266 yet when once appointed to his post or office, the Govern ment servant acquires a status and his rights and obliga tions are no longer determined by the consent of both the parties, but by statute or statutory rules which may be framed and altered unilaterally by the Government.
In other words, the legal position of a Government servant is more one of status than of contract.
The hall work of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement of the parties.
It has been observed that article 14 does not govern or control article 311.
The Constitution must be read as a whole.
article 311(2) embodies the principles of natural jus tice including audi alteram partem rule.
Once the applica tion of clause (2) is expressly excluded by the Constitution itself, there can be no question of making applicable what has been so excluded by seeking recourse to Article 14 of the Constitution.
In the case of Sukdev Singh & Ors.
vs Bhagatrarn Sardar Singh Raghuvanshi & Anr.
(supra), Mathew, J. pointed out that: "The governing power wherever located must be subject to the fundamental constitutional limitations.
" This has been referred to and relied upon in Central Inland Water Transport Corporation Ltd. and Anr.
vs Brojo Nath Ganguly and Anr.
(supra) and a similar Rule 9(i) was termed as "Henry VIII clause" as it confers arbitrary and absolute power upon the Corporation to terminate the service of a permanent employee by simply issuing a notice or pay in lieu thereof without recording any reason in the order and without giving any opportunity of hearting to the employee.
Thus, the Rule 9(i) of the Services Discipline and Appeal Rules, 1979 was held void under Section 23 of the , as being opposed to public policy and is also ultra vires of Article 14 of the Constitution to the extent that it confers upon the Corporation the right to terminate the employment of a permanent employee by giving him three months ' notice in writing or by paying him the equivalent of three months ' basic pay and dearness allowance in lieu of such notice.
Regulation 9(b) of the impugned Regulation framed under the Delhi Transport Corporation Act which is in pare materia with the said Rule 9(i) is void under Section 23 of the Contract Act as being opposed to public policy and is also ultra vires of Article 14 of the Constitution.
Another crucial question is to consider how far the impugned provisions of Regulation 9(b) framed under the Delhi Road Transport 267 Act can be read down in order to save it from unconstitu tionality.
Several decisions have been cited at the bar in order to impress upon the Court that the impugned provisions have been made for public purposes and for public interest and as such it should be read down in a manner that will save the said provisions from the on slaught of constitu tional invalidity.
In the case of Commissioner of Sales Tax, Madhya Pra desh, Indore and Ors.
vs Radhakrishnan and Ors.
, ; it has been held by this Court that for sustaining the presumption of constitutionality, the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived and can even read down this section.
It is convenient to mention here the meaning and scope of the word 'reading down ' and 'Severance ' dealt with on page 7, para B in Australian Federal Constitutional Law by Colin Howard which reads as follows: "The High Court presumes the validity of legislation to the extent that it will not of its own motion raise questions of constitutionality.
Legislation is treated as valid unless the parties to litigation challenge it on constitutional grounds.
The techniques of construction known as reading down and severance are corollaries of this presumption.
Reading down puts into operation the principle that so far as it is reasonably possible to do so, legisla tion should be construed as being within power.
It has the practical effect that where an Act is expressed in language of a generality which makes it capable, if read literally, of applying to matters beyond the relevant legislative power, the court will construe it in a more limited sense so as to keep it within power.
XX XX XX XX XX XX It does not necessarily follow that because a statute cannot be read down it is wholly invalid.
The presumption of valid ity leads naturally to the view that where a statute cannot be held wholly valid it should be held valid at least to the 268 extent that it is reasonably possible or practicable to do so.
Where reading down is not available the court next decides where there is a case for severing the invalid parts of the statute from the parts which, standing alone, are valid.
If this can be done the court declares only the invalid parts to be beyond power and leaves the remainder operative.
In Re The Hindu Women 's Rights to Property Act, 1937, and The Hindu Women 's Rights to Property (Amendment) Act, 1938 and in Re a Special Reference under Section 2 13 of the Government of India Act, 1935, the question arose whether the Hindu Women 's Rights to Property Act, 1937 (Central Act XVIII of 1937) and the Hindu Women 's Rights to Property (Amendment) Act, 1938 (Central Act XI of 1938), are applicable to agricultural land and what was the meaning of the word 'property '.
It was observed that: "When a Legislature with limited and restricted powers makes use in an Act of a word of such wide and general import as "property", the presumption must be that it is using it with reference to that kind of property with respect to which it is competent to legislate and to no other.
The word "proper ty" in the Hindu Women 's Right to Property Act must accord ingly be construed as referring to property other than agricultural land.
There is a general presumption that a Legislature does not intend to exceed its jurisdiction.
" In the case of R.M.D. Chamarbaugwalla vs The Union of India, ; the petitioners who had been promoting and conducting prize competitions in the different States of India, challenged the constitutionality of sections 4 and 5 of the (42 of 1955) and rr. 11 and 12 framed under section 20 of the Act on the grounds that prize competition as defined in section 2(d) of the Act included not merely competitions that were of a gambling nature but also those in which success depended to a substantial degree on skill and the sections and the rules violated their funda mental right to carry on business, and were unsupportable under Act.
19(6) of the Constitution, that they constituted a single inseverable enactment and, consequently.
must fail entirely.
It was held that validity of the restrictions imposed by sections 4 and 5 and rr 11 and 12 of the Act as re gards gambling competitions was no longer open to challenge under article 19(6) of the Constitution in view of the decision of this Court that gambling did not 269 fall within the purview of article 19(1)(g) of the Constitu tion.
It has been further observed that: "When a question arises as to the interpretation to be put on an enactment, what the Court has to do is to ascertain "the intent of them that make it" and that must of course.
be gathered from the words actually used in the statute.
To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act . .
To decide the true scope of the present Act, therefore, we must have regard to all such factors as can legitimately be taken into account in ascertaining the intention of the legislature, such as the history of the legislation and the purposes thereof, the mischief which it intended to suppress and the other provisions of the statute, and construe the language of section 2(d) in the light of the indications furnished by them." Having regard to the circumstances, it was held that the law which the State Legislatures moved Parliament to enact under article 252(1) was one to control and regulate prize competitions of a gambling character and as such it was held that the Act was valid It has been further observed that where the legislation falls in part within the area allotted to it and in part outside it, it is undoubtedly void as to the latter.
In the case of R. 1.
Arora vs State of Uttar Pradesh and Ors., ; challenge was thrown to the constitu tionality of the amendments made to Ss. 40, 41 and section 7 by the Land Acquisition Amendment Act (Act 31 of 1962) on the ground that it contravened article 31(2) inasmuch as it makes acquisition for a company before July 20, 1962 as being for a public purpose even though it may not be so in fact.
Section 7 was also challenged on the ground that it contra venes article 14 inasmuch as it makes an unreasonable discrimi nation in the matter of acquisition for a company before July 20, 1962 and after that date insolaf as the former acquisitions are validated on the basis of their being deemed to be for a public purpose while the latter acquisi tions are not so deemed and have to satisfy the test of public purpose.
it has been held that if the language of a provision of law is capable of only one construction and if according to that construction 270 the provision contravenes a constitutional provision it must be struck down.
A literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning of the words used.
It has been further held following the observa tions in The Mysore State Electricity Board vs Bangalore Woollen, Cotton and Silk Mills Ltd. & Ors., [1963] Supp.
2 SCR 127 that it is well settled that if certain provisions of law construed in one way will be consistent with the Constitution and if another interpretation would render them unconstitutional the court would bear in favour of the former construction.
In the case of Jagdish Pandey vs The Chancellor Univer sity of Bihar & Anr., ; 1 the challenge was to the constitutionality of section 4 of Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) (Amendment) Act 13 of 1962 as discriminatory and violative of article 14 of the Constitution.
It has been urged that section 4 confers uncana lised powers on the Chancellor without indicating any crite rion on the basis of which the power under section 4 can be exercised.
It has been observed that: " .
There is no doubt that if one reads section 4 literal ly it does appear to give uncanalised powers to the Chancel lor to do what he likes on the recommendations of the Com mission 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.
" Seervai in his book 'Constitutional Law of India ', Third Edition has stated at p. 119 that: " . the Court are guided by the following rules in discharging their solemn duty to declare laws passed by a legislature unconstitutional: (1) There is a presumption in favour of constitutionality and a law will not be declared unconstitutional unless the case is so clear as to be free from doubt; "to doubt the 271 constitutionality of a law is to resolve it in favour of its validity." . . . . . . . . . . . . . . . (6) A Statute cannot be declared unconstitutional merely because in the opinion of the Court it violates one or more of the principles of liberty, or the spirit of the Constitu tion, unless such principles and that spirit are found in the terms of the Constitution.
" On a proper consideration of the cases cited hereinbe fore as well as the observations of Seervai in his book 'Constitutional Law of India ' and also the meaning that has been given in the Australian Federal Constitutional Law by Coin Howard, it is clear and apparent that where any term has been used in the Act which per se seems to be without jurisdiction but can be read down in order to make it con stitutionally valid by separating and excluding the part which is invalid or by interpretting the word in such a fashion in order to make it constitutionally valid and within jurisdiction of the legislature which passed the said enactment by reading down the provisions of the Act.
This, however, does not under any cicumstances mean that where the plain and literal meaning that follows from a bare reading of the provisions of the Act, Rule or Regulation that it confers arbitrary, uncanlised, unbridled, unrestricted power to terminate the services of a permanent employee without recording any reasons for the same and without adhering to the principles of natural justice and equality before the law as envisaged in Article 14 of the Constitution, cannot be read down to save the said provision from constitutional invalidity by bringing or adding words in the said legisla tion such as saying that it implies that reasons for the order of termination have to be recorded.
In interpreting the provisions of an Act, it is not permissible where the plain language of the provision gives a clear and unambigu ous meaning can be interpreted by reading down and presuming certain expressions in order to save it from constitutional invalidity.
Therefore, on a consideration of the above decisions, it is impossible to hold by reading down the impugned provisions of Regulation 9(b) framed under section 53 of the Delhi Road Transport Act, 1950 read with Delhi Road Transport (Amendment) Act, 1971 that the said provision does not confer arbitrary, unguided, unrestricted and uncanalised power without any guidelines on the authority to terminate the services of an employee without conforming to the prin ciples of natural justice and equality as 272 envisaged in Article 14 of the Constitution of India.
I am, therefore, constrained to uphold the judgment of the Delhi High Court in C.W.P. No. 1422 of 1985 and dismiss Civil Appeal No. 2876 of 1986.
I allow Civil Appeal No.1115 of 1976 and agree with the order proposed to be passed thereon by the learned Chief Justice.
The other appeals as referred to in detail in the judgment of the learned Chief Justice be placed before the Division Bench of this Court to be dis posed of in accordance with the observations made herein.
I agree with conclusion arrived of by my learned brother K. Ramaswamy, J. SHARMA.J.
I have gone through the judgments prepared by the learned Chief Justice and by my other learned Brothers.
In view 01 the elaborate consideration by them of the ques tions raised by the parties, from both points of view.
I proceed to indicate my conclusions without further discus sion.
I agree with the learned Chief Justice that the rights of the parties in the present cases cannot be governed by the general principle of master and servant, and the manage ment cannot have unrestricted and unqualified power of terminating the services of the employees.
In the interest of efficiency of the public bodies, however.
they should have the authority to terminate the employment of undesira ble, inefficient, corrupt.
indolent and disobedient employ ees.
but it must be exercised fairly, objectively and inde pendently: and the occasion for the exercise must be delim ited with precision and clarity.
Further, there should be adequate reason for the use of such a power.
and a decision in this regard has to be taken in a manner which should show fairness.
avoid arbitrariness and evoke credibility.
And this.
in my view, is possible only when the law lays down detailed guidelines in unambiguous and precise terms so as to avoid the danger of misinterpretation of the situation.
An element of uncertainty is likely to lead to grave and undesirable consequences.
Clarity and precision are.
there fore.
essential for the guidelines.
Examining in this back ground, I am of the view that Regulation 9(b) of the Delhi Road Transport Authority (Condition of Appointment and Service) Regulation, 1952 cannot be upheld for lack of adequate and appropriate guidelines.
For these reasons Civil Appeal No. 2876 of 1986 is dismissed.
I also agree that the Civil Appeal No. 1115/76 should be allowed in the terms indicated in the judgment of the learned Chief Justice.
The other cases shall be placed before a division bench for final disposal.
273 SAWANT.
I had the advantage of reading the judg ments of the learned Chief Justice and B.C. Ray and K. Ramaswamy, JJ.
While with respect I agree with the conclu sion of the learned Chief Justice in Civil Appeal No. 1115/76, with utmost respect to him, I am unable to share his view of law on the subject in Civil Appeal No. 2876/86.
I am in respectful agreement with the view on the point expressed by Ray and Ramaswamy, JJ.
in the said Civil Ap peal.
I give my separate reasons for the same.
The only question involved in all these matters is whether the absolute power given to the Management of the public undertakings under their respective rules/regulations to terminate the services of an employee without assigning any reason, is constitutionally valid.
It is not necessary to refer to the facts and service rules in each case.
It will be sufficient if I reproduce hereinbelow the relevant service regulation of one of the public undertakings, viz., Delhi Transport Corporation (DTC ' for short) the validity of which is in question in the present case.
The said regulation being Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appoint ment & Service) Regulations, 1952 (hereinafter referred to as the "Regulations") reads as follows: Termination of service: (a) Except as otherwise specified in the appointment orders, the services of an employee of the Authority may be terminated without any notice or pay in lieu of notice: (i) During the period of probation and without assigning any reasons thereof, (ii) For misconduct, (;,ii) On the completion of specific period of appointment, (iv) In the case of employees engaged on contract for a specific period, on the expiration of such period in accord ance with the terms of appointment.
(b) Where the termination is made due to reduc tion of establishment or in circumstances other than those mentioned at (a) above, one month 's notice or pay in lieu 274 thereof will be given to all categories of employees.
(c) Where a regular/temporary employee wishes to resign from his post under the Authority he shall given three/one month 's notice in writing or pay in lieu thereof to the Authority provided that in special cases, the General Manager may relax, at his discretion, the condition regard ing the period of notice of resignation or pay in lieu thereof.
" It will be obvious from the provisions of clause (b) the above that it applies not only in the case of retrenchment of employees on account of reduction in the establishment but also in circumstances other than those mentioned in clause (a).
The circumstances mentioned in clause (a) are (i) probationary period, (ii) misconduct, (iii) completion of specific period of appointment and (iv) expiration of contractual period of appointment when the appointment is contractual.
In other words, when the management decides to terminate the services of an employee but not for his mis conduct 'or during his probation or because his tenure of appointment, contractual or otherwise, has come to an end, it is free to do so without assigning any reason and by merely giving either a notice of the specific period or pay in lieu of such notice.
Reduced to simple non technical language, clause (b) contains the much hated and abused rule of hire and fire reminiscent of the days of laissez faire and unrestrained freedom of contract.
There is no dispute that although the language differs, the substance of the relevant rules of the other public undertakings which are before us, is the same and hence what applies to Regulation 9(b) of the Regulations will apply equally to the relevant rules of the other undertakings as well.
The contentions advanced before us on behalf of the managements of the undertakings acknowledge at the very outset that such a service rule without anything further was not only ultra vires the Constitution but was indefensible in law even otherwise being opposed to the principles of natural justice vesting as it does the naked arbitrary power in the management.
The contention, however, was that the rule had to be read down to imply that the power vested by it could be exercised only in certain circumstances and for valid reasons and not otherwise.
It was further contended that the rigour of the rule is mitigated because the power granted by it is exercised by a high ranking officer.
It was also urged that the exercise of the said power can be con trolled by holding that it is open to scrutiny by the court, in individual cases.
In other words, the contention was that the rule by itself 275 is innocent and legal and its movements are properly con trolled being under elderly care.
Its occasional wayward behaviour in unguarded moments can be corrected by chastise ment by the courts.
But the rule, it was solemnly urged, was necessary since otherwise the management of the undertakings will be well high impossible.
The controversy before us thus lies in a narrow compass, viz., whether the rule whatever its admitted demerits, should continue to blot the statute book because it is necessary and will be used in certain circumstances only and its use in any other circumstances can be checked by the Court.
It can at once be discerned that at the bottom of all the lengthy ardent arguments lies an anxiety not to specify the circumstances under which the power given by the rule will be exercised on the spacious plea that such circum stances cannot be stated in advance and in the interests of the administration of the undertakings it is best that they are not so stated.
For once I thought that the framers of our Constitution had committed an irretrievable mistake by ignoring the interests of the Union and the State Govern ments and enumerating such circumstances in the second proviso to Article 311(2) of the Constitution.
But then I was mistaken.
The interests of the public undertakings appear to be more important than those of the Governments.
May be they are super Governments.
By claiming the privilege not to enumerate even the broad guidelines as contained in Article 311(2), the managements of the undertakings are indeed wearing a supercrown.
The posture adopted by them is all the more obdurate and untenable in law when they ask the court to read down the rule, and read in it circumstances under which the power can be used, but maintain that they will under no circumstances mend it nor should they be asked to do it, by incorporating in it those very circumstances.
With this prologue to the controversy, I may now examine the contentions advanced before us.
It is contended that it is necessary to retain the rule in its present ambiguous form because it is not possible to envisage in advance all the circumstances which may arise necessitating its use.
When we asked the learned counsel for the manage ments whether there were any circumstances which would not be governed by the broad guidelines given in the second proviso to subclause (2) of Article 311 of the Constitution, and why at least such intelligible guidelines should not be incorporated in the rule, we received no reply.
We could appreciate the embarrassment of the counsel, and as stated earlier.
there lies the nub of the matter.
What this Court in the various decisions has struck down is a similar rule in its present naked form without any guideline whatsoever, broad or 276 otherwise.
It was never the argument on behalf of the em ployees nor indeed is it to day before us that all the possible circumstances in which the rule may be used should be enumerated in it.
Their argument has been that at least the broad circumstances under which its exercise may become necessary should be incorporated to avoid an arbitrary use or rather the abuse of power, and to guarantee the security of employment.
That argument has been accepted by this Court in the past by holding that such a rule is violative of the Constitution and was not necessary to safeguard the inter ests of the undertakings or the interests of the public.
The decisions which appear to take an inconsistent view show on close analysis that either they were not dealing with the validity of the rule or were rendered when the dimensions of both Articles 14 and 21 were not expanded as they have been subsequently.
In the year 1990, it is not necessary for me to discuss in detail the authorities which have widened the horizons of Article 14 of the Constitution.
Some of these precedents are directly on the point in as much as the validity of similar service rules was considered there.
It is enough if I summarise the position of law as it obtains to day.
There is need to minimise the scope of the arbitrary use of power in all walks of life.
It is inadvisable to depend on the good sense of the individuals, however high placed they may be.
It is all the more improper and undesirable to expose the precious rights like the rights of life, liberty and property to the vagaries of the individual whims and fancies.
It is trite to say that individuals are not and do not become wise because they occupy high seats of power, and good sense, circumspection and fairness does not go with the posts, however high they may be.
There is only a complaisant presumption that those who occupy high posts have a high sense of responsibility.
The presumption is neither legal nor rational.
History does not support it and reality does not warrant it.
In particular, in a society pledged to uphold the rule of law, it would be both unwise and impoli tic to leave any aspect of its life to be governed by dis cretion when it can conveniently and easily be covered by the rule of law.
The employment under the public undertakings is a public employment and a public property.
It is not only the under takings but also the society which has a stake in their proper and efficient working.
Both discipline and devotion are necessary for efficiency.
To ensure both, the service conditions of those who work for them must be encouraging, certain and secured, and not vague and whimsical.
With capricious service conditions, both discipline and devotion are endan 277 gered, and efficiency is impaired.
The right to life includes right to livelihood.
The right to livelihood therefore cannot hang on to the fancies of individuals in authority.
The employment is not a bounty from them nor can its survival be at their mercy.
Income is the foundation of many fundamental rights and when work is the sole source of income, the right to work becomes as much fundamental.
Fundamental rights can ill afford to be con signed to the limbo of undefined premises and uncertain applications.
That will be a mockery of them.
Both the society and the individual employees, there fore, have an anxious interest in service conditions being well defined and explicit to the extent possible.
The arbi trary rules, such as the one under discussion, which are also sometimes described as Henry VIII Rules, can have no place in any service conditions.
These are the conclusions which flow from Sukhdev Singh & Ors.
vs Bhagatram Sardar Singh Raghuvanshi & Anr., ; ; Maneka Gandhi vs Union of India, [1978] 2 SCR 621; The Manager, Government Branch Press & Anr.
vs D.B. Felliappa; , ; Managing Director, Uttar Pra desh Warehousing Corporation & Anr.
vs Vinay Narayan Vajpay ee; , ; A.L. Kalra vs The Project & Equipment Corporation of India Limited, ; ; Workmen of Hindustan Steel Ltd. & Anr.
vs Hindustan Steel Ltd. & Ors.
, ; ; West Bengal State Electricity Board & Ors.
vs Desh Bandhu Ghosh & Ors., [1985] 2 SCR 1014; Olga Tellis & Ors.
vs Bombay Municipal Corporation & Ors.
etc., [1985] Supp. 2 SCR 51; Union of India & Anr.
vs Tulsiram Patel & Ors., [1985] Supp. 2 SCR 13 1; Central Inland Water Trans port Corporation Ltd. & Anr.
vs Brojo Nath Ganguly & Anr.
, ; O.P. Bhandari vs Indian Tourism Development Corporation Ltd. & Ors., ; ; N.C. Dalwadi vs State of Gujarat, ; M.K. Agarwal vs Gurgaon Gramin Bank & Ors., [1987] Supp.
SCC 643 and Daily Rated Casual Labour employed under P & T Department through Bhartiya Dak Tar Mazdoor Manch etc.
vs Union of India & Ors., 7.
Since, before us the rule in question which admitted ly did not lay down explicit guidelines for its use was sought to be defended only on two grounds, viz., that the power conferred by it is to be exercised only by high au thorities and that it is capable of being read down to imply circumstances under which alone it can be used, I need deal only with the said grounds.
278 8.
The "high authority" theory so called has already been adverted to earlier.
Beyond the self deluding and self asserting righteous presumption, there is nothing to support it.
This theory undoubtedly weighed with some au thorities for some time in the past.
But its unrealistic pretensions were soon noticed and it was buried without even so much as an ode to it.
Even while Shah, J. in his dissent ing opinion in Moti Ram Deka etc.
vs General Manager, N.E.P. Railways, Maligaon, Pandu, etc.
; , had given vent to it, Das Gupta, J. in his concurring judgment but dealing with the same point of unguided provisions of Rule 148(3) of the Railway Establishment Code, had not supported that view and had struck down the rule as being violative of Article 14 of the Constitution.
The majority did not deal with this point at all and struck down the Rule as being void on account of the discrimination it introduced between railway servants and other government servants.
The reliance placed on the decision in Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar & Ors., ; to support the above theory is also according to me not correct.
As has been pointed out there, the Commission of Inquiry Act, 1952, the validity of which was challenged on the ground of unguided powers to institute inquiries, was not violative of Article 14 because the long title and Section 3 of the Act had contained sufficient guidelines for exercise of the power.
Section 3 has stated that the appro priate government can appoint a Commission of Inquiry only for the purpose of making inquiry into any definite matter of public importance.
It is in the context of this guideline in the Act, that it is further stated there that even that power is to be exercised by the government and not any petty official.
Hence a bare possibility that the power may be abused cannot per se invalidate the Act itself.
The proposi tion of law stated there is to be read as a whole and not in its truncated form.
The authority does not lay down the proposition that even in the absence of guidelines, the conferment of power is valid merely because the power is to be exercised by a high official.
It must further be remem bered that in this case, the contention was that although the appropriate government was given power to appoint Com mission of Inquiry into any definite matter of public impor tance, the delegation of power was excessive since it was left to the government to decide for itself in each case what constituted such matter.
The court repelled the argu ment by pointing out that "definite matter of public impor tance" constituted sufficient guideline to the government.
It was not, therefore, a case of no guideline but of the absence of details of the guideline.
279 Of similar nature is the reliance placed on the decision in The Collector of Customs, Madras vs Nathella Sampathu Chetty & Anr., ; for the proposition that the possibility of the abuse of the powers is no ground for declaring the provision to be unreasonable or void.
The relevant observations are made while repelling the conten tion there that the burden thrown under provisions of Sec tion 178A of the on the possessor of the goods to show that they were not smuggled was violative of Article 19(1)(f) and (g) of the Constitution.
The obser vations are as follows: "The possibility of abuse of a statute otherwise valid does not impart to it any element of invalidity.
The converse must also follow that a statute which is otherwise invalid as being unreasonable cannot be saved by its being adminis tered in a reasonable manner.
The constitutional validity of the statute would have to be determined on the basis of its provisions and on the ambit of its operation as reasonably construed.
If so judged it passes the test of reasonable ness, possibility of the powers conferred being improperly used is no ground for pronouncing the law itself invalid and similarly if the law properly interpreted and tested in the light of the requirements set out in Part III of the Consti tution does not pass the test it cannot be pronounced valid merely because it is administered in a manner which might not conflict with the constitutional requirements.
In saying this we are not to be understood as laying down that a law which might operate harshly but still be constitutionally valid should be operated always with harshness or that reasonableness and justness ought not to guide the actual administration of such laws.
" The statute there was saved by the provisions of Article 19(6) of the Constitution and was otherwise valid.
It was not a case of a provision which was constitutionally invalid being saved by recourse to the spacious assumption of its reasonable exercise in individual cases.
In Tata Oil Mills Co. Ltd. vs Workmen & Anr., ; , it was a case of an employee of a private company who was given a discharge simpliciter.
This Court following its earlier decisions on the point observed that in several cases, contract of employment or Standing Orders authorise an industrial employer to terminate the employee 's service by giving one month 's notice or salary of one month in lieu of notice and normally an employer may, in a proper 280 case be entitled to exercise the power.
But where such order gives rise to an industrial dispute, the form of the order would not be decisive and the industrial adjudicator would be entitled to probe it to find out whether it is mala fide or is made in colourable exercise of the power.
Being a private employment, the power so conferred was not as sailed on the ground that it violated Article 14 of the Constitution.
I fail to understand the reliance placed on this authority to support the appellants ' case before us.
The other authorities relied on behalf of the appellants have similarly no relevance to the point.
In Jyoti Pershad vs The Administrator for the Union Territory of Delhi, ; , the Slum Clearance Act which was challenged there contained enough guidelines for the exer cise of the power.
In Municipal Corporation of Greater Bombay vs P.S. Malvenkar & Ors., ; , Order 26 of the Standing Orders and Service Regulations which was in question there required reasons to be given for effecting termination simpliciter of an employee.
In Organo Chemical Industries & Anr.
vs Union of India & Ors.
, ; , Section 143 of the Provident Fund Act which was challenged was held to be valid since the Act contained enough guide lines for imposing penal damages.
In Champaklal Chimanlal Shah vs The Union of India, , Rule 5 of the Central Civil Services (Temporary Services) Rules, 1949 was challenged on the ground that it discriminated between temporary and permanent employees.
There was no challenge to the absolute power given by the said rule to terminate the services of temporary employees.
In Ram Gopal Chaturve di vs State of Madhya Pradesh; , , it was a case of termination of a temporary Government servant 's services.
In Air India Corporation, Bombay vs V.A. Rebellow & Anr., ; , the challenge was to the termina tion of services on the ground that it was done in colour able exercise of power under Regulation 48 of the Air India Employees ' Service Regulations.
The said regulation was not challenged on the ground that it gave unchannelised and unguided power of terminating the services of employees.
In Hira Nath Mishra & Ors.
vs The Principal, Rajendra Medical College, Ranchi and Anr.
, , it was the case of the expulsior of students from college for two academic sessions pursuant to the order passed by the Principal of that college.
The expulsion was effected following a confi dential complaint received from 36 girl students residing in the girls ' hostels alleging that the students in question d entered the compound of the girls ' hostels at belated night and walked without clothes on them.
The students were heard but the evidence of the girls was not recorded in their presence.
281 The Court held that under the circumstances the requirements of natural justice were fulfilled since the principles of natural justice were not inflexible and differed in differ ent circumstances.
I have not been able to appreciate the relevance of this decision to the point in issue.
I may now deal with the second contention vehemently urged on behalf of the appellants.
The contention was that if it is possible to save a legislation by reading it down to read in it words, expressions or provisions, it should not be struck down.
In order to save the present rule, it was urged on behalf of the appellants that the Court should read in it circumstances under which alone it can be used.
What precise circumstances should be read in it, however, was not stated by the learned counsel.
I am afraid that the doctrine of reading down a statute has been wrongly pressed into service in the present case.
The authorities relied upon by the learned counsel for the appellants not only do not help the appellants but go against their case.
It would be better if I first deal with the authorities cited at the Bar for they will also bring out the correct meaning and application of the said doctrine as well as its limitations.
In Re The Hindu Women 's Rights to Property Act, 1937, and the Hindu Women 's Rights to Property (Amendment) Act, 1938 etc.
, [19411 FCR 12 what fell for consideration was whether the said two Act which were the Central pieces of legislation operated to regulate succession to agricultural land in the then Governors ' Provinces.
Admittedly, under the scheme of the then Government of India Act, 1935, after April 1, 1937, the Central Legislature was precluded from dealing with the subjects numerated in List II of the 7th Schedule so far as the Governors ' Provinces were concerned.
Laws with respect to the "devolution of agricultural land" could be enacted only by the Provincial Legislatures (Entry No. 21 of List II) and wills, intestacy and succession, save as regards agricultural land appeared as Entry No. 7 of List III, i.e., the Concurrent List.
Hence, it was obvious that the said Acts enacted as they were by the Central Legisla ture could not have dealt with succession to agricultural land so far as the Governors ' Provinces were concerned.
It is in these circumstances that the Federal Court read the two Acts of 1937 and 1938 as being not operative to regulate succession to agricultural land in the Governors ' Provinces but operative to regulate devolution by survivorship of property other than agricultural land.
It will thus be obvious that the limited purpose for which the doctrine of reading down was called into play in that case was to ex clude from the purview of the Act a subject which was not within the competence of the legislature which had enacted it.
282 In Nalinakhya Bysack vs Shyam Sunder Haldar & Ors.
, ; the expression "decree for recovery of pos session" in Section 18(1) of the West Bengal Premises Rent Control (Temporary Provisions) Act (XVII of 1950) fell for consideration, and the controversy was whether it included also an order for recovery of possession made under Section 43 of the Presidency Small Cause Court Act, 1882 and hence a person against whom an order under the latter provision was made was not entitled to claim relief under the former provision.
In that connection the Court observed as follows: "It must always be borne in mind, as said by Lord Halsbury in Commissioner for Special Purposes of Income Tax vs Pem sel, LR 189 1 AC 53 1 at p. 549, that it is not competent to any Court to proceed upon the assumption that the Legisla ture has made a mistake.
The Court must proceed on the footing that the Legislature intended what it has said.
Even if there is some defect in the phraseology used by the Legislature the Court cannot, as pointed out in Crawford vs Spooner; , ; 4 MIA 179; aid the Legislature 's defective phrasing of an Act or add and amend or, by con struction, make up deficiencies which are left in the Act.
Even where there is a casus omissus, it is, as said by Lord Russel of Killowen in Hansraj Gupta vs Official Liquidator of Dehra Dun Mussoorie Electric Tramway Co. Ltd., [1933] LR 60 IA 13; AIR 1953 PC 63 for others than the Courts to remedy the defect.
In our view it is not right to give to the word "decree" a meaning other than its ordinary accepted meaning and we are bound to say, in spite of our profound respect for the opinions of the learned Judges who decided them, that the several cases relied on by the respondent were not correctly decided." In R.M.D. Chamarbaugwalla vs The Union of India, ; , more or less a similar situation arose.
The Parlia ment had enacted the to provide for the control and regulation of the prize competitions, and Section 2 of the Act had defined "Prize Competitions" to mean "any competition (whether called a crossword prize competition, a missing word competition, a picture prize competition or by any other name), in which prizes are offered for the solution of any puzzle based upon the build ing up, arrangement, combination or permutation of letters, words or figures".
The validity of.the restrictions imposed by the Act was challenged as going beyond Article 19(6) of the Constitution.
The Court took a recourse to the 283 doctrine of reading down and held that the definition of prize competition given in Section 2(d) of the Act had in view only such competitions as were of gambling nature and no others.
The Court further held there that in interpreting an enactment the Court should ascertain the intention of the legislature not merely from a literal meaning of the words used but also from such matters as the history of the legis lation, its purpose and the mischief which it seeks to suppress.
In Kedar Nath Singh vs State of Bihar, [1962] Supp.
2 SCR 769, the challenge was to the constitutional validity of Section 124A of the Indian Penal Code.
Two views were before this Court with regard to the ambit of the said section.
One which held that words, deeds or writings constituted the offence of sedition under the said section only when they had the intention or tendency to disturb public tranquility, to create public disturbance or to promote disorder.
The other view was that it was not an essential ingredient of the offence of sedition under the said section that the words, deeds or writings should be intended to or be likely to incite public disorder.
The latter view of the section would have rendered it unconstitutional.
It is in these circumstances that this Court held that the former view ' should be taken which would render the said section consti tutional.
The Court in that connection also further held that keeping in mind the reasons for the introduction of the said section and the history of sedition the former view was the correct interpretation of the ambit of the said section.
In R.L. Arora vs State of Uttar Pradesh & Ors.
, ; , the validity of Sections 40 and 41 of the Land Acquisition Act, 1894, and of Section 7 of the Amending Act, was similarly upheld by placing on them construction which would render them constitutional.
The relevant provisions were construed to mean that where land is acquired for the construction of a building or work which subserves the public purpose of the industry or work in which a company is engaged or is about to be engaged, it can be said that the land was acquired for a public purpose.
In Jagdish Pandey vs The Chancellor, University of Bihar & Anr.
; , Section 4 of the Bihar State Uni versities (University of Bihar, Bhagalpur and Ranchi) (Amendment) Act 13 of 1962 was called in question as being violative of Article 14 of the Constitution on the ground that the said section did not make any provision for giving the teacher a hearing before passing the order thereunder.
By that section, every appointment, dismissal etc.
of any teacher of a college affiliated to the University (but not belonging to 284 the State) made on or after 27th November, 1961 and before 1st March, 1962 was to be subject to such order as the Chancellor of the University may on the recommendation of the University Service Commission established under Section 48 of the said Act pass with respect thereto.
The Court held that the said section was not invalid on the ground of unchannelised power given to the Chancellor because it never authorised the Chancellor to scrutinise the relevant ap pointments for satisfying himself that they were in accord ance with University Act and its Statutes etc.
The Court further held that although the said section did not make a provision for giving the teacher a hearing before passing order thereunder, such hearing must be read in the said section which the Commission had to give according to the principles of natural justice before making its recommenda tions to the Chancellor.
In Shri Umed vs Raj Singh & Ors., ; , one of the questions which fell for consideration was whether the expression "to withdraw or not to withdraw from being a candidate" referred to the stage of withdrawal of candida ture under Section 37 and whether it applied to a situation where a contesting candidate announced that he does not wish to contest the election or declared his intention to sit down after the last date for withdrawal of candidature under Section 37 had passed.
Over ruling its earlier decision in Mohd. Yunus Salim 's case AIR 1974 SC 12 18, the Court held that the function of the Court is to gather the intention of the legislature from the words used by it, and it would not be right for the Court to attribute an intention to the legislature which though not justified by the language used by it, accords with what the Court conceives to be reason and good sense and then bend the language of the enactment so as to carry out such presumed intention of the legisla ture.
For the Court to do so would be to overstep its lim its.
The Court also held that the words used by the legisla ture must be construed according to their plain natural meaning, and in order to ascertain the true intention of the legislature, the Court must not only look at the words used by the legislature but should also have regard to the con text and the setting in which they occur.
The word "context" has to be construed in a wide sense to mean all the provi sions of the Act which bear upon the same subject matter and these provisions have to be read as a whole and in their entirety each throwing light and illumining the meaning of the other.
In Sunil Batra etc.
vs Delhi Administration & Ors., it was held that under Section 30(2)of the which provided that a prisoner under sentence of death shall be confined in a 285 cell apart from all other prisoners, did not mean that he has to be confined cellularly or separately from the rest of the prisoners so as to put him in a solitary confinement.
The said expression had a restricted meaning and it only meant that such a prisoner has to be kept in a separate cell but one which is not away from the other cells.
Thus, the said expression, viz. "shall be confined in a cell apart from all other prisoners" in the said provision was read down to exclude solitary confinement.
In Excel Wear etc.
vs Union of India & Ors.
, ; , one of the questions before this Court was whether the Court could read in Section 25 O (2) of the that it was incumbent on the authority to give reasons in his order for refusing permission to close down the undertaking.
The Court answered it in the negative.
Although in the discussion that follows explicit reasons for the same are not found, it is legitimate to presume that the Court did not accept the said contention because of the clear and explicit language of the said section.
In Minerva Mills Ltd. & Ors.
vs Union of India & Ors.
, ; , the majority judgment has discussed the limitations of the doctrine of reading down which is rele vant for our purpose.
In that case, it was contended on behalf of the State that Article 31C should be read down so as to save it from the challenge of unconstitutionality and it was urged that it would be legitimate to read into that Article the intendment that only such laws would be immu nised from the challenge under Article 14 and 19 as did not damage or destroy the basic structure of the Constitution.
The Court opined that "to do so in that case would involve a gross distortion of the principle of reading down depriving that doctrine of its only or true rationale when words of width are used inadvertently." According to the Court, "the device of reading down is not to be resorted to in order to save the susceptibilities of the law makers, nor indeed to imagine a law of one 's liking to have been passed.
One must at least take the Parliament at its word when, especially, it undertakes a constitutional amendment . . . .
If the Parliament has manifested a clear intention to exercise an unlimited power, it is impermissi ble to read down the amplitude of that power so as to make it limited.
The principle of reading down cannot be invoked or applied in opposition to the clear intention of the legislature.
We suppose that in the history of the constitu tional law, no constitutional amendment has ever been read down to mean the exact opposite of what it says and intends.
In fact, to accept the argument that we should read down Article 31C, so as to make it 286 conform to the ratio of the majority decision in Kesavananda Bharati, is to destroy the avowed purpose of Article 31C as indicated by the very heading "Saving of certain laws" under which Articles 31, 3 lB and 31C are grouped.
Since the amendment to Article 31C was unquestionably made with a view to empowering the legislatures to pass laws of a particular description even if those laws violate the discipline of Articles 14 and 19, it seems to us impossible to hold that we should still save Article 3 iC from the challenge of unconstitutionality by reading into that Article words which destroy the rationale of that Article and an intendment which is plainly contrary to its proclaimed purpose." The Court then dealt with the argument of the learned Additional Solicitor General who contended that it was still open to the Court under Article 3 IC of the Constitution to decide whether the law enacted pursuant to it secured any of the Directive Principles of the State Policy and whether the object of the Directive Principles could not be secured without encroaching upon the Fundamental Rights and the extent to which encroachment was necessary and whether such encroachment violated the basic structure of the Constitu tion.
The Court opined that this argument was open to the same criticism to which the argument of Attorney General was open and that "it would be sheer adventurism of a most extraordinary nature to undertake the kind of judicial enquiry which according to the learned Additional Solicitor General, the courts are free to undertake." The Court fur ther held that in the very nature of things it was difficult for a court to determine whether a particular law gave effect to a particular policy and whether a law was adequate enough to give effect to that policy.
It was pointed out by the Court that it was not possible for the Court to set aside the law so enacted as invalid merely because in the opinion of the Court, the law was not adequate enough to give effect to that policy.
The Court further pointed out that "the only question open to judicial review was whether there was a direct and reasonable nexus between the impugned law and the provisions of the Directive Principles.
The reasonableness was to be examined with regard to such nexus and not with regard to the impugned law.
Hence, it was not open to the Court to undertake the kind of enquiry suggested by the Additional Solicitor General.
That would involve an extensive judicial review which was impermissible in law." The Court then pointed out that where the express words of the statute are clear and intended to give power without limitation, the statute cannot be saved by reading into them words and intendment of a diametrically opposite meaning and content.
The Court opined that provisions such as these provide a 287 striking illustration of the limitations of the doctrine of reading down.
In Union of India & Anr.
vs Tulsiram Patel etc.
; , the majority judgment asserts that when the statute expressly excludes the rule of audi alteram partem, there is no scope for reintroducing it by a side door to provide the enquiry which has been expressly prohibited.
In Elliott Ashton Welsh, II vs United States, ; ; 26 L. ed.
2nd 308 while making useful observations on the doctrine of reading down and of recasting the statute, in his concurring opinion Harlan, J. stated as follows: "When the plain thrust of a legislative enactment can only be circumvented by distortion to avert an inevita ble constitutional collision, it is only by exalting form over substance that one can justify this veering off the path that has been plainly marked by the statute.
Such a course betrays extreme skepticism as to constitutionality, and, in this instance, reflects a groping to preserve the conscientious objector exemption at all cost.
I cannot subscribe to a wholly emasculated con struction of a statute to avoid facing a latent constitu tional question, in purported fidelity to the salutary doctrine of avoiding unnecessary resolution of constitution al issues, a principle to which I fully adhere.
It is, of course, desirable to salvage by construction legislative enactments whenever there is good reason to believe that Congress did not intend to legislate consequences that are unconstitutional, but it is not permissible, in my judgment, to take a lateral step that robs legislation of all meaning in order to avert the collision between its plainly intended purpose and the commands of the Constitution.
It must be remembered that although this Court will often strain to construe legislation so as to save it against constitutional attack, it must not and will not carry this to the point of perverting the purpose of a statute . or judicially rewriting it.
To put the matter another way, this Court will not consider the abstract question of whether Congress might have enacted a valid statute but instead must ask whether the statute that Con gress did enact will 288 permissibly bear a construction rendering it free from constitutional defects.
The issue comes sharply into focus in Mr. Justice Cardozo 's statement for the Court in Moore Ice Cream Co. vs Rose; , ,379; 77 L ed.
1245, 1270: 'A statute must be construed, if fairly possi ble, so as to avoid not only the conclusion that it is unconstitutional, but also grave doubts upon that score. ' .
But avoidance of a difficulty will not be pressed to the point of disingenuous evasion.
Here the intention of the Congress is revealed too distinctly to permit us to ignore it because of mere misgivings as to power.
The problem must be faced and answered.
" If an important congressional policy is to be perpetuated by recasting unconstitutional legislation, as the prevailing opinion has done here, the analytically sound approach is to accept responsibility for this decision.
Its justification cannot be by resort to legislative intent, as that term is usually employed, but by a different kind of legislative intent, namely the presumed grant of power to the courts to decide, whether it more nearly accords with Congress ' wishes to eliminate its policy altogether or extend it in order to render what Congress plainly did intend, constitutional.
It is thus clear that the doctrine of reading down or of recasting the statute can be applied in limited situa tions.
It is essentially used, firstly, for saving a statute from being struck down on account of its unconstitutionali ty.
It is an extention of the principle that when two inter pretations are possible one rendering it constitutional and the other making it unconstitutional, the former should be preferred.
The unconstitutionality may spring from either the incompetence of the legislature to enact the statute or from its violation of any of the provisions of the Constitu tion.
The second situation which summons its aid is where the provisions of the statute are vague and ambiguous and it is possible to gather the intentions of the legislature from the object of the statute, the context in which the provi sion occurs and the purpose for which it is made.
However, when the provision is cast in a definite and unambiguous language and its intention is clear, it is not permissible either to mend or bend it even if such recasting is in accord 289 with good reason and conscience.
In such circumstances, it is not possible for the Court to remake the statute.
Its only duty is to strike it down and leave it to the legisla ture if it so desires, to amend it.
What is further, if the remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided.
One of the situations further where the doctrine can never be called into play is where the statute requires an extensive additions and deletions.
Not only it is no part of the court 's duty to undertake such exercise, but it is beyond its jurisdiction to do so.
Judged in the context of the above principles I am of the view that the doctrine cannot be availed of for saving the present regulation In the first instance, the regulation is a part of the service regulations of the employees made by the Delhi Road Transport Authority in exercise of the powers conferred by sub section (1) read with clause (c) of sub section (2) of Section 53 of the Delhi Road Transport Act, 1950 (hereinafter referred to as the "Act").
The object of the Act is to provide for the establishment and the regulation of Road Transport Authority for the promotion of a co ordinated system of road transport in the State of Delhi.
There is nothing either in the object of the service regulations of which the present regulation is a part or in the object of the Act which has a bearing on the said Regulation 9(b).
If anything, the object of the Act would require framing of such service regulations as would ensure dedicated and diligent employees to run the undertak ing.
The dedication of the employees would pre suppose security of employment and not a constant hanging of the Democle 's sword over their head, and hence would in any case not bear the existence of such regulation.
Secondly, the language of the regulation is so crystal clear that no two interpretations are possible to be placed on it and hence it is not permissible to read in it any meaning other than what is clearly sought to be conveyed by it.
Thirdly, the context of the said regulation makes it abundantly clear that it is meant to be a naked hire and fire rule and the authority has been vested with unguided and arbitrary power to dispense with the services of any category of the employees.
Sub clause (a) of the said Regulation 9 mentions elaborately the circumstances in which the services of an employee can be terminated without any notice or pay in lieu of such notice.
Sub clause (b) follows closely on its heel and states in clear language that when the termination is made due to reduction of establishment or in circumstances other than those mentioned in subclause (a), one month 's notice or pay in lieu thereof is all that is necessary to be given for terminating an employee 's services.
The intention of the rule making authority, therefore, is more than clear.
It 290 was to give an absolute free hand without any limitations whatsoever to terminate the services of any employee.
Both the language of the regulation as well as the context in which it is cast leave no scope for reading into it any further provision.
What is more, the kind of recasting which is suggested on behalf of the appellants would not only distort the intention of the rule making authority but would also require extensive amendment to it of a very vague nature.
The appellants suggest firstly that we should read into the regulation a provision that the concerned employee would be given a hearing.
The suggestion itself begs the question: Hearing for what? Is he to be heard with regard to his misconduct? If so, it will require that he should first be intimated of the misconduct of which he is guilty.
But that kind of a situation is taken care of by sub clause (a) of the said regulation.
There is, therefore, no need of a separate provision for the same.
If, on the other hand, the services of an employee are to be terminated on grounds other than those mentioned in sub clause (a), then those grounds being unknown to the employee, cannot be met by him even if he is given a hearing.
The reading in the rule of a mere provision of a hearing is, therefore, meaningless.
The other suggestion made on behalf of the appellants is still more objectionable.
The suggestion was that we should read in the rule all circumstances where it is not possible or necessary to hold an enquiry.
1 thought that such situations are capable of being formulated easily and conveniently at least in general terms as is done by the Constitution makers in the second proviso to Article 311(2).
In fact, one of the public undertakings viz., Indian Airlines has come out with such regulation being amended Regulation 13 of its Employ ees ' Service Regulations, and the same has been placed on record by them.
What is necessary to note in this connection is that the reading of such circumstances in the existing regulation would require its extensive recasting which is impermissible for the Court to do.
1 know of no authority which supports such wide reading down of any provision of the statute or rule/regulation.
For all these reasons the doctrine of reading down is according to me singularly inapplicable to the present case and the arguments in sup port of the same have to be rejected.
I am, therefore, of the view that there is no sub stance in this appeal.
I would rather that the long departed rule rests in peace at least now.
Hence I dismiss Civil Appeal No. 2876/86 with costs.
1 allow Civil Appeal No. 1115 of 1976 and agree with the order proposed to be passed therein by the learned Chief Justice.
291 The rest of the civil appeals, and Special Leave Peti tion (Civil) No. 7612 of 1987 be referred to the Division Bench for disposal in accordance with the opinion expressed in Civil Appeal No. 2876 of 1986 hereinabove.
The applica tion for intervention are allowed.
K. RAMASWAMY, J: 1.
These batch cases concern, a refer ence.
the correctness of the ratio rendered in Central Inland Water Transport Company Limited vs Brojonath Ganguly, = (for short Brojo Nath).
The facts in C.A. No. 2886/86 lie in a short compass and sufficient for deciding the controversy are stated thus: 2.
The Delhi Transport Corporation, a statutory body terminated the services of its three permanent employees, the Conductor (R. 2), Asstt.
Traffic Incharge (R. 3), and the Driver (R. 4) for their alleged inefficiency, by exer cising the power of Regulation 9(b) of Delhi Road Transport Authority (Conditions of appointment and Services) Regula tion, 1952 (for short "the Regulation") framed under section 53 of the Delhi Road Transport Act, 1950 read with Delhi Transport (Amendment) Act, 1971 (for short "the Act").
The first respondent union assailed the validity of the Regula tion which the High Court of Delhi struck it down as offend ing Articles 14 and 16 of the Constitution.
The High Court solely relied on the ratio in Brojo Nath whose correctness is the subject of the reference: My learned brother, My Lord the Chief Justice extensively stated the argument of the counsel on either side.
Therefore, to avoid needless burden on this judgment, I consider it redundant to reiterate them once over.
Regulation 9(b) of the Regulations read thus: Termi nation of Services: "Whether the termination is made due to reduction of establishment or in circumstances other than those mentioned in (a) above, one.
month 's notice or pay in lieu thereof will be given to all categories of employees" as is similar to Rule 9 of the Rules in Brojo Nath 's case (supra) which this Court declared to be Henry VIII clause, conferring an absolute, arbitrary and unguided power upon that Corporation and was held to be ultra vires of the provisions of the Constitution and was void under section 23 of the .
As stated earlier, the correctness thereof is the primary question in these appeals.
Sri Ashok Desai, the learned Solicitor General vehe mently contended that, under ordinary law of "master and servant" the 292 Corporation is empowered by the Contract of Service to terminate the services of its employees in terms thereof.
The declaration in Brojo Nath 's case that such a contract is void, under section 23 of the or opposed to public policy offending the Fundamental Rights and the Directive Principles, is not sound in law.
He contends that as a master the Corporation has unbridled right to terminate the contract in the interests of efficient functioning of the Corporation or to maintain discipline among its employ ees.
The termination, if is found to be wrongful, the only remedy available to the employees is to claim damages for wrongful termination but not a declaration as was granted in Brojo Nath 's case.
In support thereof, he cited passages from Chitti on Contract, Halsbury 's Laws of England and the ratio in Union of India vs Tulsiram PateI, [1985] Supp.
2 SCR 131 = AI He also placed strong reliance on Industrial Law and the decisions of this Court cited by my learned brother, the Chief Justice.
Alternatively he contended that the relevant regulations would be read down so as to be consistent with articles 14 and 16(1) read with article 19(1)(g) of the Constitution and the authority invested with such power could in an appropriate case, report to terminate the services of an employee expeditiously without recourse to an elaborated enquiry and opportunity of hear ing.
The latter contention of reading down the relevant rules received support from the learned Attorney General Sri Soli J. Sorabjee and other counsel appearing for the employ ers.
M/s. M.K. Ramamurthi, R.K. Garg, and P.P. Rao, learned counsel appearing for the employees resisted these conten tions.
The main controversy centres round the question whether the employer, Statutory Corporation or instrumental ity or other authority under article 12 of the Constitution has unbridled power to terminate the services of a permanent employee by issue of notice or pay in lieu thereof without inquiry or opportunity, in exercise of the power in terms of contract which include statutory Rules or Regulations or instructions having force of law.
It is undoubted that under ordinary law of master and servant, whether the contract of service is for a fixed period or not, if it contains a provisions for termination of service by notice, in terms thereof, it can be so determined and if the contract finds no provisions to give notice and the contract of service is not for a fixed period, law implies giving of a reasonable notice.
Where no notice or a reasonable notice was issued, before terminating the contract, the termination of the contract of service is wrongful and the aggrieved employee is entitled at law to sue for damages.
But this common law principle could be applied to the employees, appointed by a Statutory Corporation or authority or an instrumentality within 293 the meaning of Article 12 of the Constitution is the square question.
It is not disputed that Delhi Road Transport Corporation is a Statutory Corporation under the Act and the Regulations are statutory and its employees are entitled to the fundamental Rights enshrined in Part III of the Consti tution.
It is well settled law by a heed role of decisions of this Court that the Corporation or a Statutory Authority or an instrumentality or other authority under article 12 of the Constitution is not free, like an ordinary master (a private employer), to terminate the services of its employ ees at its whim or caprices or vagary.
It is bound by the Act and the Regulation and the paramount law of the land, the Constitution.
Nature of the Power Statutory Authority to terminate the services of its employees.
In Sukhdev Singh vs Bhagatram, ; = ; , the Constitution Bench of this Court put a nail in the coffin of the play of the private master 's power to hire and fire his employees and held that Regula tions or Rules made under a Statute apply uniformly to everyone or to all members of the same group or class.
They impose obligations on the statutory authorities who cannot deviate from the conditions of service and any deviation will be enforced through legal sanction of declaration by Courts to invalidate the actions in violation of the Rules or Regulations.
The statutory bodies have no free hand in framing the terms or conditions of service of their employ ees.
The Regulations bind both the authorities and also the public.
The powers of the statutory bodies are derived, controlled and restricted by the Statutes which create them and the Rules and Regulations framed thereunder.
The Stat ute, thereby fetters on the freedom of contract.
Accordingly declaration was granted that dismissal or removal of an employee by statutory Corporation in contravention of statu tory provision as void.
Mathew, J. in a separate but concur rent judgment held that a Public Corporation being the creation of a Statute is subject to statutory limitations as a State itself.
The preconditions of this Part II viz., that the corporation is created by Statute and the existence of power in the corporation is to invade a statutory right of the individual.
Therefore, the governing power must be subject to fundamental statutory limitations.
The need to subject the power centres to the control of the Constitution requires an expansion of concept of State action.
The duty of State is affirmative duty seeing that all essentials of life are made available to all persons.
The task of State today is to make the achievement of good life both by remov ing obstacles in the path of such achievement and by assist ing individual in realis 294 ing his ideal of self perfection.
The employment under public corporation is a public employment and, therefore, the employee should have the protection which appurtains to public employment.
(emphasis supplied).
The Court must, therefore, adopt the attitude that declara tion is a normal remedy for a wrongful dismissal in case of public employees which can be refused in exceptional circum stances.
The remedy of declaration should be a remedy made an instrument to provide reinstatement in public sector.
This principle was extended to numerous instances where the termination of services of the employees of a statutory corporation was affected in violation of the principles of natural justice or in transgression of the statutory rules etc.
In U.P. State Warehousing Corporation vs N.V. Vajpayee, at p 780 F to G and 783G to 784A this Court held that statutory body cannot terminate the services of its employees without due enquiry held in accordance with the principles of natural justice.
The persons in public employment are entitled to the protection of Articles 14 and 16 of the Constitution, when the service was arbitrarily terminated.
The question, therefore, is whether the statuto ry corporations are entitled to be invested with absolute freedom to terminate the services of its employees in terms of the contract of service.
In Ramana vs International Airport Authority of India, ; = (1979) SC.
p. 1628 this Court held that expression of welfare and social service functions necessitates the State to assume control over natural and economic resources and large scale natural and commercial activities.
For the attainment of socio economic justice, there is vast and notable increase of frequency with which ordinary citizens come into relationship of direct encoun ters with the State.
The Government in a welfare state is the regulator and dispenser of social services and provider of large number of benefits, including jobs etc.
Thousands of people are employed in Central/State Government Services and also under local authorities.
The Government, therefore, cannot act arbitrarily.
It does not stand in the same posi tion as a private individual.
In a democratic Government by rule of law, the executive Government or any of its officers cannot held to be possessed of arbitrary power over the interests of the individuals.
Every action of the Government must be informed with reason and should be free from arbi trariness.
That is the very essence of rule of law.
It was further held: "It was, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of 295 giving jobs or entering into contracts . . the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard of norm which, is not arbitrary, irrational or irrelevant.
The power of discretion of the Government in the matter of grant of largess including award of jobs, . . . . . must be conditioned and structured by rational relevant and non discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action or the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.
" This statement of law, though was made in the context of contractual relations, it is a general law with width and amplitude which permeates the entire spectrum of actions, legislative as well as executive.
The Constitution is the permanent law of the land and its preamble is an integral part thereof.
It assures Social and Economic Justice and also accords equality of opportuni ty and status as well as equality before law assuring digni ty of the individual.
The Constitution Forty Second Amend ment Act introduced "Socialism" in the Preamble and made explicit of what is latent in the Constitutional Scheme.
Article 14 accords equal protection of law and equality before law.
Article 16(1) provides right to an appointment or employment to an office or post under the State.
Article 19(1)(g) assures right to occupation or avocation.
article 21 assures right to life and any deprivation is as per the procedure established by law.
In General Manager, Southern Railway vs Rangachari, [1962] S.C.R. page 586 it was held that matters relating to employment would include salary, increments, leave, gratuity, pension, age of superannuation etc.
Similarly, in respect of appointments, such matters would include all the terms and conditions of service per taining to the said office.
All those matters are included in the expression "matters relating to employment or ap pointment" within the meaning of article 16(1) of the Constitu tion.
This was reiterated in State of M.P.v.
Shardul Singh, [19701 3 S.C.R. page 302 at 305 306 that conditions of service include holding of posts right from the time of appointment till his retirement beyond it like pension etc.
The middle class, lower middle class and lower classes ' educated 296 youths generally, if not mainly, depend on employment or appointment to an office or posts under the States which include corporations, statutory body or instrumentality under article 12 of the Constitution as source to their liveli hood and means to improve their intellectual excellence and liner facets of life individually and collectively as a member of the society so that himself and his dependents are economically sound, educationally advanced and socially dignified so that the nation constantly rises to standards of higher level in an egalitarian social order under rule of law as is obligated under article 51A(J ).
Right to life scope of 9.
The right to life, a basic human right assured by article 21 of the Constitution comprehends something more than mere animal existence i.e. dignity of the individual.
Field J. in Munn vs Illinois, ; and 154 held that by the term "life" as here used, something more is meant than mere animal existence.
The inhibition against its deprivation extends to all those limbs and faculties by which life is enjoyed.
The deprivation not only of life but of . . if it a efficacy be not lettered away by Judicial decision.
In Kharak Singh vs State of U.P., [1964] 1 SCR 332 this Court approved the definition of life given by Field J. in his dissenting opinion.
In Olga Tellis vs Bombay Munici pal Corporation, [1985] 2 Suppl.
SCR page 51 at 79 this Court further laid that an equally important facet of the right to life is the right to livelihood because no person can live without the means of livelihood.
If the right to livelihood is not treated as a part of the Constitutional right to life, the easiest way of depriving a person of his right to life would be to deprive him of his means of live lihood to the point of abrogation . .
That, which alone can make it possible to live, leave aside which makes life liveable, must be deemed to be an integral component of the right to life . .
The motive force which propels their desertion of their hearths and homes in the village is the struggle for survival, that is the struggle for life.
So unimpeachable is the nexus between life and the means of livelihood.
Right to life does not only mean physicaI exist ence but includes basic human dignity, vide Menaka Gandhi vs Union of India, [1978] 2 SCR 621 John Stuart Mill in his 'Consideration of Representative Govt. ' said years ago that "the power of the State is to promote virtue and intelli gence of the people".
In State of Maharashtra vs Chunder Bhan, = ; Chinnappa Reddy, J. held that public employment opportunity is a national wealth in which all citizens are equally entitled to share and Varadarajan, J. held that public employment is the property of the nation which has to be shared equally.
This rule 297 was laid when rule 15(1)(ii)(b ') of B.C.S. Rules to pay subsistence allowance during period of suspension @ Rs. 1 per month pending departmental enquiry was challenged and declared the rule as ultra vires by operation of articles 14, 16, 21 and 311(2).
The right to public employment and its concomitant right to livelihood, thus, receive their succour and nourishment under the canopy of the protective umbrella of articles 14, 16(1), 19(1)(g) and 21.
Could statutory law arbitrarily take away or abridged or abrogated it? In Board of Trustees, Port of Bombay vs Dilip Kumar, ; = ; this Court held that the expression "life" does not merely connote animal existence or a continued drudgery through life, the expression life has a much wider meaning.
Where, therefore, the, outcome of a departmental enquiry is likely to affect reputation or livelihood of a person, some of the liner graces of human civilisation which makes life worth living would be jeopardised and the same can be put in jeopardy only by law which inheres fair procedure.
In Workmen of Hindustan Steels Ltd. vs Hindustan Steel Ltd. & Ors., ; it was held that the standing order 31 which confers arbitrary, uncanalised and drastic power on the Manager to dismiss an employee without enquiry, apart from being in violation of basic requirement of natu ral justice, is such a drastic nature as to effect the livelihood and put a stigma on the character of the workman.
In Francis Corallie vs U.T. of Delhi, ; = ; this Court held that "it is for the Court to decide, in exercise of its constitutional power of judicial review, whether the deprivation of life or personal liberty in a given case is by procedure which is reasonable, fair and just and fair treatment".
The tests of reason and jus tice cannot be abstract nor can be divorced from the actual ities of life and the needs of the Society.
The tests ap plied must be pragmatic and purposive lest they cease to be reasonable.
Reasonableness must be meaningful and effica cious in content as well as in form.
The procedure provided in Rule 9(b) or allied rules, therefore, must not be just, fair and reasonable so as to be in conformity with articles 14 and 21 is the cry of the case.
The position of the public employee is whether status: The distinguishing feature of public employment is status.
In Roshanlal Tandon vs Union of India, ; at 195 196 the Constitution Bench held that the legal position of a Government servant is more one of status than of contract.
The hall mark of status 298 is the attachment to a legal relationship of rights and duties imposed by, the public law and not by mere agreement of the parties.
The employment of the Government servant and his terms of service are governed by statute or statutory rules.
Once he is appointed to the post or office, the Government servant acquires a status and his rights and obligations are no longer determined by consent of both parties but by Statute or Statutory Rules.
The relationship between the Government and its servants is not like an ordinary contract of service between a master and servant.
The legal relationship is in the nature of status.
The duties of statute are fixed by the law and in the enforce ment of the duties society has an interest.
Status is a condition of membership of a group of which powers and duties are exclusively determined by law and not by agree ment between the parties concerned.
In Calcutta Dock Labour Board vs Jarfar Imam, it was held that the statutory scheme of employment confers on the worker a status.
An unlawful act is an interference with status.
This view was followed in Sirsi Municipality vs Cecelia Kom Francis Tellis, ; Beg, J. (as he then was) held that the principles applicable to the relation of a Private Master and servant unregulated by statute, could not apply to the cases of a public statutory body exercising powers of punishment lettered or limited by statute and relevant rules of procedure.
This Court in a recent decision extended all the benefits of pay scales to all the Central Government Corporate Sector employees.
It is, thus, I hold that the employees of the corporations, statutory authority or instrumentality under article 12 have statutory status as a member of its employees.
The rights and obligations are governed by the relevant statutory provisions and the em ployer and employee are equally bound by that statutory provisions.
Nature of the right of a permanent employee to a post In Purushottam Lal Dhingra vs Union of India, ; at 84 1 843 it was held that the appointment to a perma nent post may be substantive or on probation or on officiat ing basis.
A substantive appointment to a permanent post in a public service confers normally substantive right to the post and he becomes entitled to hold a lien on the post.
He is entitled to continue in office till he attains the age of superannuation as per rules or is dismissed or removed from service for inefficiency, misconduct or negligence or any other disqualification in accordance with the procedure prescribed in the rules, and fair and reasonable opportunity of being heard or on compulsory retirement or in certain circumstances, subject to the conditions like re employment on abolition of post.
In Motiram Daka vs General Manager, [1964] 5 299 SCR 683 at 718 721=AIR 1964 SC 600 at 608 & 609 majority of seven Judges ' Bench held that a permanent post carries a definite rate of pay without a limit of time and a servant who substantively holds a permanent post has a title to hold the post to which he is substantively appointed, and that in terms, means that a permanent servant has a right to hold the post until, of course, he reaches superannuation or until he is compulsorily retired under the relevant rule.
If for any other reason that right is invaded and he is asked to leave the service the termination of his service must inevitably mean the defeat of his right to continue in service and as such, it is in the nature of penalty and amounts to removal.
In other words, termination of service of a permanent servant, otherwise than on superannuation of compulsory retirement, must per se amount to his removal and so, by Rule 148(3) or Rule 149(3) of Rly.
Establishment Rules if such a termination is brought about, the rule clearly contravenes article 311(2) and must be held to be invalid.
A permanent employment assures security of tenure which is essential for the efficiency and incorruptibility of public administration.
In Guruder Singh Sidhu vs State of Pepsu, ; another Constitu tion Bench held that for efficient administration of the State, it is absolutely essential that permanent public servant should enjoy a sense of security of tenure.
The safeguard which article 311(2) affords is no more than this that in case it is intended to dismiss or remove or reduce them in rank, a reasonable opportunity should be given to them of showing cause against the action proposed to be taken in regard to them.
In Motiram Daka 's case (supra) it was further held that in a modern democratic State, the efficiency and incorruptibility of public administration is of such importance that it is essential to afford to civil servants adequate protection against capricious action from their superior authority.
If a permanent civil servant is guilty of misconduct, he should no doubt be proceeded against promptly under the relevant disciplinary rules, subject, of course, to the safeguard prescribed by article 311(2); but in regard to honest, straight forward and effi cient permanent civil servants, it is of utmost importance, even from the point of view of the State, that they should enjoy a sense of security which alone can make them inde pendent and truly efficient.
The sword of damocles hanging over the heads of permanent railway servants in the form of Rule 148(3) or Rule 149(3) would inevitably create a sense of insecurity in the minds of such servants and would invest appropriate authorities with very wide powers which may conceivably be abused.
Thereby this Court laid emphasis that a permanent employee has a right or lien on the post he holds until his tenure of service reaches superannuation so as to earn pension at the evening of his life unless it is determined as 300 per law.
An assurance of security of service to a public employee is an essential requisite for efficiency and incor ruptibility of public administration.
It is also an assur ance to take independent drive and initiative in the dis charge of the public duties to alongate the goals of social justice set down in the Constitution.
This Court in Daily Rated Casual Labour vs Union of India, 1 SCC 122 at 130 131 further held that the right to work, the right to free choice of employment, the right to just and favourable conditions of work, the right to protection against unemployment etc., and the right to security of work are some of the rights which have to be ensured by appropriate legislative and executive measures.
It is true that all these rights cannot be extend ed simultaneously.
But they do indicate the socialist goal.
The degree of achievement in this direction depends upon the economic resources, willingness of the people to produce and more than all the existence of industrial peace throughout the country.
Of those rights the question of security of work is of most importance.
If a person does not have the feeling that he belongs to an organisation engaged in pro duction he will not put forward his best effort to produce more.
(emphasis supplied) That sense of belonging arises only when he feels that he will not be turned out of employ ment the next day at the whim of the management.
It is for this reason it is being repeatedly observed by those who are in charge of economic affairs of the countries in different parts of the world that as far as possible security of work should be assured to the employees so that they may contrib ute to the maximisation of production.
It must, therefore, be held that a permanent employ ee of a statutory authority, corporation or instrumentality under article 12 has a lien on the post till he attains super annuation or compulsorily retired or service is duly termi nated in accordance with the procedure established by law.
Security of tenure ensures the benefit of pension on retire ment.
Dismissal, removal or termination of his/her service for inefficiency, corruption or other misconduct is by way of penalty.
He/ she has a right to security of tenure which is essential to inculcate a sense of belonging to the serv ice or organisation and involvement for maximum production or efficient service.
It is also a valuable right which is to be duly put an end to only as per valid law.
How to angulate the effect of termination of service Law is a social engineering to remove the existing irabal ance and 301 to further the progress, serving the needs of the Socialist Democratic Bharat under rule of law.
The prevailing social conditions and actualities of life are to be taken into account to adjudging whether the impugned legislation would subserve the purpose of the society.
The arbitrary, unbrid dled and naked power of wide discretion to dismiss a perma nent employee without any guidelines or procedure would tend to defeat the constitutional purpose of equality and allied purposes referred to above.
Courts would take note of actu alities of life that persons actuated to corrupt practices are capable, to maneuver with higher echolons in diverse ways and also camouflage their activities by becoming syco phants or chronies to the superior officers.
Sincere, honest and devoted subordinate officer unlikely to lick the boots of the corrupt superior officer.
They develop a sense of self pride for their honesty, integrity and apathy and inertia towards the corrupt and tent to undermine or show signs of disrespect or disregard towards them.
Thereby, they not only become inconvenient to the corrupt officer but also stand an impediment to the on going smooth sipbony of cor ruption at a grave risk to their prospects in career or even to their tenure of office.
The term efficiency is an elusive and relative one to the adept capable to be applied in diverse circumstances.
if a superior officer develops likes towards sycophant, tough corrupt, he would tolerate him and found him to be efficient and pay encomiums and corruption in such eases stand no impediment.
When he finds a sincere, devoted and honest officer to be inconvenient, it is easy to cast him/her off by writing confidential with delightfully vague language imputing to be 'not upto the mark ', 'wanting public relations ' etc.
Yet times they may be termed to be "security risk" (to their activities).
Thus they spoil the career of the honest, sincere and devoted officers.
In stances either way are gallore in this regard.
Therefore, one would be circumspect, pragmatic and realistic to these actualities of life while angulating constitutional validity of wide arbitrary, uncanalised and unbriddled discretionary power of dismissal vested in an appropriate authority either by a statute or a statutory rule.
Vesting arbitrary power would be a feeding ground for nepotism and insolence; in stead of subserving the constitutional purpose, it would defeat the very object, in particular, when the tribe of officers of honesty, integrity and devotion are struggling under despondence to continue to maintain honesty, integrity and devotion to the duty, in particular, when moral values and ethical standards are fast corroding in all walks of life including public services as well.
It is but the need and imperative of the society to pat on the back of those band of honest, hard working officers of integrity and devotion to duty.
It is the society 's interest to accord such officers security of service and avenues of promotion.
302 That apart, the haunting fear of dismissal from service at the vagary of the concerned officer would dry up all springs of idealism of the employee and in the process coarsens the conscience and degrades his spirit.
The nobler impulses of minds and the higher values of life would not co exist with fear.
When fear haunts a man, happiness van ishes.
Where fear is, justice cannot be, where fear is, freedom cannot be.
There is always a carving in the human for satisfaction of the needs of the spirit, by arming by certain freedom for some basic values without which life is not worth living.
It is only when the satisfaction of the physical needs and the demands of the spirit coexists, there will be true efflorescence of the human personality and the free exercise of individual faculties.
Therefore, when the Constitution assures dignity of the individual and the right to livelihood the exercise of the power by the executive should be cushioned with adequate safeguards for the rights of the employees against any arbitrary and capracicous use of those powers.
Contract of service must be consistent with the Constitu tion.
From the above perspective vis a vis constitutional, social goals and rights of the citizens assured in the preamble, Parts III & IV i.e. the trinity, the question whether the statutory corporation or the instrumentality or the authority under article 12 of the Constitution is validly empowered to terminate the services of a permanent employee in terms of the contract of employment or rules without conducting an enquiry or an opportunity of show cause of proposed order of termination of the service.
The operating in British India was extended to the merged States in 1949 & 1950 except to the State of Jammu & Kashmir.
Therefore, after Bharat attained independ ence on August 15, 1947, the is applica ble to all States except Jammu & Kashmir.
By operation of Article 372 of the Constitution, the continues to be in operation subject to the provisions of the Constitution.
The is an amending as well as consolidating Act as held in Ramdas Vithaldas Durbar vs
section Amerchand & Co., 43 Indian Appeals 164.
Thereby common law principles applicable in England, if they are inconsist ent with or derogation to the provisions of the or the Constitution to that extent they stand excluded.
Any law, muchless the provisions of Contract Act, are inconsistent with the fundamental rights which guaran teed in Part III of the Constitution, by operation of Arti cles 13 of the Constitution, are void.
Section 2(h) of the defines "an agreement" including an agreement of service and becomes a Contract only when it is enforceable by 303 law.
If it is not enforceable it would be void by reason of section 2(g) thereof.
The question, therefore, is whether the contract of service or Regulation 9(b) in derogation to the Fundamental Rights guaranteed in of the Consti tution is valid in law and would be enforceable.
Contract whether changeable with changing times.
The law of contract, like the legal system itself, involves a balance between competing sets of values.
Freedom of contract emphasises the need of stability, certainty and predictability.
But, important as is values are, they are not absolute, and there comes a point where they "face a serious challenge" against them must be set the values of protecting the weak, oppressed and the thoughtless from imposition and oppressed.
Naturally, at a particular time, one set of value tends to be emphasised at the expense of the other as the time changes the values get changed and the old values are under replacement and new values take their due place.
Though certainty and predictability in ordinary commercial contract law is emphasised and insisted upon the need for progress of the society and to removing the disa bilities faced by the citizens and their relations when encounter with the State or its instrumentalities are in conflict with the assured constitutional rights demand new values and begin to assert themselves, for no civilised system of law can accept the implications of absolute sanc tity of contractual obligations and of their immutability.
In paragraph 4 of Chitty on Contracts (25th Edition, Volume I) it is stated that "freedom of contract is a rea sonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed and no injury is done to the economic interest of the commu nity at large.
In Anson 's Law of Contract at p. 6 & 7 stated the scope of freedom of contract in the changing circumstances thus: "Today the position is seen in a very different light.
Freedom of contract is a reasonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed, and no injury is done to the econom ic interests of the community at large.
In the more compli cated social and industrial conditions of a collectivist society it has ceased to have much idealistic attraction.
It is now realised that economic equality often does not exists in any real sense, and that individual interests have to be 304 made to subserve those of the community hence there has been a fundamental change both in our social outlook and in the policy of the legislature towards contract and the law today interferes at numerous points with the freedom of the par ties to make what contract they like.
The relation between employers and employed, for example, have been regulated by statutes designed to ensure that the employees condition of work are safe, that he is properly protected against redun dancy and that he knows his terms of service.
The public has been protected against economic pressure by such measures as the Rent Acts, the supply of goods (implied terms) at, the consumer Credit Act and other similar enactments.
These legislative provisions will override any contrary terms which the parties may make for themselves.
Further, the legislature has intervened in the Restrictive Trade Practice Act 1956 and the Fair Trading Act, 1973 to promote competi tion in industry and to safeguard the interests of consum ers.
This intervention is specially necessary today when most contracts entered by ordinary people are not the result of individual negotiation.
It is not possible for a private person to settle the terms of his agreement with a British Railways Board or with a local electricity authority.
The standard form ' contract is the rule.
He must either accept the terms of this contract in toto, or go without.
Since, however, it is not feasible to deprive onself of such necessary services, the individual is compelled to accept on those terms.
In view of this fact, it is quite clear that freedom of contract is now largely an illusion.
The trinity of the Constitution assure to every citizen Social and Economic Justice, Equality of Status and of opportunity with dignity of the person.
The State is to strive to minimise the inequality in income and eliminate inequality in status between individuals or groups of peo ple.
The State has intervened with the freedom of contract and interposed by making statutory law like Rent Acts, Debt Relief Acts, Tenancy Acts, Social Welfare and Industrial Laws and Statutory Rules prescribing conditions of service and a host of other laws.
All these Acts and Rules are made to further the social solidarity and as a step towards establishing an egalitaran socialist order.
This Court, as a court of constitutional conscience enjoined and a jealously to project and uphold new values in establishing the egali tarian social order.
As a court of constitutional function ary exercising equity juris 305 diction, this Court would relieve the weaker parties from unconstitutional contractual obligations, unjust, unfair, oppressive and unconscienable rules or conditions when the citizen is really unable to meet on equal terms with the State.
It is to find whether the citizen, when entered into contracts or service, was in distress need or compelling circumstances to enter into contract on dotted lines or whether the citizen was in a position of either to "take it or leave it" and if it finds to be so, this Court would not shirk to avoid the contract by appropriate declaration.
Therefore, though certainty is an important value in normal commercial contract law, it is not an absolute and immutable one but is subject to change in the changing social condi tions.
In Brojonath 's case, Madan, J., elaborately consid ered the development of law relating to unfair or unreasona ble terms of the contract or clauses thereof in extenso and it is unnecessary for me to traverse the same grounds once over.
The learned Judge also considered the arbitrary, unfair and unbridled power on the envil of distributive justice or justness or fairness of the procedure envisaged therein.
The relevant case law in that regard was dealt with in extenso in the light of the development of law in the Supreme Court of United States of America and the House of Lords in England and in the continental countries.
To avoid needless burden on the judgment, I do not repeat the same reasoning.
I entirely agree with the reasoning and the conclusions reached therein on all these aspects.
Whether State can impose unconstitutional Conditions.
The problem also would be broached from the angle whether the State can impose unconstitutional conditions as part of the contract or statute or rule etc.
In 1959 60 73 Harvard Law Review, in the Note under the Caption 'Unconsti tutional Condition ' at page 1595 96 it is postulated that the State is devoid of power to impose unconstitutional conditions in the contract that the power to withhold lar gess has been asserted by the State in four areas i.e., (1) regulating the right to engage in certain activities; (2) Administration of Government welfare programme; (3) Govern ment employment; and (4) Procurement of contracts.
It was further adumberated at pages 1602 1603 thus: "The sovereign 's constitutional authority to choose those with whom it will contract for goods and services is in effect a power to withhold the benefits to be deprived from economic dealings with the government.
As government 306 activity in the economic sphere increases, the contracting power enables the government to control many hitherto unreg ulated activities of contracting parties through the imposi tion of conditions.
Thus, regarding the government as a private entrepreneur threatens to impair constitutional rights . .
The Government, unlike a private individual, is limited in its ability to contract by the Constitution.
The federal contracting power is based upon the Constitu tion 's authorisation of these acts 'necessary and proper ' to the carrying out of the functions which it allocates to the national government, Unless the objectives sought by terms and conditions in government contracts requiring the surren der of rights are constitutionally authorised, the condi tions must fall as ultra vires exercise of power.
" Again at page 1603, it is further emphasised thus: "When conditions limit the economic benefits to be derived from dealings with the government to those who forego the exercise of constitutional rights, the exclusion of those retaining their rights from participation in the enjoyment of these benefits may be a violative of the prohibition, implicit in the due process clause of fifth amendment and explicit in the equal protection clause of the fourteenth amendment against unreasonable discrimination in the Govern mental bestow of advantages.
Finally, disabling those exer cising certain rights from participating in the advantages to be derived from contractual relations with the government may be a form of penalty lacking in due process.
To avoid invalidation for any of the above reasons, it must be shown that the conditions imposed are necessary to secure the legitimate objectives of the contract ensure its effective use, or protect society from the potential harm which may result from the contractual relationship between the govern ment and the individual.
Professor Guido Calabresi of Yale University Law School in his "Retroactivity, Paramount power and Contractu al Changes" ( 196 1 62) 71 Yale Law Journal P. 119 1 at 1196) stated that the Government can make contracts that are necessary and proper for carrying out any of the specific clauses of the Constitution or power to spend for general welfare.
The Federal Government has no power, inherent or sovereign, other than those specifically or explicitly granted to it by 307 the Constitution.
At page 1197, it is further stated thus: "The Government acts according to due process standards for the due process clause is quite up to that task without the rule.
Alterations of Government contracts are not desirable in a free country even when they do not constitute a 'tak ing ' of property or impinge on questions of fundamental fairness of the type comprehended in due process.
The gov ernment may make changes, but only if war or commerce re quire them and not on the broader and more ephemeral grounds that the general welfare would be served by the change.
Any other rule would allow the Government to which almost at will.
These principles were accepted and followed by the Andhra Pradesh High Court in V. Raghunadha Rao vs State of Andhra Pradesh, dealing with A.P. Stand ard specification Clauses 11, 29, 59, 62(b) and 73 and declared some clauses to be ultra vires of Articles 14, 19(1)(g) and 21 of the Constitution and Sections 23 and 27 of the Contract Act.
In Brojonath 's case (supra) after elaborate consid eration of the doctrine of "reasonableness or fairness" of the terms and conditions of the contract vis a vis the relative bargaining power of the contracting parties this Court laid down that the principles deductable from the discussion made therein is in consonance with right or reason intended to secure socio economic justice and con forms to mandate of the equality clause in Article 14.
The principle laid was that courts will not enforce and will, when called upon to do so, strike down an unfair and unrea sonable contact or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power . .
It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them.
It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscienable a clause in that contract or form or rules may be.
This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal or where both parties are businessmen and the contract is a commercial transaction.
308 22.
In today 's complex world of giant corporations with their vast infra structural organisations and with the State through its instrumentalities and agencies has been entering into almost every branch of industry and commerce and field of service, there can be myriad situations which result in unfair and unreasonable bargains between parties possess wholly disproportionate and unequal bargaining power.
These cases can neither be enumerated nor fully illustrated.
The court must judge each case on its own facts and circum stances.
Public policy whether changeable.
This Court also angulated the question from the perspective of public policy or contract being opposed to public policy.
The phrases "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition.
It is valued to meet the public good or the public interest.
What is public good or in the public interest or what would be injurious or harmful to the public good or the public interest vary from time to time with the change of the circumstances.
New concepts take place of old one.
The transactions which were considered at one time as against public policy were held by the courts to be in public interest and were found to be enforceable.
Therefore, this Court held in Brojonath 's case that "there has been no well recognised head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public." Lord Wright in his legal Essays and Addresses Vol.
III p. 76 and 78 stated that public policy like any other branch of the common law ought to be and I think is, governed by the judicial use of precedents . .
If it is said that rules of public policy have to be moulded to suit new condi tions of a changing world, that is true, but the same is true with the principles of the cannon law generally; Lord Lindley held in Janson vs Driefontein Mines Ltd., [1902] A.C.p. 484 and 507 that "a contract or other branch which is against public policy i.e. against the general interest of the country is illegal.
In Anson 's Law of Contract, 24th Edition by A.G. Guest at p. 335 stated the scope of variability of public policy attune to the needs of the day and the march of law thus: "At the present time, however, there is an increasing recog nition of the positive function of the Courts in matters 309 of public policy: 'The law relating to public policy cannot remain immutable.
It must change with the passage of time.
The wind of change blows upon it '.
Some aspects of public policy are more susceptible to change than others, during the policy of the law has, on certain subjects, been worked into a set of tolerably definite rules.
The principles applicable to agreements in restraint of trade, for example, have on a number of occasions been modified or extended to accord with prevailing economic conditions, and this process still continues.
In law of Contract by G.H. Treitei, 7th Edition at p, 366 on the topic 'scope of the public policy ' it is stated thus: "Public policy is a variable notion, depending on changing manners, morals and economic conditions.
In theory, this flexibility of the doctrine of public policy could provide a judge with an excuse for invalidating any contract which he violently disliked.
On the other hand, the law does adapt itself to change in economic and social conditions, as can be seen particularly from the development of the rules as to contracts in restraint of public policy has often been recognised judicially.
Thus Lord Haldane has said; "What the law recognises as contrary to public policy turns out to vary greatly from time to time.
" And Lord Denning has put a similar point of view. "with a good man in the saddle, the unruly horse can be kept in control.
It can jump over obsta cles.
" The present attitude of the Courts represents a compromise between the flexibility inherent in the notion of public policy and the need for certainty in commercial affairs.
From this perspective, it must be held that in the absence of specific head of public policy which covers a case, then the court must in consonance with public con science and in keeping with public good and public interest invent new public policy and declare such practice or rules that are derogatory to the constitution to be opposed to public policy.
The rules which stem from the public policy must of necessity be laid to further the progress of the society in particular when social change is to bring about an egalitarian social order through rule of law.
In deciding a case which may not be covered by authority courts have before them the beacon light of the trinity of the Constitu tion and the play of legal light and shade must lead on the path of justice social, 310 economical and political.
Lacking precedent, the court can always be guided by that light and the guidance thus shed by the trinity of our Constitution.
Public policy can be drawn from the Constitution.
Sutherland, in his Statutes and Statutory Construc tion Third Edition Vol.
3 paragraph 5904 at page 13 1 132 has stated that the most reliable source of public policy is to be found in the federal and state constitutions.
Since constitutions are the superior law of the land, and because one of their outstanding features is flexibility and capaci ty to meet changing conditions, constitutional policy pro vides a valuable aid in determining the legitimate bound aries of statutory meaning.
Thus public policy having its inception in constitutions may accomplish either a restrict ed or extended interpretation of the literal expression a statute.
A statute is always presumed to be constitu tional and where necessary a constitutional meaning will be inferred to preserve validity.
Likewise, where a statute tends to extend or preserve a constitutional principle, reference to analogous constitutional provisions may be of great value in shaping the statute to accord with the statu tory aim or objective.
Article 14 sheds the light to public policy to curb arbi trariness.
26A. In Basheshar Nath vs The Commissioner of Income Tax & Anr., [1959] Suppl.
1 SCR 528 S.R. Das, CJ., held that Article 14 is founded on a sound public policy recognised and valued in all States and it admonishes the State when it disregards the obligations imposed upon the State.
26B. In E.P. Royappa vs State of Tamil Nadu & Ant., ; Bhagwati.
J. (as he then was) held that Article 14 is the genus while Article 16 is a specie.
Arti cle 16 gives effect to the doctrine of equality in all matters relating to public employment.
The basic principle which.
therefore, informs both Articles 14 and 16 is equali ty and inhibition against discrimination.
"Equality is a dynamic concept with many aspects and dimensions and it cannot be "cribbed, cabined and confined" within traditional and doctrinaire limits.
From a positivistic point of view.
equality is antithetic to arbitrariness.
In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and ca price of an absolute monarch.
Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore 311 violative of Article 14, and if it affects any matter relat ing to public employment, it is also violative of Article 16.
Articles 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.
In Menaka Gandhi 's case it was further held that the principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non arbitrariness pervades Article 14 like a brooding omnipresence.
In Rama na 's case it was held that it is merely a judicial formula for determining whether the legislative or.
executive action in question is arbitrary and therefore constituting denial of equality.
If the classification is not reasonable and does not satisfy the two conditions namely, rational rela tion and nexus the impugned legislative or executive action would plainly be arbitrary and the guarantees of equality under Article 14 would be breached.
Wherever, therefore, there is arbitrariness in State action whether it be of legislature or of the executive or of an "authority" under Article 12, Article 14, "immediately springs into action and strikes down such State action.
" In fact, the concept of reasonableness and non arbitrariness pervades the entire constitutional scheme and is a golden thread which runs through the whole of the fabric of the constitution.
In Volga Tellies 'Case it was held that the Constitu tion is not only paramount law of the land but also it is a source of sustenance of all laws.
Its provisions are con ceived in public interest and are intended to serve public purpose.
Therefore, when the provisions of an Act or Regula tions or Rules are assailed as arbitrary, unjust, unreasona ble, unconstitutional, public law element makes it incumbent to consider the validity there 'of on the envil of inter play of articles 14 ', 16(1), 19(1)(g) and 21 and of the inevitable effect of the impugned provision on the rights of a citizen and to find whether they are constitutionally valid.
Interplay of articles 14, 16(1), 19(1)(g) & 21 as guarantors of public employment as a source of right to livelihood.
It is well settled constitutional law that different Articles in the Chapter on Fundamental Rights and the Direc tive Principles in Part IV of the Constitution must be read as an integral and incorporeal whole with possible overlap ping with the subject matter of what is to be protected by its various provisions particularly the Fundamental Rights.
By the Full Court in R.C. Cooper vs Union of India, ; it was held that the law must not impair the guarantee of any 312 of the fundamental rights in Part III.
The law authorising to impose reasonable restrictions under Article 19(1) must be intended to advance the larger public interest.
Under the Constitution, protection against impairment of the guarantee of the fundamental rights is determined by the nature of the right, interest of the aggrieved party and the degree of harm resulting from the state action.
Impairment of the right of the individual and not the object of the State in taking the impugned action is the measure of protection.
To concentrate merely on the power of the State and the object of the State action in exercising that power is, therefore, to ignore the true intent of the constitution.
The nature and content of the protection of the fundamental rights is measured not by the operation of the State action upon the rights of the individual but by its objects.
The validity of the State action must be adjudged in the light of its opera tion upon the rights of the individuals or groups of the individual in all their dimensions.
It is not the object of the authority making the law imparing the right of the citizen nor the form of action taken that determines the protection he can claim; it is the effect of the law and of the action upon the right which attract the jurisdiction of the court to grant relief.
In Minerva Mills Ltd. vs Union of India, ; the fundamental rights and directive principles are held to be the conscience of the Constitution and disregard of either would upset the equibalance built up therein.
In Menaka Gandhi 's case, it was held that different articles in the chapter of Fundamental Rights of the Consti tution must be read as an.
integral whole, with possible overlapping of the subject matter of what is sought to be protected by its various provisions particularly by articles relating to fundamental rights contained in Part III of the Constitution do not represent entirely separate streams of rights which do not mingle at many points.
They are all parts of an integrated scheme in the Constitution.
Their waters must mix to constitute that grand flow of unimpeded and impartial justice; social, economic and political, and of equality of status and opportunity which imply absence of unreasonable or unfair discrimination between individuals or groups or classes.
The fundamental rights protected by Part III of the constitution, out of which Articles 14, 19 and 21 are the most frequently invoked to test the validity of executive as well as legislative actions when these actions are subjected to judicial scrutiny.
Fundamental Rights are necessary means to develop one 's own personality and to carve out one 's own life in the manner one likes best, subject to reasonable restrictions imposed in the paramount interest of the Society and to a just, fair and reasonable procedure.
The effect of restriction or deprivation and not of the form adopted to deprive the right is the conclusive test.
It is already seen that the right to a public employ 313 ment is a constitutional right under article 16(1).
All matters relating to employment include the right to continue in service till the employee reaches superannuation or his service is duly terminated in accordance with just, fair and reasonable procedure prescribed under the provisions of the Constitution or the Rules made under proviso to Article 309 of the Constitution or the statutory provision or the Rules, regulations or instructions having statutory flavour made thereunder, But the relevant provisions must be conformable to the rights guaranteed in Parts III & IV of the Constitu tion, Article 21 guarantees the_ right to live which in cludes right to livelihood, to a many the assured tenure of service is the source, the deprivation thereof must be in accordance with the procedure prescribed by law conformable to the mandates of Articles 14 and 21 as be fair, just and reasonable but not fancyful oppressive or at vagary.
The need for the fairness, justness or reason ableness of the procedure was elaborately considered in Menaka Gandhi 's case (supra) and it hardly needs reiteration.
Principles of natural justice in Part of Article 14.
The Menaka Gandhi 's case is also an authority for the proposition that the principles of natural justice is an integral part of the guarantee of equality assured by Arti cle 14 of the Constitution.
In Union of India & Anr.
vs Tulsiram Patel & Ors., [1985] Suppl.
2 SCR 13 1 at 233, this Court held that the principles of natural justice have thus come to be recognised as being a part of the guarantee contained in Article 14 because of the new and dynamic interpretation given by this Court to the concept of equali ty which is the subject matter of that Article.
Shortly put, the syllogism runs thus: "Violation of a rule of natural justice results in arbi trariness which is the same as discrimination; where dis crimination is the result of the State action, it is a violation of article 14, therefore, a violation of a principle of natural justice by a State action is a violation of Art 14.
Article 14, however; is not the sole repository of the principles of natural justice.
What it does is to guarantee that any law or State action violating them will be struck down.
The principles of natural justice, however, apply not only to the legislation and State action but also where any tribunal, authority or body of men, not coming within the definition of 'State ' in article 12, is charged with the duty of deciding a matter.
In such a case, the principles of natural justice require that it must decide such a matter fairly and impartially.
" 314 In Moti Ram Deka 's case this Court already held that "the rule making authority contemplated by Article 309 cannot be validly exercised so as to curtail or affect the rights guaranteed to public servants under article 311(2).
Article 311(2) is intended to afford a sense of scrutiny to public servants who are substantively appointed to a permanent post and one of the principle benefits which they are entitled to expect is the benefit of pension after rendering public service for the period prescribed by the Rules.
It would, we think, not be legitimate to contend that the right to earn a pension to which a servant substantively appointed to a permanent post is entitled can be curtailed by Rules framed under article 309 so as to make the said right either ineffec tive or illusory.
Once the scope of article 311(1) and (2) is duly determined, it must be held that no rule framed under article 309 can trespass on the rights guaranteed by article 311.
This position is of basic importance and must be borne in mind in dealing with the controversy in question.
In A.K. Kraipak & Ors etc.
vs Union of India & Ors., this Court held that Rules of natural justice aims at securing justice or to prevent injustice.
They operate only in the areas not covered by any law valid ly made.
In Union of India vs Col. J.N. Sinha and Anr., [197 1] 1 SCR 791 it was held that principles of natural justice do not supplant the law but supplement it.
If a statutory provision either specifically or by necessary implication excludes the application of any rules of natural justice then the court cannot ignore the mandate of the legislature or the statutory authority and read into the concerned provision of the principles of natural justice.
In that case this Court held that principles of natural justice cannot be read into Fundamental Rule and no opportunity need be given before compulsorily retiring an employee as that implication does not arise by reason of express statutory language.
The principle of natural justice embodied as an integral part of equality clause.
Article 14 is the general principle while article 311(2) is a special provision applica ble to all civil services under the State.
Article 311(2) embodies the principles of natural justice but proviso to Clause (2) of article 311 excludes the operation of principles of natural justice engrafted in article 311(2) as an exception in the given circumstances enumerated in three clauses of the proviso to article 311(2) of the Constitution.
Article 14 read with articles 16(1) and 311 are to be harmoniously inter preted that the proviso to article 311(2) excludes the applica tion of the principles of natural justice as an exception; and the applicability of article 311(2) must, therefore, be circumscribed to the civil services and to be construed accordingly.
In respect of all other 315 employees covered by article 12 of the Constitution the dynamic role of article 14 and other relevant Articles like 21 must be allowed to have full play without any inhibition, unless the statutory rules themselves, consistent with the mandate of articles 14, 16, 19 & 21 provide, expressly such an exception.
Article 19(1)(g) empowers every citizen right to avoca tion or profession etc., which includes right to be contin ued in employment under the State unless the tenure is validly terminated consistent with the scheme enshrined in the fundamental rights of the Constitution.
Therefore, if any procedure is provided for deprivation of the right to employment or right to the continued employment till the age of superannuation as is a source to right to livelihood, such a procedure must be just, fair and reasonable.
This Court in Fertilizer Corporation Kamgar Union (Regd.), Sindri & Ors.
vs Union of India & Ors.
, ; at 60 61 held that article 19(1)(g) confers a broad and general right which is available to all persons to do works of any partic ular kind and of their choice.
Therefore, whenever there is arbitrariness in state action whether it be of the legisla ture or of the Executive or of an authority under article 12, articles 14 and 21 spring into action and strikes down such an action.
The concept of reasonableness and nonarbitrariness pervades the entire constitutional spectrum and is a golden thread which runs through the whole fabric of the Constitu tion.
Therefore, the provision of the statute, the regula tion or the rule which empowers an employer to terminate the services of an employee whose service is of an indefinite period till he attains the age of superannuation, by serving a notice of pay in lieu thereof must be conformable to the mandates of articles 14, 19(1)(g) and 21 of the Constitution.
Otherwise per se it would be void.
In Motiram Deka 's case, Gajendragadkhar, J , (as he then was) after invalidating the rules 149(3) and 148(3) under article 311(2) which impari materia Rule 9(b) of the Regulation also considered their validity in the light of article 14 and held thus: "Therefore, we are satisfied that the challenge to the validity of the impugned Rules on the ground that they contravene article 14 must also succeed.
" This was on the test of reasonable classification as the principle then was applied.
Subba Rao, J., (as he then was) in a separate but concurrent judgment, apart from.
invali dating the rule under Article 311(2) also held that the Rule infringed Article 14 as well, though there is no elaborate discussion in that regard.
But, Das Gupta, J., considered 316 elaborately on this aspect and held: "Applying the principle laid down in the above case to the present rule, I find on the scrutiny of the Rule that it does not lay down any principle or policy for guiding the exercise of discretion by the authority who will terminate the service in the matter of selection or classification.
Arbitrary and uncontrolled power is left in the authority to select at its will any person against whom action will be taken.
The Rule, thus enables the authority concerned to discriminate between two railway servants to both of whom R. 148(3) equally applied by taking action in one case and not taking it in the other.
In the exercise of the discretion by the authority the rule has therefore to be struck down as contravening the requirements of article 14 of the Constitu tion.
Even in Tulsiram Patel 's case (supra) this Court declared that it must satisfy the test of justness, fairness and reasonableness of the procedure prescribed.
But the proviso to article 311(2) was upheld for the reason that the Constitution itself made proviso an exception to the prin ciple of audi alteram partem engrafted in article 311(2) of the Constitution.
As a fact, it expressed thus: "As the making of such laws and the framing of such rules are subject to the provisions of the Constitution, if any such act or rules violates any of the provisions of the Constitution, it would be void.
Thus, as held in Moti Ram Deka 's case ; if any such act or rule tres passes on the rights guaranteed to government servants by article 311, it would be void.
Similarly, such acts and rules cannot abridge or restrict the pleasure of the President or the Governor of a State exercisable under article 3 10(1) further than what the Constitution has expressly done.
In the same way, such Act or rule would be void if it violates any fundamental right guaranteed by part III of the Consti tution.
" Gurdev Singh 's case declares the rules that empowered to order compulsory retirement of the Government employee after putting ten years of service as ultra vires.
In S.S. Muley vs
J.R.D. Tata, my learned brother Sawant, J. (as he then was) held that Regulation 48 which empowered the employer uncanalised, unrestricted and arbi trary power to terminate the service of an employee with notice or pay in lieu thereof without any opportunity of 317 hearing as violative of principles of natural justice under article 14 of the Constitution.
In Superintendent of Post Office vs
K. Vasayya, [1984] 3 Andhra Pradesh Law Journal 9 the respondent Vasayya was denied of the appointment as a Clerk on the ground that the Confidential Reports submitted by the Police disclosed adverse comments on the conduct of the respondent.
When the appointment was denied on that basis it was held that though the selection to a public office is a privilege and no vested right has been accrued till the candidate is appoint ed, in the context of fair play in action subserving the mandate of article 14 held at p. 45 thus: "Often times, convenience and justice are not on speaking terms.
It is the actual administration of law and not only the manner in which it is done that reflects the action of the State in assuring the equal protection to a citizen.
In adopting the procedure, as held by Frankfurther, J. in Joint Anti Facist Refugee Commission vs Mc.
Grath, 34 ; that a conclusion satisfies one 's private conscience does not attest its reliability.
The validity and moral authority of a conclusion largely depends on the mode by which it was reached.
Secrecy is not congenial to truth.
Seeking and self righteousness gives too slander an assurance of right ness.
No better instrument has been devised for arriving at the truth than to give a person in jeopardy of a serious loss, a notice of the case against him and an opportunity to meet it, nor has a better way been found for generating the feeling so important to a popular Government that justice has been done.
" Bradley, J. in United States vs Samuel D. singleton; , has held that: "No State shall make or enforce any law which abrogate the privileges or immunities of citizens of the United States.
" In Ramana 's case (supra), it has been held that: is indeed unthinkable that in a democracy governed by the rule of law, the executive Govt.
or any of its offi cers should possess arbitrary power over the interests of the individual . . 318 The procedure adopted should match with what justice de mands.
History shows that it is always subtle and insidious encroachments made ostensibly for a good cause that imper ceptibly but surely erode the foundations of liberty.
" Doughlas, J. in Joint Anti Facist Refugee Commission 's case (supra) held that: "This is a Government of laws not of men.
The powers being used are the powers of the Government over the reputation and fortunes of citizens.
In situations far less severe or important than those a party is told the nature of the charge against him." Harry W. Jones in his "Rule of law and Welfare State", at 146 stated that: "What is needed then is to make the welfare state itself a source of new "rights" and to surround the "rights" in public benefaction with legal safeguards both procedural and substantive comparable to those enjoyed by the traditional right of property in our law.
" Accordingly it was held that prior opportunity of hearing before denying appointment is a mandate of article 14 of the Constitution.
In West Bengal Electricity Board & Ors.
vs D.B. Ghosh & Ors., [1985] 2 SCR 1014 in similar circumstances, it was held that the regulation as "Herry VIII Clause as ultra vires of article 14 of the Constitution.
The same principle was reiterated in Brojonath 's case.
In Workman of Hindustan Steel Ltd. & Anr.
vs Hindustan Steel Ltd. & Ors.
, ; the standing order that empowers the manager to dispense with the enquiry and to dismiss an employee without any obligation to record reasons was held to be drastic power but directed to amend the standing orders consistent with proviso to article 311(2) of the Constitution.
This Court in O.P. Bhandari vs Indian Tourism Development Corpn.
Ltd. & Ors., ; struck down the similar rule on the same doctrine of 'hire and fire ' and that it is impermissible under the constitu tion of the scheme to sustain the doctrine of 'hire and fire '.
In Chandrabhan 's case, Rule 15(1)(ii)(b) of Bombay Service Rule was held to be void.
In A.P.S.R.T. Corpn.
vs 319 Labour Court, AIR (1980) A.P. 132 a Full Bench of Andhra Pradesh High Court held that the legislature is not compe tent to make law abridging the right to work.
In R.M.D. Chamarbaugwalla vs State of Punjab, ; it was held that any Act violating fundamental rights is void.
In Kanhialal vs District Judge & Ors., this Court held that termination of the service of a tempo rary employee without affording opportunity is penal in character and violates article 311(2) and was void.
In M.K. Agarwal v, Gurgaon Gramin Bank & Ors., [1987] Suppl.
643 this Court struck down regulation 10(2)(a) of the Gurg aon Gramin Bank (Staff) Services Rules, 1980.
In this light it is not open to the State to contend that "look here; though Constitution enjoins and admonishes us saying that it is no longer open to the State to make law or rule violating the rights created under articles 14 and 21, the citizen, with a view to secure public employment from us had contracted out of the constitutional rights and agreed to abide by rules including the termination of his/her services at any time at our will without notice or opportunity even for misconduct, negligence, inefficiency, corruption or rank nepotism, so we are free to impose the said punishment.
" Even in the case of minority institutions, when the employ ees are dismissed on the principle of hire and fire, this Court held it to be impermissible vide All Saints High School vs Government of A.P., ; & 938 e to f; Frank Anthoney Public School vs Union of India, ; & 269 b to e; Christian Medical College Hospital Employ ees ' Union & Anr.
vs Christian Medical College, Veilore Association & Ors., ; & 562.
In Moti Ram Deka 's case this Court held that rules 148(3) and 149(3) trespassed upon the rights guaranteed to government servants by article 311(2) and would be void.
In Kameshwar Prasad vs State of Bihar, [1962] Suppl.
3 SCR 369.
Rule 4A of the Bihar Government Servants ' Conduct Rules, 1956, in so far as it prohibited any form of demon stration was struck down by this Court as being violative of sub clauses (a) and (b) of clause (1) of article 19.
In O.K. Ghosh vs EZX Joseph, [1963] Suppl.
1 SCR 789 this Court 'struck down Rule 4A of the Central Civil Services (Conduct Rules), 1955, on the ground that it violated sub clause (c) of clause (1) of article 19 of the Constitution and that por tion of Rule 4A which prohibited participation in any demon stration as being violative of sub clauses (a) and (b) of clause (1) of Article 19.
It must, therefore, be hold that any act or provision therein, Rules or Regulations or 320 instructions having statutory force violating fundamental rights under Articles 14, 16(1), 19(1)(g) and 21 are void.
Thus it could be hold that article 14 read with 16(1) accords right to an equality or an equal treatment consist ent with the principles of natural justice.
Any law made or action taken by the employer, corporate statutory or instru mentality under Article 12 must act fairly, justly and reasonably.
Right to fair treatment is an essential inbuilt of natural justice.
Exercise of unbridled and uncanalised discretionary power impinges upon the right of the citizen; vesting of discretion is no wrong provided it is exercised purposively judiciously and without prejudice.
Wider the discretion, the greater the chances of abuse.
Absolute discretion is destructive of freedom.
than of man 's other inventions.
Absolute discretion marks the beginning of the end of the liberty.
The conferment of absolute power to dismiss a permanent employee is antithesis to justness or fair treatment.
The exercise of discretionary power wide of mark would bread arbitrary, unreasonable or unfair actions and would not be consistent with reason and justice.
The provisions of a statute, regulations or rules that empower an employer or the 'management to dismiss, remove or reduce in rank of an employee, must be consistent with just, rea sonable and fair procedure.
It would, further, be held that right to public employment which includes right to continued public employment till the employee is superannuated as per rules or compulsorily retired or duly terminated in accord ance with the procedure established by law is an integral part of right to livelihood which in turn is an integral facet of right to life assured by article 21 of the Constitu tion.
Any procedure prescribed to deprive such a right to livelihood or continued employment must be just, fair and reasonable procedure.
In other words an employee in a public employment also must not be arbitrarily unjustly and unrea sonably be deprived of his/her livelihood which is ensured in continued employment till it is terminated in accordance with just, fair and reasonable procedure.
Otherwise any law or rule in violation thereof is void.
Need for harmony between social interest and individual right 34.
Undoubtedly efficiency of the administration and the discipline among the employees is very vital to the successful functioning of an institution or maximum produc tion of goods or proper maintenance of the services.
Disci pline in that regard among the employees is its essential facet and has to be maintained.
The society is vitally interested in the due discharge of the duties by the govern ment employees or 321 employees of corporate bodies 'or statutory authorities or instrumentalities under article 12 of the Constitution.
As held in Tulsiram Patel 's case the public are vitally interested in the efficiency and integrity of the public service.
The government or corporate employees are, after all, paid from the public exchequer to which everyone contributes either by way of direct or indirect taxes.
The employees are charged with public duty and they should perform their public duties with deep sense of responsibility.
The collective responsi bility of all the officers from top most to the lowest maximises the efficient public administration.
They must, therefore, be held to have individual as well as collective responsibility in discharge of their duties faithfully, honestly with full dedication and utmost devotion to duty for the progress of the country.
Equally the employees must also have a feeling that they have security of tenure.
They should also have an involvement on their part in the organi sation or institution, corporation, etc.
They need assurance of service and they need protection.
The public interest and the public good demand, that those who discharge their duties honestly, efficiently and with a sense of devotion and dedication to duty should receive adequate protection and security of tenure.
Equally inefficient, dishonest and corrupt or who became security risk should be weeded out so that successful functioning of the industry or manufacture of the goods or rendering or services would be available at the maximum level to the society and society thereby re ceives optimum benefit from the public money expanded on them as salary and other perks.
Therefore, when a situation envisaged under statute or statutory rule or regulation or instructions having statutory force to remove or dismiss an employee the question arises whether they need at least minimum protection of fair play in action.
34A. In Vasayya 's case when a similar contention was raised I have stated at p. 47 in Para 130 & 13 1 that.
The Audi alteram partem rule must be flexible; malleable and an adaptable concept to adjust and harmonise the need for speed and obligation to act fairly.
When the rights of the Government are widely stressed, the rights of the person are often threatened, when the latter are ever emphasised Government becomes weak to keep order.
Therefore, the rule can be tailored and the measure of its application cut short in reasonable proportion to the exigencies of the situation.
The administrative agency can develop a technique of deci sion worthy being called "ethos of adjudication".
Meaningful statutory standards, realistic procedural requirements and discriminatory techniques of judicial review are among the tools to control the discretionary 322 power.
It makes no difference whether the occasion for the exercise of power is personal default or act of policy.
Good administration demands fair consultation in each case and this the law can and should enforce.
The insistence of the observance of fundamental fairness in the procedure becomes a balancing balm to alleviate apprehension of arbitrary decision by the executive Government while assuring opportu nity to disabuse the prima facie impression formed against the person to usher in a era of largest good to largest number of people with proper checks and balances between needs of the State and the rights of the individual.
The brooding omni benevolence and omnicompetency of the need for expediency and claim for justness interplay ethos of fair adjudication in action.
34B. Therefore, it is no well tuned solace to say that in a court of law at the fag end of the currier or after superannuation in the interregnum which often over takes the litigation, that the employee would be meted out with jus tice (a grave uncertainty and exposing to frustrating pro crastination of judicial process and expenses and social humiliation).
Before depriving an employee of the means of livelihood to himself and his dependents, i.e. job, the procedure prescribed for such deprivation must, therefore, be just, fair and reasonable under articles 21 and 14 and when infringes article 19(1)(g) must be subject to imposing reasona ble restrictions under article 19(5).
Conferment of power on a high rank officer is not always an assurance, in particular when the moral standards are generally degenerated that the power would be exercised objectively, reasonably, conscien tiously, fairly and justly without inbuilt protection to an employee.
Even officers who do their duty honestly and conscientiously are subject to great pressures and pulls.
Therefore, the competing claims of the "public interest" as against "individual interest" of the employees are to be harmoniously blended so as to serve the societal need con sistent with the constitutional scheme.
Statutory Construction: 35.
Statutory construction raises a presumption that an Act or a provision therein a constitutionally valid unless it appears to be ultra vires or invalid.
The legislature, subject to the provisions of the Constitution, has undoubt edly unlimited powers to make law.
In fairness to the learned Attorney General, he agrees that the impugned provi sions are per se invalid.
But he attempted to salvage them by resorting to the doctrine of reading down.
323 Reading a provision down when permissible.
The question emerges whether the doctrine of reading down would be applied to avoid a void law vesting with arbitrary power with a naked hire and fire draconian rule.
It is difficult to give acceptance to extreme contention raised by Sri Garg and Sri Rama Murthy that the Courts cannot in the process of interpretation of the Statute would not make law but leave it to the legislature for necessary amendments.
In an appropriate case Judges would articulate the inarticulate major premise and would give life and force to a Statute by reading harmoniously all the provisions ironing out the freezes.
But the object is to alongate the purpose of the Act.
In this regard 1 respectfully agree with my learned brother, my Lord the Chief Justice, on the prin ciple of statutory construction.
The question is whether Legislature intended to confer absolute power or would it be construed in such a way that would supplant the law but not supplement law made by the Legislature.
35A. Natural construction.
The golden rule of statutory construction is that the words and phrases or sentences should be construed according to the intent of legislature that passed the Act.
All the provisions should be read together.
If the words of the statutes are in themselves precise and unambiguous, the words, or phrases or sentences themselves alone do, then no more can be necessary than to expound those words or phrases or sentences in their natural and ordinary sense.
But if any doubt arises from the terms employed by the legislature, it has always been held a safe means of collecting the inten tion, to call in aid the ground and cause of making the statute, and to have the recourse to the preamble, which is a key to open the minds of the makers of the statute and the mischiefs which the Act intend to redress.
In determining the meaning of statute the first question to ask always is what is the natural or ordinary meaning of that word or phrase in its context.
It is only when that meaning leads to some result which cannot reasonably be supposed to have been the intent of the legislature then it is proper to look for some other possible meaning then the court cannot go fur ther.
Craie 's Statute Law, Seventh Edition in Chapter 5, at page 64 it is stated that where the words of an Act are clear, there is no need for applying any of the principles of interpretation which are merely presumptions in cases of ambiguity in the statute.
The safer and more correct course of dealing with the question of construction is to take 324 the words themselves and arrive, if possible, at their meaning without in the first place refer to cases.
Where an ambiguity arises to supposed intention of the legislature, one of the statutory constructions, the court profounded is the doctrine.
of reading down.
Lord Reid in Federal Steam Navigation Co. vs Department of Trade and Industry, at p. 100 (as also extracted by Cross Statutory Interpretation, Butterworths ' Edition, 1976 at page 43 in preposition 3) has stated thus: "the judge may read in words which he considers to be neces sarily implied by words which are already in the statute and he has a limited power to add to, alter or ignore statutory words in order to prevent a provision from being unintelli gible, absured or totally unreasonable, unworkable, or totally irre concileabIe with the rest of the statute.
" At page 92 of the Cross Statutory Interpretation, the author has stated that "The power to add to, alter or ignore statutory words is an extremely limited one.
Generally speaking it can only be exercised where there has been a demonstrable mistake on the part of the draftsman or where the consequence of applying the words in their ordinary, 6r discernible secondary, meaning would be utterly unreasona ble.
Even then the mistake may be thought to be beyond correction by the court, or the tenor of the statute may be such as to preclude the addition of words to avoid an unrea sonable result.
" Therefore, the Doctrine of Reading Down is an internal aid to construe the word or phrase in statute to give reasonable meaning, but not to detract distort or emasculate the language so as to give the supposed purpose to avoid unconstitutionality 35C.
This Court in Saints High School, Hyderabad vs Govt.
of A.P.; , held that: "this Court has in several cases adopted the reading down the provisions of the Statute.
The reading down of a provi sion of a statute puts into operation the principle that so far as is reasonably possible to do so, the legislation should be construed as being within its power.
It is the principle effect that where an Act is expressed in language of a generality which makes it capable, if read literally, of applying to matters beyond relevant legislative power, the Court would construe it in a more limited sense so as to keep it within the power.
" 325 Similarly restricted meaning was ascribed by Maxwell in his Interpretation of the Statutes XII Edn.
at p. 109 under the caption "Restriction of operation" that sometimes to keep the Act within the limits of its scope and not to disturb the existing law beyond what the object requires, it is construed as operative between certain purposes only even though the language expresses no such circumspection of field of operation.
It is, thus, clear that the object of reading down is to keep the operation of the statute within the purpose of the Act and consitutionally valid.
In this regard it is equally of necessity to remind ourselves as held by this Court in Minerva Mills ' case that when the effect of article 31 was asked to be read down so as to save it from unconstitu tionality this Court held that it is not permissible to read down the statutory provisions when the avowed purpose is to confer power on an authority without any limitation whatever and that at p. 259D and G it was held that the principle of reading down cannot be used to distort when words of width are used even advertantly.
In Elliott Ashton Welsh, II vs United States.
; (26 Lawyer 's Edition 2nd, 308 at 327) Herfan, J. at 327 held that "when the plain thrust of a legislative enactment can only be circumvented by distortion to avert constitutional collision, it can only by exalting form over substance that one can justify veering of the path that has been plainly marked by the Statute.
Such a course betrays extreme skepticism as to constitutionality and in this instance reflects a groping to preserve conscientious objecter exemption at all costs I cannot subscribe wholly to emasculated construction of a statute to avoid facing con stitutional question in purported fidelity to the statutory doctrine of avoiding unnecessary resolution of constitution al issues.
" 36A. In Nalinakhya Bysack vs Shyam Sunder Haldar & Ors., ; at 544 45 this Court has refused to rewrite legislation to make up omissions of the Legislature.
In Moti Ram Deka 's case when Rule 148(3) and Rule 149(3) of the Railway Establishment Code were sought to be sus tained on the 'principle of reading down ', this court held thus: "There is one more point which still remains to be consid ered and that is the point of construction.
The learned Addl.
Solicitor General argued that in construing the im pugned R. 148(3) as well as R. 149(3), we ought to take into account the fact that the Rule as amended has been so 326 framed as to avoid conflict with or non compliance of, the provisions of article 311(2), and so, he suggests that we should adopt that interpretation of the Rule which would be consistent with article 311(2).
The argument is that the termi nation of services permissible under the impugned rules really proceeds on administrative grounds or considerations of exigencies of service.
If, for instance, the post held by a permanent servant is abolished, or the whole of the cadre to which the post belonged is brought to an end and the railway servant 's services are terminated in consequence, that cannot amount his removal because the termination of his service is not based on any consideration personal to the servant.
In support of this argument, the Addl.
Solici tor General wants us to test the provision contained in the latter portion of the impugned rules.
We are not impressed by this argument.
What are not impressed by this argument.
What the latter portion of the impugned Rules provide is that in case a railway servant is dealt with under that portion, no notice need be served on him.
The first part of the Rules can reasonably and legitimately take in all cases and may be used even in respect of cases falling under the latter category, provided, of course, notice for the speci fied period or salary in lieu of such notice is given to the railway servant.
There is no doubt that on a fair construc tion, the impugned Rules authorise the Railway Administra tion to terminate the services of all the permanent servants to whom the Rules apply merely on giving notice for the specified period or on payment of salary in lieu thereof and that clearly amounts to the removal of the servant in ques tion.
Therefore, we are satisfied that the impugned rules are invalid inasmuch as they are inconsistent with the provisions contained in article 311(2).
The termination of the permanent servant 's tenure which is authorised by the said Rules is no more and no less than their removal from serv ice, and so, article 311(2) must come into play in respect of such cases.
That being so, the Rule which does not require compliance with the procedure prescribed by article 311(2) must be struck down as invalid.
I am, therefore, inclined to hold that the Courts though, have no power to amend the law by process of inter pretation, but do have power to mend it so as to be in confirmity with the intendment of the legislature.
Doctrine of reading down is one of the principles of 327 interpretation of statute in that process.
But when the offending language used by the legislature is clear, precise and unambiguous, violating the relevant provisions in the constitution, resort cannot be had to the doctrine of read ing down to blow life into the void law to save from uncon stitutionality or to confer jurisdiction on the legislature.
Similarly it cannot be taken aid of to emasculate the pre cise, explicit, clear and unambiguous language to confer arbitrary, unbridled and uncanalised power on an employer which is a negation to just, fair and reasonable procedure envisaged under Articles 14 and 21 of the Constitution and to direct the authorities to record reasons, unknown or unintended procedure, in the manner argued by the learned counsel for the appellants.
At the cost of repetition it is to reiterate that when the authority intends to take disciplinary action for imposing penalty of dismissal, removal or reduction in rank of an employee, an elaborate procedure has been provided in Regulation 15 to conduct an enquiry into misconduct after giving reasonable opportunity.
Residuary power has been avowedly conferred in Regulation 9(b) with wide discretion on the appropriate authority to take actions on similar set of facts but without any guidelines or procedure at the absolute discretion of the same authority.
The language of Regulation 9(b) is not capable of two interpretations.
This power appears to be in addition to the normal power in Regulation 15.
Thereby the legislative intention is manifest that it intended to confer such draconian power couched in language of width which hangs like Damocles sword on the neck of the employee, keeping every employee on tenterhook under constant pressure of uncertainty, precarious tenure at all times right from the date of appointment till date of superannuation.
It equally enables the employer to pick and choose an employee at whim or vagary to terminate the serv ice arbitrarily and capriciously.
Regulation 9(b), thereby deliberately conferred wide power of termination of services of the employee without following the principle of audi alteram partem or even modicum of procedure of representation before terminating the services of permanent employee.
It is well settled rule of statutory construction that when two interpretations are possible one which would preserve and save constitutionality of a particular Statute, would be preferred to the other that would render it unconstitutional and void.
When the language is clear, unambiguous and specific and it does not lead to the constructions, it is not permissible to read into those provisions something which is not intended.
It is undoubtedly true as rightly contended by 328 Mr. Ashok Desai, the learned Solicitor General that the power to take appropriate and expeditious action to meet the exigencies of weeding out inefficient, corrupt, indolent officers or employees from service should be provided and preserved to the competent authority.
Any action taken without any modicum of reasonable procedure and prior oppor tunity always generates an unquenchable feeling that unfair treatment was meted out to the aggrieved employee.
To pre vent miscarriage of justice or to arrest a nursing grievance that arbitrary, whimsical or capricious action was taken behind the back of an employee without opportunity, the law must provide a fair, just and reasonable procedure as is exigible in a given circumstances as adumbrated in proviso to article 311(2) of the Constitution.
If an individual action is taken as per the procedure on its own facts its legality may be tested.
But it would be no justification to confer power with wide discretion on any authority without any procedure which would not meet the test of justness, fair ness and reasonableness envisaged under articles 14 and 21 of the Constitution.
In this context it is important to empha sise that the absence of arbitrary power is the first essen tial of the rule of law upon which our whole constitutional system is based.
In a system governed by rule of law, dis cretion, when conferred upon executive authorities, must be confined within defined limits.
The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is.
If a decision is taken without any princi ple or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law.
(See Dicey "Law of the Constitution" 10th Edn., Introduction cx).
"Law has reached its finest moments", stated Douglas, J. in United States vs Wunderlick; , "then it has freed man from the unlimited discretion of some rules . . where discre tion is absolute, man has always suffered".
It is in this sense that the rule of law may be said to be the sworn enemy of caprice.
Discretion, as Lord Mansfield stated it in classic terms in the case of John Wilkes "means should discretion guided by law.
It must be governed by rule, not by humour; it must not be arbitrary, vague and fanciful," as followed in this Court in S.G. Jaisinghani vs Union of India.
, ; 40.
In an appropriate case where there is no sufficient evidence available to inflict by way of disciplinary meas ure, penalty of dismissal or removal from service and to meet such a situation, it is not as if that the authority is lacking any power to make Rules or regulations to give a notice of opportunity with the grounds or the material on records on 329 which it proposed to take action, consider the objections and record reasons on the basis of which it had taken action and communicate the same.
However scanty the material may be, it must form foundation.
This minimal procedure should be made part of the procedure lest the exercise of the power is capable of abuse for good as well as for whimsical or capricious purposes for reasons best known to the authority and not germane for the purpose for which the power was conferred.
The action based on recording reasoning without communication would always be viewed with suspicion.
There fore, 1 hold that conferment of power with wide discretion without any guidelines, without any just, fair or reasonable procedure is constitutionally anathema to articles 14, 16(1), 19(1)(g) and 21 of the Constitution.
Doctrine of reading down cannot be extended to such a situation.
It is undoubted that in In re Hindu Women 's Right to Property Act, involve the interpretation of single word "property" in the context to legislative compe tency but that cannot be extended to the facts of these cases.
R.M.D. Charnarbaugwalla 's case is of severability and of a single word competition.
The interpretation therein also cannot be extended to the facts of these cases.
Even the case of K.N. Singh vs State of Bihar, [19621 Suppl.
2 SCR 769 involve interpretation of Section 124(A) I.P.C. in the context of freedom of speech enshrined under article 19(1)(a) of the Constitution.
The interpretation was put as to subserve the freedom under article 19(1)(a).
R.L. Arora vs State of U.P.; , does not involve of the doctrine of reading down so as to cut down the scope of Fundamental Right.
Similarly Jagdish Pandey vs Chancellor of the Bihar, 1 also does not concern with application of doctrine of reading down so as to sacrifice the principle of natural justice which are considered as essential part of rule of law.
In Amritsar Municipality vs State of Punjab; , the court ascertained the intention of the Legislature and interpreted the Act con sistent with the said intention.
Sunil Batra vs Delhi Admn.
, ; is also a decision where it was found that the intention of the Legislature was not to confer arbitrary power.
N.C. Dalwadi vs State of Gujarat, is also a case giving reasonable interpretation of the inten tion of the provisions of the Statute and is not capable of the meaning.
In Charanlal Sahu vs Union of India, [1989] Suppl.
Scale (1) at p. 61 on which strong reliance was placed by both the learned Attorney General and Solicitor General, is a case capable of two interpretations to Sec. 4.
The decisions cited by Shri Ashok Desai i.e. Delhi Transport 330 Undertaking vs Balbir Saran Goel, ; ; Air India Corporation vs Rebellow, ; ; Municipal Corporation of Greater Bombay vs P.S. Malvankar, ; concern the industrial Iaw wherein the validity of rules on the touch stone of the reasonableness, fairness or justness was not considered.
The prevailing doctrine of reasonable classification and nexus had their play to uphold the validity of the provisions.
It is undoubtedly true as contended by Sri Bhasin, learned counsel for the intervener, that it is open to the authorities to terminate the services of a temporary employ ee without holding an enquiry.
But in view of the match of law made, viz., that it is not the form of the action but the substance of the order is to be looked into, it is open to the Court to lift the veil and pierce the impugned action to find whether the impugned action is the foundation to impose punishment or is only a motive.
A larger Bench of seven Judges of this Court in Shamsher Singh vs State of Punjab, elaborately considered the question and laid down the rule in this regard.
The play of fair play is to secure justice procedural as well as substantive.
The substance of the order, the effect thereof is to be looked into.
Whether no misconduct spurns the action or whether the services of a probationer is terminated without imputation of misconduct is the test.
Termination simpliciter, either due to loss of confidence or unsuitability to the post may be a relevant factor to terminate the services of a proba tioner.
But it must be hedged with a bonafide over all consideration of the previous conduct without trained with either mala fide or colourable exercise of power or for extraneous considerations.
Such actions were upheld by this Court.
The action must be done honestly with due care and prudence.
In view of the march of law made by article 14, in particular after Maneka Gandhi 's case, it is too late in the day to contend that the competent authority would be vested with wide discretionary power without any proper guidelines or the procedure.
The further contention that the preamble, the other rules and the circumstances could be taken aid of in reading down the provisions of the impugned rules or the regulations is also of no assistance when it is found that the legislative intention is unmistakably clear, unambiguous and specific.
Thus considered, I have no hesitation to conclude that the impugned regulation 9(b) of the Regula tions are arbitrary, unjust, unfair and unreasonable offend ing articles 14, 16(1), 19(1)(g) and 21 of the Constitution.
It is also opposite to the public policy and thereby is void under Section 23 of the .
331 44.
It is made clear that, as suggested by this Court in Hindustan Steel Case that it is for concerned to make appro priate rules or regulations and to take appropriate action even without resorting to elaborate enquiry needed consist ent with the constitutional scheme.
The correctness of the decision in Tulsiram Patel 's case though was doubted in Ram Chunder vs Union of India, it is unneces sary to go into that question.
For the purpose of this case it is sufficient to hold that proviso to article 311(2) itself is a constitutional provision which excluded the applicabil ity of article 311(2) as an exception for stated grounds.
It must be remembered that the authority taking action under either of the clauses (b) or (c) to proviso are enjoined to record reasons, though the reasons are not subject to judi cial scrutiny, but to find the basis of which or the ground on which or the circumstances under which they are satisfied to resort to the exercise of the power under either of the two relevant clauses to proviso to article 311(2) of the Con stitution.
Recording reasons itself is a safeguard for preventing to take arbitrary or unjust action.
That ratio cannot be made applicable to the statutory rules.
Accordingly I hold that the ratio in Brojonath 's case was correctly laid and requires no reconsideration and the cases are to be decided in the light of the law laid above.
From the light shed by the path I tread, I express my deep regrets for my inability to agree with my learned brother, the Hon 'ble Chief Justice on the applicability of the doctrine of reading down to sustain the offending provi sions.
I agree with my brothren B.C. Ray and P.B. Sawant, JJ.
with their reasoning and conclusions in addition to what I have laid earlier.
The appeal is accordingly dismissed, but without costs.
Similarly Civil Appeal No. 1115 of 1976 is allowed and the monetary relief granted is reasonable, but parties are directed to bear their own costs.
Rest of the matters will be disposed of by the Division Bench in the light of the above law.
In view of the majority judgment, Civil Appeal No. 2876 of 1986 (Delhi Transport Corporation vs D.T.C. Mazdoor Con gress) is dismissed.
Civil Appeal No. 11 15 of 1976 (Satnam Singh vs Zilla Parishad Ferozepur & Ant., is allowed and the other cases snail be placed before a division bench for final disposal.
C.A. 2876/86 is dismissed N.P.V. &C.A. 1115/76 isallowed.
| The respondent State had acquired a large extent of land out of the appellant 's estate under the Kerala Land Acquisi tion Regulation, 1089 for river valley irrigation project and to establish an industrial project.
The notification under Section 4(1) of the Regulation was published on Octo ber 31, 1961.
This was followed by the declaration under Section 6(1) published on February 22, 1962.
The Collector by his awards dated March 29, 1962 deter mined the market value under Section 22(1) of the Regulation at Re.O.04 per cent for certain lands, Re.O.12 per cent for certain other lands, and Rs.30 per cent for the wet lands as against the claim of Rs.40 and 50 per cent.
Compensation for the trees at timber value was also given.
The total compen sation fixed was Rs.4.84 lakhs.
Dissatisfied therewith the appellant sought reference under Section 18 of the Regulation.
They also claimed sepa rate value for fruit bearing trees on potential value and charges for severence and injurious effects on the remaining lands.
In support of the claim they relied on exhibit P. 7 dated March 9, 1951 and exhibit P. 9 dated April 4, 1957 which worked out at Rs.52.50 and Rs.43.50 per cent respectively, and the acquisition forming subject matter of exhibit P. 10 pertaining to the land in the vicinity of the industrial project award ed at the rate of Rs.80 per cent for paddy lands and Rs.43 for dry land.
The Government pleader stated before the civil court that exhibit P. 9 could form the basis for determining the market value.
The court enhanced the market value @ Rs.40 50 per cent as claimed in addition to a sum of Rs.30 to 38 per cent.
It awarded in all Rs.20.20 lakhs on all counts includ ing severence and injurious effects, 15 per cent solatium and also 6 per cent interest on additional compensation from the date of taking possession till date of payment.
363 The High Court found that the lands covered by exhibit P. 7 and exhibit P. 9 were paddy lands cultivated by irrigation sources and situated about four miles away from the acquired lands which were not irrigated and therefore held that these could not form the basis for determining market value.
Similarly, it found exhibit P. 10 could not form a base to fix the market value.
The High Court did not accept the evidence adduced by the State, which was rejected by the civil court as well.
The statement made by the State Advocate General across the bar that the market value could be fixed at Rs. 18 per cent was also not taken into account.
Consequently, it reversed the awards and decrees of the civil court.
In these appeals by special leave it was contended for the appellant that having rejected the documents produced by the State the High Court ought to have relied upon the documents produced by the appellant as comparable sales and consumed the compensation awarded by the civil court, that exhibit P. 7, 9 and 10 furnished the best material, that the Government pleader had conceded before the trial court that exhibit P. 9 could form the basis for determining the market value, that they had incurred huge expenditure on civil works for protection of the rest of the estate from injuri ous effects for which they should be recompensated, that the potential value of the trees had to be taken into account in determining the market value, that they were entitled to compensation for severence due to submersion of the lands and that they were also entitled to payment of interest on solatium.
Allowing the appeals partly, the Court, HELD: 1.1 When the Courts are called upon to fix the market value of the land in compulsory acquisition, the best evidence of the value of property is the sale of the ac quired land to which the claimant himself is a party, in its absence the sales of the neighbouring lands possessed of similar potentiality or fertility or other advantageous features made within a reasonable time of the date of noti fication in bona fide transactions on the hypothesis of a willing seller and a willing purchaser but not too anxious a buyer, dealing at arms length nor facade of sale or ficti tious and unreal transactions of speculative nature brought into existence in quick succession or otherwise to inflate the market value.
This, however, does not preclude the Court from taking any other special circumstances into considera tion, the requirement being always to arrive at as nearly as possible an estimate of the market value judged by an objec tive standard.
[181C 182D] 364 Gajapati Raju vs Revenue Divisional Officer, ; Special Land Acquisition Officer vs Adinarayana Setty, [1959] Suppl.
1 S.C.R. 404; Tribeni Devi & Ors.
vs Collector of Ranchi; , ; Dollor Co. Madras vs Collector of Madras, ; Chandra Bansi Singh & Ors. etc vs State of Bihar & Ors. etc.; , ; Tahsildar, Land Acquisition Visakhapatnam vs P. Narasingh Rao & Ors., ; Collector, Raigarh vs Hari Singh Thakur & Anr., ; ; Administrator General of West Bengal vs Collector, Varanasi, ; ; Mehta Ravindrarai Ajitrai vs State of Gujarat, ; and Hindustan Oil Co. Ltd. vs Special Duty Collector (Land Acquisition), [1990] 1 S.C.R. 59, referred to. 1.2 The prices fetched for smaller plots cannot form basis for valuation of large tracts of land as the two are not comparable properties.
Smaller plots always would have special features like the urgent need of the buyer, the advantageous situation, the like of the buyer etc.
Similar ly, the land situated on the frontage have special advantage and the land situated in the interior undeveloped area will not have the value at par since the latter will have lower value then the former.
So is the case with orchard land and agricultural land, the former being superior in quality as compared to the latter.
If such sales are relied upon rea sonable reduction should be given.
[182B C] Smt.
Kaushalva Devi Bogra & Ors.
vs The Land Acqui sition Officer, Aurangabad & Anr., ; ; Pridviraj vs State of Madhya Pradesh, ; ; Padma Uppal etc.
vs State of Punjab & Ors., [1977] 1 S.C.R. 329; Chimanlal Hargovinddas vs Special Land Acquisition Officer, Poona & Anr., ; and Mantaben Manibhai vs Special Land Acquisition Officer, Baroda, A.I.R. , referred to.
1.3 In some cases for lack of comparable sales it may not be possible to adduce evidence of sale of the neighbour ing lands possessed of same or similar quality.
So, insist ence on abduction of precise or scientific evidence would cause disadvantage to claimants in not getting the reasona ble and proper market value.
The courts of facts should, therefore, keep before them always the even scales to adopt pragmatic approach without indulging in facts of imagination and assess the market value which is capable to fetch rea sonable compensation.
They may in that process sometimes trench on the border of the guess work but mechanical as sessment should be eschewed.
Misplaced sympathies or undue emphasis solely on the claimants ' right to compensation would 365 place heavy burden on the public exchequer to which everyone contributes by direct or indirect taxes.
[185D G; 184F G] 1.4 In the instant case, the High Court found that exhibit P. 7 and P. 9 relied on by the civil court were not applica ble as the lands covered by them were paddy fields cultivat ed by irrigation sources and situated four miles away from the acquired unirrigated lands.
Similarly, it also found that exhibit P. 10 could not be relied on.
The High Court, therefore, could not be said to be unjustified in reversing the awards and decrees of the civil court.
[186B D] 2.
The amount awarded by the Land Acquisition Collector forms an offer.
It is for the claimants to adduce relevant and material evidence to establish that the acquired lands were capable of fetching higher market value and the amount offered by the Land Acquisition Collector was inadequate and he proceeded on a wrong premise or principle.
It is also the duty of the State to adduce evidence in rebuttal.
[183B, G] Ezra vs Secretary of State for India, I.L.R. ; Raja Harish Chandra vs Dy.
Land Acquisition Officer, ; Khorshed Shapoor Chenai, etc.
vs As sistant Controller of Estate Duty; , ; Dr. G.H. Grant vs State of Bihar, ; ; Asstt.
Development Officer vs Tayaballi, AIR ; Tah sildar, Land Acquisition, Visakhapatnam vs P. Narasingh Rao Secretary of State, AIR 1919 Cal.
1008; Naresh Chandra Bose vs State of West Bengal & Ors., AIR 1955 Cal. 398; Smt.
Kusumgauri Ramray Munshi & Ors.
vs The Special Land Acquisi tion Officer, Ahmedabad, ; Maharao Shri Madansinhji vs State of Gujarat, AIR 1969 Gujarat 270 and Chaturbhuj Panda & Ors.
vs Collector, Raigarh, ; , referred to.
2.2 In the instant case the evidence produced by the appellant was found untrustworthy by the High Court.
It also did not accept the evidence adduced by the State.
[186E F] 3.1 The Appellate Court after rejecting the evidence may have to find whether there are any circumstantial or other material evidence on record to fix reasonable market value.
The State Advocate General having stated across the bar in the High Court that the market value can be fixed at Rs.18 per cent, a concession made by him with all responsibility on behalf of the State, the High Court was not justified in 366 not taking into account this submission.
[186G I87B] 3.2 Any concession made by the Government pleader in the trial court cannot bind the Government as it is always unsafe to rely on the wrong or erroneous or wanton conces sion made by the counsel appearing for the State unless it is in writing on instructions from the responsible officer.
Otherwise it would place undue and needless heavy burden on the public exchequer.
[187C] 3.3 The claimants are, therefore, entitled to the market value @ Rs.18 per cent to the lands other than those to which the Collector awarded @ Rs.30 per cent, as the refer ence court shall not reduce the market value to less than that awarded by the Collector as enjoined under the statute.
From the very nature of compulsory acquisition, 15 per cent solatium as additional compensation was statutorily fixed.
Therefore, determination of additional market value is unwarranted.
[187E] 3.4 Section 25(3) of the Regulation contemplates payment of interest on solatium to recompensate the owner of the land for loss of user of the land from the date of taking possession tilldate of payment into court.
The claimants are, therefore, entitled to interest on solatium.
It is fixed at 6 per cent on the excess market value determined under the judgment including solatium from the date of taking possession till the date of payment.
In other re spects judgment of the High Court is confirmed.
[189G 190B] Union of India vs Shri Ram Mehar & Anr., [1973] 2 S.C.R. 720, referred to. 4.
The Commissioner who collected the evidence in re spect of the injurious effects on the remaining lands of the claimants admitted in the cross examination that the appel lant did not expend any money on civil works.
Though from the date of the acquisition till the date of evidence more than six years had passed by the appellant had not produced any material or account books of the estate to establish that they have expended any money in this regard.
Both the engineers examined on behalf of the State and also appel lant 's witnesses admitted that the road passing through the lands was being used by the appellant to carry its forest produce etc.
Though during rainy season that too for a short period, at some places the water gets stagnated on the roads at lower levels but that stand no impediment for the car riage of the goods.
This phenomena was prevalent even before acquisition.
The value of the land of the appellant had not been injuriously effected due to acquisition.
No 367 damage due to severence was caused.
Under these circum stances, the appellant was not entitled to compensation in this regard.
[187F 188D] 5.
The Sub Judge appears to be too anxious to award whatever is asked for on mechanical appreciation without subjecting the evidence to legal and critical scrutiny and analysis.
In such a case, even if the assessment of valua tion is modified or affirmed in an appeal as apart of the judicial process, the conduct of the judicial officer, drawable from an overall picture of the matter would yet be available to be looked into.
In appropriate cases it may be opened to draw inferences even from judicial acts of the misconduct.
The person concerned shall not, therefore, camouflage the official act to a hidden conduct in the function of fixing arbitrary or unreasonable compensation to the acquired land.
V.R. Katarki vs State of Karnataka & Ors., Civil Appeal No. 4392 of 1986 decided on March 22, 1990, referred to.
|
Civil Appeal No. 722 of 1968.
Appeal by Special Leave from the Judgment and order dated the 17th July, 1967 of the Mysore High Court in Writ Petition No. 989 of 1965.
Narayan Nettar and K. R. Nagaraja for the Appellant.
Mrs. Shyamla Pappu and Vineet Kumar for the Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
The circumstances leading to this appeal, directed against a judgment of the High Court of Mysore, are as follows: The respondent herein entered the service of the Princely State of Mysore in 1935 as Instructor of Tailoring in the Department of Public Instructions.
In 1949, three occupational Institutes (Polytechnics) at Hassan, Devangere and Chintamani were started in the State.
The respondent was sent on deputation to serve in the Polytechnic at Devangere as Instructor in Tailoring and he joined the new post on November 28, 1949.
One Shri K. Narayanaswamy Chetty who was also an Instructor in Tailoring in the Department of Public instruction was also deputed to the occupational Institute at Hassan and joined duty there on December 1, 1949.
This K. N. Chetty was .
far junior to the respondent in service.
Special officer in Charge of the three occupational Institutes considered the names of the respondent and K. N. Chetty for absorption as Instructors in Tailoring and recommended for their absorption with effect from the respective dates of their joining duty, after deputation, in the Institutes.
Accordingly K. N. Chetty was absorbed with effect from December 1, 1949, but no order was passed in the case of the respondent despite repeated representations made by the latter.
In 1953, the then State of Mysore set up the Department of Technical Education and the Polytechnic at Devangere became part of that Department.
The respondent continued tp serve on deputation in that Department.
In 1955, for no fault of the respondent, the Government passed orders reverting him to his parent Department.
On June 11, 1956, the respondent was again posted on deputation as Instructor in Tailoring in the Polytechnic at Bellary "on provisional basis".
The intervening period between his reversion and reposting to the Polytechnic was treated as leave.
On the re organization of States with effect from November 1, 1956, his services were allotted to the new State of Mysore.
The respondent continued to make representations to the effect that like other employees who were taken on deputation from other Departments, he should also be absorbed in the Department of Technical Education with effect from November 28, 1949, which was the date on which he initially came on deputation.
257 His specific grievance was that in any case, he could not be discriminated against and treated differently from K. N. Chetty who was junior to him in the parent Department and came on deputation to the Polytechnic establishment subsequently.
The State Government referred the respondent 's case to the Public Service Commission who examined it and by a communication, dated February 2, 1960, made these recommendations in favour of the respondent: "It is stated in the Government letter dated 26 10 1959 that the Director who was the Unit officer for both the departments ordered the transfer of Sri Srinivasa Murthy who was fully qualified as Tailoring Instructor in the Technical Education Department and there was no need to classify the vacancy post to which he was transferred under the then existing rules.
Along with him Sri K. Narayanaswamy C: Chetty who was his junior and possessing similar qualifications was transferred as Tailoring Instructor in the Technical Education Department and was absorbed in the same department by Government in consultation with the Public Service Commission.
The case of Sri Srinivasamurthy is on all fours with that of Sri Narayanaswamy Chetty and he is deserving of similar treatment.
D ' In view of the above, and since Sri Srinivasa Murthy, who was fully qualified was transferred in 1949 by the Director and appointed as Tailoring Instructor under the rules then in force, and as his reversion at this distance of time for no fault of his would cause a great hardship to him, the Commission are of the opinion that he may be absorbed as Tailoring Instructor from the date of his appointment as such as has been ordered in the case of Sri K. Narayanaswamy Chetty." In the opinion of the Commission, the temporary reversion of the respondent to his parent department in 1955 56, was not justified.
Ultimately, the Government by order, dated February 19, 1964, ordered the absorption of the respondent in the Department of Technical Education in the grade of Rs. 150 with effect from the date of the order, in the vacancy in which he was working, subject to these conditions.
(a) that he would not be entitled to the benefit of revision of scales of pay that had been effected in 1957 & 1961 by way of increments or weightage benefit accruing .
thereunder, (b) that he would not be given any more financial benefit or revision of pay or additional increments for his previous service.
Against this order the respondent made representations to the Government praying that his absorption should be related back to 1949 and he be given the benefit of the revisions of pay scale, including weightage benefit.
The Government did not accept the representation.
258 On April 21, 1965, the respondent filed a writ petition under Article 226 of the Constitution in the High Court, for the issue of a writ of mandamus directing his absorption in the Department of Technical Education from the date of his initial appointment therein, namely, November 28, 1949, and to give him benefits of the revisions of pay scales effected in 1957 and 1961 and weightage benefits thereunder.
The order dated February 19, 1964, was impugned on the ground that he had been invidiously discriminated against in the matter of absorption and appointment, while his junior K. Narayanaswamy Chetty, whose case was identical in all respects, and six other officers who were similarly situated, were absorbed in the Department of Technical Education with effect from the initial date of joining duty on deputation.
It was contended that in making the impugned order, contrary to the recommendations of the State Public Service Commission, the State Government had acted arbitrarily and in violation of Articles 14 and 16 of the Constitution.
The petition was opposed by the appellant, who in its counter affidavit.
contended that the respondent had no legal right to be absorbed in the service of the Department of Technical Education from a particular anterior date, or to be given the revised pay scales applicable to those borne permanently in the service of that Department.
It was further contended that the case of the respondent did not stand on the same footing as that of Narayanaswamy Chetty because the order of Chetty 's absorption was passed in 1951 and that of the respondent 's absorption in 1964, and there was a break in the service of the respondent in the Department of Technical Education, in 1955 56.
It was stated that the absorption of the employees which came on : deputation from a particular date, was a concession which could not be claimed as of right, and consequently, a writ of mandamus, as prayed for by the respondent, should not be issued.
The High Court allowed the writ petition and issued a direction that the absorption of the respondent in the Department of Technical Education, be given effect from November 28, 1949 when he initially resumed duty on deputation to the Polytechnic at Devangere.
The High Court further declared that he will be entitled to all consequential benefits from such absorption including the benefit of revision of pay scales in the years 1957 and 1961 and also weightage benefits.
Hence this appeal by the State.
Mr. Nettar appearing for the appellant contends that this case is fully covered by this Court 's decision in K. V. Rajalakshmiah Setty and Anr.
vs State of Mysore and Anr.
The point canvassed by the Counsel is, that the absorption of K. N. Chetty and five others, with effect from particular anterior dates, was not made in pursuance of any principle of policy or statutory rule, but was done as a matter of concession.
It is urged that Articles 14 and 16 of the Constitution cannot be invoked to enforce a mere concession.
Counsel has further made an attempt to show that the respondent and K. N. Chetty were not similarly situated because there was a break in the respondent 's service with the Department of Technical Education.
(1) ; 259 As against this, Mrs. Shyamla Pappu submits that in Rajalakshmiah Setty 's case (supra), the facts were entirely different.
It is emphasised that in the present case, seven employees had come on deputation from other Departments to the Polytechnics and all of them, excepting the respondent, were absorbed permanently in the Department of Technical Education with effect from the dates on which they came on deputation.
Even Narayanaswamy Chetty, who was admittedly junior to the respondent, and was identically situated, was accorded the same treatment.
It is urged that this principle of policy r was ignored in the case of the respondent, and he was without reason singled out for unfair discriminatory treatment.
It is pointed out that his so called "reversion" to the parent Department in 1958 for a short period, was a misnomer.
It was not a reduction in rank, nor a break in the continuity of his service.
Moreover, it was, as the Public Service Commission found, undeserved and could not, by any stretch of reasoning, be considered a ground for meting out discriminatory treatment to the respondent.
We find a good deal of force in the arguments of the learned Counsel for the respondent.
Rajalakshmiah Setty vs State of Mysore (supra) is clearly distinguishable from the facts of the present case.
In that case, the Government of the then State of Mysore, by a notification dated December 12, 1949, directed that the promotions of 63 petitioners therein, from the post of Surveyors as Assistant Engineers were to take effect from that date irrespective of the dates on which they were put in charge of sub divisions.
But by a notification dated May 17, 1950, the Government showed a concession to a different batch of 41 Surveyors, who had been placed in charge of different sub divisions between March 1944 and January 1946, by promoting them as Assistant Engineers, with effect from the dates of occurrence of vacancies, according to seniority.
In November 1958, another batch of 107 persons were similarly promoted as Assistant Engineers with retrospective effect from 1st November 1956, when the new State of Mysore emerged under the States Reorganization Act.
The petitioners therein filed a writ petition praying for the issue of mandamus directing the State to fix their seniority, also, on the basis that they had become Assistant Engineers from the dates on which the vacancies to which they had been posted had occurred. ' The High Court dismissed petition.
On appeal, this Court ; held that the concession shown to the batch of 41 persons who had been appointed before the petitioners and to the batch of 107 persons who had been appointed thereafter, were mere ad hoc concessions and not something which they could.
claim as of right.
It was observed that there was no service rule which the State Government had transgressed, nor the State had evolved any principle to be followed in respect of persons who were promoted to the rank of Assistant Engineers from surveyors.
It may be noted that the grant of the relief prayed for by the 63 petitioners, would have unsettled and caused wholesale alterations of 260 the seniority list with regard to the entire cadre of Engineers thus affecting persons who were not before the Court and who would have been r condemned unheard.
Further, acceptance of the petitioners ' contentions would have unsettled pre Constitution matters, and it would have been directly productive of results going against section 115(7) of the States Re organization Act.
Furthermore, the petitioners in that case .
claimed to be promoted with ' effect from past dates.
There was no , principle of policy or service rule on the basis of which they could ` claim such promotions as of right. ' Lastly, the petitioners in that case were found guilty of serious laches.
Such impediments in the way of the relief claimed by the respondent, do not exist in the present case.
It appears to us that the acceptance of the respondent 's contentions in the present case cannot lead to any untoward results such as were apprehended in Rajalakshmiah 's case (supra).
Indeed, it has not been shown that the absorption of the respondent with effect from November, 1949, would adversely affect even Narayanaswamy Chetty, who was admittedly junior to him in the parent Department.
On the` other hand, it is an undisputed fact that sit other employees, who were similarly situated, were absorbed from the dates on which they initially joined duty, after deputation to the Polytechnics.
It is not the case of the appellant that this principle whereby the absorption in the Department of Technical Education was related back to the date on which a person initially came on deputation, was ever departed from, excepting in the case of the respondent.
This being the case, the High Court was right in holding that the State Government had evolved a principle "that if a person was deputed to the Department of Technical Education from another department and he stayed on in that other department for a reasonable long time his absorption in that department should be made to relate back to the date on which he was initially sent".
There was no justification whatever to depart from this principle of policy in the case of the respondent, who was, in all material respects, in the same situation as K. N. Chetty.
very rightly, the High Court has held that his "impermissible reversion" for a short while in 1955 to the parent department was no ground to hold that he was not similarly situated as K. Nariayanaswamy Chetty.
This so called reversion to the parent Department for a short period in 1955 56, could not by any reckoning, be treated as a break in his service, this period having been treated as leave.
Nor did it amount u ' to reduction in rank.
In any case, this 'reversion ' was not ordered owing to any fault of the respondent.
It is not the appellant 's case " that the respondent 's work in the Department of Technical Education 261 was found unsatisfactory or that he was not otherwise suitable or qualified to hold the post of Tailoring Instructor in that Department.
That he was suitable to be absorbed in that post, is manifest from the recommendation of the Public Service Commission and is implicit in the impugned order, itself.
For the reasons aforesaid, we are of opinion that in the special circumstances of this case, the High Court was fully justified in granting the relief, it did, to the respondent.
The appeal fails and is dismissed with costs.
P.H.P. Appeal dismissed.
| The respondents are dealers under the Tamil Nadu Sales Tax Act.
Section 14 of the Central Sales Tax Act declares certain goods enumerated therein of ` ' special importance in inter state trade or commerce.
The list of goods given at serial No. IV reads as under: (IV) Iron and Steel, that is to say (a) pig iron and iron scrap .
(b) iron plates sold in the same form in which they are directly produced by the rolling mill; (c) steel scrap, steel ingots, steel billets, steel bars and rods, (d) (i) steel plates (ii) steel sheets, (iii) sheet bars and tin bars, (iv) rolled steel sections, I mill.
(v) tool alloy steel, J sole in the same from in which they are directly produced by the rolling mill.
The said clause IV was amended by the Central Sales Tax Amendment Act, Act 61 of 1972 by which certain more entries were added.
Section 15 of the Central Sales Tax Act provides that the tax payable under a State Law on sale or purchase of declared goods shall not be levied at more than one stage.
Respondents used to purchase iron scrap and thereafter used to convert them into steel rounds, flats, plates etc.
The scrap was already subject to tax once.
The respondents contended that the entry Iron & Steel was wide enough to include scrap as well as the steel rounds, flats, plates, etc.
made out of the scrap which was subject to tax once and that, therefore, the sale of the steel rounds, flats, plates, etc., cannot be subjected to tax again under the Tamil Nadu Sales Tax Act.
The High Court accepted the contention of the respondents.
Allowing an appeal by certificate, ^ HELD: 1.
The intention was to consider each sub item in clause IV as a separate taxable commodity for purposes of sales tax.
The object was not to lay down that all the categories or sub items of goods specified separately were to be viewed as a single saleable commodity called iron and steel for purposes j of determining a starting point for a series of sales.
The note against sub division of Clause IV makes it clear that even each sub category of a sub item retains its identity as a commercially separate item for purposes of sales tax so long as it retains the sub division.
[171Gm, 172B C] 2.
The expression 'that is to say ' is employed to make it clear and fix the meaning of words to be explained or defined.
Such words are not used, as a rule, to amplify a meaning while removing a possible doubt for which purpose the word 'includes ' is generally employed.
The precise meaning of the words 169 that is to say ' must vary with the context.
The purpose of the expression in a sales A lax law would be to indicate the types of goods each of which would constitute separate class for a series of sales.
[172F H, 173B] 3.
The chemical composition of iron and steel cannot afford a clue to the meaning of iron and steel.
Sales Tax Law taxes sales of goods and is not a taxation on sales of substance out of which goods are made.
We prefer to follow the more natural and normal interpretation which follows plainly from the fact of separate specification numbering of each item.
State of Madhya Pradesh vs Hira Lal; (1966) 17 STC 313 315 distinguished.
The case cf Devidas applied.
[173C. E F] 4.
It has not been shown to, us that any provision of the Tamilnadu Sales Tax Act violates section 15 of the Central Sales Tax Act enacted in accordance with Article 286(3) of the Constitution.
Section 2(j) of the Tamil Nadu Act defines goods and section 4 imposes charge in respect of tax on declared goods.
The Tamilnadu Act borrows clause (IV) of section 14 of the Central Sales Tax Act.
[176 C H] C
|
Appeal No. 214 of 1954.
Appeal under Article 133 (1) (c) of the Constitution of India from the Judgment and Order dated the 17th July 1953 of the, High Court of Rajasthan (Bapna and Ranawat JJ.) in Civil Writ Application No. 128 of 1953.
R. K. Rastogi and Ganpat Rai, for the appellant.
R. C. Prasad, for section L. Chhibber, for respondent No. 2. 1955.
March 22.
The Judgment of the Court was delivered by BOSE J.
The second respondent Bhurey Lal filed an election petition under section 100 of the Representation of the People Act against the appellant Sangram Singh and two others for setting aside Sangram Singh 's election.
The proceedings commenced at Kotah and after some hearings the Tribunal made an order on 11 12 1952 that the further sittings would be at Udaipur from the 16th to the 21st March, 1953.
It was discovered later that the 16th was a public holiday, so on 5 1 1953 the dates were changed to "from the 17th March onwards" and the parties were duly notified.
On the 17th the appellant did not appear nor did any of the three counsel whom he had engaged, so the Tribunal proceeded ex parte after waiting till 1 15 P.m.
The Tribunal examined Bhurey Lal and two witnesses on the 17th, five more witnesses on the 18th and on the 19th the case was adjourned till the 20th.
On the 20th one of the appellant 's three counsel, Mr, Bharat Raj, appeared but was not allowed to 5 take any part in the proceedings because the Tribunal said that it was proceeding ex parte at that stage.
Three more witnesses were then examined.
On the following day, the 21st, the appellant made an application asking that the ex parte proceedings be set aside and asking that he be allowed to cross examine those of Bhurey Lal 's witnesses whose evidence had already been recorded.
The Tribunal heard arguments and passed an order the same day rejecting the application on the ground that the appellant had "failed to satisfy ourselves that there was any just or unavoidable reason preventing the appearance of respondent No. 1 himself or of any of his three learned advocates between the 17th and the 19th of March, 1953", and it added "at all events, when para 10 of the affidavit makes it clear that Shri Bharatraj had already received instructions to appear on 17 3 1953 there was nothing to justify his non appearance on the 18th and 19th of March, 1953, if not, on the 17th as well".
The appellant thereupon filed a writ petition under article 226 of the Constitution in the High Court of Rajasthan and further proceedings before the Tribunal were stayed.
The High Court rejected the petition on 17 7 1953 on two grounds (1) "In the first place, the Tribunal was the authority to decide whether the reasons were sufficient or otherwise and the fact that the Tribunal came to the conclusion that the reasons set forth by counsel for the petitioner were insufficient cannot be challenged in a petition of this nature" and (2) "On the merits also, we feel no hesitation in holding that counsel for the petitioner were grossly negligent in not appearing on the date which had been fixed for hearing, more than two months previously".
Five months later, on 16 12 1953, the High Court granted a certificate under article 133(1) (C) of the Constitution for leave to appeal to this Court.
The only question before the High Court was whether the Tribunal was right in refusing to allow the appellant 's counsel to appear and take part in the proceedings on and after the 20th of March, 1953, and the first question that we have to decide is whether that is sufficient ground to give the High Court jurisdiction to entertain a writ petition under article 226 of the Constitution.
That, in our opinion, is no longer res integra.
The question was settled by a Bench of seven Judges of this Court in Hari Vishnu vs Ahmad Ishaque(1) in these terms: "Certiorari will also be issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an op portunity to the parties to be heard, or violates the principles of natural justice".
That is exactly the position here.
It was urged that that cannot be so in election matters because of section 105 of the Representation of the People Act of 1951 (Act XLIII of 1951), a section which was not considered in the earlier case.
It runs thus: "Every order of the Tribunal made under this Act shall be final and conclusive".
It was argued that neither the High Court nor the Supreme Court can itself transgress the law in trying to set right what it considers is an error of law on the part of the Court or Tribunal whose records are under consideration.
It was submitted that the legislature intended the decisions of these tribunals to be final on all matters, whether of fact or of law, accordingly, they cannot be said to commit an error of law when, acting within the ambit of their jurisdiction, they decide and lay down what the law is, for in that sphere their decisions are absolute, as absolute as the decisions of the Supreme Court in its own sphere.
Therefore, 'it was said, the only question that is left open for examination under article 226 in the case of an Election Tribunal is whether it acted within the scope of its jurisdiction.
(1) ; ,1121, 7 But this, also, is no longer open to question.
The point has been decided by three Constitution Benches of this Court.
In Hari Vishnu vs Ahmad Ishaque(1) the effect of section 105 of the Representation of the People Act was not considered, but the Court laid down in general terms that the jurisdiction under article 226 having been conferred by the Constitution, limitations cannot be placed on it except by the Constitution itself: see pages 238 and 242.
Section 105 was, however, considered in Durga Shankar Mehta vs Raghuraj Singh(1) and it was held that that section cannot cut down or affect the overriding powers of this Court under article 136.
The same rule was applied to article 226 in Rai Krushna Bose vs Binod Kanungo and others(1) and it was decided that section 105 cannot take away or whittle down the powers of the High Court under article 226.
Following those decisions we hold that the jurisdiction of the High Court under article 226 is not taken away or curtailed by section 105.
The jurisdiction which articles 226 and 136 confer entitles the High Courts and this Court to examine the decisions of all Tribunals to see whether they have acted illegally.
That jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally by enacting a statute that its illegal acts shall become legal the moment the tribunal chooses to say they are legal.
The legality of an act or conclusion is something that exists outside and apart from the decision of an in ferior tribunal.
It is a part of the law of the land which cannot be finally deter mined or altered by any tribunal of limited jurisdiction.
The High Courts and the Supreme Court alone can determine what the law of the land is vis a vis all other courts and tribunals and they alone can pronounce with authority and finality on what is legal and what is not.
All that an inferior tribunal can do is to reach a tentative conclusion which is subject to review under Articles 226 and 136.
Therefore, the jurisdiction of the High Courts under article 226 with that of the Supreme Court above them remains to its fullest extent despite section 105.
That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law.
The High Courts do not, and should not, act as Courts of appeal under article 226.
Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognised lines and not arbitrarily; and one of the limitations imposed by the Courts on, themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice has ensued, or is likely to ensue.
They will not allow themselves to be turned into Courts of appeal or revision to set right mere errors of law which do not occasion injustice in a broad and general sense, for, though no legislature can impose limitations on these constitutional powers it is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about these special rights decided as speedily as may be.
Therefore, writ petitions should not be lightly entertained in this class of case.
We now turn to the decision of the Tribunal.
The procedure of these tribunals is governed by section 90 of the Act.
The portion of the section that is relevant here is sub section (2) which is in these terms: "Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the Tribunal, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 (Act V of 1908) to the trial of suits".
We must therefore direct our attention to that portion of the Civil Procedure Code that deals with the trial of suits.
Now a code of procedure must be regarded as such.
It is procedure, something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up.
Too technical a construction of sections that leaves no room for reasonable elasticity of inter 9 pretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.
Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them.
Of course, there must be exceptions and where they are clearly defined they must be given effect to.
But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle.
The existence of such a principle has been doubted, and in any event was condemned as unworkable and impractical by O 'Sullivan, J. in Hariram vs Pribhdas(1).
He regarded it as an indeterminate term "liable to cause misconception" and his views were shared by Wanchoo, C. J. and Bapna, J. in Rajasthan: Sewa Ram vs Misrimal(1).
But that a law of natural justice exists in the sense that a party must be heard in a Court of law, or at any rate be afforded an opportunity to appear and defend himself, unless there is express provision to the contrary, is, we think, beyond dispute.
See the observations of the Privy Council in Balakrighna Udayar vs Vasudeva Ayyar(3), and especially in T. M. Barret vs African Products Ltd.(1) where Lord Buckmaaster said "Do forms or procedure should ever be permitted to exclude the presentation of a litigant 's defence".
Also Hari Vishnu 's case which we have just quoted.
In our opinion, Wallace, J. was right in VenkataSubbiah vs Lakshminarassimham(5) in holding that "One cardinal principle to be observed in trials by a Court obviously is that a party has a right to appear and plead his cause on all occasions when that cause comes on for hearing", and that "It follows that a party should not be deprived of that right and in fact the Court has no option to refuse that right, unless the Code of Civil Procedure deprives him of it".
Let us now examine that Code; and first, we will turn to the body of the Code.
Section 27 provides that "Where a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim".
Section 30 gives the Court power to "(b) issue summonses to persons whose attendance is required either to give evidence or to produce documents or such other objects as aforesaid".
Then come the penalties for default.
They are set out in section 32 but they are confined to cases in which a summons has been issued under section 30.
There is no penalty for a refusal or an omission to appear in response to a summons under section 27.
It is true certain consequences will follow if a defendant does not appear and, popularly speaking, those consequences may be regarded as the penalty for nonappearance, but they are not penalties in the true sense of the term.
They are not punishments which the Court is authorised to administer for disregard of its orders.
The antithesis that section 32 draws between section 27 and section 30 is that an omission to appear in response to a summons under section 27 carries no penalty in the strict sense, while disregard of a summons under section 30 may entail punishment.
The spirit of this distinction must be carried over to the First Schedule.
We deprecate the tendency of some Judges to think in terms of punishment and penalties properly so called when they should instead be thinking of compensation and the avoidance of injustice to both sides.
We turn next to the Rules in the First Schedule.
It is relevant to note that the Rules draw a distinction between the first hearing and subsequent hearings, 11 and that the first hearing can be either (a) for settlement of issues only., or (b) for final disposal of the suit.
First, there is Order V. rule 1: ". . . . . . a summons may be issued to the defendant to appear and answer the claim on a. day to be therein specified".
This summons must state whether the hearing is to be for settlement of issues only or for final hearing (rule 5).
If it is for final hearing, then (rule 8): "it shall also direct the defendant to produce, on the day fixed for his appearance, all witnesses upon whose evidence he intends to rely in support of his case".
Then comes Order VIII, rule 1 which expressly speaks of "the first hearing".
Order IX follows and is headed "Appearance of parties and consequence of non appearance".
Now the word "consequence" as opposed to the word "penalty" used in section 32 is significant.
It emphasises the antithesis to which we have already drawn attention.
So also in rule 12 the marginal note is "Consequence of non attendance" and the body of the rule states that the party who does not appear and cannot show sufficient cause "shall be subject to all the provisions of the foregoing rules applicable to plaintiffs and defendants, respectively, who do not appear".
The use of the word "penalty" is scrupulously avoided.
Our attention was drawn to rule 6(2) and it was argued that Order IX does contemplate the imposition of penalties.
But we do not read this portion of the rule in that light.
All that the plaintiff has to do here is to pay the costs occasioned by the postponement which in practice usually means the cost of a fresh summons and the diet money and so forth for such of the witnesses as are present; and these costs the plaintiff must pay irrespective of the result.
Rule I of Order IX starts by saying "On the day fixed in the summons for the defendant to appear and answer. . . . . . . . ." 12 and the rest of the rules in that Order are consequential on that.
This is emphasised by the use of the word "postponement" in rule 6 (1)(c), of "adjournment" in rule 7 and of "adjournment" in rule 1.
Therefore, we reach the position that Order IX, rule 6 (1) (a), which is the rule relied on, is confined to the first hearing of the suit and does not per se apply to subsequent hearings: see Sahibzada Zeinulabdin Khan vs Sahibzada Ahmed Raza Khan(1).
Now to analyse rule 6 and examine its bearing on the first hearing.
When the plaintiff appears and the defendant does not appear when the suit is called on for hearing, if it is proved that the summons was duly served "(a). . . . . . . . . the Court may proceed ex parte".
The whole question is, what do these words mean? Judicial opinion is sharply divided about this.
On the one side is the view propounded by Wallace, J. in Venkatasubbiah vs Lakshminarasimham(2) that ex parte merely means in the absence of the other party, and on the other side is the view of O 'Sullivan, J., in Hariram vs Pribhdas(3) that it means that the Court is at liberty to proceed without the defendant till the termination of the proceedings unless the defendant shows good cause for his non appearance.
The remaining decisions, and there are many of them, take one or the other of those two views.
In our opinion, Wallace, J. and the other Judges who adopt the same line of thought, are right.
As we have already observed, our laws of procedure are based on the principle that, as far as possible, no proceeding in a Court of law should be conducted to the detriment of a person in his absence.
There are of course exceptions, and this is one of them.
When the defendant has been served and has been afforded an opportunity of appearing, then, if he does not appear, the Court may proceed in his absence.
But, be it noted, the Court is not directed to make an exparte order.
Of course the fact that it is proceeding ex parte will be recorded in the minutes of its proceedings but that is merely a statement of the fact and is not an order made against the defendant in the sense of an ex parte decree or other ex parte order which the Court is authorised to make.
All that rule 6 (1) (a) does is to remove a bar and no more.
It merely authorises the Court to do that which it could not have done without this authority, namely to proceed in the absence of one of the parties.
The contrast in language between rules 7 and 13 emphasises this.
Now, as we have seen, the first hearing is either for the settlement of issues or for final hearing.
If it is only for the settlement of issues, then the Court cannot pass an ex parte decree on that date because of the proviso to Order XV, rule 3(1) which provides that that can only.
be done when "the parties or their pleaders are present and none of them objects".
On the other hand, if it is for final hearing, an ex parte decree can be passed, and if it is passed, then Order IX, rule 13 comes into play and before the decree is set aside the Court is required to make an order to set it aside.
Contrast this with rule 7 which does not require the setting aside of what is commonly, though erroneously, known as "the ex parte order".
No order is contemplated by the Code and therefore no order to set aside the order is contemplated either.
But a decree is a command or order of the Court and so can only be set aside by another order made and recorded with due formality.
Then comes rule 7 which provides that if at an adjourned hearing the defendant appears and shows good cause for his "previous non appearance", he can be heard in answer to the suit "as if he had appeared on the day fixed for his appearance".
This cannot be read to mean, as it has been by some learned Judges, that he cannot be allowed to appear at all if he does not show good cause.
All it means is that he cannot be relegated to the position he would have occupied if he had appeared, 14 We turn next to the adjourned hearing.
That is dealt with in Order XVII.
Rule I (1) empowers the Court to adjourn the hearing and whenever it does so it must fix a day "for the further hearing of the suit", except that once the hearing of the evidence has begun it must go on from day to day till all the witnesses in attendance have been examined unless the Court considers, for reasons to be recorded in writing, that a further adjournment is necessary.
Then follows rule 2 "Where., on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit".
Now rule 2 only applies when one or both of the parties do not appear on the day fixed far the adjourned hearing.
In that event, the Court is thrown back to Order IX with the additional power to make "such order as it thinks fit".
When it goes back to Order IX it finds that it is again empowered to proceed ex parte on the adjourned hearing in the same way as it did, or could have done, if one or other of the parties had not appeared at the first hearing, that is to say, the right to proceed ex parte is a right which accrues from day to day because at each adjourned hearing the Court is thrown back to Order IX, rule 6.
It is not a mortgaging of the future but only applies to the particular hearing at which a party was afforded the chance to appear and did not avail himself of it.
Therefore, if a party does appear on "the day to which the hearing of the suit is adjourned", he cannot be stopped from participating in the proceedings simply because he did not appear on the first or some other hearing.
But though he has the right to appear at an adjourned hearing, he has no right to set back the hands of the clock.
Order IX, rule 7 makes that clear.
Therefore, unless he can show good cause, he must accept all that has gone before and be content to proceed from the stage at which he comes in.
But what exactly does that import?
To determine that it will be neces 15 sary to hark back to the first hearing.
We have already seen that when a summons is issued to the defendant it must state whether the hearing is for the settlement of issues only or for the final disposal of the suit (Order V, rule 5).
In either event, Order VIII, rule I comes into play and if the defendant does not present a written statement of his defence, the Court can insist that he shall; and if, on being required to do so, he fails to comply "the Court may pronounce judgment against him, or make such order in relation to the suit as it thinks fit".
This invests the Court with the widest possible discretion and enables it to see that justice is done to both sides; and also to witnesses if they are present: a matter on which we shall dwell later.
We have seen that if the defendant does not appearat the first hearing, the Court can proceed exparte, which means that it can proceed without a written statement; and Order IX, rule 7 makes it clear that unless good cause is shown the defendant cannot be relegated to the position that he would have occupied if he had appeared.
That means that he cannot put in a written statement unless he is allowed to do so, and if the case is one in which the Court considers a written statement should have been put in, the consequences entailed by Order VIII, rule 10 must be suffered.
What those consequences should be in a given case is for the Court, in the exercise of its judicial discretion, to determine.
No hard and fast rule can be laid down.
ID some cases an order awarding costs to the plaintiff would meet the ends of justice: an adjournment can be granted or a written statement can be considered oil the spot and issues framed.
In other cases, the ends of justice may call for more drastic action.
Now when we speak of the ends of justice, we mean justice not only to the defendant and to the other side but also to witnesses and others who may be inconvenienced.
It is an unfortunate fact that the convenience of the witness is ordinarily lost sight of in this class of case and yet be is the one that deserves 16 the greatest consideration.
As a rule, he is not parti cularly interested in the dispute but he is vitally interested in his own affairs which he is compelled to abandon because a Court orders him to come to the assistance of one or other of the parties to a dispute.
His own business has to suffer.
He may have to leave his family and his affairs for days on end.
He is usually out of pocket.
Often he is a poor man living in an out of the way village and may have to trudge many weary miles on foot.
And when he gets there, there are no arrangements for him.
He is not given accommodation; and when he reaches the Court, in most places there is no room in which he can wait.
He has to loiter about in the verandahs or under the trees, shivering in the cold of winter and exposed to the heat of summer , wet and miserable in the rains: and then, after wasting hours and sometimes days for his turn, he is brusquely told that he must go back and come again another day.
Justice strongly demands that this unfortunate section of the general public compelled to discharge public duties, usually at loss and inconvenience to themselves, should not be ignored in the over all picture of what will best serve the ends of justice and it may well be a sound exercise of discretion in a given case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross examine them, still less to adduce his own evidence.
It all depends on the particular case.
But broadly speaking, after all the various factors have been taken into consideration and carefully weighed, the endeavour should be to avoid snap decisions and to afford litigants a real opportunity of fighting out their cases fairly and squarely.
Costs will be adequate compen sation in many cases and in others the Court has almost unlimited discretion about the terms it can impose provided always the discretion is judicially exercised and is not arbitrary.
In the Code of 1859 there was a provision (section 119) which said that "No appeal shall lie from a judgment passed exparte against a defendant who has not appeared".
The Privy Council held in Sahibzada Zeinulabdin Khan vs Sahibzada Ahmed Raza Khan( ' ) that this only applied to a defendant who had not appeared at all at any stage, therefore, if once an appearance was entered, the right of appeal was not taken away.
of the grounds of their decision was that "The general rule is that an appeal lies to the High Court from a decision of a civil or subordinate Judge, and a defendant ought not to be deprived of the right of appeal, except by express words or necessary implication".
The general rule, founded on principles of natural justice, that proceedings in a Court of justice should not be conducted behind the back of a party in the absence of an express provision to that effect is no less compelling.
But that apart.
It would be anomalous to hold that the efficacy of the so called ex parte order expends itself in the first Court and that thereafter a defendant can be allowed to appear in the appellate Court and can be beard and can be permitted to urge in that Court the very matters he is shut out from urging in the trial Court; and in the event that the appellate Court considers a remand necessary he can be permitted to do the very things he was precluded from doing in the first instance without wetting the exparte order set aside under Order IX, rule 7.
Now this is not a case in which the defendant with whom we are concerned did not appear at the first hearing.
He did.
The first hearing was on 11 12 1952 at Kotah.
The appellant (the first defendant) appeared through counsel and filed a written statement.
Issues were framed and the case was adjourned till the 16th March at Udaipur for the petitioners evidence alone from the 16th to the 21st March.
Therefore, Order IX, rules 6 and 7 do not apply in terms.
But we have been obliged to examine this order at length because of the differing views taken in the various High Courts and because the contention is that Order XVII, rule 2 throws one back to the position under Order IX, rules 6 and 7, and there, according to one set of (1) 5 I.A. 233.
3 18 views, the position is that once an ex parte "order" is "Passed" against a defendant he cannot take further part in the proceedings unless he gets that 'corder" set aside by showing good cause under rule 7.
But that is by no means the case.
If the defendant does not appear at the adjourned hearing (irrespective of whether or not he appeared at the first hearing) Order XVII, rule 2 applies and the Court is given the widest possible discretion either "to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit".
The point is this.
The Court has a discretion which it must exercise.
Its hands are not tied by the so called ex parte order; and if it thinks they are tied by Order IX, rule 7 then it is not exercising the discretion which the law says it should and, in a given case, interference may be called for.
The learned Judges who constituted a Full Bench of the Lucknow Chief Court (Tulsha Devi vs Sri Krishna(1) ) thought that if the original ex parte order did not enure throughout all future hearings it would be necessary to make a fresh ex parte order at each succeeding hearing.
But this proceeds on the mistaken assumption that an ex parte order is required.
The order sheet, or minutes of the proceedings, has to show which of the parties were present and if a party is absent the Court records that fact and then records whether it will proceed ex parte against him, that is to say, proceed in his absence, or whether it will adjourn the hearing; and it must necessarily record this fact at every subsequent bearing because it has to record the presence and absence of the parties at each hearing.
With all due deference to the learned Judges who hold this view, we do not think this is a grave or a sound objection.
A much weightier consideration is that the plaintiff may be gravely prejudiced in a given case because, as ,the learned Rajasthan Judges point out, and as O 'Sullivan, J. thought, when a case proceeds ex parte,the plaintiff does not adduce as much evidence as he would have if it had been contested.
He contents himself with leading just enough to establish a prima facie case.
Therefore, if he is suddenly confronted with a contest after he has closed his case and the defendant then comes forward with an army of witnesses he would be taken by surprise and gravely prejudiced.
That objection is, however, easily met by the wide discretion that is vested in the Court.
If it has reason to believe that the defendant has by his conduct misled the plaintiff into doing what these learned Judges apprehend, then it might be a sound exercise of discretion to shut out cross examination and the abduction of evidence on the defendant 's part and to allow him only to argue at the stage when arguments are heard.
On the other hand, cases may occur when the plaintiff is not and ought not to be, misled.
If these considerations are to weigh, then surely the sounder rule is to leave the Court with an unfettered discretion so that it can take every circumstance into consideration and do what seems best suited to meet the ends of justice in the case before it.
In the present case, we are satisfied that the Tribunal did not exercise its discretion because it considered that it had none and thought that until the ex parte order was set aside the defendant could not appear either personally or through counsel.
We agree with the Tribunal, and with the High Court, that no good cause was shown and so the defendant had no right to be relegated to the position that he would have occupied if he had appeared on 17 3 1953, but that he had a right to appear through counsel on 20 3 1953 and take part in the proceedings from the stage at which they had then reached, subject to such terms and conditions as the Tribunal might think fit to impose, is we think, undoubted.
Whether he should have been allowed to cross examine the three witnesses who were examined after the appearance of his counsel, or whether he should have been allowed to adduce evidence, is a matter on which we express no opinion, for that has to depend on whatever view the Tribunal in a sound exercise of judicial discretion will 20 choose to take of the circumstances of this particular case, but we can find no justification for not at least allowing counsel to argue.
Now the Tribunal said on 23 3 1953 "The exact stage at which the case had reached before us on the 21st of March 1953 was that under the clear impression that respondent No. 1 had failed to appear from the very first date of the final hearing when the ex parte order was passed, the petitioner must have closed his case after offering as little evidence as he thought was just necessary to get his petition disposed of exparte.
Therefore, to all the respondent No. 1 to step in now would certainly handicap the petitioner and would amount to a bit of injustice which we can neither contemplate nor con done".
But this assumes that the petitioner was misled and closed his case "after offering as little evidence as he thought was just necessary to get his petition disposed of ex parte".
It does not decide that that was in fact the case.
If the defendant 's conduct really gave rise to that impression and the plaintiff would have adduced more evidence than he did, the order would be unexceptional but until that is found to be the fact a mere assumption would not be a sound basis for the kind of discretion which the Court must exercise in this class of case after carefully weighing all the relevant circumstances.
We, therefore, disagreeing with the High Court which has upheld the Tribunal 's order, quash the order of the Tribunal and direct it to exercise the discretion vested in it by law along the lines we have indicated.
In doing so the Tribunal will consider whether the plaintiff was in fact misled or could have been misled if he had acted with due diligence and caution.
It will take in to consideration the fact that the defendant did enter an appearance and did file a written statement and that issues were framed in his presence; also that the case was fixed for the "Petitioner 's" evidence only and not for that of the appellant; and that the petitioner examined all the witnesses he had present on the 17th and the 18th and did not give up any of them; that he was given 21 an adjournment on 19 3 1953 for the examination witnesses who did not come on that date and that the examined three more on 20 3 1953 after the defendant had entered an appearance through counsel an( claimed the right to plead; also whether, when the appellant 's only protest was against the bearings a Udaipur on dates fixed for the petitioner 's evidence alone, it would be legitimate for a party acting with due caution and diligence to assume that the other side had abandoned his right to adduce his own evidence should the hearing for that be fixed at some other place or at some other date in the same place.
The Tribunal will also consider and determine whether it will be proper in the circumstances of this case to allow the appellant to adduce his own evidence.
The Tribunal will now reconsider its orders of the 20th, the 21st and the 23rd of March 1953 in the light of our observations and will proceed accordingly.
The records will be sent to the Election Commission with directions to that authority to reconstitute the Tribunal, if necessary, and to direct it to proceed with this matter along the lines indicated above.
There will be no order about costs.
| In the election held on 19.5.1982 to the Haryana Legislative Assembly from the Jind Constituency, the appellant was declared elected over his nearest rival respondent No. I with a margin of 146 votes.
Respondent No. I challenged the appellant 's election inter alia, on the ground that the appellant and his father Sita Ram and two others Ram Kishan and Amrit Lal visited Kandela village on or about 16.5.1982 and contacted Dalip Singh, Sarpanch of the village and one Dewan Singh, Secretary of the Backward Classes.
Thereafter all of them went to the house of one Dharam Singh where backward class voters including Dewan Singh, Hari Ram, Devi Ram, Fateh Singh and Mauji Ram had assembled.
The voters told the appellant that they intended to cast their votes in favour of Congress (I) candidate as they had always been in favour of the Congress (I) party Then the appellant had a talk with the Sarpanch Dalip Singh and one Dharam Singh and subsequently stated, for inducing the voters to cast their vote in his favour, that he is prepared to give a donation of Rs. 5100 as he had been told that they needed some money for their mandir.
Accordingly he gave a sum of Rs. 5100 to the Sarpanch Dalip Singh who passed it on to Dharam Singh and Dewan Singh.
The voters thereafter assured the appellant that they would vote for him and ensure that every vote belonging to their class will go in his favour.
Thus, the appellant was alleged to have committed the corrupt practice of bribery as defined in Section 123(1) of the Representation of People Act, 1951.
The appellant had denied that he had gone to Kandela village on 16.5.1982 either alone or in the company of Sita Ram and others.
He also denied that he had contacted the Sarpanch Dalip Singh and others and gave Rs. 5100 as alleged in the election petition and that the voters of Kandela village held out any promise for casting their votes in his favour.
The High Court held that the appellant had committed that corrupt practice of bribery and set aside the election as void.
313 Allowing the appeal by the appellant, A ^ HELD: 1.
As regards the corrupt practice of bribery, there is evidence only of P.Ws. 1, 16, 90, 91 and 92 which is wholly unreliable and does not prove the corrupt practice of which the appellant has been found guilty by the Learned Single Judge.
[320B] 2(i) The first respondent P.W. 1 has stated in his cross examination that the bribe money was paid by the appellant on 15.5.1982.
It would appear from his evidence that he claims to have personal knowledge about the alleged visit of the appellant and others to Kandela village on 16.5.1982 and about the alleged payment of Rs. 5100 by the appellant for the construction of a temple for the backward class people of the village in order to induce the voters of those classes to cast their votes in his favour.
But in his affidavit verifying the election petition he has stated that the allegations made in para 9(d) of the election petition regarding this item of corrupt practice are based upon information received by him from Dewan Singh.
Therefore the evidence of P.W. 1 is wholly unacceptable.
[317C D] 2(ii) The evidence of P.W. 16 that on 15.5.82 the appellant offered to give a sum of Rs. 5100 in the house of Dewan Chand and that it was given by one Madan Lal to Dharam Chand is inconsistent with the allegation in the election petition that the appellant offered to give Rs. 5100 on 16.5.1982 as donation and gave it himself to the Sarpanch Dalip Singh and he passed it on to Dharama Singh.
Therefore the evidence of P.W. 16 also cannot be accepted.
[317H; 318A] 2(iii) The evidence of P.W. 90 is that the people asked for money to vote in favour of the appellant and that thereupon he gave Rs. 5100 to Dharma Lohar on 16.5.82 is contrary to the allegation in the election petition, There is thus a vital discrepancy between the pleading in the election petition and the evidence of P.W. 90.
Moreover P.W. 90 has stated that he does not know whether any receipt was passed for the amount whereas P.W. 16 has stated in his evidence that Madan Lal gave Rs. 5100 to the temple Committee 's President Dharam Singh in his presence on 16.5.1982 and he made an entry for receipt of that amount in exhibit P.W. 16/2 in the cash book.
In these circumstances no reliance could be placed on the evidence of P.W. 90.
[319D; F G] 2(iv) The evidence of P.W, 91 is also not consistent with the allegation made in the election petition that the appellant gave a sum of Rs. 5100 to the Sarpanch Dalip Singh and that he passed in on to Dharam Singh and Dewan Singh.
Therefore no reliance can be placed on his evidence also.
[319D] 2(v) The evidence of P.W. 92 that Madan Lal of Kandela village gave Rs. 5100 is inconsistent with the allegation made in the election petition that the appellant himself gave that amount.
His evidence that it was given to Dalip Singh though consistent with the allegation made in the election petition and the evidence of P.W, 91, is inconsistent with the evidence of P.W. 90 that it was given to Dharma Lohar.
[319G H] 314
|
l Appeals Nos.
1091 to 1093 of 1971.
Appeals by special leave from the award dated April 15, 1971 of the Industrial Tribunal, Maharashtra, Bombay in References (IT) Nos. 20 of 1969, 70 of 1970 and 105 of 1969.
V.M. Tarkunde, R. A. Jahagirdar and I.N. Shroff, for the appellant (in all the appeals).
K.T. Sule.
Janardan Sharma and Indira Jaisingh, for respondent No. 1 (in all the appeals).
Urmila Kapoor and Kamlesh Bansal, for respondent No. 2 (in all the appeals).
The Judgment of the Court was delivered by Vaidialingam, J.
These three appeals, by special leave, arise out of the Award, dated April 15, 1971 of the Industrial Tribunal, Maharashtra, Bombay in Reference (I.T. Nos. 20 and 105 of 1969 and 70 of 1970).
The main questions that arise for consideration in these appeals relate to the award of Dearness Allowance, Classification of Grades and Fixation of Wages and a direction given by the Industrial Tribunal regarding the Incentive Bonus Scheme, as modified by the Company.
There is also a minor point regarding a particular clause in the Gratuity Scheme as framed by the Tribunal in Reference (I.T. No. 20 of 1969).
Though there are certain other matters dealt with in the Award in Reference (I.T. No. 20 of 1969) they are not the subject of controversy in these appeals.
We will now state the circumstances under Which the Refer ences came to be made to the Tribunal.
570 The appellant was started as a proprietary concern in the year 1944 and was later transformed to a public limited Company and registered as such under the Indian Companies Act, 1962.
From its inception, the Company has been dealing in the business of manufacturing and selling pharmaceutical products.
It had its factory in Jogeshwari in Greater Bombay.
At the time of the Reference, the Company was employing about 714 workmen of whom 558 were operatives and 156 were members of the clerical and subordinate staff.
All these employees were covered by the demands comprised in all the References.
The wage scales of the workmen had been determined originally in Reference (I.T.No. 23 of 1959).
The wage scales of the operatives were as follows "Unskilled A Rs. 1 .52 0 .09.2 .23 0 .12 2 .93
Unskilled B 1.25 0.96 1.85 0.09. 2.30 Semi skilled A 2 .00 0 .12 2 .72 0 .18 3 .80
Semi skilled B 1 .76 0 .11 2 .64 0 .15 3 .39
Skilled 2 59 0 .13 2 .85 0 22 3 .95 0 .30 4 .25".
The wage scales of the clerical and subordinate staff were as follows .200 260 "Junior Chemist Rs. 120 10 12 Manufacturing Assistant140 10 220 15 310 Store keepers Store Assistants 180 10 260 15 350 Stenographers Junior Clerk 60 8 90 10 146 E.B. 15 215.
Intermediate Clerks75 8 115 12 175 E.B. 15 250.
Senior Clerks 115 10 255 15 315 E.B. 20 395.
" In addition to the basic wages, referred to above, the employees were getting dearness allowance, which in the case of operatives was equal to 80% of the revised textile scale of dearness allowance and in the case of clerical and subordinate staff 100% of the revised textile scale of dearness allowance.
The nomenclature of the grades of the operatives was changed by a consent award in Reference (I.T. No. 170 of 1961).
The grades and wages as per this award were as follows "Unskilled Rs. 1 25 0 06 1 85 0 09 2 30 Semi skilled A, 1 52 0 02 2 33 0 12 2 93 Semi skilled B ' 1 76 0 11 2 64 0 15 3 39 Skilled 2 00 0 12 2 72 0 18 3 39 Highly Skilled 2 59 0 13 2 85 .O 22 . 3 95. .
O 30 4 25.
" The dearness allowance of the operatives and clerical and subordinate staff underwent a change by the award in Reference (I.T. No. 402.
of 1963).
Under that award the dearness allowance 571 of the operatives was increased to 90% of the revised textile scale of dearness allowance from January 1, 1964 and to 95% of the revised textile scale of dearness allowance from July 1, 1964.
The dearness allowance of the clerical and subordinate staff was supplemented at different slabs with effect from January 1, 1964 as follows : "Basic salary upto Rs. 100 Basic salary of Rs. 101 to 200 Basic salary of Rs. 201 to 300 Basic salary of over Rs. 300 .
Operatives ' dearness allowance plus Rs. 7 .50 Operative , ' dearness allowanceplus Rs. 15.
Operatives dearness allowance plus Rs. 22 50.
Operatives ' dearness allowance plus Rs. 25.
" Though the award prescribed to the clerical and subordinate staff the same rate of dearness allowance of the operatives plus a fixed amount, as referred to above, the Company continued to give them dearness allowance equal to 100% of the revised textile scale of dearness allowance.
This was also supplemented with the fixed amount depending upon the slab of the salary.
There was a settlement on June 24, 1966 between the Company and its employees, in and by which the wages of the opera tives and the clerical and subordinate staff underwent a final revision.
The wages of the operatives were fixed as follows "Unskilled Rs. 1 .25 0 .10 2 .75
Semi skilled B 1 60 0 .12 2 32 0 .15 3 .67
Semiskilled A 1 .80 0 .15 2 85 0 .20 4 . 45 Skilled 2 .,10 0 20.3 .10 0 .25 5 .10
Highly skilled 2 .75 0 20 3 75 0 .25 5 00 0 .30 6 .50.
" Similarly, the wages of the clerical and subordinate staff were as follows : "Junior Clerk Rs. 75 6 105 10 155 15 260 E. B. 17 311.
Intermediate Clerk 90 8 130 12 190 15 295 E. B. 18 349.
Senior Clerk 125 10 195. 15 270 20 390 E. B 25 440.
Steno and Storekeeper180 10 260 15 380 E. B. 20 4 460.
" The above basic scales in respect of all the categories were again supplemented by dearness allowance as provided for in the award passed in Reference (I.T. No. 402 of 1963).
The Company had also an Incentive Bonus Scheme, by virtue of which a large number of operatives were getting, on an average an additional sum of Rs. 28/ per month.
The Company further revised 572 from about November 1, 1969 the wage scales of Drivers and Watchmen as follows : "Drivers Rs. 70 6 100 9 145 12 205 E. B. 15 250.
Watchmen 45 4 65 6 95 E. B. 8. 135".
The above was the pattern of the wage structure and dearness allowance for the operatives and the clerical and subordinate staff.
The Unions concerned made a demand for introducing the following scheme of dearness allowance in respect of all the workmen with immediate effect : Wage slab .
When the working classVariation in the cost of living in dearness allow dex figure is inance for every 10 the group of 401 points rise or 410.
upto 100 100 per cent 5 per cent From Rs. 101 to 200 50 per cent2 1/2 per cent From Rs. 201 and above 25 per centII percent Minimum dearness allowance Rs. 100.
Minimum variation Rs. 5.
" They also demanded that the above scheme of dearness allow ance was to have retrospective effect from August 1, 1967.
In the same demand the Unions required that the workmen should be granted one month 's wages for every year of service as gratuity in case of resignation, dismissal, discharge, death or termination of service for any reason.
By this demand the Unions required modification of the then existing pattern of payment of dearness allowance at 95% of revised textile scale of dearness allowance to operatives and 100% of revised textile scale of dearness allowance plus Rs. 7.50 to Rs. 25/ paid to the clerical and other staff.
The Company did not agree to the demand and in consequence by order dated January 14, 1969 the Government of Maharashtra referred for adjudication to the Industrial Tribunal the demands.
This Reference was registered as Reference (I.T. No. 20 of 1969).
The Unions again made a demand for revision of scales of pay as well as the classification of employees, their grades and their fitment in the revised scales of pay.
As against the then existing six categories of workmen and their wage scales of the operatives the Unions demanded new classification and gradation into eight grades with new wage scales.
Similarly, as against the then existing five grades of the clerical and subordinate staff, the Unions demanded the creation of six categories with enhanced wage scales.
These demands again were not accepted by the Company which led to the State Government making a reference Oil January 9, 1970, which reference was registered as Reference (I.T. No. 70 of 1970).
573 The Company some time in the year 1959 had introduced an Incentive Bonus Scheme.
This was introduced, according to the appellant, because of the fact that the workmen were not giving a substantial production.
The basis of the scheme, introduced by the appellant, was that if the workmen gave only 30% of the 100% production expected of them, their performance would be considered zero.
On the other hand, if they gave production above 30% and upto 100%, they would be eligible for payment of Incentive Bonus which would be from 31 to 100 points.
In other words, for the 70 points above the first 30 points, the workmen would get Rs. 501 as Incentive Bonus which would work out approximately to about Rs. 71.43 per point.
The appellant desired that the then existing floor limit of 30% ought to be raised to 75% without varying the quantum of Rs. 501 that was originally payable on achievement of 100% production.
What was intended was that the 25 points between 75 and 100 points Were to be made eligible for payment of Incentive Bonus of Rs. 2/ for each point.
The 'Company served a notice of change on the workmen under section 9A of the .
As the workmen protested against this change, this led the Government to make a Reference to the Industrial Tribnual for adjudication.
This was numbered as Reference, (I.T. No. 105 of 1969).
The appellant resisted the claims made for revision of dearness allowance and wage scales as well as the modification sought for in the gratuity scheme.
The appellant also wanted the Tribunal to uphold the notice of change given by it under section 9A of the in respect of the Incentive Bonus Scheme.
In particular the appellant contended that it was not a comparable concern with the units referred to by the Unions and that any modification in the scale of dearness allowance and wages would be beyond its financial capacity.
The appellant also relied oil the coming into force of the Drugs (Price Control) Order, 1970 with effect from May 16, 1970.
According to the appellant the wages and dearness allowance paid by it to the workmen were far higher than what were paid by other units in the region.
The Company also referred to the various awards wherein it had been held that it could not be compared with an International Company having branches in Bombay or with foreign concern though incorporated in India.
The wage scales had been fixed by Settlement dated June, 24, 1966 and that nothing has happened since the date of Settlement to justify a revision of wage scales 'and dearness allowance.
The appellant further urged before the Tribunal that the double linking of dearness allowance, as required by the Unions had never been adopted for the Pharmaceutical units in the Bombay region.
According to the appellant, the revision 574 effected regarding the Incentive Bonus Scheme was justified and the amount of 2/ offered per point was much more than the prevailing rate of Rs. 71.43p.
per point.
It also opposed the revision of the then existing gratuity scheme as demanded by the Unions.
According to the appellant the gratuity scheme which was in force had been introduced by a consent award in 1963.
The appellant filed copies of balance sheets and profit and loss accounts from 1962 63 to 1969 70 and various other charts in support of its plea that it will not be able to bear the additional financial burden that would result if the wage scales and dearness allowance are revised as per the demands made by the Unions.
It will be seen from the facts mentioned above that thr main controversy between the parties related to the revision of wage structure and dearness allowance.
As the demands of the workmen related to regrouping, in different grades, the operatives and the clerical and subordinate staff and as this involved a very radical change in the existing pattern of grades, the Tribunal felt that the opinion of an expert should be obtained on the advisibility of the reclassification.
In this regard both the Unions and the against filed a joint application on December 22, 1970 requesting the Tribunal to appoint Sri N. L. Gadkari, retired Chief Inspector of Factories, Maharashtra State as an assessor.
They also prayed that the points mentioned in the application be referred for the opinion of the assessor.
The Assessor submitted his report on February 22, 1971, in which he recommended the continuance of the then existing grades.
The Unions, while demurring to the report of the Assessor, requested the Tribunal, by their application dated March 25, 1971 to fix for the then existing five grades the following wage scales "Unskilled. .
Rs. 85 8 125 10 225 Semi skilled B. 100 10 150 12 210 15 285.
Semi skilled A 120 12 180 15 255 18 345.
Skilled 140 15 215 18 305 20 405.
Highly skilled 225 25 350 30 500 35 675.
" The appellant, when the Reference came up for hearing, raised an objection to the selection of wage scale by the Unions for the existing grades of the operatives on the ground that such a selection was not permissible, being contrary to the provisions of s.10(4) of the .
The Unions, ultimately, made it clear to the Tribunal that their demand for revision of wage scales of the existing five grades of operatives is to be as follows : "Unskilled Rs. 60 5 85 7 155.
Semi skilled B 70 6 100 8 180.
Semi skilled A 85 8 125 10 225.
Skilled 100 10 150 12 210 15 285.
Highly skilled 120 12 180 15 255 18 345.
" 575 It is on the basis of this claim that the question of revision has been dealt with by the Tribunal.
Regarding the financial incapacity pleaded by the appellant, the Tribunal after an analysis of the balance sheets and profit and loss accounts, held that the average net profit of the Company during the years 1965 66 to 1969 70 works out to about Rs. 1384691/ .
It is also of the, view that the apprehensions of the appellant/regarding the possible impact of the Drugs (Price Control) Order, 1970 are not justified.
It is the view of the Tribunal that in spite of the price freeze effected in 1963, the appellant has been doing very good business from 1962 63 to 1969 70.
Ultimately, the Tribunal found that the financial condition of the appellant is quite sound.
Regarding the comparable concerns in the region, the Unions referred to as many as twenty units.
One of the units relied on as comparable with the appellant was M/s. Burroughs Wellcome & Co. (India) Private Ltd., Bombay.
The appellant opposed its being compared with the concerns relied on by the Unions on the ground that those units were either foreign concerns doing business in India or Indian units working, in collaboration with foreign concerns.
The appellant in turn relied on several other concerns as being comparable with it.
The appellant very strongly relied on certain previous awards in support of its contention that it has been held in those awards that the appellant cannot be compared with foreign concerns or with the concerns working in collaboration with foreign concerns.
The Tribunal, after a consideration of the materials placed ' before it, in this regard, ultimately, held that M/s. Burroughs Wellcome & Co. (India) Private Ltd., was a unit which could be considered as a comparable concern with the appellant.
The Tribunal having regard to the grades and scales of pay obtaining in M/s. Burroughs Welcome & Co. (India) Private Ltd., held that the wage scales for the five grades for the operatives of the appellant should be as follows : "Unskilled .
Rs. 42 3 71 4 112 Semi skilled B 47 3 50 82 4 122 Semi skilled A 50 4 90 5 50 134 Skilled 55 5 50 110 6 50 155 50 High skilled 72 7 142 8 182 9 5C 220.
" The Tribunal fixed the following grades and scales of pay for the clerical and subordinate staff "Junior Clerks and Laboratory Assistants Rs. 85 7 50 145 10 195 12 259 17 323 Intermediate Cierks 120 10 200 12 260 15 335 18 353 Senior Clerks 185 15 305 20 365 25 465" 576 The Tribunal did not accept the large demand made by the Unions for a general adjustment in increments of the employees.
Nevertheless, in view of the revision of the scales of wages, it gave certain directions so that the employees may be fitted in the appropriate revised wage scales.
The parties very hotly contested the question of dearness allowance as well as the pattern to be adopted.
As there were different systems of dearness allowance for the operatives and the clerical and subordinate staff, the Unions desired that a common scheme of dearness allowance on a slab system should be adopted.
The Tribunal having regard to the decisions of this Court in Greaves Cotton and Co. and others vs Their Workmen(1) and Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen(2) held that there was no justification for having two systems of dearness allowance one for the operatives and the other for the members of the clerical and subordinate staff.
Accordingly, the Tribunal held that all the employees should get the same dearness allowance irrespective of the fact whether they were operatives ,or members of the clerical and subordinate staff.
As the dearness allowance has to be fixed on industry cum region basis, the Tribunal examined the system of dearness allowance followed in the region by the industries belonging to the pharmaceutical units.
The Unions had submitted statements Exs.
DU 1 and MU. 1 containing a list of pharmaceutical units, in support of their contention that such units were adopting a slab system of dearness allowance.
The Company, on the other hand, referred to certain awards of the Industrial Tribunals in support of its stand that slab system of dearness allowance is not considered as an appropriate mode of providing neutralization.
The Unions also relied on certain awards wherein the slab system of dearness allowance had been introduced by the Industrial Tribunals.
Though the Tribunal had held that most of the units referred to in Exs.
DU 1 and MU 1, cannot be, considered for the purpose of being treated as units comparable with the appellant, nevertheless it held that the practice adopted by those units regarding the grant of dearness allowance can be taken into account as providing a guide regarding the system of dearness allowance adopted in the region.
On this basis the Tribunal accepted the statements in Exs.
DU 1 and MU 1 and held that the slab system of dearness allowance was prevalent in a large number of units belonging to pharmaceutical industry.
In this view, the Tribunal further held that slab system of dearness allowance can be adopted, if the financial burden consequent on the adoption of the said system, can be safely borne by the Company.
(1) (2) 577 The Tribunal then proceeded to consider the system obtaining in Burrough Welcome Company regarding the payment of dear ness allowance.
The system in the said Company, which was common for operatives as well as the clerical and subordinate staff, was as follows Basic Salary Dearness allowance per Variationfor month at the Bom points.
bay working class cost of living index 491 500.
Rs. 1 100.
150 percent 5 Per cent Rs. 101 200 1 50 Per cent on the 1st 21 Per cent Rs. 100.
71 Per cent on the balance.
Rs. 201 300 150 per cent on the 1st 11/4 per cent.
Rs. 100.
721 Per cent on the 2nd Rs. 100, and 36 1/4 per cent on the balance.
Minimum Dearness allowance Rs. 4 Rs. 101.
In the said Company the above scale of dearness allowance was however limited only to employees drawing a basic salary upto Rs. 360/ per month.
The appellant accepted before the Tribunal that the scheme of dearness allowance obtaining, in Burroughs wellcome Company would cast a lesser financial burden than the scale of dearness allowance as demanded by the Unions.
In fact, the Company had filed two charts Exs.
C 12 and C 13, showing the burden which it will have to bear if the scheme of dearness allowance as demanded by the Unions was introduced.
, The Company had worked out the demands in different ways and that is why it filed two statements.
According to the appellant the additional financial burden will be about Rs. 878125.00 as per exhibit C 12 and Rs. 1252693.00 as per exhibit C 13.
The Tribunal is of the view that under exhibit C 13, the Company had taken into account a sum of Rs. 186293.00 payable to some members of the staff drawing a salary of over Rs. 200/per month and amongst whom were also included 52 chemists.
According to the Tribunal the 52 chemists are not covered by the Reference and therefore the burden will have to be calculated only in respect of the workmen covered by the Reference and to, whom dearness allowance is being fixed.
On calculation the Tribunal found that about a lakh of rupees payable to 52 chemists and included in exhibit C 13 by the appellant will have to be deducted from Rs. 1252693.00 Accordingly, it held that as per the calculation of the appellant under exhibit C 13, leaving out the 52 chemists, the total burden will only be Rs. 1152693 .00.
Taking 578 into account the tax relief that the Company will get, the Tribunal ultimately held that the additional financial burden that the appellant will have to bear will only be Rs. 555000.00.
As it had already held that the average annual gross profits of the Company are over Rs. 40,00,000.00, the Tribunal held that the Company can easily bear this additional burden.
The Tribunal is further of the view that though the financial impact of the Drugs (Price Control) Order, on the business activities of the Company has had to be seen, the impact will not be such as to make the appel lant 's financial position difficult.
For all these reasons, the Tribunal fixed for the operatives and the clerical and subordinate staff of the appellant dearness allowance on a system prevalent in Burroughs Wellcome Company.
The system of dearness allowance fixed by the Tribunal is as follows : Basic salary Dearness allowance per Variation month at the Bom bay working class cost of living index 521 530.
Rs. 1 100 150 per cent Rs. 101 200 150 per cent on the 1st Rs. 100.
72 1/2 per cent on the balance.
Rs. 201 300 150 Per cent on the 1st 100 Rs.72 1/2 Percenton the 2.
Rs. 100.
36 1/4 per cent.
on the balance.
Minimum dearness allow ance Rs. 101 _ percent _ 1/2 per cent Rs. 4.
The Tribunal has further directed that dearness allowance in accordance with the above scheme will be payable only to em ployees drawing a basic salary upto Rs. 300/ per month.
It will be seen that the Tribunal while adopting the scale of dearness allowance obtaining in Burroughs Wellcome Company, has made a departure in fixing the scale of dearness allowance on the basis of the Bombay Working Class Cost of Living Index 521 to, 530.
The dearness allowance scheme obtaining in Burroughs Wellcome Company was on the Bombay Working Class Cost of Living Index 491 to 500.
The dis rent cost of living index was adopted by the Tribunal in view of the fact that the appellant was Paying incentive wages to its operatives and with a view to lessen the financial burden on the Company.
Another feature of the scheme adopted by the Tribunal is that it puts a ceiling on the employees drawing basic wages upto 579 Rs. 300/ per month alone being eligible for dearness allowance, whereas under the practice originally obtaining in the Company there was no such limit.
The Tribunal held that the revised wage scales and dearness allowance would be effective from October 1, 1969 and directed the Company to pay the arrears within three months from the date of the Award becoming enforceable.
At this stage it may be mentioned that the appellant is not challenging this direction regarding the date from which the wage scales and dearness allowance are to take effect, though it very vehemently attacks the fixation of the scale of revised wage scales and dearness allowance by the Tribunal.
Regarding gratuity, the Company had already a scheme which had been introduced under the Settlement Award in Reference (IT) No. 141 of 1962.
It is not necessary to set out the scheme that was prevalent in the Company because the only.
objection of the appellant to the revised scheme evolved by the Tribunal is in respect of raising the ceiling from 15 months to 17 1/2 months.
The demand in this regard by the Unions was that the ceiling should be raised from 15 months basic wages to 20 months basic wages.
However, the Tribunal did not accept the claim of the Unions in toto.
On the other hand, it adopted the practice obtaining in the Burroughs Wellcome Company and accordingly fixed the ceiling at 17 1/2 months basic wages.
Regarding the notice of change issued to the workmen by the appellant under s.9A of the proposing to alter the existing floor limit of 30% to 75% in the Incentive Bonus Scheme, the Tribunal on the joint application of the parties dated April 10 , 1970 appointed on April 28, 1970 Sri B. Tulpule, as Assessor to examine the question of revising the existing scheme of Incentive Bonus.
The Assessor submitted his report on August 27, 1970 making the following recommendations : "(1) The base performance index for all sections /in the Company 's factory should be revised and raised to 60 per cent.
(2) Consequent upon the revision of the base index as above, an amount of Rs. 100 per day should be added to the basic wages of the workers, this addition being independent of any other revision of the wage structure that the Tribunal may decide upon.
(3) The revised rates of incentive should continue beyond 100 pet cent performance." Though the Unions generally accepted the recommendations, the appellant was opposed, particularly to the second and third 580 recommendations.
The Tribunal, after a consideration of the objection, is, of the view that recommendations Nos. 2 and 3 were beyond the scope of the terms of reference made to him.
Therefore, those two recommendations were negatived.
Regarding the first recommendation, it is stated by the Tribunal that the Unions accepted the same and that the Company also was not opposed to that suggestion made by the Assessor regarding the raising of the base performance index to 60%.
In dealing with this aspect the Assessor in his report had stated as follows "If the base index of any incentive scheme is raised from X to Y, the workers will stop getting the incentive earnings which they used to get for the performance range from X to Y. This is also the main anxiety expressed by both the Unions in the present case.
At the outset I asked the management whether the implication of their proposed change was such a reduction in the workers ' total pay packet, at any given level of performance.
The management categorically assured me that that is not their intention.
Their purpose in proposing the change is stated by them to induce workers to raise their performance above the prevailing level.
" The Tribunal in its Award had stated that the matters men tioned in the above paragraph including the assurance stated to have been given by the appellant were not denied.
Therefore, the Tribunal, in view of the common measure of agreement between both the parties regarding the first recommendation is of the view that if the pay packet of the workman is to be protected at the wage raise base index performance of 60%, some scheme may have to be worked out.
But as the necessary materials for the purpose of evolving a scheme were not available, the Tribunal has thrown out a suggestion that the said question should be dealt with by the appellant in consultation with the Unions and frame a scheme by common consent, if possible.
Accordingly, the Tribunal left the matter to the parties to deal with the matter with the observation that if it is found that no scheme could be framed by consent, the Unions will be free to raise any dispute that may be available to them in that regard.
We have.
exhaustively referred to the questions referred to the Tribunal as well as the decision of the, Tribunal on those points.
In these appeals, as mentioned earlier, the controversy relate to (1) Scale of Dearness Allowance; (2) Fixation of Wage Scales, Classification and Grades; (3) Raising of the ceiling to 17 '2 months basic wages in. the gratuity scheme.
; and (4) the direction given by the Tribunal.
regarding the Incentive Bonus Scheme.
581 As the main points in great controversy between the parties before us relate to the pattern of dearness allowance and the classification and grades of employees and the fixation of the revised wage scales, we will take up for consideration those matters.
The very _first objection of Mr. Tarkunde, learned counsel for the appellant is regarding the manner of ascertaining grosser of its when revising the wage scales and awarding dearness allowance.
We have already pointed out that the Tribunal has proceeded on the basis that the average annual gross profits of the Company are over Rs. 40,00,000.00.
The appellant had submitted balance sheets and profit and loss accounts for the year 1962 63 to 1969 70.
It is enough to refer to the particulars that could be gathered for the five preceding years, namely, 1965 00 to 1969 70.
For those years the figures are as follows Particulars 1965 66 1966 67 1967 68 1968 69 1969 70 Paid up capital 4500000 4 50 000 0 4500000 54 00 00 0 Reserves and Surplus 2152186 2925376442151547856975714988 Sales 21997640 23866647 303593803299445637152031 Depreciation 5449195 55035784 8241111775916719 Development rebate 972426 8266105840110858144511 Provision for taxation 1915000 1590300185050016985001639000 Net Block 4601566 4905509 545821257459977375386 Net Profit 954591 1443489 159709416045011323779 From the above statement it will be seen that the average net profits work out to Rs. 1384691.00 The net profits have been arrived at, by the Company after deducting taxation, depreciation and development rebate.
It is on the basis of the net profits, so arrived at that the appellant appears to have urged before the Tribunal that the wage scales and dearness allowance are to (1),fixed.
The Tribunal rejected this contentions.
On the, other hand, the Tribunal has held that when considering a revision of wage structure what is to be taken into account is not the net profit. ; but gross profits without any deductions having been made for taxa tion, depreciation and development rebate.
It is on that basis.
that the Tribunal held that the average gross profits ' of the Company exceed Rs. 40,00,000.00.
The gross profits without deducting taxation, depreciation and development rebate for the years 1965 66 to 1969 70 will be.
proximately as follows Year Gross profits Rs. "1965 66.
35,11,752 1966 6736 ' 57,000 1961 6843, 37,698 1968 6945, 25,134 1969 7040, 24,009" 9 L1031 Sup.
Cf/72 582 From the above it will be seen that the figure of Rs. 40,00,000.00 arrived at by the Tribunal as average annual grossprofits appears to be prima facie correct.
Mr. Tarkunde, learned counsel for the appellant found con siderable difficulty in challenging the view of the Tribunal that gross profits are to be arrived at without decucting taxation and development rebate.
He rather strenuously urged that there is absolutely no warrant for arriving at gross profits without deducting depreciation.
On the other hand, Mr. K. T. Sule, learned counsel for the respondent No. 1, whose, contentions have been adopted by Mrs. Urmila Kapoor, learned counsel for the second respondent, pointed out that the approach made by the, Tribunal is correct and is also supported by the decisions of this Court.
Mr. Tarkunde referred us to sections 205 and 211 of the , as well as , Schedule VI therein.
We do not think it necessary to% refer to those provisions as, in ouropinion, they have no relevance or bearing when considering a revision of wages and award of dearness allowance under industrial adjudication.
Those provisions are intended for ' a totally different purpose.
We will presently show, by reference to the decisions of this Court that the Tribunal was justified in computing gross profits without deducting taxation, depreciation and development rebate.
In view of the decisions, to which we will immediately refer to, Mr. Tarkunde was prepared to accept the position that, at any rate, taxation and development rebate cannot be deducted, but he still maintained that depreciation has to be deducted.
In Gramophone Company Ltd. vs Its Workmen(1), this Court, in dealing with a gratuity scheme, had to consider the principles applicable for ascertaining the financial capacity of an employer.
In that decision the employer contended that before the real profit for each year can be4 arrived at, the provisions made for taxation and for development reserves should be deducted.
On this basis, it was further contended that if these deductions are made, there will not be any profit left which will enable the Company concerned to frame a gratuity scheme.
This claim for deducting taxation and development rebate reserves was negatived by this Court as follows : "When an industrial tribunal is considering the question of wage structure and gratuity which in our opinion stands more or less on the same footing as wage struc (1)[1964] 583 ture, it has to look at the profits made without considering provision for taxation in the shape of income tax and for reserves.
The provision for income tax and for reserves must in our opinion take second place as compared to provision for wage structure and gratuity, which stands on the same footing as provident fund which is also a retrial benefit.
" It was further observed that if an industry is in a stable condition and the burden of provident fund and gratuity does not result in loss to the employer, that burden will have to be borne by the employer, like the burden of wage structure in the interest of social justice.
It was finally held that the contention on behalf of the Company therein that provision for taxation and provision for reserves should take precedence over provision for gratuity cannot be accented.
From the above decision it is clear that Fixation of wage structure stands more or less on the same footing as framing of a gratuity scheme and the principles applicable for ascertaining the profits are the same : (2) Provision for taxation and provision for reserves cannot take precedence over for gratuity and fixation of wages; and (3) The provision for income tax and for reserves must take second place as compared to provision for wage structure and gratuity.
The above decision categorically rules out any deduction of taxation.
It also excludes from deduction all provision for reserves which will take in depreciation reserve also.
But, Mr. Tarkunde contended that the above decision is an authority for the proposition that the only two items that could be deducted are provision for taxation and provision for development rebate reserve.
If so, the counsel urges that the deduction of depreciation reserve as claimed by the appellant is justified and, that the Tribunal erred in declining that item to be deducted.
We are not inclined to accept this contention of Mr. Tarkunde.
The above decision is, in our opinion, an authority for the proposition that the provision for taxation and provision for reserves, which expression will take in depreciation reserve also, cannot be deducted for the purpose of computing the profits.
At 'any rate the, said decision had no occasion to consider whether depreciation reserve can be deducted or not.
We have already pointed out that the only claim made by the appellant therein was for deducting provision for taxation and for development rebate reserve and that claim was rejected.
Therefore, looked at from any point of view, the above decision is certainly not in favour of the contention of Mr. 584 Tarkunde that depreciation reserve has to be deducted before arriving at profits.
In The Indian Link Chain Manufacturers Ltd. vs Their Work men(1), this Court had occasion to consider the principles applicable to ascertain the financial capacity of a company in fixing wage scales and dearness allowance and framing of a gratuity scheme.
The Principle applicable was stated as follows "It is pertinent to notice that gratuity and wages in industrial adjudication are placed on the same footing and have priority over Income tax and other reserves, as such in considering the financial soundness of an undertaking for the purposes of introduction of a gratuity scheme the profits )that must be taken info account are those computed prior to the deduction of depreciation and other reserves.
" The decision in Gramophone Company vs Its Workmen 2 was quoted with approval in this decision.
The Company in that case had calculated profits after deducting depreciation.
This method was deprecated by this Court as follows : "All these profits it may be mentioned are computed after deducting depreciation and this should betoken into account in considering the desirability of formulating a gratuity scheme for the Appellant.
" In the end the provision made for depreciation and which had been deducted by the Company for calculation of profits was added back.
From the above decision it is clear that profits are to be computed prior to the 'deduction of depreciation and other reserves.
The said decision directly holds that provision for depreciation and other reserves cannot be deducted in computing profits be ascertained for framing a gratuity scheme.
This decision again reiterates the legal position that gratuity and wages in industrial adjudication and placed on the same footing and have priority over Income tax and other reserves.
In fact, as pointed out by us earlier, provision made for depreciation and which had been deducted by the Company for arriving at profits was added back.
by this Court.
Mr. Tarkunde urged that this Court in The Indian Link Chain Manufacturers Ltd. vs Their Workmen(1) has misunderstood and misinterpreted the earlier decision in Gramophone Company Ltd. vs Its Workmen (2 ) .
According to the counsel the error committed by this Court was on proceeding on the basis that the decision in (1) ; (2) [1964]2 L.L.J. 131.
585 Gramophone Company Ltd. vs Its Workmen(1) has laid down that depreciation reserve should not be deducted in computing the profits available for framing a gratuity scheme or when fixing a wage scale, We have no hesitation in rejecting this contention of Mr. Tarkunde.
We have already expressed our views regarding the scope of the decision in Gramophone Company Ltd. vs Its Workmen(1) and no error has been committed by this Court in The Indian Link Chain Manufactures Ltd. vs Their Workmen(2).
On the other hand, the latter decision is directly in point to the effect that provision for depreciation cannot be deducted.
We may also refer to the observation of this Court in Ahme dabad Millowners ' Association Etc.
vs The Textile Labour Association(3) that. . it is the figure of gross profit which is more important, because it is not disputed that wages payable to the employees are a first charge,, and.
all other liabilities take their place after the wages.
" Mr. Tarkunde referred us to, the statements contained in certain leading text books on principles of Accounting, Book Keeping and Accounts and Accountancy regarding the nature of depreciation reserve.
In "Principles of Auditing by F. R. M. De Paula, 8th Edition," it is stated that the main object of providing for depreciation of wasting assets is to keep the original capital intact.
In "Balance Sheets, how to read and understand them, by Philip Tovey,3rd Edition" the distinction between a "Reserve" and "Depreciation" has been stated.
The author says that depreciation should be written of before arriving at the year 's profit and that reserve is built up, by setting aside portions of the profits itself.
The author proceeds to state that depreciation represents the estimated wear and tear which will ultimately reduce the property and plant to scrap value.
In "Book Keeping and Accounts" 'by Cropper, Morr 's and Fison, 19th Edition, when dealing with the Trial Balance, Trading and Profit and Loss Accounts, it is mentioned that depreciation is the term employed by the Accountants to indicate the gradual deterioration both in the value and the usefulness of those assets which, by reason of their nature and uses, steadily decline in value.
Again in "Accountancy" by William Pickles, 3rd Edition the author has defined "Depreciation" as the permanent and continuing diminution in the.
quality, quantity or value of an asset.
it Is further stated that the provision for depreciation does not depend upon what the business can afford, as the debit therefore is an (1) [1964] 2 L.L.J.131, (2) ; (3) ; 586 essential one, constituting not an appropriation of, but a charge against, profits for the period in question.
Based upon the above statements contained in the text books, referred to above, Mr. Tarkunde urged that the principle in Accountancy is that depreciation must be deducted before ascertaining the profits.
In our opinion, the above statements may have considerable bearing in the preparation of profit and loss accounts having due regard to the provisions of the and Mercantile usage; but they have no bearing on the question of fixation of wage structure and dearness allowance in an industrial adjudication.
From what is stated above, it follows that the Tribunal was justified in arriving at gross profits without deducting the provision for Depreciation.
As already mentioned by us, Mr. Tarkunde has accepted that the Tribunal was justified in not deducting the Provision made for taxation and development rebate.
The result is that the average gross profits of the appellant being about Rs. 40,00,000,00, as held by the Tribunal, is correct.
In the fixation of wages and dearness allowance the legal position is well established that it has to be done on an industry cumregion basis having due regard to the financial capacity of the unit under consideration vide Express Newspapers (Private) Ltd., and Another vs The Union of India and others(1), Greaves Cotton and Co. and others vs Their Workmen (2) , and Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen(3).
It has been further stated in Greaves Cotton add Co. and others vs Their Workmen (2 ) as follows : "The principle therefore which emerges from these two decisions is that in applying the industry cum region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind.
But where the number of industries of the same kind in a particular region is small it is the region part of the industry cum region formula which assumes importance. . (1) (2) ; (3) ; 587 It has been further emphasized in Ahmedabad Millowners ' Association etc.
vs The Textile Labour Association(1) that industrial adjudication should always take into account, when revising the wage structure and granting dearness allowance, the problem of the additional burden to be imposed on the employer and ascertain whether the employer can reasonably be called upon to bear such burden.
The principles to be borne in mind have been stated in the said decision as follows : " It is a long range, plan; and so, in dealing with this problem, the financial position of the employer must be carefully examined.
What has been the progress of the industry in question; what are the prospects of the industry in future; has the industry been making profits; and if yes, what is the extent of profits; what is the nature of demand which the industry expects to secure; what would be the extent of the burden and its gradual increase which the employer may have to face ? These and similar other considerations have to be carefully weighed before a proper wage structure can be reasonably constructed by industrial adjudication. .
As pointed out in Greaves Cotton and Co. and others vs Their Workmen (2) , one of the principles to be adopted in fixing wages and dearness allowance is that the Tribunal should take into account the, wage scale and dearness allowance prevailing in ' comparable concerns carrying on the same industry in the region.
, The factors which have to be taken into account for ascertaining comparable concerns have also been laid down by this Court.
In Workmen of Balmer Lawrie and Co. vs Balmer Lawrie and those principles have been stated as follows "Besides, it is necessary to emphasise that in dealing with the comparable character of industrial undertakings, industrial adjudication does not usually rely on oral evidence alone.
This question is considered in the light of material fact and circumstances which are generally proved by documentary evidence.
What is the total capital invested by the concern, what is the extent of its business, what is the order of the profits made by the concern, what are the, dividends paid, how many employees are employed by the concern, what is its standing in the industry to which it belongs, these and other matters have to be examined by industrial adjudication in determining the question as to whether one concern is com parable with another in the matter of fixing wages.
Now, (1) ; (2) ; (3) ; 588 it is obvious that these questions cannot be decided merely on the interested testimony either of the workmen, or of the employer and his witnesses '" In Workmen of New Egerton Woollen Mills vs New Egerton Woollen Mills and others(1) , the above principles have again been reiterated.
From the decisions, referred to above, it follows that two principal factors which must weigh while fixing or revising wage scales and grades are: (1) How the wages prevailing in the establishment in question compare with those given to the workmen of similar grade and scale by similar establishments in the same industry or in their absence in similar establishments in other industries in the region; and (2) What wage scales the establishment in question can pay without any undue strain on its financial resources.
The same principles substantially apply when fixing or revising the dearness allowance.
The question is whether the Tribunal has adopted the above principles when revising the wage scales and dearness allowance in the case of the appellant.
The Unions had relied on as many as twenty one concerns located in the region of Greater Bombay and belonging to the same pharmaceutical units of industry as, units comparable with the appellant.
The appellant opposed its being compared with those concern,, on the ground that the units relied on by the Unions were companies haying foreign collaborations or connections, and as such possessing several advantages.
The appellant in turn relied on several concerns in the region as comparable units.
Before we refer to the concerns relied on by the Unions and the appellant as comparable concerns, it is necessary to deal with an objection raised by Mr. Tarkunde that no foreign unit doing business in India or no unit in India doing business in collaboration with a foreign concern, can ever be considered for purposes of comparison.
According to the appellant such concerns have distinct advantages of international research facilities, reputation in business which enables such concerns to market their products more easily and thus enable them to pay higher wages to their employees.
In view of the special technical facilities, that may be available to them, their output will be far higher though the number of employees will be much less, and as such they will be able to pay to their lesser number of employees higher wages.
In this connection Mr. Tarkunde relied on certain awards of the Industrial Tribunal (1)[1969] 589 wherein it is held that the comp 'es having foreign collaboration though in the same region and in the same industry, cannot be considered for the purposes of comparison with purely local On the other hand Mr. Sule, has opposed the above position and urged that the question as to who is the employers is absolutely immaterial so long as the tests for the purposes of comparability as laid down 'by this Court, are satisfied and the capacity to bear the financial burden is established.
We will deal with aspects in the first instance.
It must be stated at the outset that the Unions placed reliance on certain information contained in the prospectus of the Company and certain statements contained in the book "Indian, Pharmaceutical Industry" published in 1963 and 1969, to show that the appellant concern is also one which has foreign collaboration and as such it is to be ranked as a concern with foreign attachment.
has recorded a finding in favour of the appellant that it is not a unit having foreign collaboration.
Therefore, this finding is III favour of the appellant.
The question that now arises for consideration is whether in law there is any objection or prohibition in an industrial tribunal, when dealing with comparable units in a region from taking into account concerns having foreign collaboration.
It is no doubt true that some of the concerns relied on by the Unions are concerns working in collaboration with foreign firms.
In Chemical Industries and Pharmaceutical Laboratories Limited (Cipla) Bombay vs Their Workmen(1), it was held by the Industrial Tribunal that the Cipla cannot be compared to Glaxo Laboratories, Raptakos Brett and other pharmaceutical concerns which are either subsidiaries of foreign concerns or are closely linked with them.
It was further held that if any comparis on could be made,in can only be with concerns like Kemp & Company.
Sandu Pharmaceutical, Fair Deal Corporation, Edison Continental Laboratories, Bengal 'Chemicals and such other indigenous concerns.
Again in Alembic Chemical Works Ltd. Baroda vs Its Workmen (2) , the Tribunal held that Alembic cannot be compared to concerns like the Glaxo Laboratories and others who have associations in different degrees and forms with certain foreign concern, of international repute.
On this reasoning the Tribunal relied more on the scales wages prevailing in concerns like the Jhandu Pharmaceutical, Cipla.
Kemp & Co., and such similar concerns although it held that (2) [1958] I.C.R. Bombay, 1305.
(1) [1957] I.C.R Bombay, 1206.
590 Alembic is a much bigger concern, than the said units.
It must be stated that in both these awards concerns with foreign collaboration have been eliminated from consideration on the ground that they cannot be regarded as comparable concerns and to that extent they support Mr. Tarkunde 's contention.
In Reference (IT) No. 223 of 1959, which related to the appellant Company, the workmen placed reliance on Indian units of foreign concerns for being treated as comparable units.
,The appellant, however, pointed out that those units which have international fame and repute in world market were in a position to sell their products more easily and profitably and hence they cannot be treated as comparable units.
The Tribunal, no doubt, accepted the contention of the appellant that the Unions had selected some of the bigger concerns for comparison and held that it would be more appropriate if the appellant is placed somewhere in between the bigger and smaller concerns.
In this view the Tribunal took to the financial capacity of the appellant.
Again in Reference, (IT) No. 402 of 1963, relating to the appellant, wherein the dearness allowance was revised, the appellant had contended that it should not be compared with the units like Ciba, Dumex, Glaxo, Sandoz and the like.
The Tribunal held that the appellant cannot be compared with international pharmaceutical units having branches in Bombay or with foreign concerns like Glaxo, Ciba, Sandoz etc., which though incorporated in India are subsidiaries of foreign companies having all the advantages of connection with respect of home companies in Europe and America.
The Tribunal referred to the award in Reference (IT) No. 223 of 1,959 and held 'that a fair cross section of the industry has to be taken into account for fixing a scale of dearness allowance, which will be within the financial capacity of the appellant.
But, how ever, the Tribunal held that the appellant is a firm of good reputeand standing and that it has very fair prospects.
Though in Reference (IT) No. 223 of 1959, the Tribunal did not specifically eliminate from consideration units having foreign collaboration as such, nevertheless, in Reference (IT) No. 402 of 1963, the Tri bunal has held that the appellant cannot be compared with international pharmaceutical companies having branches in Bombay or with concerns, though, incorporated in India, are subsidiaries of foreign, companies.
From what is stated above, it is no doubt true that in the three awards, one of which specifically relates to the appellant, concerns having foreign collaboration have been eliminated for purposes of comparison.
But no legal principle on the basis of which such a decision has been arrived at has been stated in any of these awards.
591 In our opinion, so long and to the extent that concerns having foreign collaboration are doing business in India and in a particular concerned region, we do not see any reason why they should not be taken into account for purposes of being treated as comparable units, provided the tests for such purposes as laid down by this,, Court are satisfied.
No doubt some of those concerns may be having an advantage in various matters.
But merely because that they possess such advantage in the field of business is not a circum stance for eliminating such concerns for purposes of comparability.
The object of industrial adjudication is, as far as possible, to secure uniformity of service conditions amongst the industrial units in the same region.
If a concern having foreign collaboration properly satisfies the tests of comparability, it would be improper to regard ' such unit as uncomparable merely on the ground that it is a con cern with foreign collaboration or interest and that 'the unit with which it is sought to be compared is entirely of Indian origin and resources.
The object of Industrial.
Law is to improve the service conditions of industrial labour so as to provide for them the ordinary amenities of life with a view to bring about industrial peace which would in 'turn accelerate productivity of the country resulting in its prosperity.
The prosperity of the country, in its turn will help to improve the condition of labour.
The principles regarding fixation of wage scales and dearness allowance have been laid down in several decisions, by this Court and they apply equally to all industries irrespective of the character of the employer.
The worker is interested in his pay packet and given reasonable wages, he can be expected to be a satisfied worker.
There is no justification from the stand point of view of the employees for fixing different wage scales merely because of the fact that some workmen are in the employ of purely local concerns while some others are in the employ of units though in the same region, working in collaboration with, foreign concerns.
As the paramount consideration is the interest of the worker, the character of the employer is irrelevant, provided ' the latter 's financial capacity to bear the burden is established.
In the ultimate analysis the, character of the employer or the destination of profits has no relevance in the fixation of wages and dearness allowance.
We are fortified in the above view by The decision of the Constitution Bench of this Court in Hindustan Antibiotics Ltd. vs The, Workmen and others(1).
In that case on behalf of the appellant it was urged that as it was a government company in the public sector, the principles governing the fixation of wages applicable to companies in the private sector do not have any relevance.
On (1)[1967]1.S.C.R.652. 592 the other hand, on behalf of the workmen it was contended that in fixing the wage structure including dearness allowance the question, who is the employer, is irrelevant and that only the needs of the employee are of paramount importance.
The contention on behalf of the workmen was accepted by this Court and it was held that the same principles that have been laid down by the industrial adjudication and the courts regarding the fixation of wage scales and dearness allowance in respect of companies in the private sector apply with equal force to companies in the public sector also.
It was further held that in the application of the industry cum region principle to be adopted to distinction can be made between one unit and another in the same industry in the fixation of wage scale,; provided the test of financial capacity is satisfied.
It was further held that by and large the acceptance of the principle of industry cum region will be more conducive to industrial relations and that the same principles evolved by the industrial adjudication in regard to private sector undertakings will govern those in the public sector undertakings having a distinct corporate existence.
Though the decision cited above had to deal with a claim for ,differentiation being made on behalf of a company in the public sector and which claim was rejected, in our opinion, the basic principle underlying the said decision will apply even with respect 'to the question whether the units, having collaboration with foreign concerns can be taken into account for purposes of comparison, In our opinion, the above decision warrants the conclusion that such units having foreign collaboration or foreign companies doing 'business in India can be taken into account for purposes of being considered whether they are comparable units.
Of course, the test laid down by this Court for treating one unit as a comparable one, will have to be satisfied, and once that test is fulfilled, there can be no distinction made between such units and purely local units.
Therefore, in our view, the Tribunal, in the case 'before us, was perfectly justified in taking into account for purposes of comparison units having collaboration with foreign concerns and foreign units doing business in India in the same region and being in the same industry.
It follows, therefore, that the principles laid down to the contrary in the awards relied on by Mr. Tarkunde, are erroneous.
Coming to the units relied on by the parties as comparable units.
as mentioned earlier, the Unions relied on as many as 21 concerns as comparable with the appellant.
No doubt some of the units relied on by them were units having collaboration with foreign concerns.
The appellant also, in turn filed statement exhibit C 26.
referring to six companies which could be treated as comparable concerns. 593 The Tribunat rejected most of the units relied on by the Unions on the ground that the information furnished regarding such units.
were not adequate and complete regarding various factors necessary to constitute a comparable unit.
We have also gone through the statements filed by the Unions.
In exhibit DU 2, one of the Unions furnished information regarding the business performance of about nine concerns till the year 1964 65.
Similarly, in exhibit DU 3, another Union had given the average performance of nearly ton units for the years 1962 63 to 1964 65.
As it would be more desirable to consider the financial capacity of the appellant in the light of the trading results disclosed in the balance sheets and profit and loss accounts from the years 1965 66 to 1969 70, it must he considered that the information furnished in Exs.
DU 2 and DU 3 cannot he considered to be upto date and helpful.
The Unions also did not make any further attempt to supplement the informa tion contained in these two exhibits by furnishing information regarding the years subsequent to 1964 65.
No doubt, the Unions have furnished particulars regarding one unit, Burroughs Welcome India) Private Ltd., which will be dealt with later.
Therefore, the rejection by the Tribunal of most of the units relied on by the Unions, was justified.
The appellant Company relied on six units mentioned in exhibit C 26.
Those units are Cipla, Chemo Phama, Zandu, Opil, Sigma and Bengal Chemicals.
But the Company did not furnish information regarding the business performance of these concerns for a period of years in the immediate past.
But it will be noted that the four units referred to in exhibit C 26.
namely, Zandu, Cipla, Opil and Sigma, had been considered by the Industrial Tribunal in its previous award Reference (IT) No. 402 of 1963, when the scale of dearness allowance obtaining in the appellant Company was revised.
On that occasion the Tribunal had held that it was only Cipla which came nearest to the appellant Company and even there the dearness allowance obtaining in Cipla cannot be taken for comparison.
That means that these four units were left out of account and were not treated as units comparable with die appellant.
No fresh materials were placed by the appellant regarding these four units after the decision of the Tribunal in Reference (IT) No. 402 of 1963.
Therefore, the Tribunal in the present case, was justified in rejecting the claim of the appellant that those four units are comparable concerns.
The elimination of the four units.
thus left for consideration only two concerns, namely, Chemo Phama and Bengal Chemicals.
Even here the Unions had furnished statements Exs.
DU 8 and DU 9, regarding these two units in Ex ' DU 8, the business performance of Chemo Phama froth 1965 to 1969 was given and in exhibit DU 9, the business performance of Bengal Chemicals from 1965 to 1970 was given.
The 594 'Unions had also furnished exhibit DU 44 regarding the business performance of the appellant.
A comparison of the statements contained in Exs.
DU 8 and DU 9 with the material relating to the appellant in exhibit DU 44, regarding the paid up capital, reserves and surplus sales, net block, net profits and gross profits, it is quite clear that the business performance of Chemo Phama and Bengal Chemicals do not come anywhere nor that of the appellant.
The appellant in all respects stands on a much higher footing.
The average gross profits of the appellant work out to Rs. 40,11,176.
while the average gross profits of Chemo Phama works out to Rs. 5,31,511 and that of the Bengal Chemicals to Rs. 11,39,553.
Therefore, it is clear that these two units also cannot be treated as concerns comparable with the appellant and hence the wage structure prevailing in those concerns cannot provide any useful guidance.
We have already mentioned that the Tribunal has ultimately held that M/s Burroughs Wellcome (India) Private Limited is a concern comparable with that of the appellant.
It is no doubt a foreign company in the sense that its entire capital is held by foreign company as shown in the statement exhibit C 11, filed by the appellant.
But we have already rejected the contention that such a concern cannot be ruled out of consideration for purpose of comparability.
A very severe attack has been levelled by Mr. Tarkunde in the Tribunal 's treating M/s Burroughs Wellcome Company as a comparable unit.
According to the learned counsel if the various factors relevant for the purpose of comparison are considered, it will be clear that the appellant cannot stand any comparison with this unit.
Mr. Tarkunde further pointed out that instead of taking ,only one unit for purposes of comparison, the Tribunal should have taken fair cross section of the industry in order to find out where exactly the appellant can be fitted in.
It is no doubt true that a fair cross section of the industry should be taken into account.
But in this case when all the other units have been held to be not ,comparable with the appellant, this criticism levelled against the approach made by the Tribunal cannot be accepted.
Regarding Burroughs Wellcome Company, the Unions had sub mitted a statement exhibit DU 2A under a seal of confidential as it was a private limited company.
A comparison of the information ,contained in the said statement exhibit DU 2A regarding the paid up ,capital ', reserves and surplus sales, depreciation, development rebate, provision for taxation, net profits, gross profits, net block and dividend declared for the years 1967 to 1970 with the corresponding items in exhibit DU 4A with respect to the appellant shows that both the units are substantially on a par.
Normally, the 595 statements in exhibit DU 2A could have been extracted in this judgment but for the fact that Burroughs Wellcome Company being a private limited company and the statements having been furnished in a sealed cover, they could not be made public.
The paid up capital.
is identical in both the concerns.
The average sales of Burroughs Wellcome Company and those of the appellant are substantially the same.
The difference between the, net profits of the two is significantly small.
The gross profits of the two units are also close to each other.
No doubt there are some small differences between the two in these items, but they are of no significance.
The various factors which have to be taken into account for he purpose of a unit being treated as a comparable one as laid down by this Court have already been referred to.
If so, all those factors taken into account clearly show that Burroughs Wellcome Company is a unit comparable with the appellant.
No doubt the appellant has relied on the ratio of employees to sales, as well as to debt equity ration and the percentage of profit to sales in respect of the appellant and the Burroughs Wellcome Company.
exhibit C 22 contains the ratio of employees to sales in 1968 69.
Though there are certain other units referred to therein, we will only advert to the particulars regarding the appellant and the Burroughs Wellcome Company, which are as follows Ration of Employee to Sales No. of Per Name of the Company Year SalesEmployees employee sale Rs. Rs. Unichem 68 6932994456 752 43875 Burroughs.
69 25000000 425 58823 A reference to exhibit C 22 will show that the sales of the appellant is higher than that of Burroughs Welcome Co. No doubt the ratio per employee is slightly less in the case of the appellant.
It is also seen that the appellant employs nearly 752 workmen whereas Burroughs Wellcome Co. employs only 425 workmen.
In exhibit C 18, particulars regarding Debt Equity Ratio have been given.
That statement contains particulars regarding the various firms including the appellant.
In 1969 the capital of the appellant was Rs. 101.86 lakhs.
It had borrowed Rs. 95.89 lakhs and the percentage on borrowed funds to capital works out to 94.1 %.
It is no doubt true that there is no borrowed capital in Burroughs Wellcome Co. In exhibit C 18 particulars regarding nine Units have been given and it is seen that except two units, all the other seven units, including the appellant, have borrowed.
In fact it is interesting to note that Glaxo, which has a capital of Rs. 1196.81 lakhs had also borrowed Rs. 26 80 lakhs.
Similarly, 596 Chemo Phama which had a capital of only Rs. 32.05 lakhs had borrowed Rs. 37.08 lakhs and the percentage works out to Rs. 115.7%.
We are referring to these aspects because it was stressed by Mr. Tarkunde that the Debt Equity Ratio in the appellant is very high and that it has to pay a large amount by way of interest on borrowed funds which is not the case with Burroughs Wellcome Company.
But the statements contained in exhibit C 18 themselves clearly show that borrowing for the purpose of business seems to be a usual pattern followed by the companies in the region.
exhibit C 15 is a statement relating to percentage of profit to sales for the years 1965 66 to 1969 70.
No doubt the figures given therein show that the percentage of profits has been fluctuating.
but, in our opinion, the particulars contained in the above exhibits.
relied on by the appellant, do not affect the findings of the Tribunal that Burroughs Wellcome Company is a unit comparable with the appellant.
Another criticism that has been levelled by Mr. Tarkunde is that the Tribunal has not taken into account the prospects of the future business of the appellant.
In this connection the appellant relied on the coming into force with effect from January 1, 1971 of ' the Drugs (Price Control) Order, 1970.
According to Mr. Tarkunde whatever may have been the financial.
position of the appellant in the past, its future business is bound to suffer in view of this price control order.
He referred us to the decision in Williamsons (India) Private, Ltd. vs Its Workinen(1) of this Court wherein it has been held, amongst the various factors which have to be taken into account for the purpose of fixation of wage scales and dearness allowance, the prospect of future business is a very relevant circumstance.
This factor, according to the appellant, has not been taken into account by the Tribunal.
We have earlier referred to the decisions of this Court regarding the principles governing the fixation of wages and dearness allowance.
It is no doubt a long, range plan and the Prospects of future business amongst other factors have also to be taken into account.
The case of the appellant is that in 1963, there has been a price freeze and that has affected its business and therefore the Drugs (Price, Control) Order, 1970 will affect its future business.
We have, already, extracted in the earlier part of the judement the trading results, of the appellant from 1965 66 to 1969 70.
If the price freeze which came into force in 1963 had any affect, then it must have been reflected in the trading results of the appellant.
The (1) 597 trading results of the appellant during the years 1962 63 to 1964 65 are as follows : Particulars1962 63 1963 64 1964 65 Paid up capital 4491000 44992504499500 Reserves and Surplus 476569 1010753 1505353 Sales 10241405 1566588317388705 Net Block 3907400 4371113 4345467 Provision for Taxation 934000 1065000 1515000 Depreciation297243379256390878 Development rebate 33686 100617 22329 Net Profits 442881 703567 877271 A glance of the above statement clearly shows that though the paid up capital remains the same, there has been a steady rise in the reserve and surplus sales and net profits.
Similarly, the net block has also an increase.
There has been no set back in the sales.
On the other hand there has beena steady rise in the sales.
No doubt for the year 1969 70 the profits did go down; but the drop is comparably small and the appellant has not been able to, satisfy.
us that it is due to the price freeze.
Then the question is regarding the impact of the Drugs (Price Control) Order, 1970, which has come into effect from January 1,1971.
In this connection it is necessary to refer to the speech made bythe Chairman of the Board of Directors of the appellant Companyat the Annual General Meeting held on January 9, 1971.
At thisstage it may be mentioned that the Accounting year of the appellant Company is from October 1, to September 30, of the succeeding year.
On January 9, 1971, the Chairman was giving a review of the working of the Company for the year ending September 30, 1970.
He had clearly stated that the impact of the Drugs (Price Control) Order, 1970, which had come into force only recently will be felt by the Company only after the year 1970 71.
The appeal was heard by us from January 3, 1972 and concluded only on January 10, 1972.
As the Company, in the previous years had been having its Annual, General Meetings in early January, of each year, we suggested to the counsel for the appellant that as the approximate trading results for the year commencing from October 1, 1970 to September 30, 1971 would have been available by then, they may be furnished so that it may be possible to find out the impact of the Drugs (Price Control) Order on the trading results of the appellant.
But it was represented that the figures are not available.
It is not necessary for us to cornment except to state that going by the fact that on former occasions the figure had been ready by the first week of January to enable the Annual General Meeting of the Company to be held, it would not have been difficult for the appellant to have furnished at least 1031 Sup.
CI/72 598 the approximate figures, if really the trading results had shown a decline.
The appellant has missed an opportunity 'that was provided to it to establish that the Drugs (Price Control) Order has adversely affected its business.
Under those circumstances, it is not possible for us to disagree with the view of the Tribunal that the impact of the Drugs (Price Control) Order will 'not be such as to affect materially the business prospects of the appellant Company.
We may state that if the Drugs (Price Control) Order, mate rially affects the prosperity of the appellant 's trade, it would be open to it to raise a dispute for the reduction in the wage structure and in case they are able to show that in view of the Drugs (Price Control) Order, their financial position has been weakened to such an extent that they cannot bear the burden of wage structure fixed by the present award, the matter may have to be examined on its merits.
The question of fixation of wage scales need not detain us very long.
We have already extracted the wage scales prevailing in the appellant company as well as the categories of workmen when the reference was made.
We have also referred to the fixation of wage scales by the, Tribunal on a comparison with the wage scale obtaining in Burroughs Wellcome Company.
The wage structure.
as well as the grades that were prevalent in Burroughs Wellcome Co. in pursuance of the settlement dated June 13, 1966 regarding the ,operatives and clerical and subordinate staff have been incorporated ,by the Tribunal in its Award.
We do not think it necessary to reproduce the same.
A comparison of the wage scales in Burrough Wellcome Company and the wage scales fixed by the Tribunal in the Award for the Company will show that the Tribunal has only made some slight variation in view of the fact that it accepted the report of the assessor for the continuance of the existing grades in the Company.
As some of those grades were, not existing in BurToughs Wellcome Company, the Tribunal bad to make some slight changes.
Wherever it was possible the wage structure in Burroughs Wellcome Co. has been retained but the maximum has been raised a little and some slight changes have also been made in the incremental stage.
Once Burrough Wellcome Company is treated as a comparable unit, we are satisfied that the wage scales awarded by the Tribunal cannot be 'considered to be unjustified.
The Tribunal 's finding regarding the financial capacity of the appellant has already been referred to and we accept the same.
it was, however, pointed out by Mr. Tarkunde that in consi dering the comparability of a unit; strength of the labour force has also to be given due importance.
Mr. Tarkunde pointed out that 599 while the appellant employs 752 workmen, there are only 436 in Burroughs Wellcome Co. as is seen from the Statement exhibit C 22.
No doubt to this extent, the two units differ, but when one bears in mind the business performance of both the units,there is not much of a substantial difference.
It may be that because of the fact that Burroughs Wellcome Co. adopts more modem methods of production, it was employing a smaller complement of workers.
Having due regard to all the other tests that have been satisfied, this difference in the strength of labour force alone, in our opinion, cannot be given undue importance.
It is pertinent to note that this Court in Workmen of New Egerton, Woollen Mills vs New Egerton Woollen Mills and others(1) did not disagree with the view of the Industrial Tribunal which had treated the respondent therein and another unit as a comparable unit, notwithstanding the that the respondent was employing at the material time about 3000 workmen whereas the unit which was treated as a comparable unit was having the labour force of only about 1000 men, in view of the fact that all other requirements for comparability Were satisfied.
In fact, in the case before us, the Tribunal has adverted to this difference of labour force of the appellant and Burroughs Wellcome Company, but nevertheless it held that, that by itself is not sufficient to eliminate Burroughs Wellcome Company as a comparable unit.
We agree with this approach made by the Tribunal.
An objection was taken on the basis of section 10(4) of the that the Tribunal has permitted the Unions to revise their demand regarding classification and grades of workmen and that the Tribunal has further committed an error in upholding the grades of Stenographers, Assistants and Store keepers and merging them with that of the Senior Clerks.
We are not inclined to accept this contention advanced on behalf of the appellant.
We have already referred to the fact that as the question of classification and fixing grades were matters cf a technical nature, at the joint request of both the parties, the Tribunal appointed Sri Gadkari, as an assessor.
It was really in view of the stand taken by both the parties before the assessor and the Tribunal, after the report was submitted by the assessor that the Tribunal has accepted the report that the existing grades should continue.
But as the workmen had to be fitted in 'the appropriate grades, the Tribunal was justified in fitting in the categories the workmen and their grades as well as their scales of wages.
The above contention based upon section 10(4) of the , at the most can relate, if at all.
only to the operatives.
The report of Sri Gadkari has already been referred to.
He had suggested the ' retention of the existing categories.
The workmen have necessarily to, be classified for the purpose of being put in particular categories (1)[1969] 2 L.L.J.782.
600 and the wages also have to be suitably fixed depending upon the category in which they are so fitted.
Having due regard to the, nature of the reference, classification though jobwise and the fixing of wages of pay and fitting the workmen in suitable categories were all matters incidental and as such the Tribunal has acted within its jurisdiction in classifying the workmen and fixing the scales of pay after fitting them in particular categories.
In the view above expressed, we do not think it necessary to refer to the decisions referred either by Mr. Tarkunde, learned counsel for the appellant or by Mrs. Urmila Kapoor, on behalf of the respondent No. 2 as to when exactly the matter can be considered to be incidental to the question referred for adjudication.
Before we take up the question of dearness allowance, one other point that requires to be adverted to is the objection taken on behalf of the appellant regarding the raising in the gratuity scheme the ceiling limit from 15 months to 17 21 months ' basic wages.
The Tribunal has adopted the pattern obtaining in Burroughs Wellcome Company.
We do not see any question of principle involved in this matter and therefore we find no merit in the objection raised by the Company.
The pattern of dearness allowance that was in force in the appellant Company at the time of the reference has been indicated already.
We have also referred to the scale of dearness allowance fixed by the Tribunal.
There were different systems of dearness allowance for the operatives and the clerical and subordinate staff.
That such a different system of dearness allowance for the employees working under the same employer is not warranted, is clear from the decisions of this Court in Greaves Cotton & Co. and others vs Their Workmen(1) and Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen(2).
Therefore, the Tribunal was justified in devising a uniform scale of dearness allowance applicable to all the employees of the appellant.
The Unions required a common scheme of dearness allowance of slab system to be introduced for all employees.
The appellant resisted the claim on the ground that there was already a scheme of dearness allowance existing in the Company and that there is, no justification for revising the same.
But, nevertheless, the Tribunal has adopted, by and large, the scheme of dearness allowance which was in vogue in 'Burroughs Wellcome Co. Normally, once Burroughs Wellcome Co. is treated as a unit comparable with the appellant, the Tribunal must be considered prima facie to be justified in introducing the pattern obtaining in that unit.
However, it is pointed out on behalf of the appellant that the slab system of dearness allowance does not obtain in any of the pharmaceutical industries in the region.
(1) ; (2) ; 601 The contention that because there was a system of dearness allowance in existence in the Company and therefore there was no justification for revising the same, cannot be accepted.
A similar contention raised in Remington Rand of India vs Its Workmen(1) was rejected by this Court.
In that.
case there was a system of dearness allowance providing for payment of not only a rate of percentage on the basic salary but also a variation in the percentage on the rise or fall of the cost of living index.
The workmen demanded revision of the scale of dearness allowance on the ground that the cost of living index had increased.
The claim was resisted by the Company on the ground that the scheme of dearness allowance then existing in the Company itself provided for an increase in the cost of living index and therefore no revision is required.
This contention was not accepted by this Court.
It was held that a claim made by the Workmen, if otherwise justified, cannot be rejected on the sole ground that a provision is already made in an existing scheme of dearness allowance for adjustment depending upon an increase in the cost of living index.
This Court further held that if it is established that the cost of living shows a tendency to rise very high, the workmen would be entitled to claim and there may be a change in the rate of dearness allowance originally fixed, so, as to provide for more neutralisation.
It was further held that a claim made by the workmen win have to be properly considered and adjudicated upon by the Tribunal.
In fact, in that case, it is seen that there was only a 50 point rise in the cost of living index and nevertheless the revision of the scale of dearness allowance by the Tribunal was upheld.
We may also refer to the decision of this Court in Workmen of Balmer Lawrie and Co. vs Balmer Lawrie and Co.(2) wherein it has been held as follows : "If the paying capacity of the employer increases or the cost of living shows an upward trend, or there are other anomalies, mistakes or errors ', in the award fixing wage structure, or there has been a rise in the wage structure in comparable industries in the region, industrial employees would be justified in making a claim for the reexamination of the wage structure and if such claim is referred for adjudication, the Adjudicator would not normally be justified in rejecting it solely on the ground that enough time has not passed after the making of the award, or that material change in relevant circumstances had not been proved.
It is of course, not possible to lay down any hard and fast rule in the matter.
The question as to revision must be examined, on the merits in each (1) (2) ; 602 individual case that is brought before an adjudicator for his adjudication.
" On the date when the settlement was entered into between the appellant and its workmen on April 20, 1966, the cost of living , index was 630.
From exhibit C 1 it is seen that in August 1969, the cost of living index had gone up to 7 90 and from exhibit DU IO dated December 8, 1970, it is seen that when the second settlement was entered into between Burroughs Welcome, Co. and its workmen, the cost of living index had gone upto 800.1.
It is also seen that at the time of the Award it had gone up further to about 850 points.
Therefore, from the date of the settlement in 1966 the cost of living index had very rapidly gone up by 220 points.
At the time when the demand for revision of wage scales and dearness allowance wag made by the Unions and when the reference order was made by the Government, the cost of living index had gone up very high.
That clearly shows that the workmen had made out a case for revision of wage scales and dearness allowance.
We have earlier referred to the scheme of dearness allowance fixed by the Tribunal in the Award.
The scheme provides for payment of a particular percentage on the basic salary and it also provides for variation on 10 points.
But the dearness allowance has been fixed on the Bombay Working Class Cost of Living Index of 521 530.
Though more or less the same pattern of dearness allowance was obtaining in Burroughs Welcome Co. , the dearness allowance in the latter was fixed at the Bombay Working Class Cost of Living Index of 491 500.
The scale of dearness allowance, as demanded by the Unions, was on the basis of the cost of living index 401 410.
It was accepted by the appellant that the scheme obtaining in Burroughs Welcome Company is more advantageous from the financial point of view than the scheme of dearness allowance demanded by the Unions.
In fact, the Tribunal itself has made a further concession in favour of the appellant by adopting the cost of living index of 521 530 instead of 491 500 as was obtaining in Burroughs Welcome Co. The Tribunal had made this change in the cost of living index in view of the fact that in the appellant Company, there was an Incentive Wages Scheme in and by which operatives 'were getting on an average, about Rs. 28/ per month.
Therefore the financial burden cast on the appellant by the dearness allowance scheme fixed by the Tribunal is such that the appellant can bear the burden.
in order to show that in the Bombay region the pharmaceutical units were adopting the slab system of dearness allowance, the Unions had filed a chart exhibit DU 1.
It is evident from exhibit DU 1, that out of 19 pharmaceutical units, referred to therein, at least 1 1 of them adopt the slab system of dearness allowance which.
has been 603 introduced in the case of the appellant in the Award.
No doubt, it is pointed out by Mr. Tarkunde 'that in the statement filed bay the appellant, exhibit C 25, it will be.
seen that none of the Indian owned units have adopted the slab system.
But whether those units have adopted or not, we have already indicated, that no distinction can be made between a purely local unit and a foreign unit doing business in India or an Indian unit doing business in collaboration with foreign concern.
When once such units can be taken into, account as comparable units, the pattern of dearness allowance, obtaining therein can very well be considered to ascertain the system adopted by the industry as that will show the trend in the region.
As pointed out above, at least 11 units, referred to in exhibit DU 1 have adopted the.
system now introduced in the case of ' the appellant by the Tribunal.
Under those circumstances when such system is prevailing in the industry in the same region, it cannot be held that the Tribunal has committed any error, in introducing a similar pattern in the case of the appellant.
The slab system has been approved by this Court as will be seen by the decisions in Greaves Cotton and Co. and others vs Their Workmen(2) and Bengal Chemical and Pharmaceutical Works Ltd. vs Its Workmen (2) .
Even in Bombay that such a pattern of dearness allowance, as the one introduced in the case of the appellant, is existing is seen by the decisions of this Court in Greaves Cotton and Co. and others vs Their Workmen(2) and Kamani Metals & Alloys Ltd. vs Their Workmen (3).
No doubt the industries therein were not pharmaceutical units.
But that such a system exists in Bombay region is clear from the above decisions.
Mr. Tarkunde referred us to the Award of the Industrial Tri bunal in Reference (IT) No. 411 of 1966 in Voltas Limited, Bombay vs The Workmen Employed under them dated September 30, 1969 wherein the adoption of slab, system has not been approved.
On the other hand, Mrs. Urmila Kapoor, learned counsel for respondent No. 2 has drawn our attention to a number of awards of the Industrial Tribunal rendered during the years 1965 to 1968 wherein the slab system of dearness allowance has been adopted in Bombay region.
It is only necessary to refer to the award in the case of May and Baker Limited, Bombay vs Its Workmen, because that is a pharmaceutical unit.
The award was given in or about June 1967 and it is seen that the dearness allowance on the pattern now given by the Tribunal in respect of the appellant has been adopted.
We have already referred to the fact that in exhibit DU71, it is seen that as many as 11 pharmaceutical unit s in Bombay region have adopted the pattern of granting dearness allowance on the slab (1) ; (3) ; (2) 3.
604 system now incorporated in the present award.
Though most of the units referred to therein could not be treated as units comparable with the appellant because of lack of full information regarding material factors, yet those concerns can be taken into account inasmuch as the system Obtaining in those concerns will show that the slab system is not something new to the pharmaceutical units.
We have already referred to the award in May and Baker Limited, Bombay vs Its Workmen.
These facts clearly show that the scheme of dearness allowance provided in the award before us in respect of the appellant is not anything new.
On the other hand, the Tribunal has only adopted the system prevailing in the region in respect of pharmaceutical units.
So far as the financial burden is concerned we have already referred to the findings recorded by the Tribunal.
Even on the basis that the Tribunal was not justified in proceeding on the assumption that 52 chemists are not covered by the reference, in our opinion, the additional burden that will be cast on the appellant can be easily borne by if.
Therefore, we see no error in the scheme of dearness allowance introduced, in the case of the appellant, by the Tribunal.
The only other point that requires to be considered is in respect of the direction given by the Tribunal regarding the Incentive Bonus scheme in respect of which the appellant had given notice of change under section 9A of the industrial Disputes Act, 1947.
We have already referred to the nature of the scheme that originally existed and the modification sought to be made by the, appellant.
We have also pointed out that the Tribunal has not accepted most of the recommendations made by Sri Tulpule, who was appointed as an a ssessor on the joint application of both the parties.
The Tribunal has stated that it is desirable that a scheme is worked out, if possible, by consent of parties for the purpose of protecting the interest of the workmen at the increased base performance index.
According to Mr. Tarkunde the Tribunal itself should have gone into the matter and evolved a scheme.
No doubt, it would have been desirable if the Tribunal had actually evolved a scheme.
But the Tribunal has stated that the necessary material for that purpose has not been made available and as such it has not been possible to devise a scheme calculated to afford protection to the incentive earning of a workman at the raised base performance index.
In fact, we also suggested to, the counsel that the parties may consider the matter and submit a scheme for that purpose.
But it was represented to us on February 9, 1972 by Mrs. Urmila Kapoor, learned counsel for respondent No. 2, that it has not been possible for the parties to arrive at an agreement in respect of that matter, at present.
Therefore, there is nothing further that could 605 be done by this Court in this regard; and the result is that the observations made by the Tribunal in this regard will have full effect.
In the result, all the conventions of the appellant are rejected and the Award of the Industrial Tribunal in respect of the matters ,in controversy in the appeals are confirmed.
All the appeals are dismissed.
In Civil Appeal No. 1091 of 1971, the appellant will pay the costs of respondents Nos. 1 and 2.
In the other appeals, parties will near their own costs.
The appellant will have three months ' time from today for payment of the amounts due under the award.
| In the appeal against the order of the High Court dismissing the appellant 's petition for a writ of habeas corpus the appellant urged that he was not produced before a magistrate within 24 hours after his arrest as required by section 167 of the Code of Criminal Procedure or even later; that he was never informed of the grounds for his arrest; that no custody warrant was ever issued warranting the jail authorities to keep the appeal]ant in jail custody; that the remand orders passed by the magistrate were tinder section 167 and not under section 344 of the Code, as the latter section did not apply at the stage of investigation and that even if section 344 applied the magistrate could not order detention for more than 15 days in the whole.
He also urged that the Jail Superintendent did not produce before the High Court the jail records but only produced his report, thus disabling the appellant from establishing his case.
Dismissing the appeal, HELD : (1) The order sheet produced before the High Court showed that the appellant was produced before the magistrate within 24 hours after his arrest and that the magistrate remanded him to jail custody.
Though the order sheet had entries showing that on subsequent occasions when remand orders were made the appellant was produced before the magistrate, the High Court has found that the Magistrate had wrongly recorded that the appellant was produced before him on those occasions.
However, the wrong entries made by him do not mean that the remand orders were not in fact passed by him though he did so in the absence of the appellant.
Such orders can be lawfully passed if an accused person cannot for some reason or the other be brought before the magistrate.
[134 E F] Rai Narain vs Superintendent, Central Jail, New Delhi, Writ Petition No. 330 of 1970, decided on Sept. 1, 1970, referred to.
(ii) The facts negative the suggestion of the appellant being kept in ignorance of the reasons for his arrest.
[135 F] (iii) There is no reason to think that the magistrate ordered the appellant to lie taken into jail custody without custody warrant.
[136 A] (iv) section 167 operates at a stage when a person is arrested and either an investigation has started or is yet to start, but is such that it cannot be completed within 24 hours.
Section 344, on the other hand, shows that investigation has already begun and sufficient evidence has been obtained raising a suspicion that the accused person may have committed the offence 130 and further evidence may be obtained, to enable the police to do which a remand to jail custody is necessary.
The fact that section 344 occurs in the Chapter dealing with inquiries and trials does not mean that it does not apply to cases in which the process of investigation and collection of evidence is still going on.
Therefore, it is not as if the stage at which the Magistrate passed the remand orders was still the stage when section 167 applied and not section 334.
The Magistrate, provided he complied with the condition to the Explanation, was competent to pass remand orders from time to time subject to each order being not for a period exceeding 15 days.
The Magistrate had satisfied that Condition.
[136 G] View contra in Artatran vs ATR 1956 Orissa 129 disapproved.
A Lakshamanrao vs Judicial Magistrate, ; , Chanaraatn vs State, and Ajit Singh vs State, (1970) 76 Crl.
L.H. 1075, referred to The appellant was content with the production of the superintendent 's report.
No prejudice was caused to the appellant 's case since the jail record could not have proved anything more than what the jail superintendent 's report proved.
|
Appeal No. 1605 of 1972.
Appeal by Special leave from the Award dated November 24, 1971 of the Labour Court, Delhi in L.C.I.C. No. 31 of 1971.
M. K. Ramamurthi and J. Ramamurthi, for the appellant.
V. M. Tarkunde, O. C. Mathur, D. N. Mishra, and Sudhir K. Khanna, for the respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
Industrial law in India has many twilight patches, illustrated by the present appeal which projects the problem of an employee whose services have been terminated similiciter by the Management, a pump manufacturing enterprise, issuing a notice ending the ,employment and offering one month 's pay as authorized by the relevant Standing orders.
The thorny legal issue is whether the ipse dixit of the employer that he has lost confidence in the employee is sufficient justification jettison the latter without levelling and proving the objec tionable conduct which has undermined his confidence so that the tribunal may be satisfied about the bona fides of the 'firing ' as contrasted with the colourable exercise of power hiding a not so innocuous purpose.
The backdrop The facts and circumstances become decisive of the fate of the, ,case even where the law is simplistic or fair in its face.
Here, what are the events and environments of employment leading to the worker being given the boot ? Is the order an innocent and, therefore, legal quit notice sanctioned by the Standing Orders which does not stigmatize the worker but merely bids him good bye ? Oris it a sinister intent to punish as a guileless order based on 'loss of confidence ', an alibi which, on a certain reading of this Court 's rulings, is also a protective armour against judicial probe and setting aside ? 491 Michael, a permanent employee of proved efficiency and six years standing, was appreciatively given two 'merit ' increments.
But a letter of September 2, 1970 told him off service, giving him one month 's 'notice pay ' discharging him without damning, as distinguished from dismissing him for misconduct.
The rival versions illumine the factual confrontation, the resolution of which is no easy legal essay.
The worker, Michael, through his Union, protested against the 'sack ' order as victimisation of a Trade Union activist but the Management was heedless, conciliation was fruitless and the dispute between the Union and the Management was eventually referred by the Delhi Administration to the Labour Court for adjudication.
The reference ran thus "Whether the termination of services of Shri L. Michael is illegal and/or unjustified and, if so, to what relief is he entitled and what directions are necessary in this respect ?" Both sides stated their cases in their pleadings and the true nature of the conflict emerges from them.
The story set out by the employee in his statement before the Labour Court was that although he was efficient, appreciated and awarded merit increments, the Management was antagonized by his active part in the formation of an Employees ' Union, especially because oral warnings by the Regional Manager against his Unionist proclivity was ignored.
Michael became the treasurer of the Union.
This Union chapter claimed its price, for the Management quietly terminated his services by a simple letter which reads: "We are sorry to advise that your services are no longer required by the Company.
As such, this letter may be treated as a notice for the termination of your services with immediate effect.
As for the terms of your employment letter, on termination of services you will be paid one month 's salary extra.
You may please call on the undersigned and have your accounts settled.
" This act, claims the worker, was 'in flagrant violation of elementary principles of natural justice without assigning any reason and without giving him an opportunity to defend himself.
This, in his statement he challenged the termination as 'wrongful, mala fide, illegal, and an act of victimisation '.
The counter case of the management get up in its statement, as is apparent from the discharge order, is that no dismissal is involved, no enquiry necessary and no illegality invalidates.
The management claimed that the alleged annoyance with the, workman for union activity was a concoction in self defence, as the Management had not even knowledge of the formation of the Union.
This fatter limb of the plea is a little too naive.
The warning by the Regional Manager was denied and the reference to trade union activities by the worker was more 'to create a ground for the workman 's claim and has been leveled as a matter of habit and routine.
The basic plea of the management was that the action being a simple 492 termination without a sting, the process and consequence of a disciplinary action were not attracted.
The Management, however, took the Court into confidence to explain why the employee was discharged.
He was employed as a Receipt and Dispatch Clerk in the office upto 10 3 1970.
As an insider with a to office correspondence the employee misused his position by passing on 'very important and secret information about the affairs of the company to certain outsiders.
He was consequentially shifted to the post of clerk handling posting of bins and collection of payments but the workman, although denied direct access to correspondence in the Receipt and Dispatch section, made attempt 'to elicit information from the section with a view to pass it on to outsiders '.
The upshot of these activities of which the management was alerted was a loss of confidence in the employee.
This unreliability was visited with non injurious termination of service by a bona fide order.
Therefore, the action was claimed to be legal and immune to judicial interference.
Two socially vital factors must inform the understanding and application of Industrial jurisprudence.
The first is the constitutional mandate of Part IV obligating the State to make 'provision for securing just and humane conditions of work '.
Security of employment is the first requisite of a worker 's life.
The second equally axiomatic consideration is that a worker who willfully or anti socially holds up the wheels of production or undermines the success of the business is a high risk and deserves, in industrial interest, to be removed without tears.
Legislation and judicial interpretation have woven the legal fabric.
We have to see whether on the facts of the present case what the relevant law is, whether it has been applied by the Labour Court rightly and whether the appellant has merit on his side, judged by the social conscience and judicial construction of the law in this branch of discharge simpliciter versus disguised ' dismissal.
A few salient facts need emphasis before the principles of law are applied.
The workman in his statement stressed the case of malaus antinus due to his union activities, although he did vaguely refer to the termination of service as wrongful and malafide.
From this it cannot be argued, as the Management sought to make out, that his denial of leaking out office secrets was an after thought pleaded only in the rejoinder and therefore liable to be discredited.
How could the worker have a hunch about the management 's undisclosed ground for dismissal ? When the latter stated the reason which prompted this action for the first time before the Labour Court, the workman in his reply refuted this case.
It is noteworthy that there is no speck of record or any hint of written material in support of the story that the management had credible information of the appellant betraying sensitive secrets of business.
The letters sent by the Union and the worker requesting for reinstatement were being ignored.
The management could well have disclosed their suspicion in reply and told the Union and the workman that they resorted to an innocuous discharge to avoid punitive trauma.
The management could have divulged in writing to 493 the Conciliation Officer their legitimate fears about the worker 's integrity and their considerate action of simple termination.
This too they failed to do.
In their written statement in Court the Management asserted for the first time that the employee was an intractable smuggler of inside information.
The statement winds up with the legalistic plea : 'the management had, in the meanwhile, lost confi dence in the workman '.
This culminating collapse of trust is alleged to be the primary cause for the discharge from employment.
At the time of the evidence, M.W.1, a former Regional Manager, swore that the workman joined as a pump operator in 1963, was promoted as clerk in 1967, that the suspicion of disloyal communication arose 'for the first time in 1968 ' and yet 'thereafter he was given two increments extra in addition to normal increments.
He was a hard working man and has a very good memory but the suspicion was there '.
These are the facts and the evidence in the case and it has been fairly conceded before the Labour Court by the Management 's representative that were the action regarded as punitive it was bad, there having been no enquiry whatever with liberty to the employee to meet the charge.
But the single slender strand on which the discharge was suspended was 'loss of confidence of the management in the employee.
The Labour Court argued: "According to the management, as there was no proof with it for this suspicion it could not proceed against him departmentally and, in the circumstances, it was considered desirable to terminate his services by passing an order of discharge without any stigma attached to it." While on all hands it was agreed that the employee was efficient, the court took the view that the motivation for the termination was the suspicion Which lurked in the mind of the Regional Manager that information regarding tenders was being passed on by the workman '.
We, have to find out whether the holding in the award that, on the materials above placed, the action could be called colourable or saved as bona fide, could be castigated as achieving an illegitimate end or supported as a premature but straight forward and harmless farewell.
In short, was loss of confidence a legal label affixed by the management to eject the workman, there being no other legal method of accompli shing their wish to remove him for misconduct ? Two questions, therefore, fall for decision.
Can a person, reasonably instructed in the law and scrutinising with critical faculties the facts on record, conic to the conclusion that the snapping of the tic of master and servant in the present case was innocuous andbona fide or oblique circumvention of the processual protection the law provides before a workman is dismissed for mis conduct ? We can discern harmony and consistency in case lawfrom Chartered Bank(1) and Murugan(2) through Sudder Office(3) and (1) ; (2) (3) [1970] II L. L. J. 620.
423SCI/75 494 Air India Corporation(1).
The social justice ice perspective and particular facts are important, though.
The plethora if precedents need not, be covered in extenso as the law laid down is the same except that judicial response to each case situation leads to emphasis on different facets of the principle.
Even so some milestone decisions, if we may say so, may be considered.
In Murugan Mills Case (supra) Wanchoo J (as he then was), speaking for the Court made the following observations : "The right of the employer to terminate the services of his workman under a standing order like cl.17(a) in the present case, which amounts to a claim 'to hire and fire ' an employee as the employer pleases and thus completely negatives security of service which has been secured to industrial employees through industrial adjudication, came up for consideration before the Labour Appellate Tribunal in Buckingham & Carnatic Co. Ltd vs Workers of the Company The matter then came up before this Court also in Chartered Bank vs Chartered Bank Employees Union ; and the Management of U. B. Dutt & Co. vs Workmen of U. B. Dutt & Co. (1962 Supp. 2 SCR 822) wherein the view taken by the Labour Appellate Tribunal was approved and it was held that even in a case like the present the requirement of bona fides was essential and if the termination of service was a colourable exercise of the power or as a result of victimisation or unfair labour practice the industrial tribunal would have the jurisdiction to intervene and set aside such termination.
The form of the order in such a case is not conclusive and the tribunal can go behind the order to find the reasons which led to the order and then consider for itself whether the termination was a colourable exercise of unfair labour practice.
If it came to the conclusion that the termination was a colourable exercise of the power or was a result of victimisation or unfair labour practice, it would have the jurisdiction to intervene and set aside such termination.
" In that case the form of the order had no foul trace, but before the Tribunal dereliction of duty and go slow tactics were disclosed as the inarticulate reasons.
This Court ruled : "This clearly amounted to punishment for misconduct and therefore to pass an order under cl.17(a) of the Standing Orders in such circumstances was clearly a colourable exercise of the power to terminate the services of a workman under the provisions of the Standing Orders." Shri M. K. Ramamurthy, counsel for the appellants, contended for the proposition that even where a management had the power to terminate the services of its employee without reasons but with notice pay only, the colourable exercise of that power invalidated it, and the (1)[1972] 3 section C. R. 606.
495 Court could probe, beneath the surface to check upon the bonafides behind the exercise of the power.
If the reasons including the termination were victimisation, unfair labour practice or misconduct, it was foul play to avoid a fair enquiry and fall back upon the power to terminate simpliciter There are myriad situations where an employer may in good faith, have to reduce his staff, even though he may have only a good word for his employees.
Simple termination is a weapon usable on such occasions and not when the master is willing to strike but afraid to wound.
We have been referred to the Bihar State Road Transport Corporation case(1).
The power of the Court to go behind the language of the order is reaffirmed there.
In Suddek Office (supra) the Court apparently laid stress on the Management 's right to terminate the services simpliciter under the terms of contract, where there was no lack of bona fides, unfair labour practice or victimisation.
It is significant that this Court used language and laid down law very much like in the earlier cases and did refer to the precedents on the point.
For instance, Vaidialingam J., 'there observed : " It is needless to point out that it has been held by this Court in The Chartered Bank, Bombay vs The Chartered Bank Employees ' Union that if the termination of service is a colourable exercise of the power vested in the management or as a result of victimisation or unfair labour practice, the Industrial Tribunal would have jurisdiction to intervene and set aside such termination.
In order to find out whether the order of termination is one of termination simpliciter under the provisions of contract or of standing orders, the Tribunal has ample jurisdiction to go into all the circumstances which led to the termination simpliciter.
" The manner of dressing up an order does not matter.
The Court will lift the veil to view the reality or substance of the order.
The Court, in that case, examined the circumstances in detail to see whether a dismissal for misconduct was being masked as a simple send off with a month 's pay, and held ultimately : "We are satisfied that the management has passed the order of termination simpliciter and the order does not amount to one of dismissal as and by way of punishment.
" of course, loss of confidence in the workman was alleged by the management and the Court found that it was not a camouflage.
It may be noticed that in that case the workman was being entrusted with stores worth several lakhs of rupees, some goods were lost from the stores and the Union was informed by the management that it had lost confidence in the workman.
In the written statement before the Labour Court the management alleged that the workman was the head godown clerk who was the custodian of the company 's property, the post being one of trust and confidence.
It is noteworthy that in the High Court the workman did not even file a counter affidavit and the counsel for the Union and the workman agreed that the order of termination was not a camouflage to cover up what really was an order (1) 496 of dismissal.
He merely urged that the termination of the services was really by way of dismissal.
In this conspectus of circumstances, this Court found that the Head Clerk in charge of the engineering godown and responsible for the maintenance of considerable stores, held a sensitive position.
This Court observed : "The entire basis of the Labour Court 's award for holding that the order is one of dismissal is its view that the management has invoked cl. 9 to camouflage its action.
When that approach has been given up on behalf of the workman before the High Court the reasoning of the Labour Court falls to the ground and the High Court has acted within the jurisdiction under article 226 when it set aside the order of the Labour Court especially when there has been no finding of victimisation, unfair labour practices or mala fides recorded, against the management.
To conclude we are satisfied that the High Court was justified in setting aside the order of the Labour Court.
" We have gone into this decision at length to disabuse the impression that a new defence mechanism to protect termination of service simpliciter, viz., loss of confidence, had been propounded in this ruling.
We do not agree, that any such innovation has been made.
The Air, India Corporation Case (supra) may seem to support the 'no confidence ' doctrine but a closer study contradicts any such view.
of course, Shri Tarkunde, counsel for the management, placed great reliance on this ruling.
Needless to say, this Court recognised the power of the Tribunal to go behind the form of the order, look at the substance and set aside what may masquerade as termination simpliciter, if in reality it cloaked a dismissal for misconduct 'as a colourable exercise of power by the management.
The Court repeated that an Industrial employer cannot 'hire and fire ' his workmen on the basis of an unfettered right under the contract of employment.
On the facts of the Air India Case (supra) the Court concluded that it was 'not possible to hold this order to be based on any conceivable misconduct '.
Special reference was made to the grave suspicion regarding the complainant 's private conduct with air hostesses.
Where no misconduct spurs the action and a delicate unsuitability for the job vis a vis the young women in employment in the same firm is strongly suspected, resort to termination simpliciter cannot be criticized as a malafide machination.
In that background, the action was held to be bonafide and the overall unsuitability led to a loss of confidence in the employee.
Not that the loss of.
confidence was exalted as a ground but the special circumstances of the case exonerated bad faith in discharge simpliciter.
Before concluding the discussion, we may refer to the case of Delhi Transport Undertaking vs Goel(1) adverted to by the Labour Court.
Indeed that decision turned on Regulations framed under the Delhi Road Transport Authority Act, 1950 and not on pure Industrial Law or construction of the Standing Orders.
Moreover, the Court, in that (1) [1970] II LLJ 20.
497 case, appears to have discussed rulings under article 311 also.
However, on the facts of that case, the Court was satisfied that order of termination was not a disguise or cloak for dismissing the employee and the ground given that he was a cantankerous person undesirable to be retained was good.
We do not read the Delhi Transport case (supra) to depart from Murugan Mills Case (supra).
Indeed, the latter did not, and maybe could not, over rule the former.
The above study of the.
chain of rulings brings out the futility of the contention that subsequent to Murugan Mill 's Case (supra) colourable exercise of power has lost validity and loss of confidence has gained ground.
The law is.
simply this : The Tribunal has the power land, indeed, the duty to X ray the order and discover its true nature, if ,,he object and effect, if the attendant circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated.
But if the management, to cover up the inability to establish by an enquiry, illegitimately but ingeniously passes an innocent looking order of termination simpliciter, such action is bad and is liable to be set aside.
Loss of confidence is no new Armour for the management; otherwise security of tenure, ensured by the new industrial Jurisprudence and authenticated by a catena of cases of this Court, can be subverted by this neo formula.
Loss of confidence in the Law will be the conse quence of the Loss of Confidence doctrine.
In the light of what we have indicated, it is clear that loss of confidence is often a subjective feeling or individual reaction to an objective set facts and motivations.
The Court is concerned with the latter and not with the former, although circumstances may exist which justify a genuine exercise of the power of simple termination.
In a reasonable case of a confidential or responsible post being misused or a sensitive or strategic position being abused, it may be a high risk to keep the employee, once suspicion has started and a disciplinary en quiry cannot be forced on the master.
There, a termination simpliciter may be bow fide, not colourable, and loss of confidence may be evidentiary of good faith of the employer.
In the present case, the catalogue of circumstances set out in the earlier part of the judgment strikes a contrary note.
The worker was not told when he wrote; the Union was not disclosed when they demanded; the Labour Court was treated to verbal statements like; very reliable sources ' and other credulous phrases without a modicum of evidence to prove bonafides.
Some testimony of unseemly attempts by the workman to get at secrets outside his orbit, some indication of the source of suspicion, some proof of the sensitive or strategic role of the employee, should and would have been forthcoming had the case been bona fide.
How contradictory, that even when a strong suspicion of leaking out sensitive secrets was being entertained about the employee he was being given special merit increments over and above the normal increments ' A case of res ipsa loauitur.
Circums tances militate against the 'I say so ' of M.W.1 that the management had suffered an ineffable loss of confidence.
To hit below the belt by trading legal pharses is not Industrial Law.
We are constrained to express ourselves unmistakably lest industrial unrest induced by 498 wrongful terminations based on convenient loss of confidence should be generated.
Before we conclude we would like to add that an employer who believes or suspects that his employee, particularly one holding a position of confidence, has betrayed that confidence, can, if the conditions and terms of the employment permit, terminate his employment and discharge him without any stigma attaching to the discharge.
But such belief or suspicion of the employer should not be a mere whim or fancy.
It should be bona fide and reasonable.
It must rest on some tangible basis and the power has to be exercised by the employer objectively, in good faith, which means honestly with due care and ' prudence.
If the exercise of such power is challenged on the ground of being colourable or mala fide or an act of victimisation or unfair labour practice, the employer must disclose to the Court the grounds of his impugned action so that the same may be tested judicially.
In the instant case this has not been done.
There is only the ipse dixit of the employer that he was suspecting since 1968 that the appellant was divulging secrets relating to his business.
The employer has not dis closed the grounds oil which this suspicion arose in 1968.
Further after 1968, the appellant was given two extra increments, in addition to his normal increments, as stated already, in appreciation of his hard work.
This circumstance completely demolishes even the whimsical and tenuous stand taken by the employer.
It was manifest therefore that the impugned action was not bona fide.
It was urged by Mr. Tarkunde, learned counsel for the employer that the question whether or not the employer had lost confidence in the employee, was essentially one of fact aad this Court should not disturb the finding of fact recorded by the trial court on this point.
It is true that this Court, in appeal, as a rule of practice, is loath to interfere with a finding of fact recorded by the trial Court.
But if such a finding is based on no evidence, or is the result of a misreading of the material evidence, or is so unreasonable or grossly unjust that no reasonable person would judicially arrive at that conclusion, it is the duty of this Court to interfere and set matters fight.
The case before us is one such instance , where we are called upon to do so.
The Labour Court has misled itself on the law land we set aside its order.
The workmans will be reinstated with back wages.
However the management will be free, if it has sufficient material and if so advised, to proceed against the workman for misconducts or on other ,grounds valid in law.
The appeal is, accordingly, allowed with costs.
P.B.R. Appeal allowed.
| The respondent, in his election petition before the High Court, allegedd a number of corrupt practices hit by section 123(4), (5) and (6) of the Representation of the People Act, 1951 against the appellant, who was the duly elected candidate to the State Assembly.
The High Court allowed the petition and set aside the election.
On appeal to this Court it was contended that the High Court overlooked the well established principle that the charge of corrupt practice must be treated as quasi criminal in character which has to be proved beyond reasonable doubt.
Allowing the appeal and remitting the case to the High Court, HELD : (1)(a) The judgment of the High Court rests largely on appreciation of oral evidence.
It could not, therefore, be easily disturbed by this Court even in first appeal on facts in election cases.
[587B] (b) But if the High Court overlooks serious infirmities in the evidence adduced to support the case accepted by it or misreads evidence or ignores the principle that a charge of corrupt.
practice, in the course of an election, is a grave one which, if established, casts a serious reflection and imposes a disability upon the candidate held guilty of it, so that.
the Court must be satisfied beyond reasonable doubt about its veracity, this Court will not hesitate to interfere.
[587C] In the instant case, the High Court did nothing more than to rather mechanically accept the oral and documentary evidence given to support the charge of corrupt practice.
There was no consideration or discussion of a number of infirmities both in the oral and documentary evidence to support the charge.
Ibis is so because the High Court has held the view that a mere consideration of probabilities, without applying a strict standard of proof beyond reasonable doubt to a charge of corrupt practice was enough.
There is no indication , anywhere in the judgment that the stricter standard of proof, which is applicable to such charges, was kept in view by the High Court.
[588G H] Rahim Khan vs Khurshid Ahmed & Ors. ; @ 666. followed.
2(a) It is difficult to accept the contention of the appellant that oral.testimony could not be accepted in an allegation of corrupt practice unless it is corroborated by other kinds of evidence in material particulars.
There is no such general inflexible rule of law or practice which could justify a wholesale condemnation or rejection of a species of evidence which is legally admissible and can be acted upon under the provisions of the Evidence Act in every type of case if it is, after proper scrutiny, found to be reliable or worthy of acceptance.
There is no presumption that a witness deposing on oath in the witness box, is untruthful unless he is shown to be speaking the truth.
The ordinary presumption is that a witness deposing solemnly on oath before a judicial tribunal is a witness of truth unless the contrary is shown.
The evidence in an election petition cannot be equated with that of an accomplice in a criminal case whose testimony has, according to a rule of practice, though not of law, to be corroborated in material particulars before it is relied upon.
[589D E & F] 585 (b) It is not required by our law of evidence that a witness must be proved to be a perjurer before his evidence is discarded.
It may be enough if his evidence appears to be quite improbable or to spring from such tainted or biased or dubious a source as to be unsafe to be acted upon without corroboration from evidence other than that of the witness himself [589F] (c) There are no golden rules for appraising human testimony.
The extraction of what should constitute the credible foundation of judicially sound judgment is an art which nothing except sound common sense and prudence combined with experience can tear h.
[589G] (d) In judging the evidence of a grave charge, prudence dictates that belief in its correctness should form the basis of a judicial verdict of guilt only if that belief reaches a conviction beyond reasonable doubt.
[590B] (e) In deciding whether the stricter standard of proof is satisfied in a case of alleged corrupt practice, resting upon oral evidence only, the Courts should be particularly astute and not omit to examine fairly the effect of every existing substantial ground which could introduce a reasonable doubt in a case.
[590c] In the instant case the appellants contention that the motor drivers would be prepared to commit perjury at the instance of the respondent who was the defeated Minister and that because the respondent had been welcomed and garlanded by the President of the Motor Truck Drivers ' Union, the evidence of motor drivers was easily available to him cannot be accepted either as a general rule in election cases, or.
on the facts of this particular case.
It is not reasonable to carry a suspicion to the extent of attributing to every witness appearing in support of the respondent,,, case a tendency or desire to commit perjury.
The law does not discriminate against or frown upon a former Minister or view every witness produced by him with suspicion because he had been a Minister.
On the other hand, it is reasonable to believe that a person who has occupied the responsible position of a Minister would be less inclined to suborn witnesses or conspire to produce perjured evidence.
[590E G] Rahim Khan vs Khurshid Ahmed & Ors. ; (a) 666, followed.
(f) Where the examination in chief and cross examination of a witness are most unsatisfactory the Trbunal is not powerless in the performance of its duty to ascertain the truth.
There is not only section 165 of the Evidence Act which enables the Court to put any question it likes to a witness.
but there are also provisions of O.XVI, r. 14 CPC.
The High Court adopted a standard of proof which is not strict enough in appraising the worth of evidence produced to support a charge of corrupt practice.
[592G H]
|
No. 217 of 1968.
Petition under article 32 of the Constitution of India for the enforcement of fundamental rights.
Bishan Narain, B. B. Sinha, section N. Misra, section section Jauhar and K. K. Sinha, for the petitioner.
B. P. Jha, for the respondents.
The Judgment of the Court was delivered by Vaidialingam, J.
In this writ petition under article 32 of the Constitution, the petitioner prays for the issue of a writ to the respondents in the nature of Certiorari or any other appropriate writ, direction or order quashing four orders dated September 2, 1953, March 5, 1960, August 5, 1966 and June 12, 1968.
He further prays for issue of a writ in the nature of a Writ of Mandamus directing the respondents to treat him as having retired at the age of 58 and to pay him the pension that he is entitled to.
Though four orders are cought to be quashed, as we will show in due course, the grievance of the petitioner regarding the orders dated September 2, 1953 and March.
5, 1960 can no longer be considered by this Court in this writ petition.
In consequence only the last two orders, mentioned above, survive for consideration.
We will refer briefly to the circumstances leading up to the passing of the orders, referred to above, in order to appreciate the circumstances under which the last two orders in particular came to be made as well as the ground of attack levelled against these orders.
The petitioner joined service as an Assistant Teacher on September 1, 1928 in the Patna Practising School and was promoted as Sub Inspector of Schools, Lower Division, in the Subordinate Educational Service from May 31, 1934.
The petitioner later on was promoted as Deputy Inspector of Schools in Upper Division of the Subordinate Educational Service and was posted at Seraikella in the Singhbhum District in the Chhotanagpur Division, Bihar from November 1, 1949.
The State of Seriakella having merged in the erstwhile province of Bihar, the provincial 637 Government took over and assumed control directly of the education in the locality through its employees of the Education Department unlike other parts of, the province where the education was under the control and management of the District and Local Boards.
The service rendered by the petitioner as Deputy Inspector of Schools, Seraikella was found satisfactory by the superior officers including the Director of Public Instruction and hence he was recommended to be appointed to a superior post of Education Officer in the Community Project.
By about the end of 1951, he was transferred to Purulia in the district of Manbhum as Additional Deputy Inspector of Schools.
The petitioner was later on transferred to Bettiah in or about May, 1953.
At Bettiah the petitioner received a copy of the order dated September 2, 1953 from the Director of Public Instruction directing a censure to be recorded in the character roll of the petitioner based on the report of one Shri Kanhaya Lal, District Inspector of Schools, who, according to the petitioner, was inimically disposed towards him.
The attempt of the petitioner to have the order dated September 2, 1953 cancelled proved unsuccessful.
This is the first order that is sought to be quashed by the petitioner.
The petitioner on the basis of certain allegations was placed under suspension on February 6, 1954 and relieved from his duty as Deputy Inspector of Schools, Bettiah.
There was a charge sheet issued to the petitioner on March 16, 1954 and he was found guilty.
But these inquiry proceedings were later on set aside and a fresh inquiry was ordered.
In consequence the order of suspension was cancelled, but immediately thereafter a fresh inquiry was conducted in which he was again found guilty as per the report of the Inquiry Officer dated September 22, 1959.
The Disciplinary Authority, who was the Director of Public Instruction passed an order on March 5, 1960 accepting the finding of the Inquiry Officer recorded against the petitioner and held that the charges had been proved against him.
Accordingly, by this order the petitioner was reverted, as punishment, to Lower Division of Subordinate Educational Service and also directing a censure entry to be recorded in Us personal character roll.
This is the second order that is challenged in this writ petition.
It is not necessary for us to deal in any detail about the first and the second order as both those orders are now concluded against the petitioner by the decision of the High Court.
The petitioner filed title suit No. 86 of 1961 in the Court of the Munsif, III, Patna, for a declaration challenging the order dated March 5, 1960 as well as the inquiry proceedings on the basis of which the said order was passed.
He also challenged the order of censure passed on September 2, 1953 and further incorporated in the order of March 5, 1960.
Though the suit was 638 contested by the respondents, it was ultimately decreed on April 11, 1963.
The respondents filed title appeal No. 132/24 of 1963 64 before the Subordinate Judge, 11 Court, Patna, challenging the decree of the Munsif.
On June 24, 1964 the appeal was allowed, with the result that the petitioner 's title suit No. 86 of 1961 stood dismissed.
The petitioner 's Second Appeal No. 640 of 1964 was dismissed by the High Court on May 4, 1967.
From these proceedings it is clear that the order of censure dated September 2, 1953 as well as of reversion dated March 5, 1960 have both been found to be correct by the High Court and it is no longer open to the petitioner to canvass those orders again.
But it may be necessary for us to refer to certain proceedings connected with the title suit when we deal with the attack of the petitioner against the legality of the orders dated August 5, 1966 and June 12, 1968.
When the order of reversion dated March 5, 1960 was passed, the petitioner was working as Deputy Inspector of Schools, Deoghar.
The office of the Deputy Inspector of Schools was closed for Holi holidays from March 11, 1960 and the petitioner claims that he left the headquarters to go to Patna with the permission of the authorities.
The order dated March 5, 1960 was received by him at Patna on March 23, 1960 when he was ill.
He applied for leave.
According to the petitioner, he obtained an order of temporary injunction on October 5, 1961 in his title suit No. 86 of 1961 restraining the respondents from giving effect to the order dated March 5, 1960 reverting him to the Lower Division in the Subordinate Educational service.
Though he offered to join the post to which he was entitled originally, he was not allowed by the respondents to join the Upper Division of the Subordinate Educational Service.
The action of the respondent in refusing to permit him to join duty was in flagrant violation of the order of temporary injunction granted by the Munsif, Patna.
On August 5, 1966 the Director of Public Instruction passed an order that the petitioner "having not been on his duties for more than five years since March 1, 1960, has ceased to be in Government employ since March 2, 1965 under r. 76 of the Bihar Service Code".
The petitioner made representations for cancellation of this order but without any success.
This is the third order that is being challenged.
The petitioner having completed 58 years of age, addressed a letter to the Director of Public Instruction on July 18, 1967 requesting him to arrange for the payment of the petitioner 's pension.
No reply was received by the petitioner for a long time inspite of repeated reminders.
Ultimately on June 12, 1968 the Director of Public instruction passed orders on the petitioner 's ,application dated July 18, 1967 regarding payment of pension.
639 In this order it is stated that under r. 46 of the Bihar Pension Rules (hereinafter to be referred as the Pension Rules), the Department is unable to grant any pension to the petitioner.
We will refer to this rule at the appropriate stage but it is enough to take note of the fact that under the said rule, no pension may be granted to a government servant dismissed or removed for misconduct, insolvency or inefficiency.
According to the petitioner this order is illegal and void.
This is the fourth order that is under challenge.
According to the petitioner the order dated August 5, 1966 is an order removing him from service and it is illegal and void as it has been passed in contravention of article 311 of the Constitution.
Further the order is also not legal and not warranted by the Rules for the reason that the petitioner had not been absent from duty for over five years continuously.
According to the petitioner there is a further infirmity in the order as the respondents are inconsistent in their pleas regarding the date from which the period of continuous absence has to be calculated.
This plea is based upon the different dates given in the order dated August 5, 1966 and the dates given in the counter affidavit filed on behalf of the respondents.
The attack on the order dated June 12, 1968 is two fold, namely, (a) that it is not warranted by r. 46 of the Pension Rules under which it is purported to be passed; and (b) the petitioner 's right to get pension is property and by the respondents not making it available to him, his fundamental rights guaranteed under articles 19(1)(f) and 31(1) of the Constitution, have been affected.
The Assistant Director of Education has filed a counter affidavit on behalf of the respondents.
According to the respondent the orders of censure passed on September 2, 1953 and of reversion dated March 5, 1960 are valid and legal and in passing those orders no violation of any rules has been made.
The petitioner was given full opportunity to participate to the inquiry proceedings and it was after considering the report as well as the explanation furnished by the petitioner that the order of reversion was passed.
The petitioner is not entitled to challenge any of those orders as they are concluded by the decision of the Patna High Court dated March 4, 1967 in Second Appeal No. 640 of 1964.
Regarding the order dated August 5, 1966, it is admitted by the respondents that the petitioner was on duty till March 10, 1960.
He ceased to attend office only from March 11, 1960.
It is further admitted that it has been stated by mistake in the order that the petitioner has not been on duty for more than five years since March 1, 1960.
The date "March 1, 1960 should be read 640 as "March 11, 1960".
The respondents dispute the averment of the petitioner that he left the headquarters from March .11, 1960 with the permission of the authorities.
On the other hand, according to them, the petitioner had put in an application in the office of the Sub Divisional Educational Officer for leave on March 11, 1960 and that he did not obtain any prior permission for leaving the headquarters.
It is further averred that the order dated March 5, 1960 reverting the petitioner came into effect immediately and the petitioner was also informed of the same.
It is specifically pleaded by the respondent as follows: "In other words since 11 3 1960 till 5 8 1968 he was continuously not in service for more than 5 years.
By virtue of rule 76 of Bihar Service Code of 1952 the petitioner ceased to be in the service of the Government as he remained absent from duty continuously for 5 years and this itself amounts to misconduct and inefficiency in the service.
In the present case the provisions of article 311 do not apply to the facts of this case because his services are not terminated on account of any charge but are automatically terminated by virtue of the statute i.e. rule 76 of the Bihar Service Code 1952.
Article 311 applies where the services of a government servant are terminated in respect of any charge.
But it does not apply where a government servant ceases to be a government servant by virtue of any statute."
According to the respondent there has been no breach committed of article 311 of the Constitution when the order dated August 5, 1966 was passed on the basis of r. 76 of the Bihar Service Code, 1952 (hereinafter to be referred as the Service Code).
It is to be noted at this stage that there is a variation regarding the dates of continuous absence for over five years mentioned in the order and in the counter affidavit.
They will be dealt with by us when the attack of the petitioner on the order dated August 5, 1966 is con sidered.
It is further admitted by the respondents that even after the injunction order was passed by the Munsif, the Department was always insisting on the petitioner to join in the lower grade to which post he had been reverted and that the petitioner never joined that post.
Dealing with the order dated June 12, 1968 in and by which the petitioner was informed that the Department was unable under r. 46 of the Pension Rules to grant him pension, the respondents state that the order is valid and fails squarely under the said rule.
According to the respondents the order dated August 5, 1966 is an order removing the petitioner from service for not attending to his duty for more than five years and that by itself amounts to misconduct.
Therefore, the petitioner was not entitled to claim 641 any pension.
There is also an averment to the effect that there is no question of any fundamental right of the petitioner being affected by the orders under attack and hence the writ petition is not maintainable.
The petitioner has filed a rejoinder wherein he has pointed out the inconsistent dates given in the order dated August 5, 1966 and in the counter affidavit filed on behalf of the respondents by the Assistant Director of Education.
According to the petitioner in whatever manner the period is calculated either as per the dates given in the order or by the dates given in the counter affidavit, rule 76 does not apply as he has not been continuously absent from duty for over five years.
The petitioner further avers that he was absent from duty after taking the permission of the autho rities.
According to the petitioner he has not been continuously absent from duty for over five years if the period is properly calculated according to the various orders passed by the Munsif.
Patna, in his title suit.
According to the petitioner, when a court has restrained the respondents from giving effect to the order of reversion and when he offered to join duty in the post from which he was reverted, the respondents without any regard for the court orders, did; not permit him to join duty, but, on the other hand, insisted that he should join duty in the lower rank to which he had been reverted.
This, according to the petitioner, is illegal.
The petitioner further reiterates his allegation that he was entitled to pension and that withholding of the same affects his fundamental rights.
According to the petitioner the respondents do not deny his right to get pension but, on the other hand, plead that as he has been removed from service by the order dated August 5, 1966, he is not entitled to pension by virtue of r. 46 of the Pension Rules.
He further points out that as the order dated August 5, 1966 is illegal, the order dated June 12, 1966, which is based upon the earlier order, is also null and void.
The questions that arise for consideration are whether the orders dated August 5, 1966 and June 12, 1968 are legal and valid.
Before we consider that aspect, it is necessary to state that in order to sustain this petition under article 32, the petitioner will have to establish that either the order dated August 5, 1966 or June 12, 1968, or both of them affect his fundamental rights guaranteed to him.
The order of August 5, 1966, according to the petitioner, is one removing him from service and it has been passed in viola tion of article 311.
That the said order is one removing the petitioner from service is also admitted by the respondents in paragraph 11 of the counter affidavit filed on their behalf by the Assistant Director of Education.
Assuming that the said order has been passed in violation of article 311, the said circumstance will not give a right to the petitioner to approach this Court under article 32.
The stand taken by the petitioner is that his right to get 41 1 S.C. India/71 642 pension is property and it does not cease to be property on the mere denial or cancellation by the respondents.
The order dated June 12, 1968 is one withholding the payment of pension or at any rate amounts to a denial by the respondents to his right to get pension.
Either way, his rights to property are affected under articles 19(1)(f) and 31(1) of the Constitution.
His right to pension cannot be taken away by an executive order.
In the counter affidavit, the respondents do not dispute the rights of the petitioner to get pension, but they take the stand that the order dated June 12, 1968 is justified by r. 46 of the Pension Rules.
This aspect will be dealt with by us later.
There is only a bald averment in the counter affidavit that there is no question of any fundamental right and therefore this petition is not maintainable.
As to on what basis this plea is taken, has not been further clarified in the counter affidavit.
But before us Mr. B. P. Jha, learned counsel for the respondents, urged that by withholding the payment of pension by the State, no fundamental rights of the peti tioner have been affected.
We are not inclined to accept the contention of Mr. Jha that no fundamental rights of the petitioner are affected by passing the order dated June 12, 1968. 'We will refer to the relevant Pension Rules bearing on the matter and also certain decisions.
In our opinion, the right to get pension is "property" and by withholding the same, the petitioner 's fundamental rights guaranteed under articles 19(1)(f) and 31(1) are affected.
As the matter is being discussed more fully in the latter part of the judgment, it is enough to state at this stage that the writ petition is maintainable.
Even according to the respondents the order dated June 12, 1968 has no independent existence and that order has been passed on the basis of the earlier order dated August 5, 1966.
In our opinion, if the order dated August 5, 1966 cannot be sustained, it will follow that the order dated June 12, 1968 will also fall to the ground.
Hence we will deal, in the first instance, with the validity of the order dated August 5, 1966.
The full text of the order dated August 5, 1966 passed by the Director of Public Instruction, Bihar, is as follows: "Number 7 / 07 / 60 Edn.3791 Sri Devaki Nandan Prasad, Sub Inspector of Schools, Deoghhar, having not been on his duties for more than 5 years since 1 3 60 has ceased to be in Government employ since 2 3 65 under rule 76 of the Bihar Service Code.
(Sd.) K. Ahmed Director of Public Instruction Bihar.
643 Memo No. 3791 Patna, dated 5th August, 1966.
Copy forwarded to Sri Devaki Nandan Prasad, New Yarpur, Patna for information.
Rule 76 of the Service Code reads as follows: "Unless the State Government, in view of the special circumstances of the case shall otherwise determine, A Government servant after five years of continuous absence from duty, elsewhere than on foreign service in India, whether with or without leave, ceases to be in Government employ.
" The essential requirement for taking action under the said rule is that the government servant should have been Continuously absent from duty for over five years.
Under this rule it is immaterial whether absence from duty by the government servant was with or without leave so long as it is established that he was absent from duty for a continuous period for over five years.
We are referring to this aspect because it is the case of the petitioner that he availed himself of leave with effect from March 11, 1960 and he left the headquarters after obtaining the necessary sanction from his superior officers.
On the other hand, it is the case of the respondents that the petitioner merely putting in an application for leave from March 11, 1960 left the headquarters without obtaining the prior permission of the superiors.
It is not necessary for us to deal with this controversy, as under the rules absence for the period stated therein, either with or without leave, are both treated on the same basis.
According to the dates given in the order, the petitioner has not been on his duties for more than five years from March 1, 1960 and that he ceased to be in government employ from March 2, 1965.
According to the petitioner this order is illegal because he was on duty till March 10, 1960 in which case continuous absence of five years would not be completed on March 2, 1965.
But the more serious attack against this order is that there is no question of the petitioner not being on his duties continuously for more than five years.
On the other hand, according to him, he has always been ready and willing to do his duty and the respondents have illegally prevented him from joining duty by ignoring orders of the civil court.
In this connection, on behalf of the petitioner, Mr. Bishan Narain, learned counsel, has referred us to the details regarding the institution of the title suit No. 86 of 1961 by the petitioner as well as to certain orders passed by that court.
He has also drawn our attention to the letters written by the petitioner to the authorities offering to work and the respondents not sending any reply and ultimately asking the petitioner to join duty in the reverted post, though the order of reversion has been declared, illegal by the Munsif, Patna.
We have already referred 644 to the averments in the counter affidavit filed on behalf of the respondents.
So far as this aspect is concerned, it is admitted in paragraph 8 of the counter affidavit that the petitioner was on duty till March 10, 1960 and that he ceased to attend to his duty only from March 11, 1960.
Therefore, the averment of the petitioner that he was on duty till March 10, 1960 is accepted as correct by the respondents.
Therefore, it follows that even according to the respondents, the petitioner was absent from duty con tinuously for more than five years only from March 11, 1960 and he ceased to be in government employ on March 2, 1965.
Without anything more it can be easily said that this calculation is absolutely erroneous because from the dates mentioned above, the petitioner cannot be considered not to have been on duty for more than five years.
There is a slight shift in the stand taken by the respondents in the counter affidavit.
While they admit that the date from which the period of absence should be calculated is March 11, 1960 and not March 1, 1960, they have stated that the petitioner.
was absent from March 11, 1960 till August 5, 1966, the date on which the order was passed and hence he was continuously not in service for more than five years.
That is even the outer period given in the order dated August 5, 1966, namely, March 2, 1965 is changed by the respondents to the date of passing of the order dated August 5, 1966.
We will now proceed on the basis that the order dated August 5, 1966 should be read in such a manner that the petitioner was not on his duty continuously for more than five years from March 11, 1960 till August 5, 1966.
If the, respondents are able to establish this circumstance, it is needless to state that r. 76 of the Service Code will come into operation irrespective of the fact whether the petitioner was absent with or without leave.
According to the petitioner, he has not been continuously absent for over five years even during the above period as stated by the respondents.
It is now necessary to refer to certain proceedings connected with the title suit No. 86 of 1961 instituted by the petitioner in the Court of the Munsif III, Patna.
In that suit the petitioner challenged the order dated March 5, 1960 in and by which he was reverted to the lower division of the Subordinate Educational Service and a censure was directed to be recorded against his character roll.
According to the respondents in this suit Me order of censure passed on September 2, 1953 was also challenged.
On August 5, 1961, the Munsif passed an order restraining the present respondents from operating the punishment order passed on March 5, 1960 by the Director of Public Instruction on the petitioner till the disposal of the suit.
It is now admitted by the respondents that the petitioner was on duty till March 10, 1960 and 645 that he was absent only from March 11.
That there was an order of temporary injunction passed by the court restraining the respondents from giving effect to the order of March 5, 1960 is not challenged in the counter affidavit.
According to the petitioner he went on October 13, 1961 to join his post from which he was illegally reverted, but in spite of the order of the Munsif, Patna, the respondents did not permit him to join duty.
That he was prepared to join duty and work is clear from the letters written by the petitioner to the Director of Public Instruction on October 13, 1961, October 24, 1961 and November 1, 1961.
There was no reply by the respondents.
It is no doubt true that on April 3, 1962, the temporary injunction granted by the Munsif, Patna, was vacated by the Subordinate Judge.
On April 11, 1963 the title suit No. 86 of 1961 instituted by the petitioner was decreed and the respondents were prohibited from enforcing the order dated March 5, 1960 reverting the petitioner from the senior grade to the lower grade of the Subordinate Educational Service.
The petitioner again wrote a letter on April 18, 1963 to the Director of Public Instruction drawing the latter 's attention to the decree passed in title suit No. 86 of 1961 and requesting him to permit the petitioner to join duty as Deputy Inspector of Schools.
There was a reply on November 27, 1963 by the Director of Public Instructions to the effect that the plea of the petitioner has been considered at all levels of the Directorate and the Government.
The petitioner was directed to report himself to the Regional Deputy Director of Education, Bhagalpur Division and to join duty in "Lower Division of Subordinate Educational Service".
The letter proceeds to state "in case of disobedience of order you will be charged with insubordination".
We are constrained to remark that the attitude taken in this letter on behalf of the State is not commendable at all.
Admittedly there was a decree passed by the Munsif in title suit No. 86 of 1961 on April 11, 1963 restraining the respondents from giving effect to the order dated March 5, 1960 reverting the petitioner from the post of Deputy Inspector of Schools to the Lower Division of Subordinate Educational Service.
Admittedly the respondents were parties to the said decree and they had not obtained any order of an Appellate Court staying the operation of the decree in the suit.
The effect of the decree passed by the Munsif was that the petitioner was entitled to work in the original post which he was holding prior to his reversion.
That these aspects have been missed by the respondents is evident from the reply of November 27, 1963 sent by the Director of Public Instruction.
The petitioner sent a further letter dated December 6, 1963 in reply to the letter of the Director of Public Instruction dated November 27, 1963.
In this letter the petitioner again referred to the decree of the Munsif, Patna, dated April 11, 1963 and pointed out that he was entitled to hold the original post which he was occupying 646 prior to the order of reversion, which has; been directed not to be put into operation by the court.
He further pointed out that the directions contained in the letter dated November 27, 1963 sent by the Director of Public Instruction was not in conformity with the decree of the Munsif.
He further made a request that he should be allowed to join duty in the original post in the senior grade and also made a further request for payment of arrears of his salary.
There was no reply by the respondents and the petitioner was not allowed to join duty as desired by him.
The above correspondence is not at all disputed by the respondents.
In fact they have admitted in the counter affidavit that even after the order of injunction, the Department was always insisting on the petitioner joining duty as Sub Inspector of Schools, that is, in the lower grade and that the petitioner never joined duty in that post.
To complete the narration on this aspect the decree of the Munsif in favour of the petitioner restraining the respondents from enforcing the order dated March 5, 1960 was set aside on appeal by the Subordinate Judge on June 24, 1964 in title appeal No. 132/24 of 1963/64.
The petitioner 's Second Appeal No. 640 of 1964 was dismissed by the High Court on February 11, 1965.
From the narration of the above facts, it will be clear that from October 5, 1961, the date of temporary injunction granted by the Munsif, till April 3, 1962, when the order of temporary injunction was vacated by the Subordinate Judge, the Department did not allow the petitioner to join duty in the senior post, which he was entitled to occupy by virtue of the order of injunction.
We have already referred to the fact that the petitioner sent letters dated October 5, 1961, October 13, 1961, October 20, 1961 and November 1, 1961 expressing his readiness and willingness to work in the senior post.
The respondents did not permit him to join duty.
Therefore, it cannot be said that the petitioner was absent from duty during this period.
Again on April 11, 1963, the Munsif granted a decree in favour of the petitioner in the suit.
The respondents did not obtain any stay order from the Appellate Court.
So the decree of the trial court was in full force till it was set aside on appeal on June 24, 1964.
During the period April 11, 1963, June 24, 1964, the petitioner wrote several letters and to which we have made a reference earlier, requesting the respondents to permit him to join duty in the senior grade.
The respondents did not permit him to join duty in the senior grade; but, on the other hand, insisted on the petitioner 's joining duty in the lower grade on threat of disciplinary action being taken.
This attitude of the respondents, we have already pointed out, was in flagrant violation of the order of the Munsif.
Therefore, during the period April 11, 1963 to June 24, 1963, it cannot be said that the petitioner was absent from duty.
Hence it will be 647 seen that the claim made by the respondents in the counter affidavit that the petitioner, since March 11, 1960 till August 5, 1966 was continuously not in service for over five years is fallacious.
There is no question of the petitioner not being in continuous service for over five years during the period referred to above.
On the other hand, the period during which it could be said ',,hat the petitioner was absent was from March 11, 1960, the date on which he claims to have gone on leave till October 5, 1961 when the order of temporary injunction was passed by the Munsif.
From October 5, 1961 to April 3, 1962, we have already pointed out, the petitioner cannot be considered to have been absent from duty.
Therefore, the continuity of absence is broken during this period.
The petitioner can again be considered to have been absent from duty from April 3, 1962, the date on which the order of temporary injunction was vacated by the Subordinate Judge, till April 11, 1963, the date on which a decree was granted by the Munsif in favour of the petitioner.
During this period he was absent.
But again the continuity of absence is broken during the period April 11, 1963 the date of the decree of the Munsif, till June 24, 1964, the date when the Subordinate Judge reversed the decree of the trial court.
We have already referred to the various letters written during this period by the petitioner as well as the reply sent by the Director of Public Instruction on November 27, 1963.
During this period he cannot be considered to be absent from duty.
The third period from which he can be again considered to be absent from duty is June 24, 1964, the date of the decree of the Subordinate Judge till August 5, 1966, the date on which the order was passed purporting to be under r. 76 of the Service Code.
The above circumstances clearly show that the petitioner cannot be considered to have been continuously absent from duty for over five years during the period March 11, 1960 to August 5, 1966.
if that is so, the essential condition for the application of r. 76 of the Service Code is lacking and, therefore, it follows that the order dated August 5, 1966 is not supported by r. 76 of the Service Code.
Therefore that order is illegal and has to be quashed.
A contention has been taken by the petitioner that the order dated August 5, 1966 is an order removing him from service and it has been passed in violation of article 311 of the Constitution.
According to the respondents there is no violation of article 311.
On the other hand, there is an automatic termination of the petitioner 's employment under r. 76 of the Service Code.
It may not be necessary to investigate this aspect further because on facts we have found that r. 76 of the Service Code has no application.
Even if it is a question of automatic termination of service for being continuously absent for over a ' period of five years, article 311 applies to such cases as is laid down by this Court in Jai 648 Shanker vs State of Rajasthan (1).
In that decision this Court had to consider Regulation No. 13 of the Jodhpur Service Regulations, which is as follows: "13.An individual who absents himself without permission or who remains absent without permission for one month or longer after the end of his leave should be considered to have sacrificed his appointment and may only be reinstated with the sanction of the competent authority."
It was contended on behalf of the State of Rajasthan that the above regulation operated automatically and there was no question of removal from service because the officer ceased to be in the service after the period mentioned in the regulation.
This Court rejected the said contention and held that an opportunity must be given to a person against whom such an order was proposed to be passed, no matter how the regulation described it.
It was further held "to give no opportunity is to go against article 311 and this is what has happened here".
In the case before us even according to the respondents a continuous absence from duty for over five years, apart from resulting in the forefeiture of the office also amounts to misconduct under r. 46 of the Pension Rules disentitling the said officer to receive pension.
It is admitted by the respondents that no opportunity was given to the petitioner to show cause against the order proposed.
Hence there is a clear violation of article 311.
Therefore, it follows even on this ground the order has to be quashed.
The further question is about the legality of the order dated June 12, 1968 purporting to be passed under r. 46 of the Pension Rules.
The petitioner wrote a letter dated July 18, 1967 requesting the Director of Public Instructions to arrange for payment of his pension as he had attained the age of superannuation.
The order dated June 12, 1968 was passed in reply to the said request of the petitioner.
In this order it is stated that under r. 46 of the Pension Rules, the Department is unable to grant pension to the petitioner.
Rule 46 of the Pension Rules is as follows: "46.No pension may be granted to a Government servant dismissed or removed, for misconduct, insolvency or inefficiency, but to Government servants so dismissed or removed compassionate allowance may be granted when they are deserving of special consideration, provided that the allowance granted to any Government servant shall not exceed two thirds of the pension which (1) ; 649 would have been admissible to him if he had retired on medical certificate.
" It will be seen that under the said rule a Government servant who has been dismissed, or removed for misconduct, insolvency or inefficiency is not eligible for pension.
The respondents 'have admitted in their counter affidavit that the order dated August 5, .1966 purporting to be under r. 76 of the Service Code is an order of removal and it is further pleaded by them that the petitioner 's absence for over five years itself amounts to misconduct,duct and inefficiency in service.
We have already held that the ,order dated August 5, 1966, is illegal.
If that is so, it follows ,.that the petitioner has not been continuously absent from duty for over five years and he is not guilty of any misconduct or in efficiency in service.
Therefore, it will further follow that withholding of pension under the order dated June 12, 1968 on the basis of r. 46 of the Pension Rules, is illegal.
The respondents have not taken up the position that the offic ers like the petitioner are not entitled to pension.
A reference to r. 5 of the Pension Rules shows that the officers mentioned therein are entitled to pension.
There is no controversy that the petitioner is an officer in the Education Department of the Bihar 'Education Service.
It is item No. 3 of the Schedule to r. 5.
Rule 42 declares that every pension shall be held to have been granted Subject to the conditions contained in Chapter VIII.
It is not the case of the respondents that Chapter VIII which applies to re employment of pensioners, has any relevancy to the case on hand.
We have already referred to r. 46.
Under that rule a Government servant dismissed or removed for misconduct, insolvency or 'inefficiency is not eligible for pension.
But that rule clearly con templates that action by way of dismissal or removal in respect of the three matters mentioned therein has already taken place according to law.
The bar under r. 46 will operate only when the conditions mentioned therein are satisfied.
In fact the consequences envisaged under the rule flow from the action already taken.
Rule 129 provides for the payment of superannuation pension to a Government servant entitled or compelled by the ,rules to retire at a particular age.
Rule 134 clarifies the payment of retirement pension to a Government servant permitted to retire after completing qualifying service for 30 years or any such less ,time as may for any special class of Government servants be prescribed.
Rule 135 provides for Government servants mentioned in r. 5 to be entitled on their resignation being accepted to a retiring pension after completing qualifying service of not less than 25 years.
Rule 146 provides the scale of pension for Government servants mentioned in r. 5.
We have only referred to some of the important rules to show that the payment of pension does not depend upon the discretion of the State; but, on the 650 other hand, payment of pension is governed by the Rules and a Government servant coming Within the Rules is entitled to claim pension.
The order dated June 12, 1968 has to be quashed in view of the fact that the foundation for the said order is the one based on the order dated August 5, 1966, which has been quashed by us.
When the order dated August 5, 1966 can no longer survive, the order dated June 12, 1968 quite naturally falls to the ground.
The last question to be considered, is, whether the right to receive pension by a Government servant is property, so as to attract articles 19(1)(f) and 31(1) of the Constitution.
This question falls to be decided in order to consider whether the writ petition is maintainable under article 32.
To this aspect, we have already adverted to earlier and we now proceed to consider the same.
According to the petitioner the right to receive pension is property and the respondents by an executive order dated June 12, 1968 have wrongfully withheld his pension.
That order affects his fundamental rights under articles 19(1)(f) and 31(1) of the Constitution.
The respondents, as we have already indicated, do not dispute the right of the petitioner to get pension, but for the order passed on August 5, 1966.
There is only a bald averment in the counter affidavit that no question of any fundamental right arises for consideration.
Mr. Jha, learned counsel for the respondents, was not prepared to take up the position that the right to receive pension cannot be considered to be property under any circumstances.
According to him in this case, no order has been passed by the State granting pension.
We understood the learned counsel to urge that if the State had passed an order granting pension and later on resiles from that order, the latter order may be considered to affect the petitioner 's right regarding property so as to attract articles 19(1)(f) and 31(t) of the Constitution.
We are not inclined to accept the contention of the learned counsel for the respondents.
By a reference to the material provisions in the Pension Rules, we have already indicated that the grant of pension does not depend upon an order being passed by the authorities to that effect.
It may be that for the purposes of quantifying the amount having regard to the period of service and other allied matters, it may be necessary for the authorities to pass an order to that effect, but the right to receive pension flows to an officer not because of the said order but by virtue of the Rules.
The Rules, we have already pointed out, clearly recognise the fight of persons like the petitioner to receive pension under the circumstances mentioned therein.
651 The question whether the pension granted to a public servant is property attracting article 31(1) came up for consideration before the Punjab High Court in Bhagwant Singh vs Union of India (1).
It was held that such a right constitutes "property" and any interference will be a breach of article 3 1 (1) of the Constitution.
It was further held that the State cannot by an executive order curtail or abolish altogether the right of the public servant to receive pension.
This decision was given by a learned Single Judge.
This decision was taken up in Letters Patent Appeal by the Union of India.
The Letters Patent Bench in its decision in Union of India vs Bhagwant Singh (2)approved the decision of the learned Single Judge.
The Letters Patent Bench held that the pension granted to a public servant on his retirement is "property" within the meaning of article 3 1 (1) of the Constitution and he could be deprived of the same only by an authority of law and that pension does not cease to be property on the mere denial or cancellation of it.
It was further held that the character of pension as "property" cannot possibly undergo such mutation at the whim of a particular person or authority.
The matter again came up before a Full Bench of the Punjab and Haryana High Court in K. R. Erry vs The State of Punjab (1).
The High Court had to consider the nature of the right of an officer to get pension.
The majority quoted with approval the principles laid down in the two earlier decisions of the same High Court, referred to above, and held that the pension is not to be treated as a bounty payable on the sweet will and pleasure of the Government and that the right to superannuation pension including its amount is a valuable right vesting in a Government servant.
It was further held by the majority that even though an opportunity had already been afforded to the officer on an earlier occasion for showing cause against the imposition of penalty for lapse or misconduct on his part and he has been found guilty, nevertheless, when a cut is sought to be imposed in the quantum of pension payable to an officer on the basis of misconduct already proved against him, a further opportunity to show cause in that regard must be given to the officer.
This view regarding the giving of further opportunity was expressed by the learned Judges on the basis of the relevant Punjab Civil Service Rules.
But the learned Chief Justice in his dissenting judgment was not prepared to agree with the majority that under such circumstances a further opportunity should be given to an officer when a reduction in the amount of pension payable is made by the State.
It is not necessary for us in the case on hand, to consider the question whether (1) A. T. R. 1962 Punjab Punjab 1.(3) I. L. R. 1967 Punjab & Haryana 278 652 before taking action by way of reducing or denying the pension on the basis of disciplinary action already taken, a further notice to show cause should be given to an officer.
That question does not arise for consideration before us.
Nor are we concerned with the further question regarding the procedure, if any, to be adopted by the authorities before reducing or withholding the pension for the first time after the retirement of an officer.
Hence we express no opinion regarding the views expressed by the majority and the minority Judges in the above Punjab High Court decision, on this aspect.
But we agree with the view of the majority when it has approved its earlier decision that pension is not a bounty payable on the sweet will and pleasure of the Government and that, on the other hand, the right to pension is a valuable right vesting in a government servant.
This Court in State of Madhya Pradesh vs Ranojirao Shinde and another (1) had to consider the question whether a "cash grant" is "property" within the meaning of that expression in articles 19(1)(f) and 31(1) of the Constitution.
This Court held that it was property, observing "it is obvious that a tight to sum of money is property".
Having due regard to the above decisions, we are of the opi nion that the right of the petitioner to receive pension is property under article 3 1 (1) and by a mere executive order the State had no power to withhold the same.
Similarly, the said claim is also property under article 19(1)(f) and it is not saved by sub article (5) of article 19.
Therefore, it follows that the order dated June 12, 1968 denying the petitioner fight to receive pension affects the fundamental right of the petitioner under articles 19(1)(f) and 31(1) of the Constitution, and as such the writ petition under article 32 is maintainable.
It may be that under the Pension Act (Act 23 of 1871) there is a bar against a civil court entertaining any suit relating to the matters mentioned therein.
That does not stand in the way of a Writ of Mandamus being issued to the State to properly consider the claim of the petitioner for payment of pension according to law.
To conclude: No relief can be granted in respect of the orders dated September 2, 1953 and March 5, 1960 as they are already covered by the decision of the Patna High Court dated May 4, 1967 in Second Appeal No. 640 of 1967.
Even assuming that the contention of the petitioner that the order dated September 2, 1953 was not the subject of adjudication in the litigation leading up to the decision of the High Court, in the second appeal, is correct, nevertheless, no relief can be granted as the order has been passed as early as 1953.
Further, the representations made (1) ; 653 by him for cancellation of the said order have been rejected long ago.
Further, there is no infringement of any fundamental right of the petitioner by that order.
The order dated August 5, 1966 declaring under r. 76 of the Service Code that the petitioner has ceased to be in government employ is set aside and quashed.
The order dated June 12, 1968 stating that under r. 46 of the Pension Rules, the Department is unable to grant the petitioner pension is also set aside and quashed.
As the petitioner himself claims that he has been retired from service on superannuation, a writ of mandamus will be issued to the respondents directing them to consider the claim of the petitioner for payment of pension according to law.
The writ petition is allowed to the extent indicated above.
The petitioner is entitled to his costs from the first respondent, the State of Bihar.
V.P.S. Petition allowed.
| Delivery has been defined in section 2 (2) of Indian , as meaning voluntary transfer of Possession from one per 1072 son to another and it includes not only actual delivery but also symbolical or constructive delivery within the meaning of the term.
The expression "actual delivery of possession" in section 2(1)(b)(i) of the West Bengal Jute Goods Future Ordinance, 1949 means actual delivery as contrasted with mere dealings in differences within the intendment of the Ordinance and such actual delivery of possession included within its scope symbolical as well as constructive delivery of possession.
The word "involving" in the expression "involving the actual delivery of possession thereof" in section 2(1)(b)(i) of the Ordinance means in the context resulting in and this condition would be satisfied if the chain contracts in the present case, as entered into in the market resulted in actual delivery of possession of goods in the ultimate analysis.
The Ordinance came within Head 27 of List 2 of the Seventh Schedule of the Government of India Act, 1935: "Trade and commerce within the Province; markets and fair; money lending and money lenders" and the Provincial Legislature was competent to legislate on that topic.
Nippon Yussen Kaisha vs Ramjiban ([1938] L.R. 65 I.A. 263), referred to.
|
Appeals Nos. 1052, 1054 to 1058, 1060 to 1087, 1089 to 1095, 1097, 1100 to 1112, 1114 to 1118, 1120 to 1129, 1131 and 1133 to 1145 of 1968.
Appeals by special leave from the judgment and order, dated July 7, 1966 of the Kerala High Court in Writ Appeals Nos. 35, 38 to 40, 43, 44, 46, 47, 57, 59 60 to 69, 71 to 77, 79 to 82, 84 to 86, 88, 89.92 to 95, 97, 99, 102, 184 to 186, 190 to 195, 202, 217, 218, 222 to 224, 226, 227, 231 to 240, 242, 245,247, 249 to 252, 257, 273, 274, 305 to 307, and 312 of 1965 respectively and Civil Appeals Nos. 1146 and 1147 of 1968.
Appeals by special leave from the judgment and order, dated September 19, 1966 of the Kerala High Court in Writ Appeals Nos.
42 and 246 of 1965.
B.R.L. lyengar and ,A. G. Pudissery, for the appellant (in all the appeals).
Sardar Bahadur, Vishnu Bahadur and yougindra Khushalani, for the respondent (in C.As.
1080 and 1137 of 1968).
H.R. Gokhale and J. B. Dadachanji, for the respondent (in C.As.
Nos. 1094 and 1144 of 1968).
A.V.V. Nair, for the respondents Nos. 2 and 3 (in C.As.
1053, 1112 and 1139 of 1968).
Lily Thomas, for the respondent (in C.As.
1056, 1087 and 1128 of 1968) A. Sreedharan Nambiar, for the respondent (in C.As.
Nos; 1067, 1075, 1091 and 1136 of 1968).
M.C. Chagla, 1.
B. Dadachanji and Thomas Vallapally for intervener (in C.A. No. 1144 of 1968).
, Shah, J.
This group of appeals arises out of an order passed by the High Court of Kerala holding that the Kerala Buildings Tax Act 19 of 1961 is ultra.
vires the Legislature in that it infringes the equality clause of the Constitution.
The State Kerala has appealed against the decision With special leave granted by this Court.
647 The material provisions of the Kerala Buildings Act, 1961, may be briefly set out.
The Act extends to the whole of the State of Kerala; section 1 (2), and shall be deemed to have come into force with effect from March 2, 1961; section 1(3).
An "assessee" is defined by section 2(b) as meaning a person by whom building tax or any other sum of money is payable under the Act and includes every person in respect of whom any proceeding under the Act has been taken for the assessment of building tax payable by him.
Section 2(d) defines "building" as meaning a house, out house, garage or any other structure or part thereof whether of masonry, bricks, wood, metal, or other material, but does not include any portable shelter or any shed constructed principally of mud, bamboos, leaves, grass or thatch or a latrine which is not attached to the main structure.
"Floorage" is defined by section 2(e) as meaning the area included in the floor of a building, and where a building has more than one floor of a building, the aggregate area included in all the floors together.
By section 3 buildings owned by the State Government, the Central Government or any local authority and buildings used principally for religious, charitable or educational purposes or as factories or workshops are exempt from payment of tax under the Act.
By section 4 it is provided that there shall be a charge to tax in respect of every building the construction of which is completed on or after March 2, 1961, and which has a floor area of one thousand square feet or more, and that the building tax shall be payable by the owner of the building.
The Schedule to the Act sets out the rates of building tax.
Buildings having a total floor area of less than 1,000 sq.
ft. are not liable to pay tax.
The Act, on a bare perusal, discloses some singular provisions.
The liability to tax in respect of buildings having total floor area between 1,000 to 2,000 sq.
ft. varies between Rs. 100 to Rs. 200; for buildings with a floor area between 2,000 to 4,000 sq.
ft. varies between Rs. 400 to Rs. 800; for buildings having total floor area between 4,000 to 8,000 sq.
it varies between Rs. 1,200 to Rs. 2,400; for buildings, with total floor area of 8,000 to 12,000 sq.
it varies between Rs. 3,200 to Rs. 4,800; and in respect of buildings having total floor area exceeding 12,000 sq.
a rate of 50 np.
per sq.
foot i.e., Rs. 6,000 or more per annum.
For determining the quantum of tax the sole test is the area of the floor of the building.
The Act applies to the entire State of Kerala, and whether the building is situate in a large industrial town or in an insignificant village, the rate of tax is determined by the floor area: it does not depend upon the purpose for which the building is used, the nature of the structure, the town and locality in which the building is situate, the economic rent winch may be obtained from the building, the cost of the building and other related circumstances which may appropriately be taken into 648 consideration in any rational system of taxation of building.
Under the Seventh Schedule List H Entry 49, the State Legislature has the power to legislate for levying taxes on lands and buildings.
But that power cannot be used arbitrarily and in a manner inconsistent with the fundamental rights guaranteed to the people under the Constitution.
No tax may be levied or collected under our constitutional set up except by authority of law: and the law must not only be within the legislative competence of the State, but it must also not be inconsistent with any provision of the Constitution.
It has been frequently said by this Court that the validity of a taxing Statute is open to question on the ground that it infringes fundamental rights.
In K.T. Moopil Nair V. State of Kerala,(1) Sinha, C.J., delivering the judgment of the majority observed at p. 89: "Article 265 imposes a limitation on the taxing power of the State in so far as it provides that the State shall not levy or collect a tax, except by authority of law, that is to say, a tax cannot be levied or collected by a mere executive fiat.
It has to be done by authority of law, which must mean valid law.
In order that the law may be valid, the tax proposed to be levied must be within the legislative competence of the Legislature imposing a tax and authorising the collection thereof and, secondly, the tax must be subject to the conditions laid down in article 13 of the Constitution.
One of such conditions envisaged by article 13(2) is that the Legislature shall not make an) ' law which takes away or abridges the equality clause in article 14, which enjoins the State not to deny to any person equality before the law or the equal protection of the laws of the country.
It cannot be disputed that if the Act infringes the provisions of article 14 of the Constitution.
it must be struck down as unconstitutional.
: Similar observations were made in Khandige Sham Bhat V. Agricultural, Income tax Officer.
(2) The principles which have been expounded by this Court in determining whether there has been denial of equal protection of the laws are also well settled: see Shri Ram Krishna Dalmia V. Shri Justice S.R. Tendolkar and Ors.(3).
It is true that in the application of the principles, the Courts, in view of the inherent complexity of fiscal legislation admit a larger discretion to the Legislature in the matter of classification, so long as it adheres to the fundamental principles underlying the doctrine of equality.
The power of the Legislature to classify is, it is said, of "wide (1) ; (2) ; (3) ; 649 range and flexibility" so that it can adjust its system of taxation in all proper and reasonable ways Khandige Sham Bhat V. Agricultural Income tax Officer(1).
But in enacting the Kerala Building Tax Act, no attempt at any rational classification is made by the Legislature.
As already observed, the Legislature has not taken into consideration in imposing tax the class to which a building belongs, the nature of construction, the purpose for which it is used, its situation, its capacity for profitable user and other relevant circumstances which have a beating on matters of taxation.
They have adopted merely the floor area of the building as the basis of tax irrespective of all other considerations.
Where objects, persons or transactions essentially dissimilar are treated by the imposition of a uniform tax, discrimination may result, for, in our view, refusal to make a rational classification may itself in some cases operate as denial of equality.
This Court in a recent judgment has decided that the levy of tax in exercise of the power under Entry 49 List II of the Seventh Schedule in respect of factory buildings in a municipal area based on floor area was illegal: New Manek Chowk Spinning and Weaving Mills Co. Ltd. V. Municipal Corporation of the City of Ahmedabad(2).
The Court held in that case that the method of adopting a flat rate for a floor area for determining the annual value adopted by the Corporation of Ahmedabad in exercise of the powers conferred upon it by the Bombay Provincial Municipal Corporation Act 49 of 1949 was against the provisions of the Act and the Rules made thereunder as well as all recognized principles of valuation for the purpose of taxation.
If levy of tax in a municipal district based on floor area in respect of a factory building violates article 14 of the Constitution when the tax is sought to be levied by the Municipal Corporation, we see no reason to uphold the tax imposed under the impugned Act when the State, in exercise of legislative authority conferred by Entry 49 List II Sch. VII, imposes liability to tax buildings solely on floor area.
The vice of the Act in the present case is more pronounced than it was in New Manek Chowk Spinning & Weaving Mills Case(2).
In that case the Rules under which the tax was sought to be levied on the basis of floor area were restricted in their operation to factory buildings within the Corporation limits of Ahmedabad, whereas Act 19 of 1961 which is challenged in the present case applies to the whole State of Kerala in respect of buildings completed on or after March 2, 1961, whatever may be the nature or class of the building, the use to which it is put, materials used in its construction and the extent of profitable user to which the building may be put, its cost and its economic rental.
It is unnecessary in the circumstances to consider whether imposition of a tax only on buildings constructed (1) ; (2) [1967] 2 S.C.R. 679.
650 after March 2, 1961, and exempting buildings completed before that date may not violate article 14 of the Constituiton.
The High Court was, in our judgment, fight in holding that the charging section of the Act is violative of the equality clause of the Constitution.
The appeals therefore fail and are dismissed with costs.
Parties appearing in different groups of appeals through the same Advocate in tiffs Court will be entitled to one hearing fee.
G.C. Appeals dismissed.
| Under section 4 of the Kerala Buildings Tax Act, 1961, buildings constructed after the coming into force of the Act and having a floor area of one thousand square feet or more were subjected to tax on a graduated scale.
The tax was levied on the basis of floor area only and no classification was attempted.
The High Court in writ petitions filed by the present respondents held the charge to be invalid because of violation of the equality clause of the Constitution.
The State appealed.
HELD: (i) The law bY which a tax is levied must not only be within the competence of the legislature concerned but it must also not be inconsistent with any provision of the Constitution.
The validity of a taxing statute is open to question on the ground that it infringes the fundamental rights.
[648 B C] K.T. Moopil Nair vs State of Kerala, ; and Khandige Sham Bhat vs Agricultural Income tax Officer, ; , relied on.
(ii) In the application of the principles expounded by this Court for determining whether there has been denial of equal protection of the laws, the Courts, in view of the inherent complexity of fiscal legislation admit a larger discretion to the Legislature in the matter of classification, so long as k adheres to the fundamental principles underlying the doctrine of equality.
The power of the legislature to classify is of 'wide range and flexibility ' so that it can adjust its system of taxation in all proper and 'reasonable ways.
[648 H] But when objects persons or transactions essentially dissimilar are treated by the imposition of a uniform tax, discrimination may result, for, refusal to make a rational classification may itself in some cases result in denial of equality.
[649 C] in enacting the Kerala Building Tax Act no attempt at any rational classification has been made by the Legislature.
The Legislature has not taken into consideration in imposing tax the class to which a building belongs, the nature of construction, the purpose for which it is used, its situation, its capacity for profitable user and other relevant circumstances which have a bearing on matters of taxation.
They have adopted merely the floor area of the building as the basis of tax irrespective of all other considerations.
The High Court was therefore right in holding that the charging section of the Act was violative of the equality clause of the Constitution.
[649 B] Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolker & Ors. ; , referred to.
646 New Manek Chowk Spinning & Weaving Mills Co. Ltd. V. Municipal Corporation o/the City of Ahmedabad; , , applied.
[Question whether imposition of a tax only on buildings constructed after the coming into force of the Act and the exempting building completed before that date would violate article 14 of the constitution left open.] [650 A]
|
Appeals Nos. 206 to 210 of 1964.
Appeals from the judgment and orders dated September 26, 1961 of the Calcutta High Court in income tax Reference No. 24 of 1957.
Niren De, Additional Solicitor General, Ganapathy Iyer and R.N. Sachthey, for the appellants.
Sampat lyengar, B.R.L. Iyengar and D.N. Gupta, for the respondents.
The Judgment of the Court was delivered by Sikri, J.
These appeals by certificate granted by the High Court of Calcutta under section 66(A)(2) of the Indian Income Tax Act, 1922, are directed against the judgment of the said High Court answering two questions referred to it against the Revenue.
The questions are: (1) Whether the profit arising to the assessee company from miscellaneous insurance transactions of mutual character was assessable under the Indian Income Tax Act, and (2) If the answer to question No. (1) is in the affirmative, whether on the facts and in the circumstances of the case the balance of the profits as disclosed in the assessee company 's profit and loss account after deducting the various reserves should be the taxable profits within the meaning of Section 2(6C) read with Rule 6 of the Schedule of the Indian Income Tax Act.
The relevant facts and circumstances are as follows: The respondent.
the Calcutta Hospital and Nursing Home Benefits Association Limited, hereinafter referred to as the assessee, is a mutual insurance concern carrying on miscellaneous insurance business.
The principal objects for which the Association was established were: (1) By means of insurance on the mutual principle to provide, or help towards providing, anywhere in the world for the expense of accommodation and treatment in hospitals 634 and nursing homes and of private nursing for members and their dependants; (2) To organise insurance on the mutual principle under Rules and Regulations to be framed for the purpose with the object of providing such hospital, medical, surgical, nursing and allied services as before mentioned, of supporting and assisting hospitals, in Calcutta or elsewhere; of relieving members or then dependants, in whole or in part from the payment of hospital and other charges while in receipt of such hospital, medical, surgical, nursing and allied services; and of reimbursing and repaying to members or their dependants in whole or in part, all payments for such hospital and other charges which they may have incurred or made which in receipt of such hospital, medical, surgical, nursing and allied services.
The members were required to pay a monthly premium, but there was a waiting period of four months for all bench its other than maternity, for which the waiting period was one year.
Benefits and privileges became available as from the first day of the fifth calendar month of registration (in respect of Maternity the 13th month) and continued to be available thereafter so long as the subscriptions were not in arrear.
These appeals are concerned with the assessment years 1949 50 to 1953 54 and the relevant accounting years ended on December 31, 1948, December 31, 1949, December 31, 1950, December 31, 1951 and December 31, 1952, respectively.
In the statement of the case, the Appellate Tribunal describes the accounts maintained by the assessee thus: "The assessee 's published revenue accounts contained three classifications, viz. (i) miscellaneous insurance business revenue account, (ii) profit and ' loss account and (iii) profit and loss appropriation account.
In the miscellaneous insurance business revenue accounts were included subscriptions from the members, gross premia from the members and from such amounts were deducted general reserve and or contingency reserve.
Reserve so made were transferred to the balance sheet as credit accounts.
The claims paid or payable and the expenses of management were deducted from this revenue account.
The balance of the miscellaneous insurance business revenue account was transferred to the profit and loss account to the credit of which was further added interest on investments and the debits included provision for taxation, interest on loan, contribution to provident fund and depreciation.
The balance of this account being the balance of profit and loss account was transferred.
to the profit and toss appropriation account.
Therefrom, in one year, ended 635 31st December, 1949, further deduction was made against contingency reserve and the balance either loss or profit was carried forward.
" We may now set out the facts regarding 1949 50 assessment.
It is not necessary to state the facts regarding other assessment years.
The Income Tax Officer for the assessment year 1949 50 added the reserve for taxation, Rs. 1000/ , to the net profit as per profit and loss account, which showed a profit of Rs. 1,653/ , and after deducting depreciation, he assessed the total income at Rs. 2,651/ .
On appeal, the Appellate Assistant Commissioner upheld the order of the Income Tax Officer.
Following the decision of the Bombay High Court in Bombay Mutual Life Assurance Society Ltd., vs Commissioner of Income Tax, Bombay City (1) he held that the income was assessable to income tax and that under Rule 6 of the Schedule to the Income Tax Act it was permissible for the Income Tax Officer to add the reserves to the income disclosed in the profit and loss account.
On further appeal, the Appellate Tribunal found no difficulty in holding that section 2(6C) of the Income Tax Act, according to its true interpretation, included income or the profits of any insurance company of mutual assurance and the said profits shall be taken to be balance of the profits disclosed by the annual accounts.
Regarding the reserve, the Tribunal held that the provision for reserve was not an expense to be deducted from the profits disclosed by the assessee company in order to arrive at the profits within the meaning of r. 6, and the Income Tax Officer was entitled to add back the reserve.
The High Court held that the surplus, miscalled profit, arising to the assessee company from the miscellaneous insurance transactions of mutual character was not assessable under the Indian Income Tax Act and that, in any event, the assessee was entitled to deduct the reserve.
The High Court distinguished Bombay Mutual Life Assurance Society, Ltd. vs Commissioner of Income Tax, Bombay City(1) on the ground that the Bombay decision was a life insurance decision and although it was a mutual life insurance society, nevertheless different and special rules applied to life insurance and the rules with which the Bombay decision was concerned were rules 2 and 3 which did not apply to mutual insurance other than life.
The second point of distinction, according to the High Court, was the very distinctive clauses in the memorandum of objects and articles of association of the assessee.
Section 2(6C) at the relevant time defined 'income ' to include " . . profits of any business of insurance carried on by a mutual insurance association computed in accordance with Rule 9 in Schedule.
" We may mention that another section 2(6C) was substituted by Act XV of 1955, and the wording substituted by this Act in (1) 20 I.T.R.189.
636 sub clause (vii) is "the profits and gains of any business of insurance carried on by a mutual insurance association or by a co operative society computed in accordance with rule 9 in the Schedule.
" But nothing turns on the change of the language as far as a mutual surance association carrying on business of insurance is concerned.
Rule 9 of the Schedule reads thus ' "9.
These rules apply to the assessment of the profits of any business of insurance carried on by a mutual insurance association . .
Rule 6 with which we are concerned reads thus: "The profits and gains of any business of insurance other than life insurance shall be taken to be the balance of the profits disclosed by the annual accounts, copies of which are required under the , to be furnished to the Superinte ndent of Insurance after adjusting such balance so as to exclude from it any expenditure other than expenditure which may under the provisions of Section 10 of this Act be allowed for in computing the profits and gains of a business.
Profits and losses on the realisation of investments and depreciation and appreciation of the value of investments shall be dealt with as provided in Rule 3 for the business of life insurance.
" The Additional Solicitor General, appearing on behalf of the appellant, contends that the Bombay High Court was right in holding that "section 2(6C) imports into the definition of 'income ', which is to be found in the charging section 3, these profits which may not be profits in the ordinary sense of the term but which are made profits by reason of Rule 2 of the Schedule because Rule 2 really gives an artificial extension to the meaning of the word 'profits ' when it says that 'profits and gains shall be taken to be '.
Therefore a new class of artificial income is created by this rule and that artificial income is included into the meaning of Section 3 by reason of this rule.
" Mr. Sampat Ayyangar, learned counsel for the assessee, relying on the decision of the House of Lords in Arvshire Employers Mutual Insurance Association Ltd. vs Commissioner of Inland Revenue,(1) contends that the Legislature has not made its intention clear because it has used the word 'profits ' in section 2(6C) under a misapprehension that the surplus of a mutual insurance company (1) 637 carrying on insurance business is profits.
He says that in Arvshire Employers Mutual Insurance Association case(1) the Legislature had proceeded on a similar misapprehension and the House of Lords held that section 31(1) of the Finance Act, 1933 (23 & 24 Geo.
V.c. 19) did not succeed in making the profits of a mutual insurance company taxable.
He urges that we should follow this precedent.
He relies on the following passage from the speech of Lord Macmillan at p. 347: "The structure of Section 31(1) is quite simple.
It assumes that a surplus arising from the transactions of an incorporated company with its members is not taxable as profits or gains.
To render such a surplus taxable it enacts that the surplus, although in fact arising from transactions, of the comp any with its members, shall be deemed to be something which it is not, namely, a surplus arising from transactions of the company with non members.
The hypothesis is that a surplus arising on the transaction of a mutual insurance company with non members is taxable as profits or gains of the company.
But unfortunately for the Inland Revenue the hypothesis is wrong.
It is not membership or non membership which determines immunity from or liability to tax, it is the nature of the transactions.
If the transactions are of the nature of mutual insurance the resultant surplus is not taxable whether the transactions are with members or with non members.
" He further relies on the observations of Lord Macmillan that "the Legislature has plainly missed fire.
Its failure is perhaps less regrettable than it might have been, for the Sub section has not the meritorious object of preventing evasion of taxation, but the less laudable design of subjecting to tax as profit what the law has consistently and emphatically declared not to be profit." He says that similarly in this case the Legislature has plainly missed fire.
In order to appreciate the scope of that decision, it is necessary to set out the relevant part of section 31 of the Finance Act, 1933.
Section 31(1) enacted: "31. (1) In the application to any company or society of any provision or rule relating to profits or gains chargeable under Case I of Schedule D (which relates to trades) . any reference to profits or gains shall be deemed to include a reference to a profit or surplus arising from trans (1)T. C. 331.
638 actions of the company or society with its members which would be included in profits or gains for the purposes of that provision or rule if those transactions were transactions with non members, and the profit or surplus aforesaid shall be determined for the purposes of that provision or rule on the same principles as those on which profits or gains arising from transactions with non members would be so determined.
" The Section adopted the device of a deeming provision.
The profits arising from the transactions of a company or society with its members were deemed to be profits arising from transactions with non members.
Parliament assumed that the latter were taxable.
As this hypothesis was wrong, Parliament failed in its objective.
But the Indian Legislature did not adopt any deeming device.
It defined 'income ' to include profits of any business of insurance carried on by a mutual insurance association.
What are those profits is then explained by reference to the Schedule.
The effect of this in substance is to incorporate r. 6 into the definition.
If the legislature had defined income to include profits of insurance carried on by a mutual insurance association computed according to r. 6, very little would have remained arguable.
It is, however, urged that in r. 6 also the word 'profits ' means taxable profits.
But r. 6 speaks of balance of profits as disclosed in the accounts submitted to the Superintendent of Insurance.
The Superintendent of Insurance is not concerned with taxable profits.
What he is concerned with, inter alia, is the balance of profits for the purpose of the .
It is then urged that in the definition the word 'surplus ' should have been used instead of profits.
But the word 'surplus ' has a technical significance in the , and it seems to us that it would have been inexpedient to use the word 'surplus '.
At any rate.
r. 6 would then have been drafted differently.
It is finally urged that this is a taxing statute and we should give a strict construction to the definition.
The definition could still operate if we interpret it in a narrow sense as to include profits from investments and other activities of a mutual insurance company.
It is said that this definition was inserted to make it clear that such profits would be taxable.
We cannot accede to this contention.
It was well established that such profits would be taxable apart from the new definition, We cannot understand why it was necessary 639 to make it doubly clear.
Moreover, r. 6 deals with balance of profits, which would include profits arising from the business of insurance of a mutual character.
It deals with balance of profits as a composite thing.
It is impossible to dissect this composite thing.
If we were to accede to the assessee 's contention, the definition would serve no purpose whatsoever.
It seems to us that the Legislature has evinced a clear intention to include the balance of profits as computed under r. 6 within 'the word 'income ' in section 3 of the Income Tax Act, and ' accordingly such balance of profits is taxable.
We are unable to agree with the High Court that the Bombay case is distinguishable in principle.
It is true that the Bombay High Court was concerned with r. 2, but when we go to the schedule and find out what is the balance of profits or surplus that has been made taxable, it does not make any difference to the construction of section 2(6C) whether it is r. 2 that is applied or r. 6.
Therefore, disagreeing with the High Court, we answer the first question in the affirmative.
This takes us to the second question.
The answer to this question depends on the true interpretation of r. 6.
It seems to us that on its language the Income Tax Officer is bound to accept the balance of profits disclosed by the annual accounts, copies of which have been submitted to the Superintendent of Insurance.
He can only adjust this balance so as to exclude from it any expenditure other than expenditure which may under the provisions of section 10 be allowed for in computing the profits and gains of a business.
We are not concerned here with the latter part of r. 6 dealing with profits and losses on the realisation of investments, and depreciation and appreciation of the value of investments.
This Court examined the provisions of the in connection with the Schedule in Pandvan Insurance Company Ltd., Madurai vs The Commissioner Income Tax, Madras(1) and arrived at the conclusion that the "makes detailed provisions to ensure the true valuation of assets and the determination of the true balance of profits of an insurance business" and that r. 6 should be construed in the light of this background.
Examining r. 6 in the light of this background, it seems to us that the intention of the rule is that the balance of profits as disclosed by the accounts submitted to the Superintendent of Insurance and accepted ' by him would be binding on the Income Tax Officer, 640 except that the Income Tax Officer would be entitled to exclude expenditure other than expenditure permissible under the provisions of section 10 of the Act .
It is common ground in this case that these serves which were added to the balance of profits were not expenditure.
Accordingly, agreeing with the High Court, we answer the second question in the affirmative .
In the result, the appeals are accepted in part.
Parties will bear their own costs in this Court.
Appeals partly allowed .
| Out of a consignment of 60 bales of piece goods despatched by the Railway, under risk note Form Z, only 29 bales were delivered to the respondent who was the consignee.
By sending the consignment thus, the consignor got a specially reduced rate but the burden was thrown on him, of proving misconduct on the part of the railway or its servants, if there was a loss of goods.
The risknote also imposed an obligation on the Railway, to disclose how the consignment was dealt with by it, during the time the consignment was in its possession or control.
The respondent wrote a letter to the Chief Commercial Manager of the Railway stating that 60 bales were booked but only 29 bales had been delivered, and that a suit for damages would be filed.
The letter was sent within 6 months of the booking of the consignment ,and contained the details as to how the amount of damage was arrived at.
Later on, a notice was given under section 80 of the Civil Procedure Code, 1908, and a suit was filed for damages.
But, before the filing of the suit, there was no demand by the consignor for a disclosure as to how the consignment was dealt with by the Railway throughout the period it was in its possession or control.
The Railway however, made a disclosure in its written statement as.
to how the consignment was, dealt with throughout that period.
Its defence was that, there was a theft in the running train and that was how part of the consignment was lost and not due to any misconduct on the part of the Railway or its servants.
Even after the suit was filed and evidence let in at the trial, by the railway there was no statement by the respondent at any stage that the disclosure made by the Railway in the written statement or in the evidence, was in any way inadequate.
The resplendent never told the court after the evidence of the Railway w.as over, that he was net satisfied with the disclosure and that the Railway should be asked to make a further disclosure.
The suit was dismissed by the trial court but decreed on appeal, by the High Court.
In the appeal to the Supreme Court it was contended that, (i) the, suit was barred by section 77 of the Indian Railways Act, 1890, inasmuch as notice required therein was not given by the respondent, and (ii) under the terms of the risk note the Railway was absolved from all responsibility for the less of the goods consigned thereunder, from any cause whatsoever.
except upon proof of misconduct of the Railway or its servants, that the burden of proving such misconduct was on the respondent and that the respondent had failed to discharge the burden.
HELD: (i) A notice under section 77 of the Act is necessary in the case of non delivery which arises from the loss of goods.
Though the letter, written by the respondent to the Chief Commercial Manager, was not specifically stated to be a notice under the section it gave all 'the 'particulars necessary for such a notice and it was also given within time prescribed.
Therefore, the letter was sufficient notice for the purpose of the Act, [149 D F] 146 Governor General in Council vs Musaddilal [1961]3 S.C.R. 647 and Jatmull Bhojraj vs The Darjeeling Himalayan Railway Co.Ltd. ; , followed.
(ii) The view of the High Court, that there was a breach of the condition relating to complete disclosure, and that on such breach the risk note could be completely ignored and the responsibility of the Railway judged purely on the basis of section 72(1) of the Act, as if the goods were consigned at the ordinary rates on the Railway 'srisk, was not correct.
[154 H] The responsibility of the railway administration to disclose to the consignor as to how the consignment was dealt with throughout the time it was in its possession or control arises at once, under the risk note, in either of the cases referred to therein, and is not confined to the stage of litigation.
But such disclosure is necessary only where a consignor specifically asks the railway to make the disclosure.
If no such disclosure is asked for, the administration need not make it before the litigation.
Therefore, if the Railway did not make the disclosure, before the suit was filed, it could not be said to have committed a breach of the term of the contract [153 A D] The disclosure envisages a precise statement of how the consignment was dealt with by the railway or its servants.
If the disclosure is asked for before litigation commences and is not given, or the disclosure is given but it is not considered to be sufficient by the consignor, the dispute has to be judicially decided and it is for the court to say, if a suit is filed, whether there .has been a breach ,of the term.
At that stage, evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation, to, the consignor, or which might have been made in the written statement.
When the administration has given its evidence in proof of the disclosure, if the plaintiff is not satisfied with the disclosure made in evidence, he is entitled to ask the court to call upon the railway to fulfill its obligation under the contract, and the railway should then have the opportunity of meeting the demands of the plaintiff.
It is then for the court to decide whether the further disclosure desired by.
the plaintiff should be made by the railway, and if the court decides that it should be made, the railway has to make such further disclosure as the court orders.
If the railway fails to take that opportunity to satisfy the demands of the plaintiff endorsed by the court, the railway, at that stage, would be in breach of its contractual obligation of disclosure.
[153 E 154 B] The effect of the breach however is not to bring the contract to an end and throw the responsibility on the railway, as if the case was a simple case of responsibility under s.72(1).
The risk note would continue to apply and the court would have to decide whether the misconduct can be fairly inferred from the evidence of the railway, with the difference that, where the railway has been in breach of its obligation to make full disclosure, misconduct may be more readily inferred and section 114 of the Evidence Act more readily applied.
But the conditions of the risk note cannot be completely ignored, simply because there has been a breach of the condition of complete disclosure.[154 D G] Surat Cotton Spinning & Weaving Mills vs Secretary of State for India in Council [1937] 64 I.A. 176, applied.
|
vil Appeal Nos.
2266 69 of 1979.
705 From the Judgment dated 9.8.1978 of the Punjab and Haryana High Court in L.P.A. Nos.
576 to 579 of 1975.
Harbans Lal and M.V. Goswami for the Appellants.
Iqbal Singh for the Respondent.
The following Order of the Court was delivered: These appeals by special Leave are directed against the common judgment and decree of the Punjab and Haryana High Court passed in L.P.A. Nos.
576 79 of 1975.
Three brothers, by means of four sale deeds executed on June 25, 1968, sold some parcels of land to Harbhajan Singh respondent herein.
The 4th brother by the name of Ujagar Singh, whose legal representatives are the appellants herein,.
filed four suits of preemption ,against the vendee and those were decreed on July 15, 1970, on terms of payment of pre emption money on or before August 30, 1970.
Four appeals were filed by the plaintiff pre emptors before the District Judge for the reduction of the pre emption money.
On an application moved by the pre emptors the time for deposit of the amount fixed under the decree by the Trial Court was extended till further orders.
The appeals finally were rejected under Order 41 Rule 3 of the Code of Civil Procedure as being insufficiently stamped and hence not properly presented.
Before hand, however, 'the laintiff pre emptors all the same, deposited the pre emption amount in the Trial Court, on their own, on October 26, 1970.
After the rejection of their appeals, the pre emptors sought execution of the pre emption decrees which attracted objections by the vendee judgment debtor.
The primary objec tion raised was that the suits stood automatically dismissed for non deposit of the preemption money within the time identically stipulated under the questioned decrees.
The plea of the vendee was based on the mandate of Order 20 Rule 14, Civil Procedure 'Code whereunder the Court when decree ing the claim to pre emption is required to specify in the decree on or before which the pre emption money shall be paid, if not already paid, and further if it is not so paid, the suit shall stand dismissed with costs.
(Whatever is relevant in Order 21 Rule 14 alone has been taken note of).
The date specified by the Trial Court as said before was August 30, 1970 and under the interim orders of the Appel late Court the time for depositing the said money was ex tended till 706 further orders.
Undeniably the Court never passed any fur ther orders in that regard and thus the time for depositing the said money stood extended without any limit.
objec tion was sustained by the Trial/ Executing Court.
On appeal to the Appellate Court at the instance of the pre emptors, the District Judge took .a contrary view permitting the execution to proceed.
A learned Single Judge of the High Court in appeal upheld the view of the District Judge, but a Division Bench of the High Court.
In Letters Patent Appeals, reversed the District Judge as also the Single Judge uphold ing the objection by the vendee that there were no decrees which could be executed.
We have heard learned counsel for the appellant for he alonewas present.
There has been a sea change in the law of pre emption in the States of Punjab and Haryana where from these appeals have arisen.
Whereas in Punjab the Punjab Pre emption Act itself has been repealed, in Haryana it has substantially been chopped down by justicing.
This Court in Atam Parkash vs State of Haryana & Ors., ; declared ultra vires section 15(1) of the Punjab Pre emption Act, as ap plicable to Haryana, whereunder certain relatives of the vendor had been given the right to pre empt a sale of immov able.
property.
The view of this Court and the present state of law is not by any means insignificant or irrelevant for judging the present matter and for resolving the controversy in hand.
Rather its pervasive thought permeats the mind.
Learned counsel for the appellants would have the con troversy determined on the anvil of Section 148 of the Code of Civil Procedure, pleading for time to be extended by the Court, as it is extendable when any period is fixed or granted by the Court for the doing of any act prescribed or allowed by the Court, even though the period originally fixed or granted has already expired.
He has brought to our notice that in the main matter when the appeal was rejected by the District Judge as being insufficiently stamped time was asked from the District Judge to make good the deficien cy in the stamp duty but that was rejected and though he concedes that the matter was not taken up in revision before the High Court, it is still contended that this Court should exercise its plenary power to extend the time in the inter ests of justice and have the Court fee made good.
He also concedes that when the District Judge was asked to extend and specify the time for deposit of the pre emption money, he had declined to exercise his discretion, so as to regula rise payment, when the appellants had by themselves 707 deposited the pre emption money on October 26, 1970 before hand,leaving the matter to be agitated before the executing Court.
Likewise it is contended that this Court can and should specify the time for deposit so as to regularise it in exercise of powers under Section 148 C.P.C. He also high lights that the mistake herein was that of the Courtand for both the propositions he takes aid of Jogdhayan vs Babu Ram & Ors., ; and Jagat Dhish Bhargava vs Jawahar Lal Bhargava and Others, ; In any event he concedes that for the later wrongful non exercise of discre tion of the District Judge, the matter was not taken in Second Appeal or Revision, as the case may be, before the High Court.
We have pondered over, the matter.
Our view may appear some what slanting but we cannot disassociate ourselves from the canvass now spread, showing there is no law of pre emp tion permitting a decree to be drawn in terms of Section 15(1) of the Punjab Pre emption Act.
Were we to exercise at all the discretions on the subject afore mentioned we would in any event be completing the process of decreeing the suits; the suits which have been held to fall down under Order 20 Rule 14 of the Code of Civil Procedure, tantamount ing to their dismissal, and that too on present day when such decrees cannot be passed.
The High Court however, took the controversy in a different light.
It took the view that the insufficiently stamped appeals be/ore the District Judge were no appeals in the eye of law, as was contende don behalf of the vendee, and the view of the District Judge in not extending time was right as it was rightly considered that the appeals had not been entertained at all.
Support was also taken for its view by the High Court from the circumstance of the order of the Court extending time ex parte, which conferred no obligation on the vendee to treat the decree operative against him as and when the pre emptors chose to deposit the pre emption money.
The High COurt on this reasoning restored the judg ment of the Trial/Executing Court,upholding the objections of the vendee.
Where the High Court arrived by following one way, we have been led to arrive by another.
The end result, however, is the same that the objections of the vendee mustremain sustained and the pre emptor appellants must fail in the event,not getting their suits for pre emption de creed.
The appeals must thus inevitably fail and are hereby dismissed.
Decreetal money deposited by the appellants may be permitted to be withdrawn by them, ii not already with drawn.
No costs for there is no opposition.
V.P.R. Appeals dis missed.
| Three brothers executed four sale deeds on June 25, 1968, to respondent.
The 4th brother, whose legal represen tatives are the appellants, filed four suits of pre emption against the vendee respondent and those were decreed on terms of payment of pre emption money on or before August 30, 1970.
The plaintiff pre emptors appellants filed four appeals before the District Judge for the reduction of the pre emption money.
On an application moved by the pre emptors the time for deposit of the amount fixed under the decree by the Trial Court was extended till further orders.
The appeals were rejected under Order 41 Rule 3 of the Code of Civil Procedure as being insufficiently stamped and not properly presented.
Before hand, however on 26.10.1970, the plaintiff pre emptors, deposited the pre emption amount in the Trial Court.
The pre emptors sought execution of the pre emption decrees.
The vendee judgment debtor raised objections stat ing that the suits stood automatically dismissed for non deposit of the pre emption money within the time identically stipulated under the decrees.
The objection was sustained by the Trial/Executing Court.
704 The appeal to the Appellate Court at the instance of the preemptors, was allowed, permitting the execution to pro ceed.
A Single Judge of the High Court in further appeal upheld the view of the District Judge, but the Division Bench of the High Court allowed the Letters Patent Appeals, upholding the objection made by the vendee respondent, that there were no decrees which could be executed, against which these appeals by special leave to this Court .were filed.
The appellants contended that the controversy could be determined on the anvil of Section 148 of the Code of Civil Procedure by extending time by the Court, as it was extend able when any period was fixed or granted by the Court for the doing of any act prescribed or allowed by the Court, even though the period originally fixed or granted had already expired; that this Court should exercise its plenary power in the interests of justice to extend the time.
Dismissing the appeals, this Court, HELD: 1.
There is no law of pre emption permitting a decree to be drawn in terms of Section 15(1) of the Punjab Pre emption Act.
Were the Court to exercise at all the discretions on the subject, the Court would in any event be completing the process of decreeing the suits; the suits which have been held to fall down under Order 20 Rule 14 of the Code of Civil Procedure, tantamounting to their dismiss al, and that too on present day when such decrees cannot be passed.
[707C D] 2.
The objections of the vendee must remain sustained and the pre emptor appellants must fail in the event, not getting their suits for pre emption decreed.
Decretal money deposited by the appellants may be permitted to be withdrawn by them, if not already withdrawn.
[707F G] Atarn Parkash vs State of Haryana & Ors., ; , followed.
Jogdhayan vs Babu Ram & Ors., ; and Jagar Dhish Bhargava vs Jawahar Lal Bhargava and Others, ; , referred to.
|
Civil Appeal No. 1331 of 1966.
Appeal by special leave from the order dated January 20, 1966 of the Bombay High Court in Special Civil Application No. 54 of 1966.
D. V. Patel and L N. Shroff for the appellant.
G. P. Pai, Bhajan Ram Rakhiani and R. K. Khanna, for respondent No. 1.
The Judgment of the Court was delivered by Mitter, J.
The question involved in this appeal by special leave from an order of the Bombay High Court rejecting summarily a petition under Art.227 of the Constitution for the issue of a writ of certiorari or other appropriate writ for examining the legality of the award made by the Industrial Tribunal, Maharashtra on July 27, 1965 and published in the Maharashtra Gazette on August 19, 1905 and for quashing the same appears to be one of first impression so far as this Court is concerned.
The appellant before e this Court is an institution which came into existence as far back as 1834.
It originated in the desire of certain Hindu and Parsee gentlemen of the City of Bombay to put a stop to the practice of killing of stray dogs by the stray dogs by the sepoys of the East India Company.
the deed of October 18, 1834 shows that certain Hindus , Parsees and Mahajuns had resolved to start a Panjrapole with suitable.buildings by raising subscription and also by promising to pay certain fees on stated mercantile commodities to the Panjrapole to be established for the keeping of stray cattle and other animals and for protecting their lives.
This was followed by a deed of declaration of trust executed on 2nd November, 1850.
This shows that the institution mentioned in the earlier document had 204 been established and the management of its funds had been placed in the hands of certain Banians.
under the superintendence of Sir Jamshedjee Jeejeebhoy and that out of the surplus funds collected Rs. 75,057/ had been invested in the purchase of Government Promissory notes.
The trustees were to stand possessed of the said notes and interest and dividends thereof upon trust for the use and benefit of the said institution.
On 2nd November, 1850 a deed of assignment and declaration of trust in favour of panjrapole was executed by Sir Jamshedjee Jeejeebhoy to Khimchand Motichand.
This document shows that a part of the surplus funds had been invested in the purchase of several pieces or parce Is ,of lands, houses etc.
and the new trustees were to stand possessed of the same upon trust for the use and benefit ,of the said institution.
Another trust deed was executed ,on 5th September, 1851 by Khimchand Motichand, Sir Jamshedjee Jeejeebhoy and others.
This document shows that the institution was then possessed of considerable wealth comprising of Government promissory notes, houses, lands and other immovable estate in the Islands of Bombay, besides cash balances.
The funds of the institution appear to have been augmented further under a deed of 10th June, 1871.
According to this document certain charitably disposed persons, Hindus and Parsees, had raised a fund for releasing animals in Surat meant for slaughter on the occasion of Bakrild and Id E Kurbani.
The trustees of the said fund being desirous of transferring the sums in their hands with all accumulations of interest, income etc.
and also the trust thereof to the trustees of the Bombay Panjrapole had requested the trustees of the said Panjrapole to become the trustees of Surat Bakri Id fund to which the latter had a in Surat meant for slaughter on the occasion of Bakrild and Id E Kurbani.
The trustees of the said fund being desirous of transferring the sums in their hands with all accumulations of interest, income etc.
and also the trust thereof to the trustees of the Bombay Panjrapole had requested the trustees of the said Panjrapole to become the trustees of Surat Bakri Id fund to which the latter had agreed.
This document shows further that the trustees of the Bombay Panjrapole had agreed to use the said funds towards the purchasing, releasing and redeeming from slaughter some of the cows, sheep and other animals intended or likely to be sacrificed at Surat on the Bakrid or Id Kurbani occasions and for conveyance of the animals so purchased to be kept there according to the custom and rules of that institution.
In 1915 the Government 205 declared the institution as an infirmary under the Preven tion of Cruelty to Animals Act (IX of 1890).
it would appear that the Bombay Panjrapole expanded its activities considerably over the years and had besides its original seat at Bombay, branches at three other places viz., at Raita, Bhiwandi and Chembur Cattle, birds and other animals were kept and maintained at all these places.
A very large number of persons was pursuing manifold acti vities at the said places.
Latterly the workers of the institution were not satisfied with their wage scales and other service conditions.
On the basis of the report submitted by the Conciliation Officer under sub s.(4) of s.12 of the Industrial Disputes Act the Government of Maharashtra referred the dispute for adjudication to the Tribunal constituted under a Government notification.
An order of reference was made on 25th June, 1963 and the heads of disputes were, the wages, privilege, sick and casual leave, bonus, gratuity and reinstatement of certain workmen.
In the written statement filed by Panjrapole it was stated inter alia (a) The main aims and objects of the institution were purely charitable.
Whatever income the institution had was not all to be distributed either to the donors or the trustees.
It was wholly and solely for the maintenance and treatment of animals of the Bombay Panjrapole.
To aehieve the above objects the means to be adopted were (i) maintenance of a shelter house for aged and unserviceable animals; (ii) the feeding and treatment of all animals entrusted to the institution either by the owners anxious to pension their old animals or rescued by philanthropic persons from the hands of butchers and the protection of animals remanded by magistrates; (iii) the breeding of bulls under ideal and sanitary conditions; (iv) the maintenance of a dairy farm with special attention to proper feeding, accommodation and water supply, the proceeds to go to the benefit of other animals of the Panjrapole; and 20 6 (v) bringing up of calves of the young cows under healthy conditions.
(b) The Managing Committee of trustees of the institution was advised that in fulfilment of their primary and only object of maintaining sick and infirm cattle and dogs etc.
it was necessary that they should have healthy food and nutrition.
Since milk from outside would not fulfil that condition it was decided to upgrade the infirm cattle and rear them into good animals so as to get good and pure milk for the inmates of the Panjrapole.
Thus the milk that was produced and remained surplus after feeding the old cows, motherless calves and dogs and other such animals was sold to members of public instead of being thrown off.
The income derived therefrom was again utilised only after maintenance of the Panjrapole animals.
The sale proceeds of the milk was never utilised nor meant for the benefit or the profit of the donors of of trustees nor was it produced and sold for the purpose or satisfying human needs or desires or with any object of rendering material service to the community.
The cows which yielded milk were kept by the Panjrapole till the end of their lives.
The milk derived from them could only be considered as natural and incidental product in the maintenance of cows.
It was submitted on the basis of the above that essentially object with which the institution received animals was not for doing service to their owners or others but to the animals themselves.
The Tribunal examined meticulously the activities of the institution over a number of years.
The workers served various interrogatories on the trustees to elicit from the various facts relating to the income by way of rent from building etc.
the income from milk and milk products, the income from sale of other commodities, the number and categories of animals in the Panjrapole, the number of animals, if any, purchased, the number of dry and wet cows owned by the Panjrapole and the number of stud bulls either purchased by or bred at the Panjrapole for the last ten years.
The society answered all the particulars.
The chart below prepared by the respondent shows the total cattle strength of the Panjirapole in all its four branches comprising of productive animals (whether milch cows milch buffaloes, 207 stud bulls and working bullocks), the number of unpro ductive animals, including cows, buffaloes, buffalo calves, heifers and calves and bullocks.
The chart was compiled from the documents disclosed by the appellant and contains the figures for the years 1958 to 1962 Total strength in the following years.
1958 1959 1960 1961 1962 Total strength Bombay 149 117 150 201 214 Raita 833 595 508 604 538 Bhiwandi 501 653 503 408 426 Chambur 191 233 272 275 281 Total 1,674 1,598 1,533 1,4881,459 Sick, old and infirm Bombay.
Raita 32 19 10 16 31 Bhiwandi 424 364 132 150 171 Chambur.
Total 466 25 % 383 20% 142 10% 166 10% 202 15% Young animals Bombay Raita 181 44 120 50 36 Bhiwandi 6 47 5 99 59 Chambur 56 87 79 93 100 Total 243 178 204 242 185 Other cattle not sick Bombay 149 117 150 201 214 Raita 620 532 488 538 471 Bhiwandi 71 242 366 159 196 Chambur 135 146 193 182 181 Total.
975 1,037 1,197 1,080 1,602 The following chart was pared by the respondents showing the values of the milk supplied to the animals as 208 also the amounts fetched by sale of the surplus milk for the same years.
Chart.
Year Own consump Sale Total Percentage tion.
Rs. Rs. Rs. of sale approxima tely 1 2 3 4 5 1958 2,681 1,49,854 1,314 3,995 1,53,849 2.
6% 1959 5,256 6,716 5,475 17,447 1,69,465 1,86,912 9. 5% 1960 1,755 6,570 2,686 11,011 2,13,117 24,1185% 1961 2,046 3,286 3,504 8,836 2,23,095 2,31,9314 4% 1962 1,954 4,555 3,650 10,159 2,30,043 2,40,2024% The facts found by the Tribunal may be summarised as follows (1) At the end of the year 1962 there were altogether, 445 cows, 48 bulls, bullocks and oxen, other cattle (cows and bullocks) 508, calves 495, dogs 160, goats and sheep 32, horses 12, hares 18, cocks, hens and ducks ' 18 and parrots 8 : the total number was 1754.
(2) The total income for the year was Rs. 6,64,043 including the amount of Rs. 1,73,583 received by way of donation.
The income proper was thus Rs. 4,90,459.
, 20 9 (3) Some lands of the institution were under its personal cultivation.
The sale proceeds of the yield thereof was Rs. 6,492.
The rent fetched by the immovable property was Rs. 2,20.549.
The milk vielded by the cows was regularly collected and sold, the sale proceeds for the year being Rs. 4,30,034.
A large number of workmen was employed to attend to the cows and to feed them, to.
milk the cows and to carry and sell the milk to the public.
(4) The number of cows yielding milk at the end of the year was 242.
At that time there were 75 pregnant cows.
There were 57 other cows, 101 grown up calves (female) and 91 other small calves (female) all described as "reserved".
In the opinion of the Tribunal all these calves would in course of time grow into cows.
(5) The institution maintained some stud bulls.
Besides there were bullocks which were used for plying the carts or for cultivation of the lands of the institution.
(6) There were 36 heads of cattle described as arrivals from Bombay.
There were another 87 cows described as "danger"; the rest of the cattle (cows and bullocks) were 57 lame and blind, 177 weak, 51 infirm, quite infirm 80 and sick 108, the total of this category being 473; including the "danger" cows the total was 560.
These animals depended entirely on the charity of the institution.
The Tribunal found the activities of the institution in connection with its movable property and collection and sale of milk to be an industry while the maintenance of danger cows, blind, lame, infirm and sick, the dogs and other animals did not constitute an industry.
As already noted, the application under article 227 by the Panjrapole to the Bombay High Court was dismissed summarily and therefore we do not have the benefit of a judgment of the High Court.
As the records stand we must proceed one the facts found by the Tribunal and such light as is thrown thereon by arguments of counsel.
Before looking into the relevant authorities on the subject, we may note the points canvassed in support of or against the appeal by learned counsel on either side.
Referring to the trust deeds it was argued on behalf of the appellant that the essential purpose of the institution was 210 to keep and foster animals which were either rejected by their owners as old and infirm or of no use to them as suckling calves, dry cows etc.
It is not necessary to take into account the other animals which were maintained by the institution.
Leaving out of account the number of dogs kept, the number of other animals was insignificant.
It was argued that although the sale of milk produced a fair amount of income, certain portion of it was necessary for the maintenance of the sick and infirm animals and the sale of the balance of the milk ought to be regarded as incidental to the keeping of cows thrown on the hands of the institution and ought not to lead to an inference that the institution was pursuing an industry.
With regard to the immovable properties, it was said that they had been purchased out of surplus funds in the hands of the insti tution over 50 years back and on a conspirator of the acti vities of the institution it should be held that it was merely doing charity to animals and it was not producing food or giving service to humans to constitute its activity as an industry within the meaning of s.2(1) of the Industrial Disputes Act.
Learned counsel for the respondent drew our attention to certain facts which according to, him went to show that so far as the activity of keeping cattle, specially cows and she buffaloes was concerned, there could be little doubt that it was pursued as an industry.
He handed over two charts containing analysis of the cattle population as culled from the documents placed before the Tribunal by the institution itself.
The total strength of cattle in all the four branches of the institution in the year 1958 was 1674, 1598 in the year 1959, 1533 in the year 1960 and 1488 in 1961 and 1459 in 1962.
The sick, old and infirm cattle for the year 1958 was 456 or roughly 25 per cent of the total strength.
Young animals numbered 243 and other cattle which were not at all sick was 975 in number.
The percentage of sick, old and infirm cattle in the year 1959 was roughly 20 % in.
the year 1960 and 1961, 10 per cent and in the year 1962 15%.
The rest of the cattle according to counsel were neither old nor infirm but were either producing milk or being put to use immediately or capable of yielding milk or work in the future.
Another chart handed over by him went to show that the total value of milk produced in the year 1958 was Rs. 1,53,849 and 211 leaving out of account of Rs. 3,995 being the value of milk supplied to the sick cattle, the institution derived an in come of Rs. 1,49,854/ from the sale of milk.
The corres ponding figures for 1959 were total sales Rs. 1,86,912, value of milk consumed Rs. 17,447, income from milk, Rs. 1,69,465.
The figures for 1960 were Rs. 2,24, 118, Rs. 11,011 and Rs. 2,13,117/ ; those for 1961 were Rs. 2,31,931, Rs. 8,836 and Rs. 2,23,095/ .
The figures for the last year 1962 were Rs. 2,40,202, Rs. 10,159 and Rs. 2,30,043.
Thus according to the above figures, the percentage of milk given to the animals out of the total production was 2 6 in 1958, 9 5 in 1959, 5 in 1960 and 4 in the years 1961 and 1962.
Learned counsel drew our attention to the figures of expenses of tending the sick and infirm cattle either by employment of hospital workers or medical expenses and compared the same with the total expenses of the institution and the number of men employed.
The value of medical relief to animals either by way of salary to workers, dearness allowance paid to them, medical expenses and feeding of milk to the animals for the Bombay Panjrapole in the year 1961 was Rs. 11,762, 'for Raita Rs. 5,551, for Chembur Rs. 5,028 and for Bhiwandi Rs. 28,805.
The expenses of feeding and maintenance of sick animals for the said branches were Rs. 1,825, 13,596, 7,554 and 81,464.
But it is pertinent to note that medical expenses accounted for very small sums, namely, Rs. 1,267 for Bombay, Rs. 559 for Raita, Rs ' 1,696 for Chembur and Rs. 552 for Bhiwandi.
The figures of medical expenses for the year 1962 were equally negligible.
The number of people employed for giving medical relief at the Bombay Panjrapole in the year 1961 was only 7, namely, a doctor, a dresser, 4 coolies and other workers and a sundry worker.
Their total salary came to Rs. 6,000 besides dearness allowance of Rs. 2,448.
Similarly at Raita there were a doctor, two coolies, two dressers and sundry workers and expenditure was only Rs. 552 out of the total expenditure on all these items Rs. 4,992.
It was argued oil the basis of these figures that if the object of the Panjrapole was only to maintain and treat the old, diseased or infirm or rejected cattle on its hands acquired from different sources, the number of men employed would be very small and the milk required for the sick and infirm cattle could be had from only a few milch 212 cows and she buffaloes.
It was urged that the fact that a large number of milch cattle were to be found every year among the cattle population yielding milk regularly of the value of over Rs. 2,00,000 for the last 3 or 4 years went to show that the institution was pursuing an activity mole or less like that of, a dairy farm.
It was maintaining a number of stud bulls and had actually purchased one, the obvious object behind it being improving the cattle wealth of the institution by the production of good and healthy cattle, the females of which would come to yield milk in future.
It was said that the value of milk sold could not be as high as disclosed by the figures unless the institution was getting a number of milch cattle every year to replace those which were going dry for the time being.
This could only be possible if the institution was in a position to keep up its number of milch cattle from the young ones either given to the Panjrapole or those which were bred at the Panjrapole.
The only difference between the Panjrapole and a well organised dairy farm was that the Panjrapole was not buying milch cattle of good quality nor destroying or getting rid of any which were found to become useless.
As the objects of the institution did not permit it to get rid of any cattle it undoubtedly had to maintain whatever cattle came to it but nevertheless the activities displayed by the facts were enough to show that it was being run on the lines of a business or an undertaking, though not of the normal type of a well organised dairy business.
In our view the arguments of learned counsel for the respondent have considerable force.
The main heads of the income of the institution were income from immovable properties, donation from charitably disposed members of the public and the sale of milk.
No doubt the immovable property had been acquired many years back from the surplus funds in the hands of the trustees.
These were old houses and buildings but the Panjrapole was maintaining them in tenantable condition by incurring considerable expenses every year over the repairs.
The more significant factor was the steadily growing income from the sale of milk derived from milch cows and buffaloes, the number of which though not steady was always considerable.
Regard must also be had to the written statement of the institution itself before the Tribunal showing 213 that the Managing Committee of the trustees had decided some time back to upgrade the infirm cattle and rear them into good animals so as to get good and pure milk for the inmates of Panjrapole.
In fact however the upgrading was to such an extent that the milk yielded always was far in excess of the needs of the inmates of the Panjrapole.
Although the sale proceeds of the milk was never utilised nor was ever meant for the benefit or profits of the donors or trustees, the very production of it in such large bulk wholly unrelated to the needs of the sick cattle showed that the institution was pursuing an activity with the central idea of obtaining a steady income therefrom.
In our view, the facts justifiably lead to the conclusion that the institution deliberately diversified its objects from only tending to the sick, infirm or unwanted cattle by adopting the policy of keeping cattle not merely for their own sake but for the sake of improving the cattle population committed to its care with an eye to serve human beings by making large quantities of good milk available to them and thereby getting an income which would augment its resources.
It pursued its policy just as any dairy owner, would by having a few good quality bulls to impregnate the cows and thereby ensuring a steady production of milk and also improve the quality of the progeny.
We have then to consider whether on the above facts an inference ought properly to be drawn that the activities of the Panjrapole constituted an industry.
It is not necessary to go through the plethora of cases decided by this Court to find out whether the Tribunal had come to a proper conclusion.
Although there is no decision of this Court arising out of the affairs of a Panira Dole, there are several dealing with the question as to whether hospitals constituted industries.
The contention of learned counsel for the appellant W. as that the main and chief object of the appellant institution being the keeping and fostering of ' animals incidental activities ought to be disregarded and the institution ought to be considered as a hospital.
If the activities relating to the production of milk could be said to be incidental to the maintaining of sick, infirm and diseased or rejected cattle, the argument would, in our opinion, rest on solid foundation.
2 1 4 At the time when the application under article 227 of the Constantine was presented before the Bombay High Court, the decision of this Court in State of Bombay vs The Hospital Mazdoor Sabha (1) held the field and it can be assumed that it was on the strength of this decision that the Bombay High Court did not feel called upon to examine the merits of the case by issuing a rule.
In the 'Hospital Mazdoor Sabha 's case (supra) the dispute arose out of the retrenchment of respondents 2 and 3 before this Court who ' had been engaged as ward servants in the J.J. Group of Hospitals, Bombay under State control and management without payment of compensation as required by section 25 F(b) of the Industrial Disputes Act.
The decision of this Court shows that there was a group consisting of five hospitals under the administrative control of the Surgeon General of the appellant and its day to day affairs were conducted and controlled by a Superintendent who was a full time employee of the appellant.
The residential staff including the Resident Medical Officers, Horsemen, Nurses etc. were all full time employees of the appellant and their salaries were drawn on the establishment pay bills of the appellant and paid entirely by the appellant.
According to this Court : "This group serves as a clinical training ground for students of the Grant Medical College which is a Government Medical College run and managed by the appellant for imparting knowledge of medical, sciences leading to the Degrees of Bachelor of Medicine and Bachelor of Surgery of the Bombay University as well as various Post Graduate qualifications of the said University and the College of Physicians and Surgeons, Bombay; the group is thus run and.
managaed by the appellant to provide medical relief and to promote the health of the people of Bombay.
" On the question as to whether the activities of this group of hospitals would be covered by the definition of 'in dustry ' in s.2(j) of the Industrial Disputes Act, the Court ,observed (see at p. 878) "In considering the question as to whether the group of Hospitals run by the appellant undoubtedly (1) ; 21 5 for the purpose of giving medical relief to the citizens and for helping to impart medical education are an undertaking or not, it would be pertinent to enquire whether the activity of a like nature would be an undertaking if it is carried on by a private citizen or a group of private citizens.
There is no doubt that if a hospital is run by private citizens for profit it would be an undertaking very much like the trade or business in their conventional sense. .
Trust the character of the activity involved in running a hospital brings the institution of the hospital within s.2(j).
Does it make any difference that the hospital is run by the Government in the interpretation of the word "undertaking" in s.2(j)? In our opinion, the answer to this question must be in the negative.
It is the character of the activity which decides the, question as to whether the activity in question attracts the provision of s.2(j); who conducts the activity and whether it is conducted for profit or not do not make a material difference.
" As to the attributes which made the activity an under taking it was stated (see at p. 879) : "It is difficult to state these possible attributes denitely or exhaustively; as a working principle it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community with the help of employees is an undertaking.
Such an activity generally involves the co operation of the employer and the employees; and its object is the satisfaction of material human needs.
It must be organised or arranged in a manner in which trade or business is generally organised or arranged.
It must not be casual or must it be for oneself nor for pleasure.
Thus the manner in which the activity in question is organised or arranged, the condition of the co operation between the employer and the employee necessary for its success and its object to render material service to the community can be regarded as some, of the features which are distinctive of activities,, 5 Ml 1245 Sup.
Cl/71 216 to which s.2(j) applies.
Judged by this test, there would be no difficulty in holding that the State is carrying on an undertaking when it runs the group of Hospitals in question.
" The recent decision of this Court in Safdar Jung Hospital, New Delhi vs K. section Sethi and Management of M/s T.B. Hospital, New Delhi vs The Workmen (1) is a pointer in the contrary direction.
There was also another appeal relating to the Kurji Holy Family Hospital.
The Court proceeded to consider the general proposition whether a hospital could be considered to fall within the concept of industry in the Industrial Disputes Act and whether all hospitals of whatever description could be covered by the concept or only some hospitals under special conditions.
According to this Court in Safdar Jung Hospital case , '(see p.1412 paragraph 1.3) "an industry is to be found when the employers are carrying on any business, trade , under taking, manufacture or calling of employers.
If they are not, there is no industry as such.
" The Court referred to the decision of this Court in Gymkhana Club Union vs Management (2) and the conclusion therein that : "Primarily, therefore, industrial disputes occur when the operation undertaken rests upon co,operation between employers and employees with a view to production and distribution of material goods, in other words, wealth, but they may arise also in cases where the co operation is to reduce material services.
The normal cases are those in which the production or distribution is of material goods or wealth and they will fall within the expressions, trade, business or manufacture.
" With regard to trade and business it was said : "Business too is a word of wide import.
In one sense it includes all occupations and professions.
But in the collocation of the terms and their defi (1) A. I.R. 1970 S.C. 1407.
(2) [1968] 1 S.C.R. 742.
217 nitions these terms have a definite economic content of a particular type and all the authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production, distribution and consumption of wealth and the production and availability of material services.
" With regard to the Hospital Mazdoor Sabha case (1) was remarked (see p. 1414) "The case proceeds on the assumption that there need not be an economic activity since employment of capital and profit motive were considered unessential.
It is an erroneous assumption that an economic activity must be related to capital and profit making alone.
An economic activity can exist Without the presence of both.
Having rejected the true test applied in other cases before, the test applied was 'can such activity be carried on private individuals or group of individuals? ' Holding that a hospital could be run as a business proposition and for profit, it was held that a hospital run by Government without profit must bear the same character.
With respect, we do not consider this to be the right test.
This test was employed to distinguish between the administrative functions of Government and local authorities and their functions analogous to business but it cannot be used in this context.
When it was emphasised in the same case that the activity must be analogous to business and trade and that it must be productive ,of goods or their distribution or for producing ,material services to the community at large or a part of it, there was no room for the other proposition that privately run hospitals may in certain circumstances be regarded as industries.
" This Court held that the Hospital Mazdoor Sabha case(1) "took an extreme view of the matter which was not justi fied".
With regard to the activities of the individual hospitals it was said the Safdar Jung hospital had not embarked on an economic activity which could be said to be analogous to trade or business.
There was no (1) [1960] 2 section C. R. 866, 218 evidence that it was more than a place where persons could get treated.
This was a part of the functions of Government and ,the hospital was run as a Department of Government and could not therefore be said to be an industry.
Again, with regard to Tuberculosis hospital it was found not to be an independent institution but a part of the Tuberculosis Association of India.
The hospital was wholly charitable and was a research institute.
The dominant purpose of the hospital was research and training, but as research and training could not be given without beds in a hospital, the hospital was run.
According to this Court, treatment is thus a part of research and training.
In these circumstances the Tuberculosis hospital could not be described as an industry.
With regard to the Kurji Holy Family Hospital again it was found to be entirely charitable.
It carried on the work of training, research and treatment; its income was mostly from donations and distribution of surplus as profit is prohibited.
It could not therefore be an industry as laid down in the Act.
Reference may also be made to the case of Lalit Hari Ayurvedic College Pharmacy vs Its Workers ' Union (1).
In this the appellate Tribunal found that the pharmacy run by the appellant sold medicines in the market and realised about Rs. one lakh per annum whereas in the hospital run by it about 30% of the medicines manufactured by it were consumed and about 70% were sold in the market.
This judgment was delivered on the same date by the same Bench which decided the Hospital Mazdoor Sabha case (supra).
On the facts found this Court held that there could be no doubt "that the activity of the appellant in running the pharmacy and the hospital was an undertaking under s.2(j) and was an industry".
The only case of Panjrapole which appears to have come before the High Courts was that of the Madras Panjrapole vs Labour Court(2)which was the subject matter of an industrial dispute referred to in the year 1958 by the State Government for adjudication by the Labour Court, Madras.
This was decided after the Hospital Mazdoor, Sabha case.
The facts referred to by the High Court were that the Madras Panjrapole was a charitable society (1) A.I.R. 1960] S.C. 1261.
(2) 219 registered under the Societies Registration Act occupying an area of about Ac.
12 00 of land within the city of Madras on which the munificence of several donors had enabled the construction of shelters for animals as well as sanctuary for birds.
The objects of the society, as stated in the memorandum of association, are protection, care and treatment of old, infirm and injured cows, calves, bullocks etc.
and affording freedom to such animals from being slaughtered unnecessarily and to guarantee old age relief to the old, infirm and unserviceable animals till they die of natural causes.
To achieve these objects, the means envisaged to be adopted were : (a) maintenance of shelter house for aged and unserviceable animals ' (b) the feeding and treatment of all animals entrusted to the care of the society either by the owners anxious to pension their old animals or rescued by philanthropic persons from the hands of butchers and the protection of animals remanded by magistrates; (c) the breeding of bulls under ideal and sanitary conditions (d) the maintenance of a dairy farm with special attention being paid to proper feeding, accommodation and water supply, the proceeds of which will go to the benefit of the other animals of the Panjrapole; and (e) the bringing up of the calves of the young cows under healthy conditions.
The Court observed (see p. 689): " It is a matter of common knowledge that a number of dry cows in the City of Madras are sold away to butchers by the poor milkmen who could not support them.
Butchers themselves offer tempting prices for such cows, a temptation which the poverty of the milkmen could not but lead him to succumb.
Dry cows were admitted into the Panjrapole to prevent them from going into the slaughter house.
Maintenance of the dry cows called for stud bulls Stud bulls were presented to the society by the Government.
In the course of time, the dry cows brought forth their progeny and began to yield milk.
220 The Panjrapole was, therefore, in a position to sell milk yielded by the cows which were received by it with a view to protect them from the slaughter house details of the sale amounts in respect of the milk produced shows that the institution had been receiving substantial sums every year by sale of milk." So for as the activities of the Madras Panjrapole and Bombay Panjrapole are concerned they are Practically identical except that in the present case the maintenance, of a dairy farm is not explicitly referred to anywhere but the facts as culled from the evidence makes the same only too obvious.
There was however a certain difference in the case of the Madras Panjra pole inasmuch as the Madras High Court found that (see p. 691) "During certain years, it even went a step further.
The Panjrapole purchased cows, maintained a dairy farm and supplemented their own production of milk with out side milk and sold them.
These activities would certainly partake the character of a business, though the profit of such business might have gone to the humanitarian activities undertaken by the society.
But the activities have long ago ceased.
What the society is now having is the milk yielded by its own cows.
Those cows are admittedly kept by the Panirapole till their lives.
They are not sold.
They are the property of the Panjrapole.
The milk yielded by those cows could only be considered as an incidental product in the maintenance of the cows.
The sale of cowdung cakes and menure and of the calves after the mother cows become dry are also incidental.
It cannot be held that a trade or business is conducted by the institution.
" According to the learned single Judige who heard the peti tion the activities of the Panjrapole had nothing to do with human needs.
They were solely devoted to the needs of helpless animals; though incidentally such activities have a business tinge about them it cannot be said to be for human need or material welfare.
The objects were mainly religious and humanitarian.
Following the test laid down in the Hospital Mazdoor Sabha case the learned Judge was of opinion that there was no industrial dispute which could be referred by the State Government to the 221 Labour court for adjudication.
The case went in appeal to a Letters Patent Bench : Workmen Employed in Madras Panjrapole vs Madras Panjrapole (1).
The Bench took a somewhat different view from that of the learned single Judge.
It demurred to the observations of the trial Judge that "there is no element of trade or business involved in the various activities of the society".
According to the Bench : "These observations, however, do not extend to subsequent developments, the result of the growth of the institution, and its attempt to achieve self sufficiency.
There were (1) purchase and sale of milk, a fairly wide upon scale, (2) the maintenance of a dairy farm during a period of the history of the institution, and (3) similarly, the maintenance of stud bulls, to enable dry cows to conceive and bear calves." The Bench felt compelled to allow the appeal to the extent of modifying the writ of certiorari and laying down that the actual decision would have to be arrived at after the record of adequate evidence by the Labour court in the light of the principles formulated, the available evidence being both inadequate and contradictory.
For the guidance of the Labour court the Bench observed Even if the institution at the inception, and as basically defined, be purely humanitarian,.
non industrial and not amenable to any of the tests.
upon which the definition has been applied,, it cannot be gainsaid that, if the.
institution had largely altered its complexion through the years, so as to have become a focus of economic production, the definition again night be applicable.
" The Bench also examined the question whether the activity of the Panjrapole was in essence religious, or spiritual, as according to it a temple or a church could not be considered to be an industry.
(1) [1962]2 L.L.J. 472.
222 The net result of the above seems to be that although the Bench was inclined to hold that the Madras Panjrapole at its inception was not an industry the complexion of its activities might have been altered by later developments so, as to render the institution as then organised an industry within the meaning of, the Act.
Further according to the Bench individual units of the Organization (like the dis trict dairy farm) might constitute an industry though the society itself may not be one.
The matter came up again before the Madras High Court (see , The Tribunal held in favour of the workmen and the learned Judge dismissed the application for the issue of a writ by the Panjrapole.
The learned Judge referred to the reports of the institution in several years past from 1937 to 1957.
He found that the object of the society had been amended in 1937 to enable it to receive young cows and charge fees from the owners.
The idea of starting a dairy farm was for supporting the infirm cows, bullocks and horses and in pursuance of that idea stud bulls were acquired for improving the cattle breeding.
, The income from the sale of milk rose phenomenally reaching the figure of Rs. 60,000 in the year 1957.
The learned Judge found himself unable to hold that maintaining cows and stud bulls and selling milk were only Subsidiary in nature to the humane the society, namely, to provide Shelter for the de CrePit and useless and infirm animals.
The learned Judge held that "if the Madras Panjrapole had confined itself to the objectives at its inception, namely, to give protection to the old, infirm and decrepit animals, it could well be con tended that it was only for the purpose of satisfying purely spiritual needs, as it is common knowledge that Hindus 'consider cow protection.
as one of their religious duties.
If the Madras Panjrapole had not extended its activities, following 'the, authorities cited above, would have had no hesitation in holding that it is not an industr) A reading of the annual reports show that a large number of high milk yielding cows and buffaloes were pur ,chased, by the society and due to the successful working of the dairy farm the Panjrapole was able to supply milk to various institutions .
The reports show that considerable profits were made by the Panjrapole, the sale of milk fetching a sum of Rs. 60,000 in the year 1957".
In the 223 result the petition was dismissed and the labour court was directed to determine the other issues.
We have referred at some length to the Madras Panjle case to show the analogy of the activities of the radoras Panjrapole to the.
Bombay Panjrapole.
Save for the fact that the Madras Panjrapole definitely and expressly changed its objective by starting a dairy farm and purchasing mulch cows and stud bulls there is very little difference between the facts of the case before us from those in the Madras Panjrapole case.
In the present case only one stud bull w s purchased but the activities pursued by the Bombay Panjrapole make it clear that they were pursuing the same kind of activity, namely, that of using ,stud bulls for the purpose of breeding healthy cattle including cows so as to be able to make a very sizable income from the sale of milk.
For the last few years, from 1958 to 1962 the number of milch cows was always Considerable which could only be accounted for by the fact that from time to time the place of cows which had become dry was being taken up by cows fecundate by the bulls maintained for the purpose of keeping up a steady supply of milk.
We have already referred to the fact that ' the value of milk supplied to the sick and infirm cattle was infinitesimal compared to that sold in the market.
The expenses incurred in connection with the treatment of sick and infirm animals was also negligible compared to the total expenses of the institution.
The number of men employed for such treatment was very small at all times.
The mere fact therefore that the Panjra pole never purchased milch cows and never purchased stud bulls except once makes no difference to the question as to whether their activity of maintaining cows and bulls could only be considered as an investment.
It was certainly carried on as a business although it was not pursued in the same way as astute businessmen only out to make profit would, namely, get rid of the animals which were no longer fit for any Use.
The value of the milk supplied for the last 3 or 4 years was well in excess of Rs. 2 lakhs per annum and this could only be possible if the cows and buffaloes had been kept and maintained not merely to keep them alive but with the idea of getting as much production out of them as possible.
224 In this view of the matter, it is hardly necessary to consider the other cases which were cited at the Bar, namely, Gymkhana Club Union case (1), Cricket Club vs Labour Union (2) and Harinagar Cane Farm vs State of Bihar (1).
It was remarked in the Gymkhana Club case that the activity of the club is conducted with the aid of employees, who follow callings or avocations and that the activities of the club was not a calling or business of its members, of Managing Committee and there was no undertaking analogous to trade or business.
In the Cricket Club 's case (2) the Court examined the different activities of the club and came to the conclusion that they did not lead to the inference that the club was carrying on an industry.
On the facts of this case we hold that the activities of the Panjrapole as disclosed in this case constituted an industry within the meaning of section 2(j) of the Industrial Disputes Act and the appeal must therefore be dismissed with costs.
S.C. Appeal dismissed. (1) [1968] 1 S.C.R. 742.
(2) ; (3) ; 225.
| Under a compromise decree the respondent plaintiff agreed to deposit in court the sale amount by January 1, 1960.
December 31, 1959 and January 1, 1960 were holidays.
The respondent made the deposit on January 2, 1960 and sought to enforce his right under the decree compelling the appellant defendant to execute the conveyance.
The appellant filed execution for cost on the basis that the suit stood dismissed as per the provision in the compromise decree on the failure of the respondent lo deposit the amount by January 1, 1960.
, The Court held that the respondent had made the deposit in substantial compliance with the decree.
appeals against this order were also dismissed.
In appeals to this Court it was contended (i) where a party had to perform an act within a certain of by a certain date, the law would not take notice of the circumstance that the act became incapable of performance by reason of circumstances beyond his control on the last day of the period; (ii) the executing court had no right to alter or modify the terms of the decree and hold that the deposit made on January 2, 1960 had to be deemed to be a deposit made on January 1, 1960 and (iii) a compromise decree was a contract notwithstanding the fact that an order of court was superadded to it and a provision in a contract that an act had to be done within a certain period or by a particular day by a party was absolute dismissing the appeal.
HELD : (i) The respondent had the right or the liberty to deposit the amount in court till and including January 1, 1960.
That being so, the fact that be did not choose to make the deposit earlier would not affect his right or liberty to deposit the amount in court on January 1, 1960.
[518 F G] Halsbury vol.
37 3rd Edn.
p. 96; Fateh Khan vs Chhajju & Ors., A.I.R. 1931 Lah. 386, referred to.
It is a generally recognised principle of law that parties who are prevented from doing a thing in court on particular day, not by an act of their own, but by the court itself, are entitled to do it at the first subsequent opportunity.
[520 G] Halsbury Vol.
37, 3rd Ed.
p. 97, para 172, Muhammad Jan vs Shiam Lal; I.L.R. XLVI All. 328 (1924); Shooshee Bushan Rtidro vs Gobind Chander Roy, I.L.R. Cal.
XVIII (1891) 231, Sambasiva Chari vs Ramasaini Reddi, I.L.R. 22 Mad.
(1899) 179 and Mayor vs Harding, , referred to.
The present case is concerned with a decree which specifically provided that the respondent should deposit the amount in court.
He had, therefore, no option to pay the same to the appellant [520 C D] Kunj Bihari vs Bitndeshri Prasad, I.L.R. vol.
51, 1929, All.
527, Roshan Lal vs Ganpat Lal.
A.I.R. 1938 All.
, Indal vs Chaudhary 516 Ram Nidh, A.I.R. 33 [1946] oudh.
156 and Rain Kinkar Singh V. Smt.
Kamal Basini Devi, A.I.R. 1938 Pat. 451, distinguished.
Chatlapali Suryaprakasa Rao vs Polisetti Venkataratnam, A.I.R. 1938 Mad.
523, referred to.
(ii)The executing court has the right to construe the decree in the light of the applicable provisions of law, If in this case, on such a construction.
the court found that the deposit made by the respondent on January 2, 1960, was according to law a deposit in compliance with the terms of the decree, then, the executing court was not varying the terms of the decree but executing the decree as it stood.
[522 E] (iii)Although a contract is not the less a contract because it is embodied in a Judge 's order, it is something more than a contract.
Different considerations would apply when a contract is embodied in a Judge ' .; order [523 C] Wentworth vs Bullen, E.L.R. 141 769, Charles Hubert Kinch vs Fdward Keith Walcott, A.I.R. 1929 Journal & P.C. 289, Govind waman vs Murlidhar Shrinivas, A.I.R. 1953 Bom, 412 and Morris vs Barret, E.I.R. 141, 768, referred to.
|
Civil Appeals Nos. 299 and 120 to 124 of 1972.
From the Judgment and order dated the 25th March, 1970 of the Punjab & Haryana High Court in Civil Writ No. 325 of 1968, L.P.A. No. 177 of 1969, Civil Writ No. 1534, 1545, 1829 and 2201 of 1969 respectively.
G. L. Sanjay, section K. Mehta, R. L. Batta and M. Qumaruddin, for the appellants (in Civil Appeal No. 299/72).
2 V. C. Mahajan, section section Khanduja and R. L. Bata, for the appellants (In C.As.
120 124/72) D. Mukherjee, Hardev Singh, R. section Sodhi and G. C. Garg, for the respondents.
(In C.A. No. 299/72).
The Judgement of the Court was delivered by GOSWAMI, J.
In these appeals by certificate of the High Court of Punjab and Haryana validity of action taken by the Market Committee, Patiala, under the provisions of the Punjab Agricultural Produce Markets Act, 1961, is under challenge.
The appellants are shop keepers of Gur Mandi, Patiala, and are licensees under section 10 of the Punjab Agricultural Produce Markets Act, 1961 (briefly the Act) and are also pucca arhtiyas.
It is not in dispute that they sell gur and shakkar within the market area notified under the Act.
It is also admitted that they have licences under section 10 of the Act in Form 'B ' as kacha arhtiyas or commission agents.
Since they were found to be selling gur and shakkar in their own shops within the notified market area without submitting accounts and without payment of fees they were asked to show cause by the Market Committee why legal action should not be taken against them for violation of rules 29(3) and 31(1) of the Punjab Agricultural Produce Markets (General) Rules, 1962 (briefly the Rules) and for violation of condition No. 1 of the licence which is to the effect that the licensee shall comply with the provisions of the Act, Rules and Bye laws framed thereunder and instructions issued from time to time.
The appellants disclaimed liability to pay fee under the Act on various grounds.
The Administrator of the Market Committee after some correspondence levied on one of the appellants, M/s Prem Chand Ram Lal, appellants in Civil Appeal No. 120 of 1972, Rs. 5014/ as market fee on the basis of best judgment assessment and imposed equal amount of penalty and a demand notice was issued for payment.
M/s Prem Chand Ram Lal filed a writ application before the High Court for quashing the demand notice.
The High Court allowed the petition quashing the order of assessment as arbitrary and violative of the principles of natural justice.
The High Court, however rejected the other contentions of the said petitioner questioning the validity of the fee levied.
M/s Prem Chand Ram Lal filed a Letters Patent Appeal against the judgment of the learned single Judge rejecting their other substantial points.
The appellants in civil Appeal No. 299 of 1972 had also filed a writ application under articles 226 and 227 of the Constitution in the High Court questions the action taken against them as well as the levy under the Act.
By a common judgement of March 25, 1970 the Division Bench of the High Court dismissed the Letters Patent Appeal of M/s Prem Chand Ram Lal as also the writ application of the appellants and granted certificates to appeal to this Court.
The question is whether the appellants are liable to payment of fee under the Act.
3 Action in this case was taken for violation of rules 29(3) and 31(1) of the Rules.
We will read these rules : R.29(1). 'Under section 23 a Committee shall levy fees on the agricultural produce bought or sold by licensees in the notified market area at the rates fixed by the Board from time to time`. " (3) "The fees shall be paid to the Committee or a paid officer duly authorised to receive such payment on the day of the transaction or on the following day".
R.31(1).
"Every licensed dealer and every dealer exempted under rule 18 from obtaining a licence shall submit to the Committee a return in Form M showing his purchases and sale of each transaction of agricultural produce on each day, on the day on which the transaction takes place or on the following day . . " The fault of the appellants lies in that they have neither paid fees under rule 29(3) nor have they submitted returns in Form 'M '.
A perusal of the above two rules would show that the Committee is authorised to levy fees on agricultural produce brought or sold only by a licensee in the notified market area.
Similarly under rule 31 (1) only a licensed dealer is required to submit a return.
We have now to take note of the scheme disclosed in a few other relevant provisions which are material for our purpose.
Under section 10 of the Act "any person may apply to the authority specified in section 9 for a licence which may be granted for such period, in such form, on such conditions and on payment of such fees not exceeding one hundred rupees as may be prescribed".
There is a proviso to this sub section whereby "if any personal carrying on any business of the nature specified in sub section (3) of section 6 in a notified market area on the date of issue of notification under sub section (1) of that section fails to apply for licence on or before the date specified therein t`or obtaining licence, the prescribed authority may, before a licence is issued, impose on him such penalty not exceeding one hundred rupees as may be prescribed".
By section 5 of the Act the State Government by notification declares its intention of exercising control over the purchase, sale, storage and processing of specified agricultural produce in a specified area.
By section 6(1) the Government by notification notifies a market area for the purpose of the Act.
Section 6(3) may be quoted: 6(3). "After the date of issue of such notification or from such later date as may be specified therein, no person, unless exempted by rules made under this Act, shall, either for him I self or on behalf of another person, or of the State Government within the notified market area set up, establish or continue or allow to be continued any place for the purchase, sale, storage and processing of the agricultural produce except 4 under a licence granted in accordance with the provisions of the Act.
the rules and by laws made thereunder and the conditions specified in the licence. ." As we read the above sub section it is clear that no person shall, unless exempted by rules, inter alia, purchase, sell, store or process the specified agricultural produce except under a licence.
It is not the case of the appellants that they belong to the exempted class.
Rule 17(1) provides that "a person desirous of obtaining a licence under section 10 of the Act shall apply in Form A (to be submitted in duplicate) to the Chairman of the Board through the Committee of the area in which he wishes to carry on his business and shall also deposit with the committee the requisite licence fee".
Sub rule (3) provides that if any person on the specified date fails to apply for a licence, he is liable to penalty in accordance with a certain scale.
Under sub rule (7) "the Chairman may grant a licence to the applicant in Form B.
The licence shall be subject to the conditions mentioned therein".
When we look to Form 'A ' which is the form for application for a licence under section 10 we find that against entry 8, the applicant has to give the "particulars of the business for which the licence is required" under four heads: (1) Kacha Arhtiya (2) Commission Agent (3) Storage (4) Processing Similarly in Form 'B ' which is the form of the licence under section 10, against entry 5, the same particulars of the business as against entry in Form 'A ' appear.
As a matter of fact one of the licences of the appellants was shown to us and it was in accordance with Form 'B '.
It is, therefore, clear that no licence has been issued to the appellants for doing business of buying and selling agricultural produce.
It is the case of the appellants that they make direct purchases and this fact is not controverted.
Although, there are, the appellants are licensees as required for some of the businesses mentioned in Form 'B ', they have no licence for carrying on business of purchase and sale of agricultural produce within the notified market area.
Now under section 23 "a Committee may, subject to such rules as may be made by the State Government in this behalf, levy on ad valorem basis fees on the agricultural produce brought or sold by licensees in the notified market area at a rate not exceeding rupee one fifty paise for every one hundred rupees, provided. . " Section 43 provides for rule making power.
Rule 24 is referable to section 43(2)(v), but we are not concerned with this rule in this case.
Rule 29 provides that under section 23 a Committee shall levy fees on the agricultural produce bought or sold by licensees in the notified market area at the rates fixed by the Board from time to time.
Reading section 23 and rule 29 together it is not possible to escape from the conclusion that the Act 5 authorises levy of fee on agricultural produce bought or sold by licensees only.
The appellants have licence only in respect of the business of kacha arhtiya and commission agent.
While we express no opinion on the point whether the absence of reference to buying and selling of agricultural produce in Form 'A ' and Form 'B ' disables the Committee to issue licences for that purpose, we are of opinion that the present appeals can be disposed of all the sole ground that the appellants have not as a matter of fact been issued such licences and no fees can, therefore, be levied on them in respect of purchases and sales of agricultural produce by them.
The appellants are, therefore, not liable to payment of fee under the Act as demanded.
The appellants also contend that since gur and shakkar are manufactured products they cannot come under the definition of agricultural produce with the meaning of section 2(a) of the Act.
Section 2(a) defines agricultural produce to mean "all produce whether processed or not, of agriculture, horticulture, animal husbandry or forest as specified in the Schedule to this Act" which mentions 85 items of commodities.
These are statutorily agricultural produce under section 2(a).
It is not possible to entertain the argument that the Court will undertake a judicial scrutiny of these items in order to come to a conclusion whether these are agricultural produce or not.
In view of the definition in section 2(a) such an enquiry is out of place.
In this context we may note that under section 38 the State Government may be notification add to the schedule any other item of agricultural produce or amend or omit any such specified item It is because of this power to add to the schedule items of agricultural produce that the first part of the definition under section 2(a) gives guidance as to what agricultural produce means.
The submissions are.
therefore.
devoid of substance.
In the result the appeals are allowed.
The appellants are not liable for payment of fee with regard to their sales in the notified market area other than in the capacity as kacha arhtiyas or commission agents.
In the circumstances of the case there will be no order as to costs.
P.H.P. Appeals allowed.
| The respondents were tried for having committed offences under section 4(3), 20(3) and 22 of the Foreign Exchange Regulation Act, 1947 read with section 120 B of the Indian Penal Code and section 23 of ' the Act.
The Court discharged the respondents in view of the decision of the High Court of Calcutta in M/s Serajuiddin & Co. and Ors.
vs Union of India and Ors.
Civil Rules Nos.
2183 (W) of 1966 and cases Nos.
1998 and 1999 of 1963 decided on 16 9 1971, holding that section 23(AI) was violative of article 14 of the Constitution.
The appellant filed a revision petition against the order, before the High Court.
The High Court concurred with the decision of the trial Court and dismissed the revision.
This appeal, by special leave, is against that order dismissing the revision, It was contended for the respondents that section 23 provides for two different procedures for dealing with contravention of the provisions of the Act.
That is to say, persons who have contravened the provisions specified in section 23(1)(a) and are found guilty by the Director of Enforcement need not face prosecution in a criminal court if the Director is of opinion that the penalty he is empowered to impose would be adequate punishment, whereas, the persons alleged to contravene the other provisions of the Act have necessarily to face prosecution in criminal court without being given the benefit of an inquiry by the Director of Enforcement and the opportunity to the delinquents to convince him that imposition of penalty by him would be adequate punishment even if they are found guilty.
The classification made in section 23(1) is under inclusive and is, therefore, unreasonable.
Allowing the appeal, HELD : (i) When the purpose of a challenged classification is in doubt, the courts attribute to the classification the purpose thought to be most probable.
Instead of asking what purpose or purposes the statute and other materials reflect, the court may ask what constitutionally permissible objective this statute and other relevant materials could plausibly be construed to reflect.
The latter approach is the proper one in economic regulation cases.
The decisions dealing with economic regulation indicate that courts have used the concept of 'purpose ' and 'similar situations ' in a manner which give considerable leeway to the legislature.
This approach of judicial restraint and presumption of constitutionality requires that the legislature is given the benefit of doubt about its purpose.
[805H 806C] (ii) Often times the courts hold that tinder inclusion does not deny the equal protection of laws under Article 14.
In strict theory, this involves an 803 abandonment of the principle that classification must include all who are similarly situated with respect to the purpose.
This under inclusion is often explained by saying that the legislature, is free to remedy parts of a mischief or to recognize degrees of evil and strike at the harm where it thinks it most :acute.
There are two main considerations to justify an under inclusive classification.
First, administrative necessity.
Second, the legislature might not be fully convinced that the particular policy which it adopts will be fully successful or wise.
Thus to demand application of the policy to all whom it might logically encompass would restrict the opportunity of a state to make experiment.
These techniques would show that some sacrifice of absolute equality may be required in order that the legal system may preserve the flexibility to evolve new solutions to social and economic problems.
[806E; H.807B] Missouri &. and T. Rly.
vs May, ; at p. 269 and Gujarat vs Ambica, Mills ; referred to.
(iii) The experience of the Government was that persons contravening the provisions of the Act specified in section 23(1)(a) invariably escaped without punishment.
: firstly because, successful prosecution of these offences in many cases was not possible for want of legal evidence; secondly because, the criminal courts were not equipped with the training, expertize and experience necessary to deal with the intricate and ingenious methods adopted by the persons contravening them.
The Government, therefore, thought that imposition of penalty by departmental adjudication would prove a more effective means of ,checking these types of foreign exchange offences as against the previous system of ' prosecution of all offences on the basis of the strict standard of proof required for criminal prosecution which proof was, by and large, so much within the special knowledge of the offender and so much out of the reach .of the department.
[808D F] The basis of classification was that in cases where there was likelihood of getting sufficiently unimpeachable evidence as, for instance.
in cases involving contravention of sections 14, 13(2), 15, 18 etc., where the Reserve Bank of India as a specialized agency comes into the picture and be in possession of relevant materials, those cases were left to be dealt with under section 23(IA) by criminal courts.
The classification made in section 23(IA) is, therefore, not dis criminatory.
[808H; 809E]
|
Criminal Appeal E No. 289 of 1978 were Cri.
Appeal No. 403 of 1978.
From the Judgment and Order dated 10.5.1978 of the Allahabad High Court in Criminal Appeal No. 213 of 1973.
S.K. Dhingra and K. B. Rohtagi of the Appellant inn Crl.
A. No. 289 of 1978.
R.K. Jain, Rakesh Khanna and R.P. Singh for the Appellant in Crl.
A. No. 403 of 1978.
Prithvi Raj Singh and Dalveer Bhandari for the Respondent.
PG NO 247 The Judgment of the Court was delivered by JAGANNATHh SHETTY, J.
This appeal by Special leave is from a Judgment of the Allahabad High Court dated 10 May 1978 dismissing Criminal Appeal No. 1 13 of 1973.
The appellants were convicted and sentenced under Section 302,364 and 210 IPC by the trial Judge.
On appeal, the High Court maintained the said conviction and sentence of appellant No. (1), but reduced the same of appellant No. (2) to one under Section 201.
The prosecution case in brief is as follows: lslam, the deceased, is the younger brother of Shabbir (PW 1).
They were not living together.
The former used to live with his mother.
Islam had his own share of lands measuring 16 Bighas.
He was separately cultivating the same.
The appellants were once his close associates.
They were of bad character.
So mother and brother advised lslam to part company with them.
So lslam did and went on minding his own work.
He was unmarried.
The appellants had an evil eye on the property of Islam.
They got executed a fraudulent sale deed (exhibit Ka. 12).
The deed Was dated 15 February.
One Ahsan who has been examined as PW 1 ' has impersonated Islam before the Sub Registrar.
They deed purports to transfer that agricultural land of Islam in favour of the wife of appellant No. ( 1).
It is said that the appellants in order to eliminate the possibility of this fraud being detected.
murdered Islam.
Shabbir suspecting foul play of the appellants lodged a report on 21 April, 1971.
Zakir Ali appellant No, (1) was first arrested.
He pointed out a dead body on IX July, 1971.
It wits recovered from a place deeply burried in a water logged pond.
However, it was said to be identified as that of islam.
The identification was based on a shirt (exhibit 1) and a tahmad (exhibit 2.).
Upon the post mortem.
the Doctor was unable to give his opinion regarding the cause of death or its duration.
The evidence against appellants is purely circumstantial: (i) motive for the crime (ii) the evidence as to last seen (iii) recovery of the body at the instance of Appellant No. (2), and (iv) identification of the clothes with which the dead body was found.
PG NO 248 We will first examine whether the motive which is of course relevant in this case has been satisfactorily established.
exhibit Ka.
12 is the sale deed by which the properties belonging to Islam were said to have been sold to the wife of Sardar Hussain, appellant No. (1).
Usman Ali (PW 11), who is the scribe of the sale deed, has deposed to its contents.
He has stated that one Sarfaraz (PW 20) along with the accused came to him with a request to draft the sale deed.
They gave the particulars.
He has written the sale deed of which the executant was Islam.
In the Court, he has identified Ahsan (PW 12) as the person who impersonated Islam and put his thumb impression.
He has also identified Zakir Ali appellant No. (2) who affixed his thumb impression to the sale deed as a witness.
But when Sarfaraz Hussain was examined as PW 20 in the Court.
nothing was elicited about the sale deed or the persons who accompanied him to PW 1 1.
No question was put to him as to the contents of sale deed exhibit Ka. 12 or to the identification of persons who affixed the thumb impressions thereon.
PW 12 has, no doubt deposed that he had put his thumb impression on exhibit Ka.
But the prosecution has not sent the thumb impression of the executant of exhibit Ka.
12 with the admitted thumb impression of PW 12 for expert opinion.
There is, therefore, no satisfactory evidence that the sale deed exhibit Ka. 12 was executed by somebody impersonating Islam.
As to identification of the dead body, the evidence on record is equally unsatisfactory.
Shabbir (PW 1) has deposed that about 14 months before, Islam was taken by Sardar Hussain and Yasin.
Yasin is the father in law of Sardar Hussain.
He has also stated when Islam went with them, he was wearing a Shirt of green check and a black striped tahmad.
Islam was taken on the pretext that they would get him married.
He has further stated that Mian Jan (PW 1) and,Sadiq (PW 3) and one other person called Majid had seen Islam going with the Sardar Hussain and Yasin.
But Main Jan (PW 2) and Sadiq (PW 3) did not speak anything about the dress which Islam was wearing when he was taken by Sardar Hussain and Yasin.
Secondly, how could Shabbir see all that he had stated.
Islam and Shabbir were living separately.
Islam was not taken after a meeting with Shabbir.
It is not the case of Shabbir that Islam came to him and told him about the purpose of his going with the accused.
If the purpose was to get Islam married.
why did he allow Islam to go with the accused.
Islam had by then parted company with them at the instance of Shabhir and mother, because they were of bad character.
Is it understandable that such bad characters should arrange the marriage without the assistance or approval of Shabbir and mother? It is difficult to believe Shabbir in the circumstances.
PG NO 249 Islam was said to have disappeared on 12 Aprial, 1971.
PW 1 lodged the report on 21 April, 1971.
The dead body was recovered on 18 July, 1971.
The post mortem was done on 20 July, 1971.
It was more than three months from the date of alleged disapearance of Islam.
Dr. D.P. Manchanda (CW 1) who conducted the post mortem was not able to give the cause of death.
He has stated that it was a skeleton of a young adult male.
According to him, it would be difficult to tell correctly as to when the death of the deceased had taken place.
There was no flesh left in the body.
The eye balls were missing.
The Vertabrae was not found attached to the skull.
With this condition of the skeleton the Doctor could not have given any better opinion.
Gulab Singh (PW 7) is a Panch witness for the recovery of the dead body.
He has deposed that when the body was removed, the tahmad and shirt were intact and they were taken out by Sub Inspector.
Man Singh (PW 8) is another Panch witness.
He has also stated that the shirt and tahmad were removed by the Sub Inspector.
washed, packed and sealed.
The Panch witnesses could not identify the shirt and tahmad as belonging to the deceased.
That clothes are said to have been identified by Shabbir and his wife Smt.
Bhoori (PW 13) .
The identification was conducted by Ramakant Dube (PW 9).
He had mixed up the said clothes with five like clothes resembling with each other.
He has stated that Shabbir and Smt.
Bhoori correctly identified them and did not commit mistake.
But if one carefully peruses his evidence, the identification was nothing but farce.
The dead body was not recovered in the presence of Shabbir.
He was called to tbe Court of the Magistrate only for the identification of the clothes and the body.
He has stated that the dead body by appearance looked like that of his brother.
We have earlier seen that the Sub Inspector had removed the clothes, washed dried and packed them separately with the seal of the panchas.
Shabbir could not have seen the dead body with the clothes.
The shirt (exhibit 1) and tahmad (exhibit 2) were no doubt mixed up with other similar clothes for the purpose of identification as deposed by PW 9.
But the witness identified exhibit 1 because there was paper chit pasted on it.
He identified exhibit 2 because it had a knot.
That is why we said earlier that the identification was a farce.
We are surprised that the Courts below should rely upon this kind of evidence.
The circumstantial evidence in the case thus falls short of the required standard on all material particulars.
We are, therefore, unable to sustain the conviction of the appellants.
PG NO 250 In the result, these appeals are allowed.
The conviction and sentence passed against the appellants are set aside.
They are acquitted of all the charges.
They be set at liberty if they are in custody, and if they are not required in any other case.
N.P.V. Appeals allowed.
| The appellants had granted a lease of commercial premises in favour of the respondent company, who carried on the business in clothing and textiles in the demised premises.
Later, the appellants moved an application under section 13 of the East Punjab Urban Rent Restriction Act, I94Y seeking eviction of the respondent inter alia on the ground that it had unauthoirsdly and without the consent of the appel lant inducted two sub tenants a tailor and an ice cream vendor in two portions of the premises.
The defence of the respondent in the written statement was that the maintenance of such booths had become a necessary adjunct of all big shops in modern shopping centres, and that the respondent remained in the exclusive possession of the demised premises.
The appellants relied particularly on the Report and evidence of the Court Commissioner who in his report substantially corroborated appellants ' charge of sub letting.
On the other hand, the respondent relied upon the agreements entered into by it with the alleged sub tenants which, according to it, clearly excluded any possibility of sub letting.
The respondent also examined M.L. Sharma, (R.W. 3) a senior architect in Chandigarh Administration who PG NO 310 PG NO 311 produced the Plans (Ext.
R. 4) relating to certain alterations in the demised premises.
The Rent Controller, on an appreciation of the evidence, was persuaded to the view that while the allegations of sub letting in favour of the tailor had not been established, the case of sub letting so far as the Ice cream parlour was concerned had clearly been established.
The Rent Controller held that the evidence on record indicated the exclusive possession of M S Kwality Ice Cream.
The Rent Controller further held that in the circumstances of the case it was also legitimate to draw an inference, and raise a presumption that monetary consideration alone had prompted the respondent into the transactions.
The respondent filed an appeal before the District Judge, and the Appellate Authority affirmed the finding of the Rent Controller on the question of sub letting in so far as the Ice Cream Parlour was con cerned.
The Appellate Authority also found that even in the case of the tailor there was sub letting.
In Civil Revision, the High Court upon a re appreciation of the evidence set aside the concurrent finding of the Courts below in regard to the element of exclusive possession and set aside the order of eviction passed by the Courts below.
The High Court relied on the agreements between the respondent and the sub tenants and held that the conditions prescribed in these documents did prima facie indicate that it was a case of licensees and not of sub letting.
The High Court took note of the procedural objection in regard to the appointment of the local Commis sioner without notice to the respondent, and was of the view that there were circumstances to show that his report was not factually correct.
On behalf of the appellants it was contended that (i) the High Court was in error in interfering, in exercise of its revisional jurisdic tion, with the concurrent finding of fact recorded by the courts below; ; (ii) the reliance on the High Court on the evidence of R.W. 3 and Plans (Exhibit R.4) on the point of exclusive possession was wholly misplaced (iii) a finding of fact which was the result purely of appreciation of oral evidence by the trial court could not be interfered with by an Appellate Court and a fortiorari in Revision; and (iv) the view of the High Court as to the alleged infirmity of the Court Commissioner 's report was erroneous.
On behalf of the respondent it was contended that (i] where a finding of fact was shown to have been rendered infirm and vitiated by a misreading of evidence, the PG NO 312 Revisional jurisdiction under the Act, which was wider than that under section 115 C.P.C. could be invoked to correct errors even in findings of facts; [ii] the finding of a question of sub tenancy being a mixed question of fact and law, this Court even on an independent consideration of the whole matter, should not interfere as one of the essential ingredients in the concept of a sub lease, viz., the existence of monetary consideration, in the form of Rent ', as dis tinct from consideration by way of services, was wholly lacking; and (iii) the appear should fail on the correctness of the finding of the High Court on the lack of exclusive possession alone; and (iv) the two transactions lacked the normal and the usual indicia of tenancy and were no more than mere personal privileges or personal licence to occupy, and that no interest in the property was transferred.
Allowing the appeal, this Court, HELD: 1.
One of the twin principal tests by which a lease was distinguishable from the relationship created under a licence is the element of the right to exclusive possession involving the transfer of an interest in the property; the other being the 'Rent ' stipulated for the grant.
The grant only of the right to use the premises without being entitled to the exclusive possession thereof operates merely as a licence.
[323B C] Wood vs Leadbitter, 153E.R. 351 354; Glenwood Lumber Co. vs Phillips.
[l9O4] A.C. 405 408; Associated Hotel of India vs R.N. kapoor, ; B.M. Lall vs Dunlop Rubber Co., ; , 27; Qudrat ullah vs Municipal Board Bareilly, [l974] SCC 202, 204; Board of Revenue vs A.N. Ansari, [l976] 3 SCR 661, 665 and Khulil ahmad Bashir Ahmed vs Tufelhussain Samasbhai Sarangpurwala., JT ,346, referred to. 2.
It is essential to the creation of a tenancy that the tenant be granted the right to the enjoyment of the property and that, further, the grant be for consideration.
[323F] Dipak Banerjee vs Smt.
Lilabati Chakkroborty, 3 454, 456, referred to.
Exclusive possession itself is not decisive in favour of a lease and against a mere licence, for, even the grant of exclusive possession might turn out to be only a licence and not a lease where the grantor himself has no power to grant the lease.
In the last analysis, the question whether PG NO 313 a transaction is a lease or a licence "turns on the operative intention of the parties" and there is no single litmus test to distinguish one from the other.
[324C D] Cobb vs Lane, [l952] 1 All E.R. 1198; Merchant vs Charter, [19773 3 All E.R. 918, 922 and M.N. Clubwala vs Fida Hussain Sahel, [l9d4l 6 SCR 642, referred to. 4.
In deciding whether a grant amounts to a lease or only a licence, regard must be had more to the substance than the form of the transaction.
It is determined by the law and not by the label the parties choose to put on it.
To give exclusive possession, there need not be express words to that effect; it is Sufficient if the nature of the acts done by tie grantee show that he had and was intended to have the right of exclusive possession.
The fact that the agreement contained a clause that no tenancy was to be created will not, of itself, preclude the instru ment from creating a lease.
[l327G H; 328A] B.M. Lall vs Dun(op Rubber Co., [l968j 1 SCR 23, Z7, referred to 5.
The scope of revisional jurisdiction depends on the language of the statute conferring the revisional jurisdiction.
Revisional jurisdiction is only a part of the appellate jurisdiction and cannot be equated with that of a full fledged appear.
Though the revisional power depending upon the language of the provision might be wider than revisional power under section ~51 of the Code of Civil Procedure, yet a revisional court is not second or first appeal.
[330H; 331A] 6.
When the findings of fact recorded by the Courts below are supportable on the evidence on record, the revisional Court must, indeed, be reluctant to embark upon an independent re assessment of the evidence and to supplant a conclusion of its own, so long as the evidence on record admitted of and supported the one reached by the Courts below.
In the circumstances, the concurrent finding as to exclusive possession of M/s Kwality Ice Cream,was not amenable to reversal In revision.
[331B D] 7.
The question whether the statement of the witnesses in regard to what was amenable to perception by sensual experience as to what they saw and heard is acceptable or not is the area in which well known limitation on the powers of the appellate Court to reappreciate the evidence falls.
The appellate Court, if it seeks to reverse those findings PG NO 314 of fact, must give cogent reasons to demonstrate how the trial Court fell into an obvious error.
[33H; 335A] Watt vs Thomas, , 487, 488; Benmax vs Austin Motor Co. Ltd., 119551 2 W.L.R. 418, 422 and Sarju Pershad vs Jwaleshwari 4Pratap Narain Singh; , , 783; referred to.
It is no doubt true that in the present case the order of the trial court appointing a Commissioner did not in terms direct the parties to appear before the Commissioner.
There is this infirmity in the proceedlngs of the Commissioner.
But It is possible to construe the power to appoint a Commissioner to inspect the extant state and natur of structures as not confined to Rule 9 of Order 26 but referable to Rule 7 of Order 39 CPC where the court can dispense with prior notice, should it appear to the court that the very object of making of appointment of a Commissioner would be defeated and frustrated by the issue of prior.
[335E G ] Latchan Naidu and Anr.
vs Rama Krishan Ranga Rao Bahadur Bobbili Samasthanam, 9.
A more careful examination of the context in which M.L. Sharma, the senior architect, who produced Ext.
R. 4 was examined shows that Ext.
R. 4 was relied upon in rebuttal of and in answer to an Altogether different ground, i.e,, the ground of unauthorised structural 'alterations and the alleged damage caused to the building thereby and to show that the structural alterations had been authorised by the first appellant.
It is quite plain that Respondent itself did not seek to rely on this evidence on the point of exclusive possession or lack of it.
Reliance on the plans to take away the effect of the positive evidence on record was not, therefore, justified.
[330D E, G] 10.
In the present case, the appellants specifically pleaded "sub letting".
Respondent understood that pleading as to imply all the incidents of sub letting including the element of `Rent ' and specifically traversed that plea by denying the existence of consideration.
Parties went to the trial with full knowledge of the ambit of the case of each Other.
In the circumstances the pleadings would require to be construed liberally.
[336F] Ram Sarup Gupta vs Bishun Narain Inter College, ; ; referred to.
PG NO 315 11.
The burden of establishing facts and contentions which support the party 's case Is on the party who takes the risk of non persuasion.
If at the conclusion of the trial, a party has failed to establish these to the appropriate standard, he will lose.
although the burden of proof as a matter of law remains constant through out a trial, the evidential burden which rests initially upon a party bearing the legal burden, shifts according to the weight of the evidence adduced by the party during the trial.
In the circumstances of the case, the appellants having been forced by the Courts below to have established exclusive possession of the Ice Cream Vendor of a part of the demised premises and the explanation of the transaction offered by the respondent having been found by the Courts below to be unsatisfactory and unacceptable, it was not impermissible for the Courts to draw an inference, having regard to the ordinary course of human conduct, that the transaction must have been entered into for monetary considerations.
[337F.H; 338A B]
|
Appeal No. 441 of 1965.
Appeal from the judgment and decree dated September 19, 1958 of the Mysore High Court in Regular Appeals Nos. 154 and 196 of 1952 53.
section Govind Rao and K. Rajendra Chaudhuri, for the appellants.
C.B. Aggarwala and R. Gopalakrishnan, for the respondents. 1084 The Judgment of the Court was delivered by Bhargava, J.
One Khanmull, whose legal representatives are the appellants in the present appeal, instituted Original Suit No. 59 of 1949 50 on 10th January, 1950 for recovery of amounts due to him on the basis of two simple mortgages dated 12th January, 1937 and 14th June, 1937 in the Court of the District Judge, Civil Station, Bangalore.
Both these mortgages were executed by three brothers, Ahmed Saleh Mohamed Sait (since deceased), Elias Saleh Mohamed Sait (respondent No. 1), and Mohamed Saleh Mohamed Sait (respondent No. 2), while their mother Rahamatbai alias Bhayabai joined them in the execution of the mortgagedeed of 14th June, 1937.
In the suit, in addition to respondents 1 and 2, Hajirabai widow of the deceased brother Ahmed Saleh Mohamed Sait, and their sisters, Ameenabai and Haneefabai, were also impleaded as defendants 3, 4 and 5.
Further, Khan Saheb Abdul Gani Saheb, and Khan Saheb Abdul Shakoor Saheb were impleaded as defendants 6 and 7 in their capacity of purchasers of the equity of redemption from the mortgagors.
On the foot of the first mortgage, the amount claimed was Rs. 51,200/ as principal and interest, while, on the foot of the second mortgage, the amount claimed as principal and interest was Rs. 60,200/ .
The contractual rate of interest was 1 per cent per mensem.
The trial court decreed the suit on 27th March, 1952, after applying the provisions of section 17 of the Mysore Money Lenders Act No. 13 of 1939 (hereinafter referred to as "the Act").
For the purpose of giving effect to.the provisions of section 17 of the Act, the trial court held that the principal amount of the two loans was Rs. 44,000/ , being the aggregate of the consideration shown in the two mortgage deeds, and, consequently, allowed as arrears of interest the sum of Rs. 44,000/ .
The preliminary decree was, therefore, granted for a sum of Rs. 88,000/ composed of Rs. 44,000/ as principal and Rs. 44,000/ as interest.
The excess interest claimed at the contractual rate of 1 per cent per mensem was disallowed on the ground of the maximum limit for the grant of the total amount of interest laid down in section 17 of the Act.
Thereupon, both the parties filed appeals in the High Court of Mysore.
The High Court held that the trial court had wrongly treated the amounts of Rs. 20,000/ and Rs. 24,000/ as the principal amounts of the original loans; and recorded a finding that the principal amounts, in fact, were Rs. 15,017 8 0 in respect of the first mortgage deed, 'and Rs. 22,954/ in respect of the second mortgage deed.
The High Court, thus, worked out the aggregate of Rs. 37,971/50P as the principal amount of the two loans advanced under these two mortgage deeds and, applying section 17 of the Act, granted a decree for this amount as principal together with the same amount as interest.
The High Court further held 1085 that this would be the arrears of interest to which the appellants would be entitled up to the date fixed for payment of the redemption money by the judgment of the High Court, that date being the 19th March, 1959.
The High Court also made a direction that the principal amount will carry interest at 6% per annum from the date fixed for redemption till realisation.
The appellants have now come up against this decree passed by the High Court by certificate granted by that Court.
In this appeal, Mr. Govinda Rao, learned counsel for the.
appellants, raised only two points.
The first point urged was that the High Court was wrong in re opening the accounts in respect of loans prior to.
the two mortgage deeds which formed the consideration for the two mortgage deeds in suit, and that the.
High Court should have held that the principal amount was Rs. 44,000/ for the two mortgages as decided by the trial Court.
The second point urged by learned counsel was that the High Court was wrong in fixing the dates up to which the arrears of interest could be calculated for being included in the decree and for prescribing future rates of interest.
It was urged that the arrears of interest envisaged by section 17 of the Act should be interpreted to mean arrears only up to the date of the institution of the. suit.
and the High Court should have granted future interest subsequently instead of granting future interest only with effect from the date fixed for redemption.
So far as the first point raised by learned counsel is concerned, it appears to us that it is totally misconceived, because the language of section 17 of the Act plainly justifies the view taken by the.
High Court.
Section 17, in prescribing the maximum amount of arrears of interest to be allowed, refers to "the principal of the original loan" and not "the principal of the loan".
If the latter expression had been used, it could have been argued in the present case that the sums of Rs. 20,000/ and Rs. 24 '000/which purported to be the principal amounts of the two loans evidenced by the two mortgage deeds in suit, were the principal amounts of the loans to be taken into account in working out the maximum amount of interest permissible under section 17 of the Act.
The expression "the principal of the original loan" makes it clear that, in determining the maximum amount of arrears of interest allowable, the Court must go behind the transaction of the loan and find out what was the actual cash originally advanced as principal and ignore all interest that may have been added subsequently to that original advance in order to make up the consideration for the loans in suit.
In the present case, therefore, the High Court was justified in looking at the transactions prior to the two mortgage deeds to find out what were the actual cash amounts origi 1086 nally advanced which, together with interest and after adjustment of accounts, formed the principal amounts for the two mortgagedeeds.
It was admitted by counsel for both parties before us that the figures accepted by the High Court as the principal amounts of the two loans are correct, if the original cash advances are treated as the principal amounts of the original loans.
It is, therefore, clear that, on the plain language of section 17 of the Act, the High Court was right in holding that the aggregate of the principal amounts of the original loans was only Rs. 37,971/50 P and.
not Rs. 44,000/ and, consequently, in awarding arrears of interest only to the extent of the same amount and not a larger amount.
On the second question, we are unable to agree with the view of the High Court that the arrears of interest mentioned in section 17 of the Act mean interest calculated up to the date fixed for redemption.
At the same time, we are also unable to accept the submission made on behalf 'of the appellants that the arrears of interest in this section mean arrears of interest up to the date of the suit.
It is to be noticed that the section is in the form of a directive to a Court not to pass a decree on account of arrears of interest for a sum greater than the principal of the original loan.
This language clearly gives an indication of the intention of the Legislature.
Obviously, the directive is to be carried out by the court at the time of passing the decree and, consequently, it would be at that time that the court will see how much it is awarding for arrears of interest.
The maximum prescribed for the arrears of interest must, therefore, be held to be the maximum amount in respect of interest payable up to the date of the decree when the court carries out the directire laid down in this section.
In the present case, the trial Court passed the decree on the 27th March, 1952 and, consequently, the amount of Rs. 37,971/50 P awarded as arrears of interest must be the arrears of interest due up to that date.
The High Court, in our opinion, was not correct in holding that these arrears of interest will cover interest due up the date fixed for redemption by the High Court.
In this connection, learned counsel for the respondents urged that the arrears of interest envisaged by section 17.
of the Act should be held to include interest due up to the date of the decree by the High Court, because that is the effective decree granting interest to the mortgagees; but this arguments overlooks the principie of law that the decree of an appellate Court takes effect from the date of the decree of the original court.
In this case, therefore, even though the High Court passed the appellate decree at a later date, that decree has to.
be deemed to have come into 1087 effect from 27th March, 1952 which was the date of the decree of the trial Court, so that no question can arise of holding that the arrears of interest under section 17 of the Act must be computed up to the date on which the High Court passed the decree.
The further point that arose was as to the interest which the appellants could claim after the date of the decree, viz. 27th March, 1952, on the amount decreed.
On behalf of the appellants, reliance was placed on Order 34, r. 11 of the Code of Civil Procedure and it was urged that interest.
should be allowed after that date in accordance with the provisions of that rule.
The High Court has expressed the opinion that, if interest is allowed under r. 11 of Order 34, C.P.C., it would be in conflict with section 17 of the Act; but we are unable to see any such conflict.
Section 17 of the Act confines itself to laying down the maximum of arrears of interest to be allowed up to the date of the decree and is not concerned with the interest that is to be allowed for the period thereafter.
Admittedly, the Code of Civil Procedure was applicable to this suit and, consequently, interest subsequent to the date of the decree had to be awarded in accordance with Order 34, r. 11, C.P.C.
Under r. 11(a)(i), interest would be payable on the principal amount found or declared due on the mortgage, from the date of the decree up to the date fixed for payment, at the rate payable on the principal, or, where no such rate is fixed, at such rate as the Court may deem reasonable.
In this case, the date of the decree by the trial Court was 27th March, 1952, while the date fixed for payment became 19th March, 1959 as a result of the decree of the High Court.
The interest for this period has to be calculated in accordance with r. 11(a)(i) of Order 34, C.P.C., on the principal amount of Rs. 37,971/50 P. As regards the rate, it is true that, under the mortgage deeds, the interest was payable @ 1% per mensem but, under the provisions of the Act read with the provisions of the Usurious Loans Act (Mysore Act IX of 1923), the fair interest payable on the loan would be @ 9 per cent per annum and it is at this rate that the interest must be calculated on this principal amount for this period.
In addition, under r. 11(a)(ii) of 0.34, C.P.C., interest @ 6% per annum has to be allowed on the amount decreed for costs, charges and expenses incurred by the appellants up to the date of the preliminary decree.
A further direction that is necessary is that interest under r. 11 (b) of 0.34.
C.P.C., will be payable up to the date of realisation or actual payment on the aggregate of the two principal sums just mentioned @ 6% per annum which must be deemed to be reasonable as interest at that rate is ordinarily awarded in all decrees in respect of future periods.
1088 The result is that the decree passed by the High Court will have to be amended in respect of calculation of interest in the manner indicated by us above.
The appeal is partly_ allowed to this extent.
In the circumstances of this case, we direct parties to bear their own costs of this appeal.
G.C. Appeal partly allowed.
| To ensure against the grave nuisance which may be caused to the residents of a locality if carcasses of dead animals are allowed to remain on the premises within the city, 'a duty is imposed by sections 367, 372 and 385 of the Bombay Municipal Corporation Act, 1888, as amended by Act 14 of 1961, upon the owner of the animal or the person having charge of the animal or the occupier of premises in which the animal .dies, to remove the carcass at his own expense with the permission of the Commissioner of the City of Bombay.
or, to have.
it removed through the agency of the Corporation, for which he was required to pay a fee of Rs. 20.
It was further enacted that after it was removed it shall be deposited in 'a receptacle, depot or other place set apart for the purpose, either by the owner or the Corporation.
Thereupon, the owner lost his property in the carcass and ' it became the property of the Corporation.
Under the Act it was the duty of the Corporation to arrange for its disposal causing the least practicable nuisance.
The second respondent was the owner of a stable of filch cattle in Bombay.
He was selling the carcasses of animals dying in his stable for a price.
The first respondent was a purchaser of carcasses and carried on the business of skinning the dead animals and utilising the products for industrial uses.
The Corporation prohibited the first respondent from removing carcasses and resolved to grant the contract for the disposal of carcasses deposited under the provisions of the Act to Harijan Workmen 's Cooperative Labour Society.
The respondents challenged the provisions and the High Court declared them ultra vires.
In appeal to this Court, on the questions: (1) Whether the obligation not to sell the carcass but to dispose it of as per the provisions of the Act infringe the fundamental rights of the respondents under article 19(1)(f); (2) Whether there was infringement of the fundamental right because of the obligation on the second respondent to incur expenditure for its removal; (3) Whether fee of Rs. 20 was excessive; (4) Whether the second respondent 's loss of ownership and property in the carcass on depositing it as per the provisions of the Act violated the.
respondents ' fundamental right under article 31; and (5) Whether the granting of the contract to the Harijan Society destroyed the business of the first respondent and infringed its fundamental right to carry on business.
HELD: (1) The second respondent had a right of ownership in the carcasses of his animals.
But he was only entitled to constitutional protection against unreasonable restriction on his right to sell the carcasses.
393 Reasonableness of restrictions imposed by a law has to be.
adjudged in the light of the nature of the right, danger or injury which may be inherent in the unbridled exercise of the right and the necessity of protection against danger which may result to the public by the exercise of the right.
In each case the test is whether the restriction is commensurate with the need for protection of public interest against the exercise of the right.
[400 C; 402] A mere imposition of an injunction to remove a carcass only abates the nuisance arising from a dead animal remaining on the premises: it does not eliminate the graver hazard caused by the adulteration of food of the people from its products.
Meat and fat from carcasses are used by unscrupulous persons for adulterating the food of the community.
Even b.y imposing stringent supervision upon persons carrying on the business of skinning carcasses,, protection of the community against food adulteration cannot be effectively secured, because, a purchaser who was not subject to the Corporation control could remove it beyond the Corporation limits and bring back contaminated meat and fat.
Therefore, the Legislature has devised a scheme by which reasonable restrictions are placed upon a citizen 's right to dispose of the carcass.
Under the Act, the Corporation has to set apart a place for depositing the carcass and it is implicit in the scheme of the Act that the Corporation shall provide a suitable place for skinning it.
The Corporation has control over the contractors entrusted with the disposal of carcasses and has supervision over the disposal of the products.
A law which compels the removal of a carcass to an appointed place and its disposal under the supervision of the Corporation which has the duty to take steps for maintaining public health, cannot be regarded as arbitrary or excessive.
The Corporation, has to arrange for effectively disposing of the carcass and it would be necessary for effectuating that purpose to provide that the tatle of the owner in the carcass should be extinguished.
Such a provision is not beyond ' the legitimate purpose for which it was intended, and the fact that the owner is unable to sell for a price the carcass does not render a provision, which is essentially conceived in the interest of the general public,unreasonable.[401 E H;402 B D; 403 E; 404 D] Restriction upon the right of the owner to sell the carcass does not directly infringe the fundamental right of the purchaser.
who, but for the restriction may have been able to purchase it.
Assuming however, that the imposition by law of the restriction upon the owner of the carcass involves also a restriction upon the right of the first respondent having regard to the character of t_he legislation and its avowed object,the restriction upon the first respondents right to carry on his occupation or business is a reasonable one within the meaning of Art 19(5) and (6).
[409 E G] .
Chintaman Rao vs State of M.P. [5950] S.C.R. 759 and State Row; , , followed.
(2) If the carcass is likely to be deleterious to public health and its removal from the place where it is lying being in the interests of the public health, imposition of an obligation upon the owner to remove the carcass at his own expense or to Pay for its removal cannot be regarded as unreasonable, even if the charge which falls upon the owner is in addition to the loss which he suffers by reason of the extinction of his tetle in the carcass.
[404 B D] (3) Whether the fee of Rs. 20 levied on the owner of a carcass for its removal was in excess of the expenditure which the Corporation may go.
Cll69 s 394 have to incur.
was not investigated into by the High Court.
and therefore the question could not, be raised for the first time in this Court.
[404 A B] (4) (a) In the present case, the restrictions imposed by the impugned law upon the right of the owner satisfy the test of reasonableness under article 19(5) and (6).
Therefore, though there is a deprivation of property, it is by a valid law and hence there is no violation of article 31(1).
[406 C D] Smt.
Sitabati Debi vs Stale of West Bengal, , followed.
Kavalappara Kottarathil Kochuni vs State of Madras, referred to.
(b) A law which provides for extinction of the ownership and creation of an interest in the Corporation for .the purpose of disposal of the carcass is not a law for acquisition 'of property for a public purpose: its primary purpose is destruction of a carcass in the public interest, and not its utilisation for a public purpose.
The case does not, therefore, fall within the terms of article 31(2).
[406 F G] (c) In any case the statute is squarely protected by article 31 (5) (b) (ii) and on that account the owner is not entitled to compensation for loss of his property.
Where the State acquires property and seeks to utilize it for promotion of public health or prevention of danger to life or property the State is liable to pay compensation.
But a law which directive and immediately seeks to promote public health or to prevent danger to life or property falls within the exemption of cl.
(5)(b)(ii) even if thereby, the owner 's interest in the property is extinguished and is vested in the State for purposes of destruction.
[406 G H; 407 A B] (d) Article 31(5)(b)(ii) is not confined to 'temporary occupation of property.
In the case of acquisition of immovable property, to have the protection of the clause the occupation of the property must be temporary.
But in the case of movable property, even if its possession is taken with a view to destroying it, if such destruction is in the interests of general public, that is.
for the prevention of danger to life or property, it need not be temporary.
Even such taking of movable property will be protected by cl.
(5) (b) (ii) and the guarantee of article 31(2) would not be attracted.
[408 E G] Deputy Commissioner and Collector, Kamrup vs Durganath Sarma, ; , explained.
The first respondent cannot claim the protection of article 31(2), because, until it purchases the carcasses from the owner it has no right in the property, and it cannot set up a grievance for loss of property which it does not own.
[409 H] (5) Whether by virtue of the contracts given by the Corporation to other persons who are claimed to be rivals in business of the first respondent unreasonable restrictions may be deemed to be placed upon the first respondent 's fundamental right is a matter on which no argument Was advanced before the High Court.
In any event, it cannot affect the validity of the statute or its provisions.
[410 B D]
|
Criminal Appeal No. 461 of 1987.
From the Judgment and Order dated 20.5.1987 of the Delhi High Court in Criminal Revision No. 105 of 1987.
Ashok Desai, Additional Solicitor General, P.K. Chaube, G. Venkatesh Rao, Ms. A. Subhashini and P.K. Choudhary for the Appellant.
R.K. Garg, J.P. Pathak and P.H. Parekh for the Respondent.
The Judgment of the CoUrt was delivered by section RATNAVEL PANDIAN, J.
The State represented by C.B.I., New Delhi has directed this appeal against the Order dated 20.5.1987 of the High Court of Delhi passed in Criminal Revision No. 105 of 1987 dismissing the petition of the petitioner in limine.
The relevant facts which have given rise to this appeal can be stated thus: The respondent, S.J. Choudhary is taking his trial before the Additional Sessions Judge, New Delhi for the offences under Section 302 I.P.C. and Sections 3 and 4 of the Explosive Substances Act in Sessions Case No. 36 of 1983.
According to the prosecution that on 2.10.1982 at about 5.45 p.m., the deceased in this case, namely, Krishan Sikand received a parcel addressed to him.
The deceased being unaware of the camouflaged contents opened the parcel which on opening exploded resulting in the instantaneous death of the deceased.
Relating to this incident, a case was registered at Hazrat Nizamuddin Police Station as FIR No. 305 dated 2.10.1982.
The investigation was taken up by the police of the said police station.
Thereafter, the investi gation was transferred to Crime Branch, Delhi on the very next day i.e. on 3.10.1982 and finally in March 1983 to the Central Bureau of Investigation where it was registered as case RC 3/83 CBI/DSPE/CIUI(P)/New Delhi.
The respondent/accused was arrested by the C.B.I. on 1.8.83.
Under the orders of Court, the 126 custody of the respondent was handed over to the CBI for sometime.
After completing the investigator the CBI laid the charge sheet on 28.10.1983.
Presently, the case is pending trial before the Addi tional Sessions Judge, Delhi.
While the petitioner in the SLP, filed in August, 1987 would state that as many as 63 prosecution witnesses have been examined and PW 64 is in the witness box, the respondent in his affidavit dated 21.2.
1990 has stated that so far 67 witnesses have been examined.
Be that as it may, according to the prosecution the cover of the device parcel containing camouflaged live hand grenade was found pasted with a typewritten name and address of the deceased, Krishan Sikand on a white slip and the explosion of the hand grenade resulted in the shattering of the materials into pieces inclusive of the said slip.
The police collected from the scene of incident the typewritten pieces of the paper in which the grenade had been wrapped amongst the debris and remanents which were sent to the Central Forensic Science Laboratory for examination and expert opinion.
In the laboratory, the parcel sent by the Investigating Agency for examination was opened by PW 61, Dr. G.R. Prasad, Head of the Ballistic Division on 12.10.1982.
He while examining the contents of the parcel succeeded in partially reconstructing the typewritten name and address of the deceased from the shattered pieces of the slip.
It is the version of the prosecution that on 5.8.83, while the respondent was in the custody of the CBI pursuant to the order of the Court, he made a voluntary confession which led to the discovery of the fact that the address on the aforesaid parcel was got typed by him from a commercial college namely, Janta Commercial College at I 43, Lajpat Nagar II, New Delhi.
The Investigating Agency took the specimen of typing prints from the 13 English typewriters found in the said college.
The re constructed typed address and the specimen type prints were examined by Sh.
S.K. Gupta.
Head of Document Division in the Central Forensic Science Laboratory.
Mr. S.K. Gupta gave his opinion that on balance of similarities and dissimilarities, it is a asona ble to conclude that the typescripts found on the slip pasted on the wrapper of the parcel collected from the scene have been typed from one of the machines of the Janta Com mercial College as both the impressions are identical.
Now, the prosecution wants to examine Mr. S.K. Gupta as an expert to prove the above fact.
This request of the prosecution to examine Mr. S.K. Gupta was stoutly resisted by the learned counsel of the accused on the ground that the evidence of such typewriting expert is 127 inadmissible under Section 45 of the Indian Evidence Act as it does not fall within its ambit.
It seems from the. im pugned order that several decisions were cited at the Bar by both the parties but the Trial Court on the strength of certain observations made by this Court in Hanumant & Anr.
vs State of Madhya Pradesh, [1952] SCR 1091 dismissed the prayer of the prosecution holding thus: "It shows that Hon 'ble Judges of the Supreme Court meant that such evidence cannot be brought on record and be evaluated by the Court.
It is well settled that if their Lordships of the Supreme Court clearly intended to declare the law on a particular point then even though the observa tions may be 'obiter dictum ', they are nevertheless binding upon the High Court and subordinate Courts.
Under these circumstances, I uphold the objections raised by the counsel of the accused and order that Sh.
S.K. Gupta, who is sought to be examined as an expert on type written documents cannot be examined to give evidence on this point.
" On being dissatisfied with the above order of the High Court, this criminal appeal is filed by the State.
For proper understanding and appreciation of the ques tion involved in this case, the relevant portion of the observation of this Court in Hanurnant 's case on the strength of which the High Court has passed the impugned order may be reproduced hereunder: "Next it was argued that the letter was not typed on the office typewriter that was in use in those days, viz. article B and that it had been typed on the typewriter article A which did not reach Nagpur till the end of 1946.
On this point evidence of certain experts was led.
The High Court rightly held that opinions of such experts were not admissible under the Indian Evidence Act as they did not fail within the ambit of Section 45 of the Act.
This view of the High Court was not contested before us.
It is curious that the learned Judge in the High Court, though he held that the evidence of the experts was inadmissible, proceeded nevertheless to discuss it and placed some reliance on it." Though a lengthy argument was advanced by the respective 128 counsel for both the parties by citing a series of decisions in support of their respective contentions, we are not adverting to all those contentions except to the relevant one, as we are of the view that the matter requires an in depth analysis and examination by a larger Bench in view of the observation in Hanumant 's case.
The learned Solicitor General has submitted that the words Science or Art ' occurring in Section 45 of the Indian Evidence Act should be given wide and liberal construction so as to cover all ranches of specialised knowledge to the formation of opinion, that by the march of science, the evidence of expert regarding type script has assumed impor tance, that such expert evidence on type script needs to be considered at par with the evidence of other experts brought within the ambit of Section 45 of the Evidence Act, and therefore, the expert opinion of Mr. S.K. Gupta cannot be shut out as being inadmissible.
According to him, the brief observation of this Court in Hanumant 's case (supra) cannot be construed as ratio decidendi binding on this Court or even obiter dictum but it is only a passing observation as there was no issue in that case as to whether the expert 's testimony on type script was admissible or not under the Evidence Act and consequently there was no discussion of law on that subject and in fact, there was no contest on the question of the admissibility of the evidence of an expert regarding typed documents.
He would reiterate that the judgment in Hanumant 's case has not declared the law in regard to the admissibility of the testimony of an expert in regard to typescript and that the learned Judges have pro nounced no independent opinion upon the same.
In support of this submission, firstly he drew our attention to the fol lowing passage appearing in Woodrofee and Ameerali 's Law of Evidence, which reads thus: "The Supreme Court has held in Hanumant v, State of M.P. that the opinion of an expert that a particular letter was typed on a particular typewriting machine does not fall within the ambit of section 45 of the Evidence Act and it is not admissible.
It is respectfully submitted it may require consideration in the light of the modern knowledge indicated to some extent by the research materials which show that detection of forgeries of typewritten documents has become an integral part of the science of questioned documents.
" Secondly, he brought to the notice of this Court the opinion expressed by the Law Commission in its 69th Report (Vol. IV) in Chap 129 ter 17 captioned 'Opinion of Expert ' wherein the Law Commis sion after referring to the decision in Hanumant 's case stated thus: "17.26 One could regard these observations as not laying down a definite view on the subject.
But the words "rightly held" could be construed as approving the negative view.
17.31.
We, therefore, recommend that Section 45 should be amended so as to include identity of typewriting".
According to the learned Solicitor General, as viewed by Woodrofee and Arneerali in 'Law of Evidence ' and by the Law Commission in its 69th Report, the word 'science ' occurring in Section 45 should be held comprehensive enough to include the opinion of an expert in regard to the transcript as well.
But the acceptability or otherwise of an expert testi mony on typewritten documents would depend upon the satis faction of the Court about the specialised skill and experi ence of that expert on that subject.
Finally, he requested that this Court notwithstanding the passing observation in Hanurnant 's case be pleased to examine in detail the ques tion of the admissibility or otherwise of an expert testimo ny on type script and lay down the law on this subject.
Mr. R.K. Garg, senior counsel appearing on behalf of the respondent vehemently urged that the observation in Hanu mant 's case cannot be discarded or brushed aside as a pass ing observation and if that argument is to be accepted by treating the view expressed by this Court as gratis dicta and to declare law on the subject ignoring the view in Hanumant 's case it would be tantamount to saying that the view expressed by the learned three Judges in that case as having been wrongly held and therefore, the argument of the learned Solicitor General has to be discountenanced.
The proceeding of the trial which has already been considerably delayed on this issue which is only academic so far as this case is concerned and so the respondent should not be sub jected to immeasurable hardship.
According to him, the High Court has passed this impugned order only on the strength of the observation in Hanumant 's case and rejected the plea of the prosecution to permit it to examine Sh.
S.K. Gupta as an expert and, therefore, the impugned order can neither said to be incorrect nor it calls for any interference.
He adds that this Court should not dissent lightly from the previous decision of this Court merely on the ground that the con trary view appears to be preferable and that the power of review must be exercised with due care and caution and that too only for advancing the public well being in the light of the surrounding cir 130 cumstances.
In support of this submission, he places reli ance in The Bengal Immunity Company Ltd. vs The State of Bihar & Ors., at 630.
He continues to state that this Court should exercise its discretionary jurisdic tion under Article 136 of the Constitution of India only in cases where there is violation of the principles of natural justice, causing substantial and grave injustice to parties or which raise important principles of law requiring eluci dation and final decision of this Court or which disclose such of the exceptional or special circumstances which merit the consideration of this Court on a particular issue.
He cites the decision of this Court in Bengal Chemical & Phar maceutical Works Ltd. Calcutta vs Their Workmen, ; at 140 in support of his later submission.
Finally, he states that the facts and circumstances of the case on hand do not warrant examination of the request made by the appellant.
After bestowing our anxious consideration on the ques tion of law involved, we without expressing any view at this stage on the observation made in Hanumant 's case feel that the question with regard to the admissibility of the opinion of an expert on type script should be examined in detail and decided.
Needless to say that by the march of time, there is rapid development in the field of forensic science and, therefore, it has become imperative to match the said march of modern vistas of scientific knowledge, the question whether the opinion of an expert in regard to type script would fall within the ambit of Section 45 of the Evidence Act has to be decided.
In fact, when the SLP in this matter came up for admission, the Bench considering the importance of the question involved made the following order: "Special leave granted.
Since the question involved is important and is involved in many cases, it is desirable that it should be heard as early as possible and the matter be mentioned to Hon 'ble the Chief Justice for appropriate directions.
" Taking the overall view of this matter, we feel that this important question of law involved in this case is to be examined in detail and decided by a larger Bench as the judgment in Hanumant 's case was rendered by three learned Judges of this Court.
Since the matter is urgent, it may be posted for hearing at an earliest point of time so that the trial of the case may not be further delayed.
| After passing his M.A. examination securing more than 40 per cent marks (364 out of 900), the appellant secured admission in 1983 to three years law course in Ganjam Law College.
Along with his form seeking admission he had sub mitted the mark sheet with his M.A. degree certificate.
He completed his first year course 'Pre Law course ' in 1984 and was promoted to the "Intermediate Law course".
In 1985, he appeared for the 'pre law ' and 'inter law ' examinations.
He gave the said examination and in the same year was admitted to the Final Law course.
However his results for the Pre Law and Intermediate Law course were not declared by the Univer sity on the ground that in view of the Regulations of the University, he was not qualified to be admitted to the law course.
His admission being improper, he was not eligible to sit at the examinations aforesaid.
The appellant made repre sentations to the Bar Council of India and the Administrator of the University but to no avail.
When his representations and even the communication from the Chairman of the Board of Studies to the University did not yield the desired result, the appellant approached the Orissa High Court by means of writ petition on 11.5.87 challenging the non declaration of his results and the University 's refusal to permit the appellant to appear in the final examination.
The writ petition having been dismissed by the High Court, he has filed this appeal by special leave.
The question that falls for determination by this Court is whether the appellant was eligible to be admitted to Law Course.
Allowing the appeal, this Court, HELD: (Per Sawant, J.) The requirement of 40 per cent marks in the aggregate, is meant 273 only for graduates such as of Bachelor of articles etc.
That requirement does not apply to those candidates who pass any higher degree examination after graduation.
For admission to the Law Course there is no requirement of any particular marks for post graduate students like the appellant, and the appellant is entitled to be admitted under Reg. 1 in Chapter VIII of the said Regulations.
The appellant satisfies the other qualification as well, viz., he has passed the M.A. examination with 36 per cent marks in the aggregate deduct ing 13 marks in one of the papers and is therefore, duly qualified to be admitted to the Law course.
[277G; 278F G] Resolution No. 123/1984 of the Bar Council of India does not speak of the requirement of marks for examination at post graduate level.
[279G] The distinction between graduates and post graduates made in the matter of the qualifying marks is as it ought to be, since graduates and post graduates cannot be treated equally.
The appellant while securing his admission in the Law College had admittedly submitted his marks sheet along with the application for admission.
The Law College had admitted him.
He had pursued his studies for two years.
The Universi ty had also granted him the admission card for the Pre law and Intermediate Law examinations.
He was permitted to appear in 'the said examinations.
He was also admitted to the Final year of the course.
It is only at the stage of the declaration of his results of the Pre law and Inter law examinations that the University raised the objection to his so called ineligibility to be admitted to the Law course.
The University is therefore clearly estopped from refusing to declare the results of the appellant 's examination or from preventing him from pursuing his final year course.
[280C E] (Per Sharma, J. ) From the letters of the University it is clear that it was not depending upon the opinion of the Principal and had decided to verify the situation for itself.
In that situa tion it cannot punish the student for the negligence of the Principal or the University authorities.
It is important to appreciate that the appellant cannot be accused of making any false statement or suppressing any relevant fact before anybody.
He had produced his marks sheet before the College authority with his application for admission, and cannot be accused of any fraud or misrepresentation.
[281D F] 274 Assuming the construction of the rule as contended by the University is correct, the Principal cannot be condemned for recommending the candidature of the appellant for the examination in question.
It was the bounden duty of the University to have scrutinised the matter thoroughly before permitting the appellant to appear at the examination and not having done so, it cannot refuse to publish his results.
[281F G] It is impressed upon the University authorities to frame the rules in such clear terms that it may not require great skill for understanding them.
In order to achieve clarity, it does not matter, if the rule, instead of being concise, is elaborate and lengthy.
[281H; 282A]
|
Appeal No. 2069 of 1982.
From the Judgment and Order dated 23 4 1982 of the Andhra Pradesh Administration Tribunal in Representation Petition No 508 of 1982.
Mrs. C. Markandeya for the Appellants.
PG NO 807 B. Kanta Rao and G.N. Rao for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
This appeal by special leave is filed against the Judgment dated 23.4.1982 of the Andhra Pradesh Administrative Tribunal in Representation Petition No 508 of 1982 issuing a direction to the State Government to refrain from making any direct recruitment against temporary vacancies in the cadre of Assistant Engineers under the Andhra Pradesh Panchayat Raj Engineering Service (Special) Rules (hereinafter referred to as 'the Special Rules ') as amended by G.O. Ms. No. 227 dated 28.4.1980 and issuing certain other ancillary directions.
The facts of the case are as follows.
Recruitment to the Andhra Pradesh State and Subordinate Services was governed by the Andhra Pradesh State and Subordinate Services Rules, 1962 (hereinafter referred to as 'the General Rules ').
Rule 6 of the General Rules which dealt with the method of recruitment provided that where the normal method of recruitment to any service, class or category was neither solely by direct recruitment nor solely by transfer but was both by direct recruitment and by transfer, the proportion or order in which the special rules concerned may require vacancies to be filled by persons recruited direct or by those recruited by transfer shall be applicable only to substantive vacancies in the permanent cadre.
In those Rules the expression special rules meant the rules in Part III of the General Rules applicable to each service or class of service and included ad hoc rules applicable to temporary posts.
On 23.3.1963 the Governor of Andhra Pradesh promulgated in exercise of his powers conferred by proviso to Article 3()9 of the Constitution of India the Special Rules providing for the constitution of and the method of recruitment to the Andhra Pradesh Panchayati Raj Engineering Service and the Special Rules were given retrospective effect from November 1, 1960 Under the Special Rules the Andhra Pradesh Panchayati Raj Engineering Service was to consist of four categories of officers, namely, Chief Engineer, Superintending Engineer, Executive Engineer and Assistant Engineer.
The post of Assistant Engineer was required to be filled up as follows: "4 Assistant (1) By direct recruitment.
Engineer or (2) By transfer from among (a) Junior Engineer ;or PG NO 808 (b)Supervisors of the Andhra Pradesh Panchayati Raj Engineering Subordinate Service . . . . . . . . . (c) Out of every 8 vacancies among Assistant Engineers, 3 shall be filled up or reserved to be filled up by direct recruits on the results of the competitive examinations and the remaining 5 by transferees.
Note: Rules 6, 8(a)(i) and 29(b) of the General Rules for the Andhra Pradesh State and Subordinate Services shall not apply to the appointment of Assistant Engineers by direct recruitment in the Andhra Pradesh Panchayati Raj Engineering Service . . . . . . . . .
By Notification bearing G.O.Ms.
No 125 dated 28.5.1973 Explanation (c) in the Special Rules relating to the method of recruitment of Assistant Engineers was substituted by a new explanation which read as follows: "(c) Out of every 8 vacancies among Assistant Engineers the 2nd, 5th and 8th vacancies shall he filled in by direct recruits on the results of the competitive examination and the rest of the vacancies by transfer " Thus by the year 1978 the posts of Assistant Engineers (now designated as Deputy Executive Engineers) were be filled up either by direct recruitment or by transfer from among Junior Engineers or Supervisors or Draftsmen Ist Grade of Andhra Pradesh Panchayati Raj Subordinate Service and if no qualified or suitable candidates were available for recruitment as stated above by transfer from any other service or on tenure basis.
Out of every eight vacancies in posts of Assistant Engineers the 2nd, 5th and 8th vacancy had to be filled in by direct recruits on the result of the competitive examination and the rest of the vacancies by transfer The Special Rules further provided that rules 6, 8(a)(i) and 29(b) of the General Rule would not apply to the appointment of Assistant Engineers by direct recruitment in the Andhra Pradesh Panchayati Raj Engineering Service and thereby it became permissible to the State Government to PG NO 809 take into consideration the number of temporary vacancies also in addition to the subqs vacancies in any year for purposes of recruitment.
Three out of eight vacancies (which included both substantive and temporary vacancies) could be filled up by direct recruitment.
In other words 37 1/2 per cent of the total number of vacancies (both substantive and temporary vacancies) in the cadre of Assistant Engineers could be filled by direct recruitment.
The Chief Engineer of the Andhra Pradesh Panchayati Raj Engineering Service reported to the State Government in his letter dated 25.11.1979 that the total number of posts of Assistant Engineers (Permanent and Temporary) excluding the cyclone posts available were 203 by the end of May, 1979.
Out of the said 203 posts the number of posts available for direct recruitment was 75 (203 x 3/8) and that out of them 38 vacancies of Assistant Engineers had either been filled in by direct recruitment or notified to the Public Service Commission for selection and that the balance number of vacancies available for direct recruitment were 37 for the years 1978 and 1979.
Out of these 37 remaining vacancies, as 23 posts had been filled by Assistant Engineers selected in direct recruitment, an estimate of 15 vacancies of Assistant Engineers was furnished to the Public Service Commission on 3.6.1978.
For the recruitment years 1978 and 1979 the estimate of vacancies were due with the Public Service Commission in the first week of May, 1978 and of May, 1979.
In accordance with the above rule then in force the State Government took the decision in February, 1980 to notify 18 vacancies for the recruitment year 1978 and 18 vacancies for the recruitment year 1979.
The Chief Engineer was informed of the decision of the State Govern ment to recruit the above said 18 plus 18, i.e., 36 vacancies in addition to the 15 vacancies already notified to the Public Service Commission and was asked to sent the zone wise break up of vacancies keeping in view the rules of special representation for Scheduled Castes, Scheduled Tribes, Backward Classes etc.
After the receipt of the proposals from the Chief Engineer on 6.8.1981 the estimate of vacancies for the years 1978 and 1979 was also sent to the Public Service Commission for recruitment of Assistant Engineers.
In the meanwhile the Public Service Commission had published an advertisement in or about September, 1980 inviting applications for recruitment of Assistant Engineers directly specifying 8.1.1981 as the last date for submitting the applications.
In that notification the Public Service Commission had intimated that 15 vacancies were available for recruitment as per the first communication received by it from the State Government.
When the process of recruitment was in progress some of the officer.
who were working as In charge Assistant Engineers or Junior Engineers PG NO 810 in the Panchayati Raj Department Engineering Service made representations to the State Government raising objection to the proposed direct recruitment of 51 Assistant Engineers on the basis of the total number of substantive and temporary vacancies which had arisen in the years 1978 and 1979 relying upon an amendment which had been made to the Special Rules by G.O.Ms.
No. 227 dated 28.4.1980 by which Explanation (c) and the proviso thereunder in the Special Rules had been substituted by the following explanation and proviso: "37 1/2 of the substantive vacancies arising in the category of Assistant Engineers shall be filled by direct recruitment on the results of the competitive examination and the remaining 62 l/2 by promotion or transfer as indicated under explanation (d) below . " Their contention was that the 51 vacancies which had been notified to the Public Service Commission for direct recruitment could not be filled up any longer by direct recruitment as according to them after the amendment of the Rules on 28.4.1980 only 37 1/2 per cent of the substantive vacancies could be filled up by direct recruitment They contended that the 5 1 vacancies which had been notified to the Public Service Commission had been arrived at by taking into consideration temporary vacancies also and that was not permissible after the amendment.
They further urged that under the Special Rules, as amended on 28.4.1980, only 8 vacancies could be filled up by direct recruitment When the above representation made by them did not elicit any positive reply from the State Government, they instituted Representation Petition No. 508 of 1982 on the file of the Andhra Pradesh Administrative Tribunal for injunction restraining the State Government and the Public Service Commission from recruiting 51 persons as direct recruits to the cadre of Assistant Engineers The petition was opposed by the State Government It pleaded that the amendment made on 28.4 1980 to the Special Rules was only prospective in effect and had no effect on the vacancies which had arisen prior to the date on which the amendment was made and, therefore, it was open to the State Government to fill by direct recruitment 37 1/2 per cent of the total number of vacancies (substantive as well as temporary) in the cadre of Assistant Engineers which had arisen before the amendment.
The Tribunal rejected the contention of the State Government and held that it was not permissible for the State Government to make recruitment to the 51 vacancies after the Special Rules were amended on 28.4.1980 irrespective of the fact that the vacancies in question had arisen prior to the PG NO 811 date of the amendment.
Accordingly the Tribunal directed the State Government and the Public Service Commission to refrain from making any direct recruitment against the temporary vacancies in the Andhra Pradesh Panchayati Raj Engineering Service contrary to the Special Rules as they stood amended from 28.4.1980.
Aggrieved by the decision of the Tribunal some of the candidates, who had been selected by the Public Service Commission as Assistant Engineers, filed a special leave petition in this Court under Article 136 of the Constitution of India requesting this Court to grant special leave to appeal against the judgment of the Tribunal.
On 4.6.1982 this Court granted special leave to appeal against the judgment of the Tribunal and also stayed the operation of the judgment of the Tribunal.
Thereafter the State Government issued a notification bearing G.O.Ms.
No. 525 dated 30.10.1982 appointing the appellants, respondent No. 4 and 48 others as Assistant Engineers (now called Deputy Executive Engineers) on temporary basis under rule 10(a)(i)(1) of the General Rules.
44 of the 51 candidates so appointed joined service as Deputy Executive Engineers.
All those who joined the service accordingly have continued to be in the service of the State of Andhra Pradesh till now.
It is not necessary for purposes of this judgment to decide all the contentions which had been raised by the petitioners who had filed the representation petition before the Andhra Pradesh Administrative Tribunal since the Tribunal has allowed the petition only on one ground, namely, that the recruitment in question was governed by the Special Rules as amended on 28.4.1980 and not by the rules which were in force when the vacancies in question arose.
It is clear from the Special Rules as they were in force prior to the amendment on 28.4.1980 that it was open to the State Government to fill 37 1/2 per cent of the vacancies (both substantive and temporary) in the cadre of Assistant Engineers by direct recruitment It is also not in dispute that during the years 1978 and 1979 the position of the vacancies was such that it was permissible for the State Government to appoint 51 Assistant Engineers by direct recruitment.
The only question which has now to be considered is whether the amendment made on 28.4.1980 to the Special Rules applied only to the vacancies that arose after the date on which the amendment came into force or whether it applied to the vacancies which had arisen before the said date also.
The crucial words in the Explanation which was introduced by way of amendment in the Special Rules on 28.4.1980 were "37 1/2 per cent of the substantive vacancies arising in the category of Assistant Engineers shall be PG NO 812 filled by the direct recruitment".
If the above clause had read "37 1/2 per cent of the substantive vacancies in the category of Assistant Engineers shall be filled by the direct recruitment" perhaps there would not have been much room for discussion.
The said clause then would have applied even to the vacancies which had arisen prior to the date of the amendment but which had not been filled up before that date.
We feel that there is much force in the submission made on behalf of the appellants and the State Government that the introduction of the word 'arising ' in the above clause made it applicable only to those vacancies which came into existence subsequent to the date of amendment.
In Eramma vs Verrupanna & Ors., the words "the property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter" in section 8 of the came up for consideration.
In that case this Court held that the words "the property of a male Hindu dying intestate shall devolve" occurring in section 8 made it very clear that the property whose devolution was provided for by that section must be the property of a person who had died after the commencement of the and it could not be the property which belonged to a Hindu male who had died before the said Act came into force The effect of the use of the word `arising ' in the Special Rules qualifying the word `vacancies ' is also the same.
The clause which was introduced in the Special Rules by the amendment made on 28.4.1980 cannot, therefore, be interpreted as having any effect on the vacancies which had arisen prior to the date of the amendment.
We do not find any indication in the amendment that was made on 28 4 1980 that it would be applicable to the vacancies which had arisen prior to the date of the amendment even by necessary implication In the instant case the State Government had taken the decision even before the amendment came into force to fill up the vacancies by direct recruitment according to the law prevailing then.
Had it been the intention of the State Government, while promulgating the amendment that the amendment should be applicable to the vacancies which had arisen prior to the date of the amendment simultaneously the State Government would have addressed a letter to the Public Service Commission to make recruitment in accordance with the Special Rules as amended on 28 4.1980 No such action was taken by the State Government in this case.
We may at this stage refer to another decision of this Court in Y. V. Rangaiah and Others etc.
vs J. Sreenivasa Rao and Others, [ 1983] H 3 S.C.C. 264 in which in a similar situation this Court has observed in Paragraph 9 at page 289 thus: PG NO 813 "The vacancies which occurred prior to the amended rules would be governed by the old rules and not by the amended rules.
It is admitted by counsel for both the parties that henceforth promotion to the post of Sub Registrar Grade II will be according to the new rules on the zonal basis and not on the State wide basis and, therefore, there was no question of challenging the new rules But the question is of filling the vacancies that occurred prior to the amended rules.
We have not the slightest doubt that the posts which fell vacant prior to the amended rules would be governed by the old rules and not by the new rules " The facts of the case before us are in no way different from the facts involved in the above decision In view of the foregoing we are of the view that the observations made by the Tribunal to the following effect, namely: "In this case the rules for recruitment have been changed on 28.4.1980.
Hence, prima facie it would not be legal to make direct recruitment against temporary vacancies, even if the vacancies were at an earlier date ear marked for direct recruits . .
In these circumstances, there is, in my opinion, no scope for direct recruitment against temporary vacancies after 28.4.1980, i.e., the date on which the rules were amended as stated above." are unsustainable.
We hold that the amendment made on 28 4 1980) does not apply to the vacancies which had arisen prior to the date of the amendment We accordingly set aside the judgment of the Tribunal and remand the case to it again to decide in the light of the above observations the other contentions which had been raised by the persons who had filed the Representation Petition before the Tribunal and to dispose of the case on the basis of the findings to be recorded by it on those contentions The appeal is accordingly disposed of.
There is no order as to costs.
R.S.S. Appeal disposed of.
| The Public Service Commission invited applications for direct recruitment against 51 vacancies of Assistant Engineers in the Andhra Pradesh Panchayat Raj Engineering Service.
The number of vacancies was arrived at under the provisions of the Andhra Pradesh Panchayat Raj Engineering Service (Special) Rules 1963, on the basis of the total number of substantive as well as temporary vacancies which had arisen in the years 1978 and 1979.
Explanation (c) in the special Rules relating to the method of recruitment of Assistant Engineers, prior to its amendment on 28.4.1980.
provided that "out of every 8 vacancies among Assistant Engineers, the 2nd, 5th and 8th vacancies shall be filled in by direct recruitment . ".
The amended Explanation (c) provided that "37 1/2 of the substantive vacancies arising in the category of Assistant Engineers shall be filled by direct recruitment . " Some of the officers who were working as In charge Assistant Engineers or Junior Engineers in the Panchayat Raj Department Engineering Service made representations to the state Government raising objection to the number of vacancies notified for direct recruitment, contending that the 51 vacancies notified could not be filled up any longer by direct recruitment as, according tn them, after the amendment of the Rules on 2X.4.1980, 37 l/2 per cent of only substantive vacancies could be filled up by direct recruitment.
while the vacancies notified had taken into consideration temporary vacancies also When their representation failed to elicit any positive reply from the State Government, they instituted a petition before the Andhra Pradesh Administrative Tribunal.
Before the Tribunal the State Government pleaded that the amendment made on 28.4.1980 to the Special Rules was only prospective in effect and had no effect on the PG NO 805 PG NO 806 vacancies which had arisen prior to that date.
The Tribunal rejected the contention of the State Government.
Setting aside the judgment of the Tribunal and remanding the case to it again, this Court, HELD: (1) It is clear from the Special Rules as they were in force prior to the amendment on 28.4.1980 that it was open to the State Government to fill 37 1/2 per cent of the vacancies (both substantive and temporary) in the cadre of Assistant Engineers by direct recruitment.
[811F] (2) The crucial words in the Explanation which was introduced by way of amendment in the Special Rules on 28.4.1980 were "37 1/2 per cent of the substantive vacancies arising in the category of Assistant Engineers shall be filled by direct recruitment.
" The introduction of the word 'arising ' in the above clause made it applicable only to those vacancies which came into existence subsequent to the date of amendment.
[811H;812A B] (3) This Court does not find any indication in the amendment that was made on 28.4.1980 that it would be applicable to the vacancies which had arisen prior to the date of the amendment even by necessary implication.[812E F] (4) The amendment made on 28.4.1980 therefore does not apply to the vacancies which had arisen prior to the date of the amendment.
[813F] Eramma vs Verrupanna & Ors., and Y.V. Rangaiah and Others vs J. Sreenivasa Rao & Ors., 11983] 3 SCC 264, referred to.
|
Civil Appeal No. 2213 of 1978.
From the Judgment and Order dated 31.1.1978 of the Delhi High Court in Civil Writ Petition No. 106 of 1978.
V.M. Tarkunde, S.B. Wad, Mrs. J.S. Wad and Mrs. Tamali Wad for the Appellants.
K.T.S. Tulsi, Solicitior General, T.C. Sharma and P. Parmeshwaran for the Respondents.
Kirpal Singh and M.A. Krishna Moorthy for the Intervener.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by the Ramjas Foundation, a society duly registered under the Societies Registration Act, 1960 and five others who are the Secretary and trustees of the Ramjas Foundation is directed against the order of the Delhi High Court dated January 31, 1978 dismissing the civil Writ Petition No.106 of 1978 in limine.
On November 13, 1959, the Chief Commissioner Delhi issued a Notification under Section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as 'the Act ') Land measuring 34070 acres was notified as land likely to be acquired by the Government at the public expense for a public purpose, namely, the planned development of Delhi.
The following land was excluded from the scope of the notification: (a) Government land and evacues land; (b) the land already notified, either under Section 6 of the Land Acquisition Act for any Government Scheme; (c) the land already notified either under Section 4 o. under Section 6 of the Land Acquisition Act, for House Building Cooperative Societies mentioned in annexure lII; (d) the land under graveyards, tombs, shrines and the land attached to religious institutions and Wakf property.
The aforesaid land measuring 34070 acres included land measuring about 872 bighas, 9 biswas situated in Chowkri Mubarikabad and measuring about 730 bighas situated in Chowkri Sadhurakhurd, belonging to the Ramjas Foundation.
The present appeal relates to the land situated in Chowkri Sadhurakhurd.
The Ramjas Foundation on December 11, 1959 filed objections under Section 5A of the Act for the entire land situated in Mubarikabad as well as Sadhurakhurd.
The Lt. Governor of Delhi subsequently issued notifications under Section 6 of the Act on 15.4.1968, 27.4.1968, 15.5.1968, 19.8.1968, 14.1.1969 and 18.1.1969.
The Lt. Governor also issued notices under Sections 9 and 10 of the Act on December 27, 1972 for Sadhurakhurd land.
As regards the land in Mubarikabad notification under Section 6 of the Act was issued on February 28, 1968.
Ramjas Foundation filed a writ petition in may, 1968 in the Delhi High Court challenging the action of the Government in acquiring their lands situated in Mubarikabad.
In the said writ petition Sachar, J. (as he then was) who heard the petition was of the view that the matter ought to be tried in a suit instead of writ proceedings.
He, therefore, by his order dated August 10, 1971 permitted the Ramjas Foundation to withdraw the petition with liberty to agitate the matter in a suit and as such the writ petition was dismissed as withdrawn.
The Ramjas Foundation then filed a suit in the Delhi High Court on November 8, 1971 for quashing the notifications issued under Sections 4 and 6 of the Act in respect of the land situated in Mubarikabad.
The suit was dismissed by Awadh Behari Rohtagi, J. of the Delhi High Court by order dated 21.3.1977 reported in AIR 1977 Delhi 261.
Learned Counsel for the appellants brought to our notice that Letters Patent Appeal before the Division Bench of the High Court is pending against the aforesaid Judgment of the Learned Single Judge.
So far as the land situated in Sadhurakhurd with which we are concerned in the present appeal a Writ Petition No. 213 of 1973 was filed in the High Court and the same was dismissed as withdrawn on 30th March, 1977.
Thereafter another Writ Petition No. 106 of 1978 was filed challenging the notifications issued under Sections 4, 6, 9 and 10 of the Act and the same was dismissed by the High Court by the impugned order dated January 31, 1978 in limine as already mentioned above.
We have heard Mr. Tarkunde, Learned Senior Advocate on behalf of the appellants and Mr. Tulsi, Learned Additional Solicitor General on behalf of the respondents.
Learned counsel for the appellants contended that the appellants had submitted their objections under Section 5A of the Act on 11.12.1959 but the same were rejected without affording any opportunity of personal hearing.
It was submitted that it was mandatory on the part of the respondents to have given an opportunity of personal hearing specially when the same was desired and a denial of such opportunity of personal hearing invalidates the notifications issued under Sections 6 and 9 of the Act.
Reliance in respect of the above contention is placed on Farid Ahmed Abdul Samad & Anr.
vs Municipal Corporation of the City of Ahmedabad & Anr., [19771 1 SCR 71.
It was also contended on behalf of the appellants that the notification issued under Section 4 of the Act itself excludes the land of wakf property.
It has thus been contended that so far as the land in question is concerned the same being also a wakf property as such ought to have been exempted under the notification itself.
It was submitted that Ramjas Foundation is an educational charitable society which is running several schools and post graduate college in Delhi and several educational institutions are being run on the alleged acquired land itself.
As an alternative argument it was submitted that in case this Hon 'ble Court takes the view that wakf property mentioned in the alleged notification does not include the educational and charitable institutions run by Hindus or non Muslims then such notification is void for violation of article 14 of the Constitution.
As regards the objection of the violation of the mandatory provisions of Section 5A of the Act in.
not affording an opportunity of personal hearing while deciding such objections, we granted an opportunity to the Learned Additional Solicitor General to place material after examining the original record.
We granted, this opportunity to the respondents on account of the reason that the writ petition had been dismissed by the High Court in limine without issuing notice to the respondents and as such the respondents had not been given any opportunity before the High Court to place any material to refute the allegations made by the appellants in this regard.
The Additional Solicitor General during the course of the hearing of the matter placed an order of the Land Acquisition Collector, Delhi dated 23.2.1968 which has been taken on record and for the purposes of identification has been marked as Annexure 'X '.
A copy of the said Annexure 'X ' was also given to the Learned counsel for the appellants.
A perusal of the aforesaid order dated 22.3.1968 clearly shows that the Ramjas Foundation Society was represented through Sh.
Ratan Lal Gupta, Advocate who was given a personal hearing.
From a perusal of the aforesaid document Annexure 'X ' dated 23.2.1968 it is clear that full opportunity of hearing through counsel was afforded to the Ramjas Foundation.
It has been further mentioned in this order that the Ramjas Foundation Society was also allowed to file fresh objections if so desired, but Sh.
Ratan Lal Gupta, Learned Advocate for the Petitioner society declined and stated that there was nothing more to add in the previous objection petition.
After bringing the said document Annexure 'X ' to the notice of the Learned counsel for the appellants, no satisfactory explanation or argument came forward on behalf of the appellants.
The conduct of the appellants in raising the plea that no opportunity of personal hearing was given to the appellants in respect of the objections filed under Section 5A of the Act was totally baseless and factually incorrect and such conduct is reprehensible.
lt is well settled that a person invoking an equitable extraordinary jurisdiction of the Court under article 226 of the Constitution is required to come with clean hands and should not conceal the material facts.
The objection regarding not affording an opportunity of personal hearing in respect of objections filed under Section 5A of the Act was one of the main planks of the grounds raised in the writ petition as well as in the Special Leave Petition filed before this Court and ought we know if such ground had not been taken this Court would have entertained this appeal or not.
The appellants have taken the advantage of obtaining the stay order also from this Court which is continuing for the last 14 years as the Special Leave Petition was filed in 1978 itself.
It may be further noted that a common objection petition under Section 5A of the Act in respect of both the lands situated in Mubarikabad as well as in Sadhurakhurd was filed on 11.12.1959 through Sh.
Ratan lal Gupta, Advocate.
The said objections were heard in the presence of Shri Ratan Lal Gupta, Advocate and disposed of by one common order Annexure 'X ' and we cannot believe an ipse dixit explanation made orally during the course of arguments on behalf of the appellants that they had no knowledge of any personal hearing being given to Shri Ratan Lal Gupta, Advocate.
It is also important to note that no such objection was taken in respect of land in Mubarikabad.
Another ground on which the present appeal has been contested is the ground of delay, laches and acquiescence in filing the writ petition challenging the acquisition proceedings.
As already mentioned above a common notification was issued under Section 4 of the Act for an area of 34070 acres of land needed for planned development of Delhi.
Between 1959 and 1961, about, six thousand objections were filed under Section 5A of the Act.
The objections were overruled.
On March 18, 1966, the declaration under Section 6 of the Act was published in respect of a portion of the area.
Thereafter, in 1970 notices were issued under Section 9(1) of the Act and some of the persons who had received such notices challenged the validity of acquisition proceedings by filing writ petitions before the High Court of Delhi.
The High Court negatived all the contentions raised in those cases and dismissed the writ petitions.
Thereafter appeals by grant of special leave against the judgment of the Delhi High Court as well as writ petitions filed directly under article 32 of the Constitution were heard and disposed of by this Court by a common Judgment reported in Aflatoon & Ors.
vs Lt. Governor Delhi & Ors., ; In the aforesaid case a Constitution Bench of this Court held that in the case of an acquisition of a large area of land comprising several plots belonging to different persons, the specification of the purpose can only be with regard to the acquisition of the whole area.
Unlike in the case of an acquisition of a small area, it might be practically difficult to specify the particular purpose for which each and every item of land comprised in the area is needed.
It was further held in the above case that about six thousand objections were filed under Section 5A by persons interested in the property.
Several writ petitions were also filed in 1966 and 1967 challenging the validity of the acquisition proceedings.
The Government had necessarily to wait for the disposal of the objections and petitions before proceeding further in the matter.
The High Court was of the view that there was no inordinate delay on the part of the Government in completing the acquisition proceedings.
The conclusion of the High Court was held to be correct.
It was also held in the above case that the writ petitions were liable to be dismissed on the grounds of laches and delay on the part of the petitioners.
In the above case this Court had found that the appellants of that case had not moved in the matter even after the declaration under Section 6 was published in 1966.
They approached the High Court with their writ petitions only in 1970 when the notices under Section 9 were issued to them.
This Court then observed as under: "There was apparently no reason why the writ petitions should have waited till 1972 to come to this Court for challenging the validity of the notification issued in 1959 on the ground that the particulars of the public purpose were not specified.
A valid notification under Section 4 is sine qua non for initiation of proceedings for acquisition of property.
To have sat on the fence and allowed the Government to complete the acquisition proceedings on the basis that the notification under Section 4 and the declaration under Section 6 were valid and then to attack the notification on grounds which were available to them at the time when tile notification was published would be putting a premium on dilatory tactics.
The writ petitions are liable to be dismissed on the ground of laches and delay on the part of the petitioners".
The delay and laches in the case before us are even worse than those in the above cited Aflatoon 's case.
The appellants had initially filed a writ petition No. 213/73 challenging the notification dated 13.11.1959 under Section 4 of the Act and notification dated 27.4.1968 under Section 6 of the Act with respect to 245 bighas and 1 biswas of land situated in the revenue estate of Sadhurakhurd and the notices dated 27.12.1972 under Sections 9 and 10 of the Act issued by the Land Acquisition Collector, Delhi with respect to Khasra No. 1040/353 (12 bighas and 8 biswas).
On 30.3.1977 Shri M.C. Gupta, Learned counsel for the Ramjas Foundation stated that he had instructions from his clients to state that they did not want to press the petition and wish to withdraw it.
The statement of Sh.
Gupta had been separately recorded.
The Court, in these circumstances permitted to withdraw the petition and dismissed the same as withdrawn.
lt is important to note that in the statement Sh.
M.C.Gupta, Learned counsel for the petitioners stated as under: "I may be permitted to withdraw this petition in view of the Judgment delivered by Hon.
Mr. Justice Awadh Behari in Suit 451 of 1971 decided on 21st March, 1977, between the parties, wherein the contentions urged were precisely the same as urged in this petition, my clients reserved the opportunity to file a fresh suit if so necessitated by the circumstances in future.
" It may be noted that the reference with regard to suit No. 451 of 1971 decided on 21st March, 1977 is in respect of the land of petitioners situated in Mubarikabad.
It is surprising that though the opportunity was sought for filing a fresh suit, the appellants again filed a writ petition No. 106 of 1978 in the High Court on 7.1.1978 which was ultimately dismissed by the High Court in limine on 31st January, 1978 by a Division Bench comprising of T.P.S. Chawla and Awadh Behari, JJ.
In this writ petition No. 106 of 1978 the appellants conveniently omitted to mention that the permission to withdraw the petition No. 213 of 1973 was granted on the statement of Sh.
M.C. Gupta that his clients reserved the liberty to file a fresh suit and not writ.
Thus no liberty was sought or given for filing a fresh writ petition.
In any case there were no fresh ground or circumstances available to the appellants to file a fresh writ petition No. 106 of 1978 on 7.1.1978 on identical grounds when the earlier writ petition No. 213 of 1973 had been dismissed as withdrawn on 30.3.1977.
Nothing had happened between 30.3.1977 and 7.1.1978 for giving a fresh cause of action to the appellants to file the writ petition No. 106 of 1978.
Awadh Behari, J. had dismissed the suit No. 451 of 1971 by order dated 21.3.1977 in regard to the lands in Mubarikabad and he was also one of the Judges of the Division Bench who passed the impugned order dated January 31, 1978 dismissing the writ petition in limine as he was fully aware of the entire background of this litigation.
The appellants are themselves responsible for creating confusion in initiating separate proceedings at different period of time in respect of the lands situated in Mubarikabad and Sadhurakhurd though challenge to the acquisition proceedings was on common grounds.
Learned counsel for the appellants was unable to satisfy in respect of such conduct of hide and seek on the part of the appellants.
In case, as sought to be explained by Mr. Tarkunde, Learned Senior Counsel for the appellants, the appellants were depending on the result of the civil suit filed in respect of the lands situated in Mubarikabad there was no justification for filing the writ petition No. 213 of 1973 in respect of the land situated in Sadhurakhurd as the suit was not decided in 1973 but was in fact dismissed on 21.3.1977.
We find no justification for filing the writ petition in respect of the land situated in Sadhurakhurd in 1973 and subsequently withdrawing the writ petition on 30th March, 1977 reserving the liberty to file a fresh suit but thereafter again filing the writ petition on 7.1.1978 instead of suit.
Independently, of all the circumstances mentioned above, we shall now consider the question of delay and laches in filing the writ petition No. 106 of 1978 and the earlier writ petition No. 213 of 1973 relating to lands in Sadhurakhurd.
Mr. Tarkunde, Learned Senior Counsel vehemently contended that there is no limitation prescribed for filing the writ petition and the question of delay and laches has to be examined independently in the facts and circumstances of each case.
He has argued that the appellants are continuing in possession uptil date and though challenge has been made to the validity of notifications issued under Section 4 in 1959, Section 6 in 1968 and 1969 and Section 9 and 10 in 19722, there is no delay, since no award has been passed so far and no loss has occasioned to the respondents due to lapse of time.
It has been submitted that there was no change of circumstances during the intervening period and the delay had been fully explained on the aforesaid grounds.
It has also been argued that notifications under Sections 9 and 10 were issued in 1972 and soon there after the appellants came forward with a writ petition No. 213 of 1973 challenging the notifications issued under Sections 4, 6, 9 and 10 of the Act.
We find no force at all in the above contentions.
It is an admitted fact that notification under Section 4 of the Act was issued as early as 1959 and all the notifications under Section 6 of the Act in relation to the land of the appellants in Sadhurakhurd were issued in 1968 and 1969.
The challenge to the acquisition proceedings was mainly based on the ground that in the notification dated 13.11.1959 issued under Section 4 of the Act the lands of wakf property were excluded and the lands of the appellants being also used for educational and charitable purposes the same were also liable to be excluded.
At a later stage a ground was also taken that if wakf property in the aforesaid notification under Section 4 of the Act meant only wakf properties of the Mohammedans, then such notification was discriminatory and violative under article 14 of the (Constitution as there was no reasonable ground to discriminate such properties of Hindus or non Muslims also meant for charitable purposes.
So far as the notifications under Section 6 of the Act are concerned the same were attacked on the ground that no opportunity of personal hearing was given to hear the objections filed under Section 5A of the Act.
Thus it is abundantly clear that the challenge was in respect of notifications under Sections 4 and 6 of the Act alone and though in the prayer clause relief had been sought to quash the notification under Sections 9 and 10 of the Act also which were issued in 1972 but no ground whatsoever has been pleaded in the writ petition nor raised before us as to how the notifications under Sections 9 and 10 had any concern for explaining the delay in respect of the challenge to notifications under Sections 4 and 6 of the Act.
It is worthwhile to note that according to the appellants own showing the notices under Sections 9 and 10 issued to the appellants in 1972 were in respect of the land being Khasra No. 1040/353 which related to 12 bighas and 8 biswas only.
The challenge on the other hand in the writ petition is in respect of notifications under Sections 4 and 6 covering the entire land measuring about 730 bighas situate in village Sadhurakhurd.
We find no justification at all in explaining the delay on the ground that no award has been passed nor the appellants have been dispossessed so far.
This cannot be an explanation for not challenging the notifications under Sections 4 and 6 of the 9Act and in the present case the appellants had themselves sought stay from this Court as early as 15.11.1978 for not making and declaring the award and not to dispossess the appellants.
Thus we find no justification at all for the delay in not challenging the notification issued under Section 4 on 13.11.1959 till 1973.
Even notifications under Section 6 of the Act were issued in 1968 and 1969 but not challenged till 1973.
As already mentioned above in Aflatoon 's case (supra) a Constitution Bench of this Court has clearly held that even after the declaration under Section 6 of the Act published in 1966, the appellants had approached with their writ petitions in 1970 when the notices under Section 9 were issued to them the writ petitions were liable to be dismissed on the grounds of laches and delay.
Mr. Tarkunde, learned senior counsel made strenuous effort to distinguish the aforesaid case on the ground that in the aforesaid case the Court was influenced with the fact that the petitioners had sat on the fence and allowed the Government to complete (emphasis added) the acquisition proceedings.
Much emphasis has been laid on the word 'to complete ' the acquisition proceedings.
We find no force in this submission as the facts narrated in the above case clearly shows that the petitioners in those cases had filed writ petitions in the High Court in 1970 and in the Supreme Court in 1972 after the issuance of notices under Sections 4, 6 and 9 of the Act.
The use of the word complete ' was not of much significance and the main reasoning of the case was that grounds to attack the notification under Sections 4 and 6 of the Act were available at the time of publication of such notifications.
In the facts and circumstances of the case before us the appellants were also sitting on the fence and did not take any steps of challenging the notification under Sections 4 and 6 of the Act till 1973 though the grounds now sought to be urged were available to the appellants as soon as such notifications were issued.
Thus viewing the matter from any angle we are clearly of the view that the writ petition was also liable to be dismissed on the ground of laches and delay on the part of the appellants apart from other grounds already dealt by us.
In the face of the aforesaid view taken by us, it is not necessary at all to go on other questions raised in the case.
We decline to express any opinion on any questions of law raised in the appeal.
In the result we dismiss this appeal with costs.
In view of the dismissal of the appeal itself all interim orders stand vacated automatically.
G.N. Appeal dismissed.
| Notification under Section 4 of the Land Acquisition Act, 1894 was issued in respect of certain lands including the lands belonging to the appellant foundation situated at two different places.
The appellant Foundation filed objections.
Subsequently notifications under Sections 6 and Notices under Sections 9 and 10 were also issued.
The appellant Foundation challenged the notifications in respect of the land situated at one of the two places, by way of a Writ Petition before the High Court and the same was dismissed as withdrawn with liberty to the petitioner to agitate the matter in a suit.
Thereupon, the appellant Foundation filed a suit and the same was dismissed by a Single Judge of the High Court.
The Letters Patent Appeal filed against that decision is pending.
In respect of the land situated at the other place, a Writ Petition was filed by the appellant before the High Court, which came to be dismissed as withdrawn.
Thereafter, another Writ Petition was filed by the appellant Foundation before the High Court challenging the notifications.
The High Court having dismissed the Writ Petition, the appellant Foundation preferred the present appeal.
On behalf of the appellants, it was contended that they filed their objections under Section 5A of the Act, but the same were rejected without affording any opportunity of personal hearing, and the denial of such opportunity invalidated the notifications; and that the land of the appellants being wakf property it ought to have been excluded on the basis of the notification under Section 4 of the Act.
Alternatively it was contended that the appellant has been running several educational institutions on the very land and that if the exemption for wakf property is not applicable to such educational and charitable institutions run by Hindus or non Muslims, then such a notification would be violative of Article 14 of the Constitution.
The Respondents contested the appeal on grounds of delay, laches and acquiescence in fling the Writ Petition challenging the acquisition proceedings.
It was also stated that the appellants were given opportunity of personal hearing.
Dismissing the appeal, this Court, HELD: 1.
The conduct of the appellants in raising the plea that no opportunity of personal hearing was given to the appellants in respect of the objections filed under Section 5A of the Land Acquisition Act, 1894 was totally baseless and factually incorrect and such conduct is reprehensible.
It is well settled that a person invoking an equitable extraordinary jurisdiction of the Court under article 226 of the Constitution is required to come with clean hands and should not conceal the material facts.
[431 F, G] Farid Ahmed Abdul Samad & Anr.
vs Municipal Corporation of the City of Ahmedabad & Anr., [1977] 1 SCR 71, referred to. 2.
The challenge to the acquisition proceedings was mainly based on the ground that in the notification dated 13.11.1959 issued under Section 4 of the Act the lands of wakf property were excluded and the lands of the appellants being also used for educational and charitable purposes the same were also liable to be excluded.
At a later stage a ground was also taken that if wakf property in the aforesaid notification under Section 4 of the Act meant only wakf properties of the Mohammedans, then such notification was discriminatory and violative under article 14 of the Constitution as there was no reasonable ground to discriminate such properties of Hindus or non Muslims meant for charitable purposes.
Thus the challenge was in respect of notifications under Sections 4 and 6 of the Act alone and though in the prayer clause relief has been sought to quash the notification under Sections 9 and 10 of the Act also which were issued in 1972, no ground whatsoever has been pleaded in the writ petition nor raised in the present appeal as to how the notifications under Sections 9 and 10 had any concern for explaining the delay in respect of the Challenge to notification under Sections 4 and 6 of the Act, Admittedly the notices under sections 9 and 10 issued appellants in 1972 were in respect of a portion of the land.
The challenge on the other Land in the writ petition is in respect of notifications under Sections 4 and 6 covering the entire land.
There is no justification at all in explaining the delay on the ground that no award has been passed nor the appellants have been dispossessed so far.
This cannot be an explanation for not challenging the notifications under Sections 4 and 6 of the Act and in the present case the appellants had themselves sought stay from this Court as early as 15.11.1978 for not making and declaring the award and not to dispossess the appellants.
Thus there is no justification at all for the delay in not challenging the notification issued under Section 4 on 13.11.1959 till 1973.
Even notifications under Section 6 of the Act were issued in 1968 and 1969 but not challenged till 1973.
[435 H; 436 A G] Aflatoon & Ors.
vs Lt. Governor Delhi & Ors., [2975] 1 SCR 802, relied on.
|
N: Criminal Appeal No. 240 of 1982 From the Judgment and Order dt.
2.3.1982 of the High Court of Kerala at Ernakulam in Crl.
R.P. No. 435181.
Criminal Appeal No. 661 of 1982 From the Judgment and Order dt.
12.2.1982 of the High Court of Kerala at Ernakulam in O.P. No. 6834/81.
G.L. Sanghi, G N Rao, A.S. Nambiar, after Singh for the Appellant in Crl.
A. No. 240182 & Respondents in Crl.
A. No. 611/82.
Govind Mukhoty, Mr. V. Maya Krishnan, A N. Bordiyar for the Respondents in Crl A.
No 240/82 and Appellants in Crl.
A. No. 661182.
D S.M. Rebelo (In person).
The Judgment of the Court was delivered by, FAZAL ALI, J.
BY Our Order dated February 12, 1985 we disposed of the above mentioned two criminal appeals dismissed criminal appeal No. 66118,2 and allowed criminal appeal No. 240 of 1982.
We now proceed to give the reasons for our Order The facts of the case lie within a very narrow compass.
The appeal by special leave has been filed by the appellant company contending that the respondent was not entitled in law to get full compensation for one year as was granted by the High Court for premature termination of his services.
The detailed facts have been given by the High Court and the criminal court and it is not necessary to repeat the same.
However, in older to understand the delicate and difficult points raised by the respondent, it may be necessary to give a short history of the circumstances in which the services of the respondent, who was Master of the ship called 'M.V. Anastasis ', were terminated it is common ground that the respondent was appointed on October 22 l980 for a period of one year.
It is not disputed that on December 11, 1980 the said ship touched the harbour and thereafter 1001 proceeded to Beypore, Calicut where the respondent received a A message from the owner of the ship that the ship has been sold as scrap to the appellant company, Steel Industrials Kerala Ltd Consequent upon the sale of the ship, by an order dated 20.12.80 the services of the respondent were terminated.
On December 22, 1980, i e, two days later, the respondent wrote a letter to the previous owner intimating that, as directed, he had handed over the ship to the appellant company A little later on 24.12.80, the respondent moved the Magistrate under section 145 of the (hereinafter referred to as the 'Act ') for payment of necessary wages. .The
Magistrate after considering all the pros and cons of the matter felt that the respondent was entitled to get compensation at least equivalent to three months ' pay.
The respondent was, however, not satisfied with the order of the Magistrate because he claimed a much higher compensation as his services were terminated before completion of one year for which he was appointed.
It is true that the salary of the respondent, calculated at the rate of $1800 per month, amounts to a substantial sum of money if he were to get compensation on a full salary basis for the entire period, which actually he had not served We are, however, not concerned with the quantum of the compensation which he could get, but the main point for consideration in this case is to whether or not his claim for compensation for the whole year could be entertained.
In one of the letters which he had written to the owner of the ship he had himself admitted that he was entitled to two months ' notice pay plus other emoluments.
This would show that the contract between the parties as understood by them was that if the services of the respondent were terminated before completion of the term of one year, he would be entitled to two months ' notice.
the Magistrate, however, took a more liberal view in the matter and held that the respondent was entitled to at least three months ' notice and consequently to the emoluments calculated at the rate of $1800 per month, and accordingly ordered payment of three months ' pay This is in accordance with section 143 read with section 148 of the Act.
It is manifest that under the contract the respondent was not appointed to any permanent post which was to last until his retirement but his appointment was really a term appointment for a fixed period.
The main contention of the respondent before us was that as he did not get any discharge slip under the provisions of the Act, he 1002 was entitled to full wages for the entire term of one year.
In this connection, he relied on certain provisions of the Act to which we shall refer here after.
It appears that the respondent seems to have presumed that he was equal in status to that of a seaman and, therefore, unless a discharge certificate was given to him he was entitled to compensation for the entire period of the contract.
A perusal of the relevant sections, clearly reveals that the statute makes a well knit distinction between a seaman and a master of the ship.
This now takes us to an analysis of the relevant provisions of the Act on which reliance has been placed by the respondent.
To begin with, sub section (22) of section 3 defines a 'Master ' thus: "master" includes any person (except a pilot or harbour master) having command or charge of a ship;" It is pertinent to note that the definition of 'Master ' does not include a seaman and, therefore, the argument of the respondent that he should be equated with a seaman or treated as such, cannot be accepted and is in fact without any substance.
Sub section (42) of section 3 defines a 'seaman ' as every person (except a master, pilot or apprentice) employed or engaged as a member of the crew of a ship but for certain specific purposes under sections 178 to 183 it includes a master.
An analysis of this sub section shows that a seaman cannot in the ordinary sense of the term be equated with a 'master '.
Thus, the second part of sub section (42) on which great reliance was placed by the respondent clearly carves out a separate area where for the purpose of this sub section a seaman might include a master.
This limited area is to be found within the four corners of sections 178 to 183.
This now brings us to a consideration of 9. 178 which may be extracted thus: "178.
Meaning of serving seaman A seaman shall, for the purposes of these provisions, be deemed to be a serving seaman during any period commencing on the date of the agreement with the crew and ending thirty days after the date on which the seaman is finally discharged from such agreement." 1003 There is nothing in this section to indicate that a seaman can m any sense of the term be equated with a 'master '.
Even section 179 refers only to a serving seaman and not a Master.
The relevant provisions of section 180 may be extracted thus:: "180.
Notice lo be given in case of unrepresented seaman (1) If a collector has certified under sub section (2) of section 179, or if a court has reason to believe that a seaman who is a party to any proceeding before the court, is unable to appear therein or is a serving seaman, the Court shall suspend the proceeding and shall give notice thereof to the shipping master :" This section merely provides that if a court has reason to believe that a seaman was a party to any proceeding and does not appear therein, the court shall postpone the proceeding and give notice thereof to the shipping master.
In this sub section, the word 'master ' has been used for the first time but the term has been used not to equate a seaman with a master but in quite a different content and subserve a different purpose The other sections also, particularly section 183, merely provide that a serving seaman may refer the question to the shipping master whose certificate shall be conclusive evidence on the question whether a seaman was a serving seaman or not at any particular time or period.
There is no clear provision from which it can be inferred either directly or by necessary intendment that a master is also a seaman for the purpose of getting compensation if his services were terminated.
Section 89 defines the duties of shipping masters which may be extracted thus: F "It shall be duty of shipping masters (a) to superintend and facilitate the engagement and discharge of seamen in the manner provided in this Act: (b) to provide means for securing the presence on , Board at the proper times of the seamen who are so engaged; (c) to facilitate the making of apprenticeship to the sea service; 1004 ( d) to hear and decide disputes under section 132 between a master, owner or agent of a ship and any of the crew of the ship, (e) to perform such other duties relating to seaman, apprentices and merchant ships as are for the time being committed to them by or under this Act.
" The various sub sections of section 89 do not at all govern the terms and conditions of a 'master ' but serve to carve out his duties at various levels or stages.
Similarly, section 101 refers only to the question that there should be an agreement with the crew in a prescribed form.
There is no reference to the terms and conditions of a master in any of the sub sections.
Section 103 is a general section which governs the terms and conditions of a seaman and there is no reference to a master of the ship.
Reliance was then placed on section 118, the relevant portion of which may be extracted thus: "118.
Discharge before shipping master (1) When a seaman serving in a foreign going ship is, on the termination of his engagement, discharged in India, he shall, whether the agreement with the crew be an agreement for the voyage or a running agreement, be discharged in the manner provided by this Act in the presence of a shipping master.
" This sub section taken together with the other sub sections also governs the terms and conditions of a seaman and not those of a master of the ship.
Section 119 merely provides that the master shall sign and give to seaman who is discharged, a discharge certificate either on his discharge or on payment of his wages specifying the period of his service and the time and place of his discharge.
This section also governs the terms and conditions of a seaman and has nothing to do with the terms and conditions of a master of a ship.
Similarly, section 120 relates to the consequences where a seaman is discharged.
Some reliance was also placed on sub section (1) of s.125 which may be extracted below: "125.
Master to deliver account of wages 1005 (1) The master of every ship shall, before paying off A or discharging a seaman under this Act, deliver at the time and in the manner provided by this Act a full and true account in the form prescribed of the seaman 's wages and of all deductions to be made therefrom on any account whatever " B This again defines the duties of a master in respect of a seaman who is discharged.
Section 132 provides the procedure to be followed in case any dispute arises, under the agreement with the crew, between the master, owner or agent of a ship and lays down that the same should be submitted for decision to the shipping master.
Section 143, on which some reliance was placed by counsel for the respondent, refers only to the circumstances under which a seaman could be discharged and the consequences ensuing therefrom.
D It is apparent from the facts narrated and the analysis of the sections made by us that there is no provision in the Act which equates a seaman with a master of a ship in regard to the terms and conditions or emoluments or mode of discharge.
In fact, there is no provision under which a master of a ship can get a discharge certificate.
But under section 143 read with section 148 a Master is entitled to three months ' wages in case of discharge or termination in the same manner as a seaman is entitled to three months ' wages.
Great reliance was, however, placed by the counsel for the respondent on sub sections (l) and (2) section 148 which provide that a master of a ship would have the same rights, liens and remedies for recovery of his wages as a seaman either under the four corners of the Act or by any law or custom Sub s.(2) may be extracted thus: "(2) The master of a ship and every person lawfully acting as master of a ship by reason of the decease or in G capacity from illness of the master of the ship shall, so far as the case permits, have the same rights, liens and remedies for the recovery of disbursements or liabilities properly made or incurred by him on account of the ship as a master has for the recovery of his wages.
" 1006 Hence, it is manifest that since there is no provision in the Act under which a discharge certificate can be given to a master of a ship or even otherwise, he cannot claim the rights and privileges of a seaman.
This is obviously so because a master of a ship is an officer of a higher rank than that of a seaman and therefore his terms and conditions are bound to be different from that of a seaman.
Reliance was also placed on section 199 of the Act which also deals not with the condition is of service of a master but of the forfeiture of wages of a seaman on apprentice on desertion from a ship.
It was contended on behalf of the appellant that the contract between the master of a ship and the owner was in the nature of a contract of personal service and could not be specifically enforced.
This view is supported by a decision of this Court in Dr. S.B. Dutt vs University of Delhi(1) where Sarkar, J., observed thus: "The High Court had held that it was not open to the arbitrator "to grant Dr. Dutt a declaration that h was still a professor in the University which no Court could or would give him".
The High Court felt that this declaration amounted to specific enforcement of a contract of personal service which was forbidden by section 21 of the Specific Relief Act and therefore disclosed an error on the face of the award.
We are in entire agreement with the view expressed by the High Court.
There is no doubt that a contract of personal service cannot be specifically enforced." Thus, the appellant rightly pointed out that Annexure I appearing at page 64 of the paperbook in criminal appeal No. 240 of 1982, clearly defines the terms of the appointment of Capt.
Rebello, master of the chip.
It is true that s 148 provides that a master of a ship shall have the same rights and remedies as a seaman but that is only for a particular purpose.
In these circumstances, the High Court has misconstrued the various sections of the Act and by a strange process of reasoning arrived at the conclusion that the respondent was entitled to full (1) ; 1007 compensation of one year 's wages even if his services were terminated before expiry of his actual term but there does not appear to be any warrant for this view.
Thus, having regard to the various provisions of the act which we have analysed fully, there can be no doubt that the High Court was not at all legally justified in holding that the respondent was entitled to wages for one year when in fact the ship having been treated as a scrap was no longer required and, therefore, the services of the respondent had to be dispensed with.
The respondent himself understood the terms of his appointment (mentioned at page 64 of the paperbook) and has therefore rightly put his claim at two months ' wages if he was discharged before completion of his term.
As already indicated, the Magistrate has awarded the compensation for three months ' wages instead of two months ' wages and we entirely agree with his view.
The result is that we allow criminal appeal No. 240 of 1982, set aside the judgment of the High Court and restore that of the Magistrate.
Criminal appeal No. 661 of l982, is dismissed but in the circumstances of the case there will be no order as to costs.
The excess amount which has been withdrawn by the respondent shall be refunded to the appellant within four months from today either in instalments or in one lump sum, failing which it will be open to the appellant to recover the same by way of restitution If the amount is not returned within four months, then the recovery will be made with interest at the rate of 12% per annum S R. C.A. No. 24018 ' allowed.
C.A. No. 661182 dismissed.
| The respondent was appointed on October 22,1980 for a period of one year as a "master ' of the ship called 'M V Anastasis" in terms of the appointment order under which he was entitled to two months ' wages, if the was discharged before the completion of his term The said ship on December 11, 1980, touched the harbour and thereafter proceeded to Beypore, Calicut, where the respondent was informed that the ship having been sold as a scrap to the appellant company, Steel Industries, Kerala, he should handover the ship to the company.
Consequent upon the sale of the ship, by an order dated 20.12.80 the services of the respondent were terminated.
On December 22, 1980 the respondent wrote a letter to the previous owner of the ship of having handed over the ship to the appellant company On 24.12.80 the respondent moved the Magistrate under section 145 of the for payment of necessary wages.
The Magistrate after considering all the pros and cons of the matter felt that the respondent was entitled to get compensation at least equivalent to three months ' pay calculated at $1800 per month In appeal the High Court of Kerala increased the compensation equivalent to one year 's wages.
Allowing the company 's ' criminal appeal No 240/82 and dismissing o the Master 's appeal No 661/82, the Court ^ HELD: 1 The High Court has misconstrued the various sections of the and by a strange process of reasoning arrived at the conclusion that the respondent was entitled to full compensation of one years wages even if his services were terminated before the expiry of his actual term, when in fact the ship having been treated as a 999 scrap was no longer required and therefore his services had to be dispensed A with and when the respondent himself rightly understood the terms of his appointment and put his claim at two months ' wages only.
[1006H; 1007] 2.1 There is no provision in the which equates a seaman with a master of a ship in regard to the terms and conditions or emoluments or mode of discharge or under which a matter of a ship can get a discharge certificate But under section 143 read with section 148 a Master is entitled to three months ' wages.
[1005C E] 2.2 A perusal of the relevant section clearly reveals that the statute make a well knit distinction between a 'seaman ' and a Master ' of the ship.
The definition of 'Master ' in sub section(22) of section 3 does not include a seaman.
Sub section 42 of section 3 clearly shows that a 'seaman ' cannot in the ordinary sense of the term be equated with a 'Master ' but for certain specific purposes under sections 178 to 183 it includes a ;Master In sub section (1) OF section 180, the word 'Master" has been used for the first time but even here the term has been used not to equate a seaman with a master but in quite a different context and subserve a different purpose.
[1002B, D, E F, 1003D] 2.3 There is no clear provision from which it can be inferred either directly or by necessary intendment that a master is also a seaman for the purpose of getting compensation if his services were terminated.
The various sub sections of section 89 do not at all govern the terms and conditions of a master ' but serve to carve out his duties at various levels or stages.
Sections 101, 103, 108, 119, 120, 121.
132, 143 and 199 of the Merchant Shipping Act all these govern the terms and conditions of a service of a seaman and the crew and have nothing to do with the master of A ship.
It is true that sub sections I and 2 of section 148 provide that a master of a ship would have the same rights, liens and remedies for recovery of his wages as a seaman either under the four corners of the Act or by any law or custom.
But there is no provision in the Act under which a discharge certificate can be given to a master of a ship or even otherwise, a master cannot claim the rights and privileges of a seaman because a master of a ship is an officer of a higher rank than that of a seaman.
Therefore, his terms and conditions are bound to be different from that of a seaman.
[1003E F, 3.
The contract between the master of a ship and the owner is in the nature of a contract of personal service and cannot be specifically enforced.
[1006D] Dr. section B. DurJ vs University of Delhi, [l959l S.C.R. 1236 referred to.
[The Court directed (i) that the excess amount which has been with.
drawn by the respondent shall be refunded to the appellant within four months from 26.
2. 85 either in installment or in one lump sum failing which it will be open to the appellant to recover the same by was of restitution, and (ii) that if the amount is not returned within four months then the recovery will be made with interest at the rate of 12% per annum.] [1007E F] H 1000
|
nd circumstances of the instant case, admission to medical or dental Institution by conducting examination in Hindi or other regional languages would be appropriate or desirable or not, is a matter on which debate is possible and the acceptance of one view over the other involves a policy decision.
It cannot be appropri ately dealt with by this Court, and order under Article 32 of the Constitution in those circumstances would not be an appropriate remedy.
[592H, 593A] & CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No. 428 of 1989.
(Under Article 32 of the Constitution of India).
Dr. L.M. Singhvi, N. Wazir and D. Bhandari for the Petition ers.
Rajiv Dutta for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, CJ.
This is an application under Article 32 of the Constitution of India for issue of a writ of mandamus 590 directing the Central Government to hold pre medical and pre dental entrance examinations in Hindi and other regional languages as, according to the petitioners, mandated by Article 29(2) of the Constitution of India.
The petition is by nine petitioners.
Petitioner No. 1 is Hindi Hitrakshak Samiti which is stated to be a society formed with the aim and object of propagating and ensuring the propagation of the national language Hindi and other regional languages; and to further the cause of the citizens of India who are educated in any one or more of the languages and who face difficulty in competitive examinations in which the medium of examination is English only.
Petitioners Nos.
3 to 10 are the students who allege that they wish to appear in the coming PMT/PDT examinations in Hindi or other regional languages and are being adversely affected and discriminated against, and will be in a disad vantageous position in the forthcoming PMT/PDT examination in comparison to those who have passed the higher secondary or equivalent examination with English as their medium of instruction.
The petition seeks issue of writ directed against the Union of India, Central Board of Secondary Education and Medical Council of India.
It is stated that in the year 1974 there was a survey by National Council for Educational Research & Training (NCERT) which, according to the petitioners, showed that out of the students passing intermediate, about 92.5% take their exami nation in Hindi and other regional languages.
The petition ers allege that Kothari Commission 's report on Civil Serv ices Examination had recommended that the examination papers be set both in English and Hindi and the examinees should have a choice of answering them in English, Hindi or any of the 15 regional languages Constitutionally recognised.
It was stated that it was also noteworthy that the Kothari Commission 's report had recommended that Hindi and other regional languages in Universities would be necessary in order to make use of the best potential available in the country.
In 1986 this Court in the case of Dr. Dinesh Kumar & Ors.
vs Motilal Nehru Medical College, Allahabad & Ors., ; dealt with certain aspects of admission to the Medical College, but not on the present aspect.
Letters and representations to the Ministry of Health & Family Welfare, by the petitioners were made on 23rd September, 1988 requesting the Government to consider conducting the PMT/PTD examinations in Hindi and other regional languages.
It is stated that a letter was issued on both December, 1988 by the Government of India to the effect that the Joint Engineering Examination (JEE) for the five I.I.Ts.
and the 591 Engineering College of Banaras be conducted in Indian lan guages from 1990 onwards.
The petitioners assert that they had received numerous letters and grievances from students with Hindi medium background to press for this instant petition.
When the application was moved before this Court on 17th April, 1989 this Court had issued notice.
We have examined the matter and have heard Mr. L.M. Singhvi.
We are of the opinion that the prayers sought for herein are not such which can be appropriately, properly and legitimately dealt with under Article 32 of the Constitution of India.
The contention of the petitioners is, as mentioned hereinbefore, that pre medical studies in medical and dental examination should be permitted in Hindi and other regional languages and not in English alone, and the admission to the Institutions should not be refused and/or examinations should not be held in English alone if the examinees or the entrants seek to appear in Hindi or other regional language.
Article 32 of the Constitution of India guarantees enforcement of fundamental rights.
It is well settled that the jurisdiction conferred on the Supreme Court under Arti cle 32 is an important and integral part of the Indian Constitution but violation of a fundamental right is the sine qua non for seeking enforcement of those rights by the Supreme Court.
In order to establish the violation of a fundamental right, the Court has to consider the direct and inevitable consequences of the action which is sought to be remedied or the guarantee of which is sought to be enforced.
Mr Singhvi, counsel for the petitioners, contends that under Article 29(2) of the Constitution no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them.
He contends that by not holding the test in Hindi or other regional languages, there is breach of Article 29(2).
He also draws our attention to Article 29(1) of the Constitution which enjoins that any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of his own, shall have right to conserve the same.
It is difficult to accept that in not holding entrance examination in any particular language.
be it Hindi or regional language, amounts to denial of admis sion on the ground of language.
Every educational institu tion has right to determine or set out its method of educa tion and conditions of examination and studies provided these do not directly or indirectly have any casual connec tion with violation of the fundamental rights guaranteed by the 592 Constitution.
It may be that Hindi or other regional lan guages are more appropriate medium of imparting education to very many and it may be appropriate and proper to hold the examinations, entrance or otherwise, in any particular regional or Hindi language, or it may be that Hindi or other regional language because of development of that language, is not yet appropriate medium to transmute or test the knowledge or capacity that could be had in medical and dental disciplines.
It is a matter of formulation of policy by the State or educational authorities in charge of any particular situation.
Where the existence of a fundamental right has to be established by acceptance of a particular policy or a course of action for which there is no legal compulsion or statutory imperative, and on which there arc divergent views, the same cannot be sought to be enforced by Article 32 of the Constitution.
Article 32 of the Constitu tion cannot be a means to indicate policy preference.
It is difficult to contend that the actions following from nonacceptance of any policy perspective, amount to direct and causal violation of the fundamental right of the citizens guaranteed under the Constitution of India.
Court is not the forum to adjudicate upon the questions of policy unless such a policy is the direct mandate of the Constitu tion.
It is well settled that judicial review, in order to enforce a fundamental right, is permissible of administra tive, legislative and governmental action or non action, and that the rights of the citizens of this country are to be judged by the judiciary and judicial forums and not by the administrators or executives.
But it is equally true that citizens of India are not to be governed by the Judges or judiciary.
If the governance is illegal or violative of rights and obligations, other questions may arise out wheth er, as mentioned hereinbefore, it has to be a policy deci sion by the Government or the authority and thereafter enforcement of that policy, the Court should not be, and we hope would not be an appropriate forum for decision.
In the background of the facts and the circumstances of the case and the nature of controversy that has arisen, we are of the opinion that proper and appropriate remedy in a situation where enforcement of the right depends upon the acceptance of a policy of examination for admission in any particular language to the Institution on that basis, is a matter of policy.
Whether in particular facts and the cir cumstances of this case admission to medical or dental Institution by conducting examination in Hindi or other regional languages would be appro 593 priate or desirable or not, is a matter on which debate is possible and the acceptance of one view over the other involves a policy decision.
It cannot be appropriately dealt with by this Court, and order under Article 32 of the Con stitution in those circumstances would not be an appropriate remedy.
Counsel for the petitioners drew our attention to the facts that notice had been issued to the respondent.
That is true.
On a closer examination of this matter we are of the opinion that in view of the controversy involved herein, we should not proceed with this application on that basis any further.
Counsel for the petitioners then wanted to withdraw this writ petition.
He is permitted to do so, and the writ peti tion is dismissed as withdrawn but this will not prejudice the rights, if any, of the petitioners, legal or otherwise, to take appropriate steps, if any, as they may be advised, in accordance with law.
N.P.V. Petition dismissed.
| In August 1982 the Government of Madhya Pradesh decided to abolish the Madhya Pradesh Lift Irrigation Corporation.
It was also decided to merge the surplus staff of the Corpo ration in the equivalent posts of the Irrigation Department of the State Government.
Accordingly, with effect from 8.10.1982 the appellants, who were serving as Senior Techni cal Assistants (S.T.As.) in the Corporation, became Junior Engineers in the Irrigation Department but their seniority therein was fixed below the erstwhile Junior Engineers of the State Department.
For this purpose, an equivalent number of posts were deemed to have been created in the dying cadre of Junior Engineers.
Similarly, the Junior Technical Assist ants in the Corporation were absorbed in the lower cadre of Sub Engineers.
The Junior Engineers of the State Department on comple tion of two years ' service as Junior Engineers, were enti tled to be considered for promotion to the gazetted post of Assistant Engineers.
Sometime in 1984, the appellants who were at the bottom of the seniority list of Junior Engineers became eligible for promotion as Assistant Engineers.
Their legitimate claims in this regard were being stalled by the State, and so the appellants filed a writ petition in the High Court of Madhya Pradesh in 1986.
Later, the whole scheme of merger, as envisaged in the order dated 8.10.1982, was sought to be upset to the detri ment of the appellants, and towards that end the order issued on 8.10.
1982 was amended on 1.3.1986.
The effect of this amendment was that the Senior Technical Assistants were to be absorbed in the lower posts of Sub Engineers retro spectively with effect from 8.10.82.
The amendment however, provided that they shall be eligible for promotion to the posts of Assistant 425 Engineers from the quota of Graduate Sub Engineers.
This amendment vitally affected the interests of the appellants in so far as their status and chances of promotion were concerned.
Having failed before the High Court, the appellants have come to this Court by way of special leave.
Before this Court it was contended on behalf of the appellants that they having been given the right at the time of absorption in 1982 that they will be eligible for promo tion in the same way as the erstwhile Junior Engineers of the State Department, this right could not be done away by invoking an earlier amendment of the rules.
On behalf of the respondent State it was inter alia contended that (1) the decision of the State Government to absorb the appellants as Junior Engineers had overlooked the fact that on 8.10.1982 there was no cadre of Junior Engi neers because that cadre had been abolished in July 1979, and therefore this mistake was rectified on 1.3.1986 by absorbing the appellants in the lower cadre of Sub Engi neers;.(2) the appellants when they opted to join as Junior Engineers were aware that according to the rules prevailing on that date there was no avenue of promotion for them as Assistant Engineers; (3) after 27.7.81 the relevant recruit ment rules had been amended which made it clear that after that date there could be no promotion to the posts of As sistant Engineers from amongst Junior Engineers; and (4) the Junior Engineers belonging to the State Service had a right of promotion earlier and this was continued even after the amendment whereas the appellants became Junior Engineers at a time when there was no further promotion available to them and this made all the difference.
Allowing the appeal, this Court, HELD: (1) The assumption of the respondents that the cadre of Junior Engineers had ceased to exist long before the absorption of the appellants into the Department is incorrect.
Though the decision to abolish the cadre was taken in 1979 and the existing posts were converted into those of Assistant Engineers/sub Engineers on 27.5.1980, the cadre did not die, for the Junior Engineers of the Depart ment who were then functioning continued to function as before until they were promoted in due course as Assistant Engineers.
[438E F] (2) It is also not correct to say that this crucial fact had been overlooked at the time of passing the merger order of 8.10.82.
On the 426 contrary, the State was fully conscious of its earlier decision and the order of 8.10.82 specifically mentions that the posts of Senior Technical Assistants will be merged in the posts of Junior Engineers and an equivalent number of posts shall be deemed to have been created in the dying cadre of Junior Engineers.
[438F G] (3) Rule 6(iv) of the Non Gazetted Service Rules, read with Schedule I, clearly empowered the Government, in the exigencies of the situation, to continue the cadre for limited purposes and augment the same by the number of Senior Technical Assistants absorbed from the Corporation.
[439H; 440A] (4) On the terms of the relevant rules as on the lan guage of the order of 8.10.1982, the appellants, viz. Senior Technical Assistants absorbed from the Corporation were constituted as a part of the cadre of Junior Engineers, placed on complete par with the Junior Engineers of the department already in service and given the same promotional eligibility and opportunities as the latter.
[440A B] (5) It was open to the State, in view of rule 7(4) of the Gazetted Service Rules of 1968, to promote members of the non gazetted services also to the Gazetted Service to the extent of a prescribed quota.
The restricted language of rule 7, cannot therefore, be construed in such a way as to render redundant the specific provision in the Schedule entitling several persons from the Non Gazetted services to promotion.
[440G H] (6) In interpreting these rules and Government orders one should bear in mind that the promotional stipulations in Schedule II should be read in the light of rule 7(4) which permits a wide latitude to the Government in making recruit ments, by way of promotion, even otherwise than in the manner outlined in rule 7(1).
Reading the rules and the Government orders issued from time to time harmoniously, the effect of the cabinet order of July 1979 was that all J.Es., in position as such, should continue to be promoted until all of them became Assistant Engineers.
[442F G] (7) It is seen from the records that such of the Junior Engineers, belonging to the cadre as had been in service with the State Department have continued to get their promo tions even after the 1981 amendment.
If that be so, then, clearly the Department cannot discriminate as between offi cers belonging to the same cadre by promoting some of them and denying promotion to others.
A discrimination between them would be totally arbitrary and contrary to the scheme of absorption envisaged in 1982.
[441F G; 442B] 427 (8) The truth of the matter is that, when abolition of the cadre of Junior Engineers was thought of, the State decided that this should not affect the existing Junior Engineers and their promotional chances.
Again, when the merger of the Corporation and State services was thought of, the decision was that the Senior Technical Assistants should be placed on par with the Junior Engineers of the State Service.
This was a conscious and equitable decision and to go back upon it has resulted in arbitrary discrimination against the appellants.
By the decision of 1986, they lose their status as Junior Engineers (and are equated to Sub Engineers, which is the status also accorded to the Junior Technical Assistants, their subordinates in the erstwhile Corporation), they lose their right to promotion, they lose seniority by being placed at the bottom of the Sub Engineers of the State services, and the promotional quota now allot ted to them is illusory.
[443B D] (9) Gross injustice has been done to the appellants by the decision of 1.3.1986.
This decision is therefore quashed.
Accordingly, the appellants will be entitled to be considered for promotion as Assistant Engineers in the same manner and to the same extent as the Junior Engineers of the State service have been considered and not on the basis of the percentages prescribed for Sub Engineers under the amended rules.
[443F G]
|
N: Criminal Appeal Nos.
545 of 1982, 209, and 210 213 of 1983.
From the Judgment and Order dated 13.9.82 of the Gauhati High Court in Crl.
Death Ref No 1/8l and Crl.
Appeal No. l9(j), 24 & 25 of 1981.
Jain and Mrs. K. Kochar for the Appellants.
Nandy for the State of Assam.
537 Rajendra Singh, M/s. M.L. Lahoty, VB.Joshi Hrishikesh Roy & A R. Kathahzarika for the appellants in Criminal Appeal No. 209 of 1983.
Vaidyanathan for the respondents.
Patel for the complainant in Criminal Appeal No. 545 Of 1982.
Singh for the respondents in Criminal Appeal Nos.
210 213 of 1983.
The Judgment of the Court was delivered by VARADARAJAN, J.
These appeals by special leave are against the common judgment of a Division Bench of the Gauhati High Court in Criminal Death Sentence Reference No. 1 of 1981 in regard to two accused persons Henry Westmuller Roberts and Sunil Chandra Biswas and Criminal Appeal No. 19 of 1981 filed by those two condemned persons and Criminal Appeals Nos. 4 and 25 of 1981 filed by Naresh Chandra Ghatani and Anil Chandra Barua respectively.
The Sessions Judge, Dibrugarh in Sessions Case No. 33 (TSK) of 1978, convicted and sentenced Henry Westmuller Roberts and Sunil Chandra Biswas (hereinafter referred to as Henry and Sunil respectively) to death under section 302 read with section 34 I.P.C. for the murder of a boy Sanjay), alias Gettu Agarwala (hereinafter referred to as Sanjay), and to imprisonment for life under section 364 read with section 34 I.P.C. and rigorous imprisonment for seven years under section 201 read with s 34 I.P.C. and those two accused Henry and Sunil and accused Anil Chandra Barua and Naresh Chandra Ghatani (hereinafter referred to as Anil and Naresh respectively) to rigorous imprisonment for five years each separately under section 120B and section 387 read with section 34 I.P.C.
The sentences awarded to all the four accused were directed to run concurrently.
Henry, Sunil, Anil and Naresh were accused 1, 2, 3 and 4 respectively in the Sessions Court.
The High Court allowed Criminal Appeals Nos. 24 and 25 of 1981 in full and acquitted Anil and Naresh and also allowed Criminal Appeal No. 19 of 1981 in full as regards Sunil and acquitted him and rejected the death sentence reference relating to him and allowed the appeal of Henry in part as regards his conviction under section 120B l.
P.C. and dismissed his appeal in other respects 538 and accepted the death sentence reference relating to him.
The result is that the High Court found Henry guilty under sections 302, 364, 201 and 387 I.P.C. and not guilty under section 120B l.
P.C. and maintained the sentence awarded to Henry by the Sessions Court except in regard to the offence under section 120B l.
P.C. and acquitted the other three accused persons in full.
Henry has filed Criminal Appeal 545 of 1982 against his conviction and sentence awarded to him under section 302, 364, 201 and 387 I.P.C.
The deceased Sanjay 's father Chabil Prasad Agarwala has filed Criminal Appeal No. 209 of 1983 against the acquittal of Sunil, Anil and Naresh in entirety.
The State of Assam has filed Criminal Appeal No. 210 of 1983 against the rejection of the death sentence reference in regard to Sunil and Criminal Appeals Nos. 22, 212 and 213 of 1983 against the acquittal of Sunil in Criminal Appeal No. 19 of 1981, Naresh in Criminal Appeal No. 25 of 1981 and Anil in Criminal Appeal No. 24 of 1981.
Henry who had been acquitted by the High Court under section 120B l.
P.C. is not a party to Criminal Appeal Nos.
209 to 213 of 1983.
The case of the prosecution is this: In 1975 Henry, Sunil and Naresh were employees of the Oil and Natural Gas Commission (ONGC) at Sibsagar in Assam.
Henry, an Anglo Burmese was a Laboratory Attendant.
Sunil, a Bengali Hindu was a truck Driver.
Naresh, a Nepalese was a Black smith Anil, an Assamese was a Mohurrir under a con tractor of the ONGC at Sibsagar.
These four accused entered into a conspiracy to kidnap minor children at Sibsagar, Dibrugarh and Tinsukhia with a view to extract ransom.
Chabil Prasad Agarwala, P.W. 23 was doing business in food grains in a shop at Siding Bazar, Tinsukhia situate in Dibrugarh district.
He was living in a dwelling house situate adjacent to his shop with his wife Lilavati Agarwala, P.W. 19 and seven children including Sumita Agarwala, P.W. 21 and the deceased Sanjay who was nine years old and Studying in the Girls ' Hindu School.
There was a day long 'Holi ' (fagua) festival in Tinsukhia town on 26.3.1975.
The people belonging to the Marwari community of Siding Bazar had erected a pandal near a Shiva temple in connection with the ' Holi ' festival.
On that day three 539 persons who came to the temple for darshan at 9 or 9.30 a.m. stayed on in the temple till about 12.30 p.m.
Two of them have been subsequently identified as Henry and Sunil.
A number of children collected in the pandal to participate in the festivities.
Sanjay was in the pandal at about 5 or 5.30 p.m. playing with some children including Anil Kumar Chetri, P.W. 12 and Nirmal Kumar Jain, P.W. 13.
One man, who has been subsequently identified as Henry, came and watched the play and remarked that Sanjay was playing well.
A little later he gave chocolates to P.W. 12 and Sanjay and asked them for the names of their fathers which they readily mentioned.
Soon thereafter Sanjay 's elder sister, P.W. 21 aged about 10 or 11 years came to the pandal in search of Sanjay as directed by her mother, P.W. 19 and called him to go along with her.
Then Henry who was in the pandal called Sunil, who was present there, as 'Driver ' and asked him to bring chocolate.
When P.W. 21 and Sanjay were moving away from the pandal Henry called Sanjay by his name and asked him to come saying that he would give him chocolates.
Thereupon, Sanjay stayed behind after telling his sister, P.W. 21 that he would come a little later.
Sunil brought chocolates which Henry distributed to the children.
Henry asked Sunil whether the car was ready and he answered in the affirmative.
P.W. 13 left the pandal a little later while Henry, Sunil and Sanjay remained in the pandal at about 6 or 6.30 p.m. Sanjay did not return home.
His father, P.W. 23 who came home at about 7 p m.
On that day went out again and returned home only at about 3 a.m. On 27.3.1975.
P.Ws. 19 and 21 told P.W. 23 that Sanjay had not returned home.
Thereafter, P.W. 23 and his men went out searching for Sanjay.
Ramabatar Agarwala, P.W. 20, an accountant in the partnership business of P.W. 23 and Hanuman Prasad Agarwala, P.W. 35 informed the Inspector of Police, Tinsukhia Police Station, P.W. 42 at about 3.30 a.m on 27.3.1975 about Sanjay missing since the previous day.
At about 12 noon on 27.3.1975 when P.W. 23 and others including P.W.42 were in P.W. 23 's shop a message came over telephone No 159 located at the shop demanding a ransom of Rs. 3 lakhs for the return of Sanjay.
P.W. 23 informed P.W. 42 about this demand then and there and later sent a written complaint, exhibit 17 to Tinsukhia Police Station at about 4 30 p.m.
On the same day.
A few minutes before P.W. 42 registered a case on the basis of that report, Brahamadeo Rai, P.W. 29, a rickshawman, came to the 540 Police Station and handed over a packet saying that it was left behind by a passenger in his rickshaw who entered a market and did not turn up.
P.W. 42 opened the packet and found it to contain a pair of a small boy 's shorts, M. exhibit 26, two martons, M. exhibit 28 and an envelope, M. exhibit 1 containing the letter, M. exhibit 2 written in English and addressed to "Shri Chabil Das, Siding" and two other items.
The letter written in capital letters read: "Come with Rs. 3 lakhs to Jewel Hotel tomorrow 6 p.m. (28).
Do not inform police.
Come alone.
If not I kill.
If no money take loan.
" The address on the envelope, M. exhibit I and the body of the letter, M. exhibit 2 have been found by the hand writing expert, P.W. I on a comparison with the specimen hand writing and signatures taken from Henry to be in the hand writing of Henry.
Sanjay 's mother, P.W. 19 identified the shorts, M. exhibit 26 as those which were worn by Sanjay on the day of his disappearance on which she had embroidered the alphabet "sha" in Marwari script.
On 30 3.1975 P.W. 23 received the telegram, M. exhibit 13 addressed to "Chabin Das, Siding T.S." to the effect "I am not satisfied by your performance.
Last chance for transaction.
If you want your item wait instruction Lal", and he informed P.W. 35 and others about it.
exhibit 3 is original of that telegram seized by the police from the lost Master, Moran Post Office, P.W. 9.
On 31.3.1975 Pay.
23 received the bearing envelope, M. exhibit 26 containing the letter, M. exhibit 7 written in Hindi.
The hand writing expert, P.W. 1 has, on a comparison of M. Exs. 3 and 6 with the specimen hand writings of Henry found M. Exs. 3 and 6 to be in the hand writing of Henry.
On 8.4.1975 P.W. 23 received a telephone call from Digboi asking him whether he had received letter and telegram.
When P.W 23 answered the caller in the affirmative he asked P.W. 23 to come to Digboi if he wanted back his son.
P.W. 23 told the caller that he could not pay such a huge amount.
It was ultimately agreed over the phone that P.W. 23 should pay a ransom of Rs. 40,000/.
The caller told P.W. 23 that he should come to the Church gate situate behind Digboi Railway Station and act according to a letter which would be found under a stone by the side of one of the panels of that gate.
P.W. 23 and others accordingly went there and found a plastic cover underneath a stone 541 near the gate, containing the letter, M. exhibit 5 written in English capital letters.
The hand writing expert, P.W. I has found M. exhibit 5, on a comparison with the specimen hand writing of Henry to be in the hand writing of Henry.
The police had deployed some plain clothed police personnel at the Digboi public call office for arresting anyone coming to book a call to Tinsukhia telephone No. 159.
Henry went to that office at about 7.30 or 8 p.m.
On 10.4 1975 and booked a call to that telephone number.
After obtaining confirmation about the booking of the call from the telephone office employee, Ajit Kumar Chakraborti, P.W. 33, the Town Sub Inspector of Police, P.W. 24 with help of two constables P.Ws. 26 and 34 arrested Henry near that lt public call office.
When interrogated by the Investigating Officer, P.W. 42 Henry made a statement, Ex.33 offering to show the place where the dead body of Sanjay had been buried.
On 11.4.1975 Henry took the police party including the Assistant Political Officer and Magistrate, Kanta Das, P.W. 38 to a place situate by the side of a hillock in Bapapung.
There was a mound from which the earth had been disturbed at that place.
Two bones and three ribs were found near that mound and a big bone was found in the bushes and 8 more bones and a jaw bone with some teeth were found nearby.
When the mound was dug a human skull with some hair sticking to it and seven bones were found.
At the Digboi Police Station, P.W 38 obtained specimen hand writing and signatures from Henry, M. Exs.
l l to 14.
The Interrogation of Henry on 10.4 1975 led to the arrest of the other three accused Sunil, Anil and Naresh OD 11.4.1975 at Sibsagar.
Exs. 15 to 17 are the specimen hand writings of Naresh obtained by the Judicial Magistrate, P.W.3 on 27.5.1975.
Ex.2 is the report of the hand writing expert, P.W.1 submitted to the Chief Judicial Magistrate, Dibrugarh on 20.8.1975, containing his opinion about the hand writings.
The Investigating Officer, P. W. 43 who had taken over from P.W.42 produced Henry before the Chief Judicial Magistrate, Dibrugarh on 12.4.1975 for recording his confessional statement which he was in a mood to make, and it was recorded by the Judicial Magistrate, P.W.3 on 12.4 1975 itself after giving him some time for reflection.
Sunil was arrested by the Inspector of Police, 542 P.W.41 on 14.4.1975.
Sunil, Anil and Naresh made their confessional statements, Exs. 7, 8, and 9 on 18.4.124, 1975, 19.4.1975 and 21.4.1975 respectively before the Judicial Magistrate, P.W.3.
The medical Officer, P.W.37 packed the incomplete skeletal remains mentioned above in the presence of the Judicial Magistrate, P.W.3 and sent them to the Forensic Science Laboratory, Gauhati on 24.4.1975 under the direction of the Chief Judicial Maistrate, Dibrugarh along with P.W.37 's autopsy certificate and two photo graphs of Sanjay.
The Assistant Director, Biology Section, Forensic Science Laboratory, Gauhti, P.W.27 obtained some more photographs of Sanjay with their negatives and also a coat and a check shirt of the boy from the Chief Judicial Magistrate, Dibrugarh.
After a study of the skeletal remains P.W.27 found that they related to a 9 to 10 years old boy.
By making super imposition P.W.27 concluded that the skull in question could have been the skull of Sanjay as per his enlarged photographs.
Ex.26 is the report of P.W.27.
The Scientific Officer of the photograph Section of the Forensic Science Laboratory, Gauhati, P.W.28 performed the super imposition experiment of the photograph of the skull, M.Ex.48 and the photo graph of Sanjay, M.Ex. 59 and found them to be of the same per son.
Ex 27 is the report of P.W.28.
The four accused were subjected to test indentification in the parade held by the Second Class Magistrate, P.W.2 on 30.4.1975 and 4.9.1975.
In the parade held on 30.4.1975 Henry was indentified by 12 witnesses without any mistake while Sunil was indentified by 6 witnesses without any mistake and Anil was indentified by two witnesses without any mistake.
Ex.5 is P.W.2 's report relating to the proceedings of 30.4.1975.
In the parade held on 4.9.1975 Henry was identified by Rajender Nath Sharma, P.W.9 and Jiten Barua, P.W.25 without any mistake.
Ex.3 is the report relating to the proceedings of 4.9.1975.
In their statements recorded under s.313 of the Code of Criminal Procedure all the four accused retracted their confessional statements and denied all the circumstances appearing against them in the edvidence.
The learned Sessions Judge, Dibrugarh, on a consideration of the evidence convicted all the four accused and sentenced them as mentioned above, accepting the confessional statements, Exs.
6 to 9.
543 of the four accused recorded by the Judicial Magistrate, P.W.3 and the other evidence in the case.
The learned Sessions Judge has considered these confessions in paras 101 to 110 of his judgment and has observed that there is nothing improbable or unbelievable in them, that they appear to be spontaneous and are studded with vivid facts about the manner of commission of the crimes, that they receive assurance in several material particulars from the circumstantial evidence let in by the prosecution and that they are all voluntary and reliable though it appeared from the cross examination of the prosecution witnesses and from the statements of the accused recorded under section 313 Cr.
P.C. that they are retracted.
But the learned Judges of the High Court rejected all the confessions and the evidence of P.Ws. 10, 11, 16 and 25 regarding the identification of the accused in the test identification parade.
They have considered the confession of Henry in paras 45,55,62 and 64 of their judgment and have observed that the Judicial Magistrate, P.W.3 had failed to act properly in giving only three hours to Henry for reflection before recording his confession, Ex.6 on 12.4.1975.
They have further observed that though it is difficult to lay any hard and fast rule, in Serva Singh Rattan Sing vs State of Punjab(1) it has been held by this Court that generally speaking when an accused is produced under police custody it is reasonable to insist upon giving him at least 24 hours for reflection.
They have held that Henry 's confessional statement, Ex.6 has been obtained by coercion and is not voluntary and that it suffers from serious infirmity and cannot be acted upon.
They have considered Sunil 's confessional statement, Ex.7 in paras 74 and 76 of their judgment and found that he too had been given only three hours for reflection before his confession was recorded by the Judicial Magistrate, P.W. 3 on 18.4.1975 and that it is not voluntary and therefore, it is invalid in law.
They have considered the confession, Ex.8, of Anil in paras 77 and 79 of their judgment and have observed hat the Judicial Magistrate, P.W.3 who recorded it on 19.4.1975 had failed to see whether the accused was going to make the confession voluntarily after comprehending the implications of his admission.
They have considered the confession, Ex 9, of Naresh recorded by the Judicial Megistrate, P.W. 3 on 21.4.1975 in paras 84, 87 and 88 of their judgmemt and found that it has been made due to duress and (1) ; 544 inducement by the police and is not voluntary and that it suffers from serious infirmities and cannot be acted upon.
On a consideration of the other evidence, the learned Judges found that Sanjay had been kidnapped and murdered, and they accepted the trial court 's judgment that the corpus Delecti has been correctly identified to be that of Sanjay.
They accepted the evidence of P.Ws. 12 to 15 and 21 about the presence of Henry and Sunil in the pandal at the temple before Sanjay had disappeared on 26.3.1975.
They accepted the evidence of the rickshawman, P.W. 29 who has identified Henry in the test identification parade held by P.W.2 as the man who had left behind in his rickshaw the packet containing Sanjay 's shorts, M.Ex.26 and certain other things including the letter, M.Ex.2, enclosed in the envelope, M.Ex.1 which he had produced at the police station on 27.3.1975, and found on the evidence of the hand writing expert, P.W.I .Ex.2 to be in the hand writing of Henry.
On the evidence of the Post Master, Moran, P.W.9 Who has identified Henry in the test identification parade hold by P.W.2 as the person who landed over the telegram, exhibit 3, copy whereof, exhibit 13 had been received by P.W. 23, the learned Judges found that Henry had given the telegram, exhibit 3.
On the evidence of the hand writing expert, P.W. ] they found that exhibit 3 is in the hand writing of Henry and they held that exhibit 3 connects Henry with the crime.
The learned Judges found on the evidence of P.W. 23 that he had received a bearing letter, M. exhibit 7 written in Hindi on 31.
3.1975 enclosed in the envelope, M. exhibit 6, but held that it is not proved to be in the hand writing of any of the accused though the address written on the envelope, M. exhibit 6, of that letter is proved by the hand writing expert, P.W. 1 to be in the hand writing of Henry, and they rejected the evidence relating to that letter.
The learned Judges accepted the evidence of P.W. 23 about the telephonic conversation he had with some caller from Digboi at about 8 or 8.30 p.m.
On 8.4.1915 when that caller demanded a ransom of Rs. 3 lakhs for the return of Sanjay and it was ultimately agreed that P.W. 23 should pay Rs. 40,000 for the purpose.
They accepted the prosecution evidence that in accordance with that conversation P.W. 23 accompanied by some police personnel in plain clothes who posted themselves at suitable places went near 545 the gate of the Church situate behind Digboi Railway Station on 9.4.1975 and found the letter, exhibit 5 which has been found by the hand writing expert, P.W. 1, to be in the hand writing of Henry in English capital letters and they held that this was a strong piece of circumstantial evidence against Henry.
The learned Judges found that Henry attempted to run away when he was pointed out by P.W.33 while he was standing near a pan shop in front of the public telephone call office at Digboi on 10.4.1975, waiting for the trunk call booked by him at about 7 or 7.30 p.m on that day to Tinsukhia telephone No. 159 to mature and that he bit the constable, P.W.34 and tried to escape from his hold and that the circumstances under which he was arrested and his conduct at that time unerringly point to his guilt.
The learned Judges accepted the evidence of P.Ws. 14, 15 and 21 about the identification of Henry and Sunil in the test identification parade held by the Judicial Magistrate, P.W.2 as the persons who were present in the pandal before the disappearance of Sanjay on 26.3.1975, observing that these three witnesses had seen the suspects in broad day light and were in a position to notice their physical features correctly.
The learned Judges accepted the prosecution evidence that skeletal remains were recovered at the instance of Henry and pursuant to his confessional statement, exhibit 33 (admissible portion) and found that the evidence of P.Ws.27, 28 and 37, agreeing with the trial court, that the skull bone recovered pursuant to exhibit 33 is that of Sanjay and they have observed that the recovery of the skull bone of Sanjay at the instance of Henry is an important piece of evidence pointing unerringly to his guilt.
The learned Judges accepted the evidence of the witnesses who had identified Henry in the test identification parade held by the Judicial Magistrate, P.W.2 except the evidence of P.Ws. 10, l l, 16 and 25 on the ground that the photographs of Henry had been shown to P. Ws. 10, 11 and 25 before the identification and P.W. 16 could not identify Henry in the court during the trial.
The learned Judges noticed the law relating to circumstantial evidence in para 19 of their judgment thus: 546 "The law regarding circumstantial evidence is well settled.
When a case rests upon circumstantial evidence, such evidence must satisfy three tests: (i) the circumstances from which an inference of guilt is sought to be drawn must be cogently and firmly established; (ii) those circumstances should be of definite tendency unerringly pointing towards the guilt of the accused; and (iii) the circumstances taken cumulatively should form a chain so complete that there is no escape from the conclusion that within all human probability the crime was committed by the accused and none else.
The circumstantial evidence in order to sustain (a) conviction must be complete and incapable of explanation on any other hypothesis than that of the guilt of the accused.
The circumstantial evidence should not only be consistent with the guilt of the accused but should be inconsistent with his innocence.
After thus taking note of the law relating to circumstantial evidence the learned Judges have held in para 146 of their judgment that the circumstantial evidence against Henry taken cumulatively forms a chain so complete that there is no escape from the conclusion that the crime was committed by him and none else and that each of the circumstances established against him is incriminating and they cumulatively prove the complicity of the Henry in the kidnapping and murder of Sanjay.
They found that the evidence is not satisfactory to prove the offence of conspiracy under section 120R I.P.C. against Henry and acquitted him of that charge, but agreed with the trial court in regard to the finding on the other charges and held him guilty under sections 364, 387, 302 and 201 I.P.C. They thus allowed his appeal in part only as regards his conviction under s.120B I.P.C. and dismissed it in other respects and they accepted the death sentence confirmation case against him and confirmed the sentence of death as well as the other sentences awarded to him by the trial court except under section 120B I.P.C. As regards Sunil, apart from the confession, Ex.7 which has been rejected by the learned Judges they found that there was no other evidence except the evidence let in to prove his presence with Henry in the temple and the pandal in the morning and even 547 ing of 26.3.1975 and they held that it is not sufficient to sustain his conviction and that as regards the other two accused, Anil and Naresh there is no evidence except their retracted confessions, Ex.8 and 9 which have been rejected by them.
In that view they acquitted three accused, Sunil, Anil and Naresh of all the charges framed against them and rejected the death sentence confirmation case against Sunil.
The trial court acted upon the judicial confessional statements, Exs.
6 to 9 of all the four accused as being voluntary and reliable.
But the learned Judges of the High Court rejected all of them as not being voluntary or acceptable.
They have held that Henry 's confession, Ex.6 has been obtained by coercion and suffers from serious infirmity.
As regards Anil 's confession, Ex 8 they have observed that the Judicial Magistrate, P.W.3 who had recorded it on 19.4.1975, had failed to see whether Anil was going to make the confession voluntarily after comprehending the implications of his admission.
As regards Naresh 's confession, Ex.9 they have held that it has been made due to duress and inducement by the police and that it suffers from serious infirmities.
In the view we are taking as regards Anil and Naresh, it is not necessary to consider which of the two views, whether of the trial court or of the High Court is correct n regard to their confessional statements, Ex.8 and 9.
The acceptability or otherwise of the confessional statements of the other two accused, Henry and Sunil, has to be considered in detail.
The Judicial Magistrate, P.W.3 who had recorded Exs.6 and 7 on 12.4.1975 and 18.4.1975 respectively had admittedly given only three hours time for reflection before he recorded them.
He has stated in his evidence that after Henry was produced before him by constable Hadi Hussein at 11 a.m.
On 12.4,1975 he told Henry that he is a Judicial Officer and no other person was present inside the court and nobody would harm if he showed any reluctance to confess and that he was not bound to make any confessional statement but if he made one it would be used against him.
He has G stated that after Henry told him that his mind was clear from the time of his arrest and that he wanted to confess out of repentance for what he had done he gave him three hours time for reflection and put him in the custody of a peon of the Chief Judicial Magistrate, Dibrugarh in his own chamber and saw to it that no police officer was allowed to enter the court until the recording of the 548 confessional statement of Henry was over.
He was stated that after Henry was brought before him from his chamber after the said interval he cautioned him as above and that after being satisfied that Henry was going to confess voluntarily he recorded his statement in Ex.6.
As regards Sunil also, P.W.3 has stated that he administered the caution as he did in the case of Henry when he was produced before him at 11.30 a.m.
On 18.4.1975 and that Sunil told him that he wanted to confess because he was repentant for what he had done and that he replied in the negative when he asked him if he had been threatened by the police.
He has stated that after giving him three hours time for reflection he repeated the aforesaid warning to Sunil and that he expressed his willingness to make the confessional statement and he recorded it in Ex.7 after he was satisfied that Sunil was going to confess voluntarily.
It appears that Henry had some injury on his person when he was produced before P.W.3 and that on an earlier occasion Sunil had expressed his unwillingness to make any confessional statement.
The injury found on Henry, according to the entry, exhibit Kal in the jail register was this: "Both hands on the back slight swelling, complains of pain in both legs".
The injury was not serious enough to force Henry to make a false confessional statement It must be remembered that Henry had attempted to run away when the postal employee, P.W.33 pointed him to the police personnel in plain clothes and that after he was caught by the constables, P.Ws.26 and 34 as directed by the Sub Inspector of Police, P.W.24 he bit the hand of P.W.34 (according to P.W.26) before he was put in a police vehicle and taken to the police station.
It was suggested to P.W. 34 ill cross examination that Henry was beaten by the police on or after 10.4.1975, which has no doubt been denied by him.
It is not improbable that Henry was roughed up and given some beating by the police when he tried to escape from the hold of P.Ws. 26 and 34 before he was forcibly put into the police vehicle and taken to the police station, resulting in some injury to his person.
It has to be noted that Henry had not told the Judicial Magistrate, P.W.3 that he was beaten by the police for causing him to make a confessional statement.
It is not possible to hold that Sunil 's confessional statement, Ex.7 was not voluntary from the mere fact that he had a prior occasion declined to make a confessional statement.
The Judicial Magistrate, P.W.3 would have been well advised if he had given more time for reflection to the accused than he has done.
But it is not possible to reject the confessional statements merely because only three hours time had been given for reflection, if they are 549 Otherwise acceptable.
Therefore it is necessary to note what Henry And Sunil have stated in their confessions to find out whether intrinsically they are voluntary statements or tutored ones made under coercion.
We will state in our own words what Henry and Sunil have stated in their confessional statements.
Henry has stated in his confession thus: "I was arrested at Digboi at 7.30 p.m.
On 10.4.1975.
On 26.3.1975 1 and Sunil and Anil went from Dibrugarh to Tinsukia.
Boys were playing in a big pandal in Tinsukhia.
I was waiting a little away from the pandal.
Sunil went near the pandal and called a boy and after asking him for his father 's name he brought the boy to me.
Sunil offered sweets to the boy and asked him to follow me, saying that I would give him many things.
1 took the boy in a rickshaw and proceeded a furlong and Sunil brought a Taxi.
The boy mentioned his name as Sanjay Agarwala.
Sunil told me that the boy could be confined in an abandoned house in Bapapung and we went there.
1 was proceeding ahead of Sunil and the boy.
When we were proceeding towards the Bapapung oil field area I heard moaning sound.
I looked back and found that Sunil had caught hold of the boy 's neck and pulled him down.
Sunil pressed the chest of the boy with his knee and also pressed his mouth.
Ultimately Sunil strangled the boy to death.
There was a hole which looked like a foxhole.
Sunil kept the dead body of the boy inside the hole and filled it up with earth.
Sunil tore off the shirt and pants of the boy and took them with him.
After the murder we came to Digboi.
Next morning l and Sunil came to Tinsukia.
1 rang up the father of the deceased to demand a ransom of Rs. 3 lakhs.
Then at 3 p.m. we sent the pants and the shirt of the deceased to his father through a rickshaw wallah.
We sent a letter along with the clothes.
The letter was written by me in English.
In the letter I mentioned that if the farther wanted the boy back he would have to give three lakhs of rupees, The father was directed to give the money at the Jewel Hotel, Dibrugarh.
On 29.3.1975 I sent a telegram to the father of the boy from Moran Post Office directing him to wait for our instructions.
On 7.4.1975 1 and Sunil went to 550 Dibrugarh and spent the night there.
On the next day T booked a call to the father af the boy.
When the bell rang y Sunil held the receiver and demanded the money to be given positively on the next day, but the father did not turn up.
On 10.4.1975 Sunil asked me to book a call.
I held the receiver in a public phone booth and asked the exchange to book a call to Tinsukhia telephone No. 159.
In the mean time Sunil suspected something and asked me to leave the place and he disappeared.
When I entered the sweepers line, two plain clothed cyclists stopped me and took me to the police station.
On my asking the deceased mentioned the name of his father as Chabil Das Agarwal or something like that.
I have done all this at the instigation of Sunil.
" Sunil has stated in his confessional statement thus: "About one and a half months ago I went to Naresh 's shop to buy provisions as at fair price.
Then Henry came there and said that we had not achieved anything in life by work and that if I follow the line shown by him I would get a lot of money overnight.
When I asked him what the line was, he said that we should kidnap sons of rich people and keep them for two or three days and demand money and return them after getting the money.
There after, on 25.3.1975 I,, Henry and Anil went to Naresh 's shop where Henry said that we should kidnap boys at Dibrugarh and he would bear all the expenses.
We went to Dibrugarh on that day at 5 p.m. and stayed in Kusum Hotel.
On the next day we went to Tinsukhia and spent the night in the railway station platform.
After hunting the whole of next day Henry managed to take away a boy by inducement from a pandal at Tinsukhia and put him in a rickshaw and I followed them in another rick show.
Henry sent Anil for a taxi and when it was brought 1 and Henry boarded it along with the boy near Shivadam, and Anil went away.
We got down near the gate of Bapapung oil field.
While getting down Henry made the boy to stand up leaning against his own body.
When the taxi left Henry took up the boy in his arms.
As the boy 's hands were hanging loose 1 asked what had happened.
Henry told me that the boy had gone to sleep for ever and he 551 had finished him off.
Looking closely I found a length of string tied round the boy 's neck.
Then Henry said that the boy 's disposal should be arranged.
Taking the boy we went to the cremation ground at Bapapung.
Finding a hole there, Henry took off the boy 's pants and shirts and pushed the boy into it.
I and Henry completed the burial by putting earth over the body.
Next morning we went to Tinsukhia by train.
In the platform Henry wrote a letter and placed the boy 's pants with the letter and asked a rickshaw puller to deliver the packet to Chabil Marwari.
Before kidnapping the boy Henry stated that after kidnapping he would demand three lakhs of rupees from his father.
While getting down at Namrup, Henry said that I would have to go to Moran on the next day with Ghatani.
After reaching Sibsagar I went to Moran with Chatani on 27.3.1975 and we met Henry and Anil.
While I was taking tea in a hotel Henry sent a telegram from the post office to Chabil Agarwala informing him that he would let him know when and where the money should be delivered.
Only then Henry said that boy was Sanjay and his father was Chabil Agarwala.
In the Kusum Hotel Henry said that Chabil would deliver the money at the Jewel Hotel.
Henary went into the Jewel Hotel and came back and said that it would not be convenient and that we should move off.
On 6.4.1975 I and Henry went to Digboi and stayed there for the night.
At 6 p.m.
On the next day Henry telephoned Chabil Marwari from the Digboi main post office, informing him that on 8.4.1975 he would leave a letter at the gate of the Church situate behind that railway station and that he should collect that letter after leaving a sum of Rs. 3 lakhs.
At 3 p.m. Chabil came by car and collected the letter and left a letter written in Hindi at the gate.
On 9.4.1975, or 10.4.
1975 Henry wanted to telephone once again and at 6 p.m., I and Henry went to Digboi Post Office.
While I waited near a pan shop Henry booked a call from that post office.
The Post Master said that it would take about ten minutes to put the call through.
Four or five policemen in plain clothes arrested and took away Henry.
I hid myself in the cremation ground from where the police found me and arrested me." 552 A perusal of these confessional statements, Exs. 6 and 7 shows that they are more or less exculpatory of the maker, for Henry had attributed everything to Sunil and stated that he had done every thing at the instance of Sunil while Sunil had attributed the important roll in the crime to Henry.
As pointed out by Mr. Rajender Singh, Senior Counsel appearing for complainant, P.W. 23, this would not normally be the position if the confessions were the result of turoring by the police.
The confessional statement of Henry is quite long while that of Sunil is much longer.
As remarked by the learned Sessions Judge these confessions are full of facts and minute details which would not be there normally if the confessions are the result of tutoring or of compulsion.
The circumstantial evidence relied upon by the trial court and the High Court lend assurance to the genuineness and voluntary nature of these confessions.
They have no doubt been retracted, but in view of the fact that they are generally corroborated by the circumstantial evidence in ample measure, there is no satisfactory reason for the confessions not being accepted and acted upon.
In these circumstances, we agree with the learned Sessions Judge that the confessional statements of Henry and Sunil, Exs. 6 and 7, are voluntary and can be acted upon, together with the circumstantial evidence, for basing a conviction.
We agree with the courts below that the corpus delecti has been correctly established by the prosecution to be that of Sanjay.
The letter M.Ex. 2 (enclosed in the envelope, M.Ex.1) was found in the paper packet delivered by the rickshawman, P.W.29 at the Tinsukhia Police Station on 27.3.1975.
The packet Contained inter alia the pair of shorts, M.Ex 26 which have been identified by Sanjay 's mother, P.W.19 as those which he was wearing on the day of his disappearance.
In that letter, M.Ex.2 addressed to "Shri Chabil Das, Siding", it stated that if the ransom of Rs.3 lakhs is not paid by 6 p.m.
On 28.3.1975 at the Jewel Hotel the person who wrote that letter would "kill".
No doubt it is not mentioned in that letter as to who would be killed if the money was not paid within the time.
The amount which was finally settled at Rs. 40,000 in the telephonic conversation which P.W.23 I ad from some caller from Digboi on 8.4.1975 had not been paid.
In the confessional statements, Exs. 6 and 7 it is stated that Sanjay was killed though the manner, the place and the hands which killed him are mentioned differently.
Pursuant to the confessional 553 statement, Ex.33 (admissible portion) of Henry offering to show the place where the dead body of the boy had been buried some skeletal remains including the skull which have been later found to be that of a nine or ten years old human being were recovered from a pit or hole situate by the side of hillock in the Bapapung oil field area.
Those skeletal remains were sent by the Medical Officer, P.W.37 duly packed in the presence of the Judicial Magistrate, P.W.3 to the Forensic Science Laboratory, Gauhati.
The Assistant Director, Biology Section of that laboratory, P.W. 27 obtained some photographs of Sanjay with their negatives from the boy 's family through the police.
After performing the superimposition test with Sanjay 's enlarged photograph, M.Ex.59 the Scientific Officer of the Photography Section of that laboratory, P.W.28, found the skull, M.Ex. 48 and the photograph, MEx.
59 of Sanjay to be of the same person.
Ex.27 is his report.
In these circumstances, we think that there is no reason to disagree with the findings of the courts below that the corpus delecti recovered from the place pointed out by Henry as per his confessional statements Ex.33 has been proved to be that of Sanjay who had disappeared from the pandal at the temple in Tinsukhia town in the evening of 26.3.1975.
We agree with the courts below and find that the prosecution has proved beyond all reasonable doubt that Sanjay, who was about nine years old at the time of his disappearance, had been kidnapped and murdered.
The case rests purely upon circumstantial evidence, there being no direct evidence about the kidnapping and other offences alleged.
The case of the prosecution is that all the four accused stayed at the Kusum Hotel on 24.3.1975 as shown by the entries in the register of that hotel, M.Ex.10 and that Henry and Sunil were together in the pandal at the Shiva temple in Tinsuk hia town in the forenoon and evening of 26.3 1975.
On the basis of this circumstance and the confessional statements the prosecution has sought to establish its case of conspiracy against the accused.
In his confessional statement, Ex.7 Sunil had stated that when he went to Naresh 's shop about one and a half months prior to 18.4.1975 for buying provisions at fair price Henry cam there and told him that they had not achieved anything in life by work and that if he would follow the line shown by him he would get a lot of money overnight, that when he asked Henry about what that line was he told him that they should kidnap sons of rich people and keep them for two or three days and demand money as ransom and return 554 them after getting the money, and that thereafter on 25.3.
1975 he went along with Henry and Sunil to Naresh 's shop where Henry stated that they should kidnap boys at Dibrugarh and he would meet all the expenses.
He has also stated that Henry told him at the Kusum Hotel that Chabil (P.W. 23) would deliver the money at the Jewel Hotel.
He has mentioned about the presence of Anil and Naresh on some other occasions also in his confessional statement.
In his confessional statement, exhibit 6 Henry has made repeated reference to Sunil but only once to Anil and that is that he went along with Sunil and Anil from Dibrugarh to Tinsukhia on 26.3.1975.
There is no other evidence about the conspiracy.
We agree with the High Court that the evidence adduced by the prosecution is not sufficient to prove that charge.
Mr. Rajender Singh, learned Senior Counsel who appeared for the complainant did not advance any argument regarding the charge of conspiracy.
The admitted that there is no evidence against Anil and Naresh except their retracted confessions and that they may not be sufficient to prove any of the charges against them.
In these circumstance, we find no satisfactory reason to interfere with the conclusion of the learned Judges of the High Court that the charge of conspiracy against all the four accused and the other charges against Anil and Naresh have not been proved satisfactorily.
The circumstances found by the trial court and the learned Judges of the High Court to have been proved satisfactorily against Henry are these: (1) His presence along with Sunil in the pandal at the Shiva temple in Tinsukhia town in the forenoon and afternoon of 2(.3.1975 his offer of sweets to Sanjay and other boys, P.Ws. 12 and 13, during that time; his calling Sanjay when he was moving away from the pandal with his sister, P.W. 21 with an offer of more sweets to him; and his continued stay in the pandal along with Sunil and Sanjay even after P.Ws. 12, 13 and 21 left the place, the last of them at about 5.30 p.m. (2) Receipt at the Tinsukuia Police Station on 27.3.1975, of the packet containing inter alia the pair of shorts, M.Ex. 26 and the letter, M.Ex.
written in English and addressed to "Shri Chabil Das, Siding," demanding a ransom of Rs. 3 lakhs for the return of Sanjay 555 by 6 p.m.
On the next day at the fixed place on pain of murder of the boy in case of default.
The shorts, M. exhibit 26 have been identified by Sanjay 's mother, P.W. 19 to be those which Sanjay was wearing on the day of his disappearance.
The handwriting expert, P.W. 1 has opined in his report, exhibit 2, on a comparison of the hand writing contained in M. exhibit 2 with the speciman hand writing and signatures of Henry, M.Exs.
11 to 14 obtained by P.W. 38 at Digboi Police Station that M.Ex.
2 is in the hand writing of Henry.
(3) Receipt of the telegram, M.Ex 13 by P.W.23 on 30.3.
1975 to the effect "I am not satisfied with your performance.
Last chance for transaction.
If you want your item await instructions.
" M.Ex.3 the original telegram was handed over to the Post Master, Moran, P.W.9 on 29.3.1975 by Henry who has been identified by P.W.9 in the test identification parade held by P.W. 2 as well as in the court during the trial.
The hand writing expert, P.W.I has found M.Ex.3 to be in the hand writing of Henry in his report, M.Ex.l.
(4) On 31.3.1975 P.W,23 had received the bearing envelope, M.Ex.6 containing the letter, M.Ex.7 written in Hindi.
The Hindi writing in exhibit
M.7 has not been proved to be in the hand writing of any of the accused but the hand writing expert, P.W. I has found the address on the envelope, M.Ex.6 to be in the hand writing of Henry in his report, M.Ex.2.
(5) On 8.4 1975 P.W. 23 had received a telephone call from Digboi asking him if he had received the letter and when he answered in the affirmative he was asked by the caller to come to Digboi if he wanted his son back.
In that conversation the amount to be paid by P.W. 23 as ransom for return of his son was fixed at Rs. 40,000 and he was told by the caller that he should come to the gate of the Church at Digboi where he would find a letter underneath a stone and that he should act according to the contents of that letter.
Accordingly, P.W. 23 and others went by a car? and 556 P.W. 23 proceeded towards the gate of the Church alone and found the letter, M.Ex. 5 written in English capital letters.
That letter which has been recovered by the police has been found by the hand writing expert, P.W. t to be in the hand writing of Henry in his report, M.Ex. 2.
(6) On 10.4.1975 at about 7 or 7.30 p.m.
Henry had booked a call from Digboi Public call office to Tinsukhia telephone No. 159 relating to P.W. 23 and was waiting outside for the call to materialise.
Then he was point ed out by the public telephone call office employee, P.W.33 to the police who were keeping a watch in plain clothes.
At the instance of the Sub Inspector of police, P.W. 24 the constables, P. Ws. 26 and 34 caught hold of Henry when he tried to run away from the place.
In the process he kicked P.W. 34 and bit one of his fingers.
However, he was over powered and apprehended.
As soon as P.W. 26 grabbed him he said "I do not know about this matter." He was taken from I here by a police vehicle to the police station.
This is suspicious conduct on the part of Henry.
(7) On 10.4.1975 When interrogated by the Investigating Officer, Henry made.
a statement, exhibit 33 (admissible portion) offering to show the place where the dead body of the boy had been buried.
On the next day Henary took the police party and others including the Political Officer and Executive Magistrate, P.W. 38 to a place situate by the side of a hillock in the ONGC oil field area of Bapapung.
From a mound from which earth had been disturbed and from the surrounding area some skeletal remains including the skull bone, M.Ex. 48 were recovered by the police.
The skull bone, M.Ex.
48 has been found by the super imposition test conducted by the experts, P.Ws. 27 and 28 of the Forensic Science Laboratory, Gauhati to be the skull bone of Sanjay as per P.W. 28 's report, Ex.27 (8) Henry has been identified in the test identification parade held by the Judicial Magistrate, P.W. 2 on 30.4.1975 557 by 12 witnesses without any mistake and on 4.4.1975 by the Post Master, Moran, P.W. 9 without any mistake.
Some of the witnesses who identified Henry in the test identification parade as well as in the court are P.Ws.10, 14, 15, 17, 18, 26 and 29.
The above are very strong circumstances which can safely be relied upon.
They form a complete chain pointing unerringly to the guilt of Henry and are inconsistent with his innocence.
We were taken through the evidence by the learned Counsel for the parties and we also perused the summary of the evidence given by the learned Sessions Judge in paras 13 to 13 (43) of his judgment.
We do not think it necessary to deal with the evidence of the witnesses in detail as we agree with the courts below in regard to these circumstances.
Accordingly, we agree with the courts below that Henry 's guilt has been proved by the prosecution satisfactorily beyond all reasonable doubt in respect of all the charges framed against him except the one under section 120B I.P.C .
As regards Sunil, there is the evidence of P.Ws. 14, 15 and 21 about his presence in the pandal at the Shiva temple in Tinsukhia town in the forenoon and evening of 26.3.1975.
The pujari of the temple, P.W. 14 has identified Henry and Sunil as the persons who were present in the pandal on 26.3. 1975 correctly both in the test identification parade held by the Judicial Magistrate, P.W. 2 and in the court.
P.W. 15, a businessman of Tinsukhia, who had gone to the temple on 26.3.1975 also has identified Henry and Sunil both in the test identification parade held by P.W. 2 as well as in the court as the men who were standing near a bamboo post of the pandal when Sanjay and other boys were playing nearby.
He learnt on the next day about Sanjay missing.
Sanjay 's elder sister, P.W. 21 who went to fetch him from the pandal at about 5 or 5.30 p.m, on 26.3.1975 has stated in her evidence that Henry and Sunil, both of whom she has identified correctly in the test identification parade held by P.W. 2 as well as in the court, were present in the pandal when Sanjay and other boys including P.W. 12 and 13 were playing.
When she called Sanjay to go home with her one of those two men called the other as 'Driver ' and asked him to get chocolates.
Then P.W. 21 left the place along with Sanjay, but after they had covered some distance one of the men called Sanjay by his name and said that he would give him chocolates.
Then Sanjay asked P.W, 21 to go ahead and inform his mother that he would came in a short 558 while.
So P.W. 21 had left the place leaving Sanjay behind.
She has pointed out that it was Henry who sent Sunil to fetch chocolates.
There is no reason for not accepting the evidence of these three witnesses, P.Ws. 14, 15 and 21 about the presence of Sunil along with Henry in the pandal at the Shiva temple in Tinsukhia town on 26.3.1975 when Sanjay was playing there with other boys, P.Ws. 12 and 13.
There is also no reason for not accepting the evidence of P.W. 21 that Henry called Sanjay when he was moving away along with her back to the place saying he would give him chocolates, that he called Sunil as 'Driver ' a few minutes earlier and asked him to get chocolates, and that P.W. 21 left Sanjay behind as desired by him and went away to her house at about 5.30 p.m. on the day of Sanjay 's disappearance.
Sunil has been identified by 6 witnesses in all without any mistake.
There is also the evidence of P.W.41, the then officer in charge of Sibsagar Police Station that he arrested Sunil on 14.4.1975 from a house in Sibsagar town cremation ground after a long chase and that he was until then hunting for him in vain from 11.4.1975.
He has stated that Sunil started to flee as soon as he saw him and that he succeeded in catching him after giving him a chase 1 1/2 or 2 furlongs.
In his confessional statement, Ex.7 Sunil has admitted his presence with Henry in the pandal at Tinsukhia on 26.3.1975 and his arrest from the cremation ground on 14 4.1975.
There are some other circumstances brought out in the evidence and his confessional statement extracted supra pointing to his guilt unmistakably.
Mr. Rajender Singh, learned Counsel for the complainant submitted that circumstantial evidence against Sunil is practically the same as in the case of Henry except that no recovery has been made at his instance and that there is nothing on record by way of his hand writing unlike the case of Henry.
Mr C.B. Singh, learned Counsel who appeared for Sunil as amicus curiae submitted that having regard to Henry 's letter, exhibit 2 in which he had stated that he would kill (the victim) if the ransom amount is not paid by 6 p.m.
On the next day it is probable that Henry might have killed Sanjay.
He submitted that there is no satisfactory material on record to show that Sunil either did anything for killing Sanjay or that he shared the intention of Henry to kill the boy.
He further submitted that Sunil 's intention as reflected in his confessional statement, exhibit 7 was only to kidnap and keep the boy for two or three days and send him back after collecting the 559 ransom.
Having regard to all the circumstances of the case we are inclined to accept this submission of Mr. Singh as being most probable and reasonable.
We hold that the offence proved against Sunil is only kidnapping of Sanjay with intent to secretly and wrongfully confine him, an offence punishable under section 365 I.P.C. Henry had nothing to say when he was examined by the the learned Sessions Judge on the question of the sentences to be awarded to him except that he intended to file an appeal in the High Court.
The learned Sessions Judge has observed that the crimes committed by Henry are heinous and he had held Sanjay for ransom and that lt is a fit case in which the extreme penalty of the law is called for as regards Henry.
Accordingly, he sentenced Henry to death under s.302 read with s 34 I.P.C., imprisonment for life under section 364 read with s.34 I.P.C., rigorous imprisonment for seven years under section 201 read with s.34 I.P.C., and rigorous imprisonment for five years under section 387 read with section 34 I.P.C., and directed the sentences to run concurrently.
The learned Judges of the High Court have agreed completely with reasons given by the learned Sessions Judge for awarding the sentence of death to Henry and they have confirmed all the sentences awarded to him and accepted the death sentence reference relating to him as mentioned above.
We are of the opinion that the offences committed by Henry, the originator of the idea of kidnapping children of rich people for extracting ransom, ate very heinous and pre planned.
He had been attempting to extract money from the unfortunate boy 's father, P.W. 23 even after the boy had been murdered by making the father to believe that the boy was alive and would be returned to him if he paid the ransom.
In our opinion, this is one of the rarest of rare cases in which the extreme penalty of death is called for the murder of the innocent young boy, Sanjay in cold blood after he had been kidnapped with promise to be given sweets.
We, therefore, confirm the sentence of death and the other sentences awarded to Henry by the High Court under sections 302, 364, 201 and 387 I.P.C. and dismiss Criminal Appeal No. 545 of 1982 filed by him.
We allow Criminal Appeal No. 209 of 1983 filed by Chabil Prasad Agarwala, P.W. 23 against the acquittal of Sunil, Anil and Naresh in part and convict only Sunil under s.365 I.P.C. for having kidnapped Sanjay in order to secretly and wrongfully confine him and sentence him to undergo rigorous imprisonment for seven years and dismiss that appeal in other respects.
We reject Criminal Appeal No.210 of 1983 filed by the 560 State of Assam against the rejection of the death sentence reference in regard to Sunil and dismiss Criminal Appeals Nos. 212 and 213 of 1983 filed by the State of Assam against the acquittal of Naresh in Criminal Appeal No.25 of 1981 and of Anil in Criminal Appeal No. 24 of 1981, both on the file of the High Court, and allow Criminal Appeal No.211 of 1983 filed by the State of Assam against the acquittal of Sunil in Criminal Appeal No. 19 of 1981 on the file of the High Court as indicated in Criminal Appeal No.209 of 1983 and dismiss it in other respects.
The sentences of imprisonment awarded to Henry by the trial court and confirmed by the High Court and by us shall run concurrently and merge with the sentence of death.
M.L.A Criminal Apreal Nos.
545/82, 210/83, 212 13/83 disnnssed and Criminal Appeal No. 209 Allowed.
| The deceased a boy of 9 was playing with the children in the Pandal near a Shiva Temple on 26th March 1975 which was a day of 'Holi ' festival.
The prosecution 's case is that accused Nos. 1 and 2 kidnapped and murdered the deceased with a view to extract ransom from his father.
Accused No. 1 was arrest d on 10th April 1975 and on 11.4.75 he showed the place where the dead body of the deceased had been buried.
His interrogation also led to the arrest of other three accused Nos. 2, 3, and 4.
All the accused made their confessional statements on different dates before a Judicial Magistrate.
The four accused were subjected to test identification in the parade held by the Second Class Magistrate, P.W. 2 on 30.4.1975 and 4.9.1975.
Accused No.
I was identified by 12 witnesses without any mistake while accused No. 2 was identified by six witnesses without any mistake and accused No. 3 was identified by two witnesses without any mistake.
In their statements recorded under section 313 of the Code of Criminal Procedure all the accused retracted their confessional statements and denied all the circumstances appearing against them in the evidence.
The learned Sessions Judge on a consideration of the evidence convicted all the four accused and sentenced accused No. I and accused No. 2 to death under section 302 read with section 34 I.P.C. for the murder of the deceased and to imprisonment for life under section 364 read with section 34 I.P.C. and rigorous imprisonment for seven years under section 201 read with section 34 I.P.C. and those two accused Nos. 3 and 4 to rigorous imprisonment for five years each separately under section 120B and section 387 read with section 34 I.P.C.
The sentences awarded to all the four accused were directed to run concurrently.
On appeals by the four accused.
the High Court rejected the confessional statements of the four accused as not being voluntary or acceptable and held that the circumstantial evidence against accused No. I taken cumulatively forms a chain so complete that there is no escape from the conclusion that the crime was commit 534 ted by him and none else and that each of the circumstances established against him is incriminating and they cumulatively prove the complicity of accused No.1 in the kidnapping and murder of the deceased.
The High Court found that the evidence is not satisfactory to prove the offence of conspiracy under s.120 I.P.C. against accused No 1 and acquitted him of that charge, but agreed with the trial court in regard to the finding on the other charges and held him guilty under ss.364,387, 302 and 201 I.P.C. The High Court thus allowed the appeal of accused No. I in part only 'as regards his conviction under section 120B I.P.C. and dismissed it in other respects and accepted the death sentence confirmation case against him and confirmed the sentence of death as well as the other sentences awarded to him by the trial court except under s.120B I P.C. As regards accused No.2, apart from the confession, which was rejected by the High Court, it found that there was no other evidence except the evidence let in to prove his presence with accused No. I in the temple and the pandal in the morning and evening of 26.3.1975 and it held that it is not sufficient to sustain his conviction and that as regards the other two accused No.3 and 4 there is no evidence except their retracted confessions which were rejected by it.
In that view, the High Court acquitted accused Nos. 2, 3 and 4 of all the charges framed against them and rejected the death sentence confirmation case against accused No. 2.
In appeals to this Court by accused No. I and the State and the father of the deceased, the Court.
^ HELD: 1.
It has to be noted that accused No. 1 had not told the Judicial Magistrate, P.W.3 that he was beaten by the police for causing him to make a confessional statement.
It is not possible to hold that accused No. 2 's confessional statement exhibit 7 was not voluntary from the mere fact that he had on a prior occasion declined to make a confessional statement.
The Judicial Magistrate, P.W. 3 would have been well advised if he had given more time for reflection to the accused than he has done.
But it is not possible to reject the confessional statements merely because only three hours ' time had been given for reflection, if they arc otherwise acceptable.
Therefore, it is necessary to note what accused Nos.
I and 2 have stated in their confessions to find out whether intrinsically they are voluntary statements or tutored ones made under coercion.
A perusal of the confessional statements of accused Nos. 1 and 2 shows that they are more or less exculpatory of the maker, for accused No. 1 had attributed everything to accused No .2 and stated that he had done every thing at the instance of accused No.2 while accused No. 2 had attributed the important role in the crime to accused No. 1.
This would not normally be the position if the confessions were the result of tutoring by the police.
The confessional statement of accused No. 1 is quite long while that of accused No.2 is much longer.
As remarked by the learned Sessions Judge these confessions are full of facts and minute details which would not be there normally if the confessions are the result of tutoring or of compulsion.
Pursuant to the confessional statement, Ex.33 (admissible portion) of accused No. 1 offering to show the place where the dead body of the boy had been buried, some skeletal remains including the skull which have been later found to be that of a nine or ten years old human being were recovered from a Pit or hole situate by the 535 side of a hillock in the Bapapung oil field area.
There is no reason to disagree with the findings of the courts below that the corpus delecti recovered from the place pointed out by accused No. 1 as per his confessional statement, exhibit 33 has been proved to be that of the deceased who had disappeared from the panda I at the temple in Tinsukhia town in the evening of 26.3.
I 975.
The circumstantial evidence relied upon by the trial court and the High Court lend assurance to the genuineness and voluntary nature of these confessions.
They have no doubt been retracted, but in view of the fact that they are gene rally corroborated by the circumstantial evidence in ample measure, there is no satisfactory reason for the confessions not being accepted and acted upon, In these circumstances the learned Sessions Judge was right in holding that the confessional statements of accused Nos. 1 and 2 are voluntary and can be acted upon, together with the circumstantial evidence, for basing a conviction.
[552F H; 553 A C3] 2.
The case rests purely upon circumstantial evidence, there being no direct evidence about the kidnapping and other offences alleged.
There is no evidence against accused Nos. 3 and 4 except their retracted confessions and they may not be sufficient to prove any of the charges against them.
There is also no satisfactory reason to interfere with the conclusion of the learned Judges of the High Court that the charge of conspiracy against all the four accused and the other charges against accused Nos. 1 and 2 have not been proved satisfactorily.
[553F;554D E] 3.
(i) The circumstances found by the trial Court and the High Court against accused No. I are very strong and can safely be relied upon.
They form a complete chain pointing unerringly to the guilt of accused No. I and arc inconsistent with his innocence Accordingly, accused No. I guilt has been proved by the prosecution satisfactorily beyond all reasonable doubt in respect of all the charges framed against him except the one under section 120B l.
P.C. [547C D] 3 (ii) The offences committed by accused No. 1, the originator of the idea of kidnapping children of rich people for extracting ransom, are very heinous and pre planned.
It had been attempting to extract money from the unfortunate boy 's father, P.W. 23 even after the boy had been murdered by making the father to believe that the boy was alive and would be returned to him if he paid the ransom.
Therefore, this is one of the rarest of rare cases in which the extreme penalty of death is called for the murder of the innocent young boy, Sanjay in cold blood after he had been kidnapped with promise to be given sweets.
Therefore, the sentence of death and the other sentences awarded to accused No. 1 by the High Court under sections 302, 364, 201 and 387 I.P.C. are confirmed and Criminal Appeal No. 545 of 1982 filed by him is G dismissed.[559E G] 3.
(iii) As regards accused No. 2, there is the evidence of P.Ws. 14, 15 and 21 about his presence in the pandal at the Shiva temple in Tinsukhia town m the forenoon and evening of 26.3.1975, There is no reason for not accepting the evidence of these three witnesses.
14. 15 and 21 about the 536 presence of accused No. 1 in the pandal at the Shiva temple in Tinsukhia town on 26.3.1976 when the deceased was playing there with other boys, P.Ws. 12 and 13.
There is also no reason for not accepting the evidence of P.W. 21 that accused No. 2 called the deceased when he was moving away along with her back to the place saying he would give him chocolates, that he called accused No. 2 as Driver ' a few minutes earlier and asked him to get chocolates, and that P.W. 21 left the deceased behind as desired by him and went away to her house at about 5.30 p.m.
On the day of the decease 's disappearance.
He has been identified by 6 witnesses in all without any mistake.
There is also the evidence of P.W. 41, the then officer in charge of Sibasagar Police Station that he arrested accused No. 2 on 14.4.
1975 from a house in Sibasagar town cremation ground after a long chase and that he was until then hunting for him in vain from 11.4.1975.
He has stated that he started to flee as soon as he saw him and that he succeeded in catching him after giving him a chase for 11/2 or 2 furlongs.
In his confessional statement, exhibit 7 accused No. 2 has admitted his presence with accused No. 1 in the pandal at Tinsukhia on 26.3.1975 and his arrest from the cremation round on 14.
1. 1975.
There are some other circumstances brought out in the evidence and his confessional statement extracted (supra) pointing to his guilt unmistakably.
But, there no satisfactory material on record to show that accused No. 2 either did anything for killing the deceased or that he shared the intention of accused No. 1 to kill the boy.
It appears that accused No.2 's intention as reflected in his confessional statement, exhibit 7 was only to kidnap and keep the boy for two or three days and send him back after collecting the ransom.
Having regard to all the circumstances of the case the offence proved against accused No. 2 is only kidnapping of Sanjay with intent to secretly and wrongfully confine him, an offence punishable under section 365 l.
P.C. [559B H; 559A] Therefore, Criminal Appeal No. 209 of 1983 filed by the father of the deceased, P.W. 23 against the acquittal of accused Nos. 2, 3 and 4 is allowed in part and only accused No. 2, is convicted under section 365 I.P.C, for having kidnapped Sanjay in order to secretly and wrongfully confine him and he is sentenced him to undergo rigorous imprisonment for seven years and it is dismissed in other respect.
Criminal Appeal No. 211 of 1983 is allowed as indicated in Criminal Appeal No. 209 of 1983 and Criminal Appeals No. 210. 212 and 213 of 1983 are dismissed.
[559G H; 560AB]
|
171 of 1958.
Petition under Article 32 of the Constitution of India, for enforcement of fundamental rights.
Purshottam Tricumdas, Porus A. Mehta, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the petitioners.
C. K. Daphtary, Solicitor General of India, N. section Bindra, B. H. Dhebar and T. M. Sen, for the respondents.
December 9.
The judgment of Sinha, C.J., Gajendragadkar, Das Gupta and Shah, JJ., was delivered by Das Gupta, J. Subba Rao, J., delivered a separate judgment.
DAS GUPTA J.
The first petitioner is a Company registered under the Indian Companies Act having its registered office in Bombay and is engaged in the business of dyes, chemicals, plastics, and various other goods.
The second petitioner is the Chairman and a Director of the first petitioner Company.
In this petition for enforcement of fundamental rights under the Constitution they pray for the issue of a writ of certiorari or other appropriate writ, direction or order quashing an order made by the first respondent, the Chief Controller of Imports and Exports, Government of India, New Delhi, by which he cancelled five import licences which had been granted to the first petitioner by the Joint Chief Controller of Imports and Exports, Bombay.
There is also a prayer for an order on the second respondent, the Collector of Customs, Bombay, directing him to assess the goods of the petitioner Company which have been landed in Bombay having been imported on the strength of these licences and allow the petitioner company to clear them.
Of these five licences, two were dated July 24, 1958, two dated August 16, 1958, and the fifth 411 dated September 4, 1958.
The total value of the imports authorised by these five licences was Rs. 25,75,000.
The petitioners contend that these five licences were granted to the petitioner Company on five applications sent by them by registered post to the Chief Controller of Imports and Exports, Government of India, New Delhi three sent on June 17, 1958, one on June 26, 1958, and the last on July 22, 1958.
It is further stated that in respect of each of these applications a letter was received by the Company from the office of the Chief Controller of Imports and Exports, Government of India, New Delhi, intimating that their application had been forwarded to the Joint Chief Controller of Imports and Exports, Bombay with the necessary comments and asking the Company to contact this officer, the Joint Chief Controller of Imports and Exports, Bombay, direct in the matter.
The petitioner Company wrote in each case to the Chief Controller of Imports and Exports, New Delhi, acknowledging receipt of these letters and at the same time to the Joint Chief Controller of Imports and Exports, Bombay, requesting that the licences should be issued to them at an early date.
After the licences were received by the Company from the office of the Joint Chief Controller of Imports and Exports, Bombay, the Company placed orders for the goods covered by these licences and some of the goods actually arrived at Bombay.
Before however any of these goods could be cleared the Company received a notice dated September 24, 1958, stating that whereas there was reason to believe that these five licences had been obtained fraudulently, the Government in the exercise of the powers specified in para.
9 of the Imports Control Order, 1955, proposed to cancel the said licences unless sufficient cause against that was furnished to the Chief Controller of Imports and Exports, New Delhi, within 10 days of the date of the issue of the said notice '.
On September 26, the petitioner Company 's solicitors sent a telegram to the Chief Controller of Imports and Exports, New Delhi, requesting him to give particulars of the alleged fraud and to give them an appointment for inspection of papers 412 and documents relied upon by him.
On September 27, Company wrote a letter to the same officer in which they gave a written explanation pointing out various facts and stating that they were victims of foul play by some person interested in causing damage to them and involving their reputation and in order to bring them in bad books with the authorities.
In the concluding portion of this letter the Company stated: " We also reserve our right to add to, amend or alter the explanations contained in this letter hereafter and to submit such further explanations as may become necessary after taking inspection of all the papers and after getting the particulars of the alleged fraud.
We shall thank you to give us also an opportunity of a personal hearing in the matter.
" This written explanation was handed over to the first respondent by the Company 's representatives at an interview with him on September 30.
At that interview also, it is said, the representatives of the Company pointed out to Mr. Bilgrami that in the absence of any particulars of the alleged fraud and without inspection of the papers relied upon by him it was not possible for the petitioners to give a complete explanation and that they reserved their right to give further explanation on getting the said particulars and inspection of the said papers.
The Company 's representatives had another interview with Mr. Sundaram, Director (Administra tion) in the Chief Controller 's Office on October 14, 1958.
At this interview the petitioners again requested Mr. Sundaram to give them particulars and that they might be permitted to inspect the papers.
No particulars were however furnished and no inspection was allowed; but on that very date when they had this interview with Mr. Sundaram the first respondent made the order of cancellation.
The ten grounds set out in Cls.
A to L of para.
15 of the petition as the basis for the relief resolve on analysis into four only.
These are: (1) Clause 9(a) of the Import Control Order under which the order of cancellation has been made is itself unconstitutional, being violative of the petitioners ' 413 rights under article 19(1)(f) & (g) and article 31 of the Constitution ; (2) The Order of cancellation has been made without compliance with the mandatory requirement of cl. 10 of the Imports Control Order to give the licensee "a reasonable opportunity of being heard "; (3) The first respondent, Mr. Bilgrami, bad no authority in law to make any order under cl. 9 of the Import Control Order; (4) The petitioners have been denied equal protection of laws under article 14 of the Constitution inasmuch as other persons similarly situated have been given a proper opportunity and a personal hearing before taking any action against them, while the petitioners have been denied a proper opportunity to show cause for the cancellation of licences and personal hearing in the matter.
Of these four grounds, the third ground, viz., that Mr. Bilgrami had no authority in law to make an order under cl. 9 of the Imports Control Order was made in apparent ignorance of the fact that the Chief Controller of Imports and Exports, became competent to make an order thereunder in consequence of an amendment made in the Order, in 1958.
As the clause originally stood the relevant words were: " The Central Government or any other officer authorised in this behalf may cancel any licence granted under this order. .
By the amendment made on February 27, 1958,the words ,or the Chief Controller of Imports and Exports " were inserted after the words "the Central Government " in this clause.
The position on the relevant dates in September and October, 1958, therefore was that the Chief Controller of Imports and Exports, New Delhi, had authority to cancel any licence granted under the Imports Control Order without being specially authorised in that behalf.
It was apparently in view of this position which was pointed out by Mr. Bilgrami in his affidavit in opposi tion that the ' learned Counsel for the petitioners did not press this ground at all.
Nor did he press the fourth ground, viz., that the petitioners ' right under 53 414 article 14 of the Constitution has been infringed.
It is obvious that if the order has been made without the petitioners having been given a reasonable opportunity of being heard that itself would entitle them to the relief prayed for.
The question whether or not other persons were given a fair opportunity of being heard is entirely irrelevant.
In opposition to this application, Mr. Bilgrami, the first respondent, contends inter alia that the provision for cancellation of a licence under cl. 9 of the Order does not contravene any of the fundamental rights granted under article 19(1)(f) and (g) and Art 31 of the Constitution and that the petitioners were given adequate and reasonable opportunity of being heard before the order of cancellation was made.
Mr. Bilgrami has stated in the affidavit that while it is true that four applications for licence three dated June 17, arid one dated June 26, 1958, were received in his office, the fact is that all these four applications were rejected and that it is now found that while these four rejected applications were lying in his office, four similar applic ations bearing the same dates and containing the same particulars and a fifth application bearing the date July 22, 1958, somehow made their appearance in the office of the Joint Chief Controller of Imports and Exports, Bombay, along with five separate letters, one in respect of each application, containing recommendations for issue of licences purporting to have been issued from the office of the Chief Controller of Imports and Exports, New Delhi, under the signature of one Shri M. L. Gupta, Deputy Chief Controller of Imports and Exports.
The respondent contends that the purported signatures of Shri M. L. Gupta on these letters were not genuine.
Mr. Bilgrami also contends that though these letters purported to state that the issue of licences was authorised by him he did not in fact give any authority, and that when the petitioners ' representatives interviewed him on September 30, 1958, they were told of the " general nature of the fraud " and that he further told them that the issue of the licences had not been authorised by him as they purported to be and that they had been obtained 415 fraudulently.
The respondents further contend that when again on October 14, 1958, the petitioners had an interview with Mr. Sundaram, the Director of Administration in the office of the Chief Controller of Imports and Exports, Mr. Sundaram told them expressly that the recommendations against which the disputed licences were granted to the petitioners were not genuine.
The first contention on behalf of the petitioners is that cl. 9(a) of the Imports Control Order is itself invalid as it violates a licensee 's rights under article 19(1)(f) and (g) and article 31 of the Constitution.
Clause 9(a) is in these words : Cancellation of Licence: The Central Government or the Chief Controller of Imports and Exports or any other officer authorised in this behalf may cancel any licence granted under this order or otherwise render it ineffective : (a) If the licence has been granted ' through inadvertence or mistake or has been obtained by fraud or misrepresentation. . .
As in the present case there is no question of the licences having been granted through inadvertence or mistake it is not necessary for us to consider whether the provision for cancellation of licences on the ground that they have been granted through mistake or inadvertence is invalid.
The question in the present case is whether the provision for cancellation of licences on the ground that they have been obtained by fraud or misrepresentation is " a reasonable restriction in the interests of the general public " on the exercise of the petitioners ' right under article 19(1)(f) and It has to be noticed first that here is no case of unbridled authority to cancel a licence nor is there any scope for arbitrary action.
If a provision for giving a reasonable opportunity of being heard bad not been made in the Order itself, it would have been necessary to consider whether this had still to be given, because rules of natural justice required it.
No discussion about the requirements of the rule of natural justice is however called for here, as cl.
10 of the Order provides that no action shall be taken under clauses 7, 8 or 9, 416 unless the Licensee/Importer has been given a reasonable opportunity of being heard.
It is proper to state that the learned Counsel for the petitioners does not attack the validity of the, provisions on the ground that it gives unbridled authority to cancel a licence, or that the requirements of natural justice have not been sufficiently fulfilled by clause 10.
His argument is that though it may not be unreasonable that a licence should be cancelled if the licensee himself has practised fraud in obtaining it, cancellation is wholly unreasonable if it is made merely on the ground that it has been obtained by fraud, without it being further shown that the licensee himself has been a party to the fraud.
It appears to us that in most cases, if not in all cases, where a licence is obtained by fraud or misrepresentation it would be reasonable to think that the person in whose favour the licence has been obtained, cannot but be a party to the fraud or misrepresentation.
The petitioners ' Counsel submitted that it is possible to imagine a case where an enemy of the person in whose favour the licence is granted procures such grant by means of fraud with the deliberate motive of accusing this person later on of fraud and thereby subjecting him on the one hand to criminal prosecution and on the other hand damaging his reputation and ruining his business.
It is unnecessary for us to decide in the present case whether this may ever happen.
Clearly however the fact that fraud by which the grant of the licences has been induced by an enemy is wholly immaterial on the present question.
The entire scheme of control and regulation of imports by licences is on the basis that the licence is granted oil a correct statement of relevant facts.
That basis disappears if grant of the licence is induced by fraud or misrepresentation.
Whether the licensee himself or some others party is responsible for the fraud or misrepresentation, the fact remains that in such cases the basis of the grant of licence has disappeared.
It will be absolutely unreasonable that such a licence should be allowed to continue.
We are therefore of opinion that the provision that licence may be cancelled, if it is found, after giving a 417 reasonable opportunity to the licensee to be heard, to have been obtained by fraud or misrepresentation is a reasonable restriction in the interests of the general public on the exercise of the fundamental right of a citizen guaranteed under article 19(1)(f) and (g) of the Constitution.
The cancellation being under a valid law there can be no question of any right under article 31 of the Constitution having been infringed.
This brings us to the main contention pressed on behalf of the petitioners, viz., that the licensee has not been given a reasonable opportunity of being heard before the order of cancellation was made.
There can be no doubt that if a reasonable opportunity to be heard as against the proposed order of cancellation has not been given the order would be an unjustified interference with the petitioners ' right.
It is necessary therefore to examine the material on the record to see whether the petitioners have succeeded in showing that no reasonable opportunity has been given.
The requirement that a reasonable opportunity of being heard must be given has two elements.
The first is that an opportunity to be heard must be given; the second is that this opportunity must be reasonable.
Both these matters are justiciable and it is for the Court to decide whether an opportunity has been given and whether that opportunity has been reasonable.
In the present case, a notice to show cause against the proposed order was given; it was stated in the notice that the ground on which the cancellation was proposed was that the licences had been obtained fraudulently; and later on, a personal hearing was given.
It must therefore be held that the requirement that an opportunity to be heard must be given was satisfied.
What the petitioners ' Counsel strenuously contends however is that though an opportunity was given that opportunity was not reasonable.
In making this argument he had laid special stress on the fact that particulars of the fraud alleged were not given and an opportunity to inspect the papers though repeatedly asked for was not given.
It is now necessary to consider all the circumstances in order to arrive at a conclusion whether the omission to give particulars of fraud and 418 inspection of papers deprived the petitioners of a reasonable opportunity to be heard.
There can be no invariable standard for " reasonableness" in such matters except that the Court 's conscience must be satisfied, that the person against whom an action is proposed has bad a fair chance of convincing the authority who proposes to take action against him that the grounds on which the action is proposed are either non existent or even if they exist they do not justify the proposed action.
The decision of this question will necessarily depend upon the peculiar facts and circumstances of each case, including the nature of the action proposed, the grounds on which the action is proposed, the material on which the allegations are based, the attitude of the party against whom the action is proposed in showing cause against such proposed action, the nature of the plea raised by him in reply, the requests for further opportunity that may be made, his admissions by conduct or otherwise of some or all the allegations and all other matters which help the mind in coming to a fair conclusion on the question.
The action proposed in the present case viz., the cancellation of the five licences was proposed on a tentative conclusion by Mr. Bilgrami on the basis of the material in his possession that the five licences bad been obtained fraudulently.
The main grounds on which this tentative conclusion appears to have been based were that four applications three dated June 17 and one dated June 26, 1958, similar in all particulars to the four which are now found in the office of the Joint Controller of Imports and Exports, Bombay, had been actually received but had been rejected and were lying in the Chief Controller 's Office; that four similar applications, bearing the same dates and same particulars which were lying in the Bombay Office and also a fifth application dated July 22, were accompanied by five forwarding letters purporting to have been signed by Mr. M. L. Gupta recommending the prayer for licence and containing a statement that the first respondent had authorised such issue of licences on those applications but these signatures purporting to have been of Mr. M. L. Gupta were not really his 419 signatures ; that while the forwarding letters purported to state that the issue of these licences prayed for had been authorised by Mr. Bilgrami as the Chief Controller of Imports and Exports, New Delhi, he himself knew that such issue had not been authorised by him.
We find that in the very notice that was given to the petitioners ' company to show cause against the proposed action of cancellation, it was stated that these licences appeared to have been obtained by fraud.
On the question of particulars of fraud, it has been stated by the first respondent in his affidavit that at that stage no particulars of the fraud could be given by him as they were unknown to him, but that be did inform the petitioners ' representatives Mr. Parikh, a director of the Company the second petitioner Mr. Rangwala, who is the Chairman of the Company and the Company 's solicitor, Mr. Hussaini Doctor of the " general nature of the fraud ".
In para 23 of his affidavit Mr. Bilgrami has made the following statement: " I say that the Director of the petitioners ' Company, Shri B. K. Parekh and Shri Rangwala and their attorney 's partners, Mr. Huseni Doctor saw me on the 30th September, 1958.
I told them that the issue of the licences had not been authorised by me as they purported to be and that they had been obtained fraudulently, though at that stage I was unable to say how exactly and by whom the fraud was committed.
As also the investigation by the Police was already in progress, it was not possible to give minute particulars of the fraud.
When the petitioners were told as above, the petitioners ' chairman started raising contentions suggesting that the fraud might have been committed by reason of the Gujarati Maharashtrian and anti Muslim feeling amongst the employees of his firm.
" The affidavit in reply was sworn by Mr. Rangwala himself.
We find therein repeated denials of Mr. Bilgrami 's assertion that the Company 's representatives were told of the " general nature of the fraud ".
It was worth noting however that as regards the categorical statement made in para.
23 as to what 420 Mr. Bilgrami told Mr. Rangwala and others and what they told him there is no clear denial.
Dealing with para.
23 of Mr. Bilgrimi 's affidavit in para.
of his own affidavit in reply Mr. Rangwala after saying that the first respondents, statement does not say anything as to how exactly and by whom the fraud was committed but simply added that the first respondent did not say anything beyond the fact that the licences had been obtained by fraud.
It is significant that no specific denial was made of Mr. Bilgrami 's assertion that to Mr. Rangwala, Mr. Parekh and Mr. Huseini Doctor he had himself stated that the " issue of the licences had not been authorised by him as they purported to be ".
No less important is the fact that Mr. Rangwala does riot deny the assertion made by Mr. Bilgrami that he (Mr. Rangwala) in the course of that interview on September 30, suggested that the fraud might have been committed by reason of certain feelings amongst the employees of his firm.
It is reasonable therefore to believe that besides stating that the licences had been obtained fraudulently Mr.
Bilgrami definitely informed the Company 's representatives on September 30, 1958, that though issue of the licences had been purported to be authorised by him with apparent reference to the forwarding letters recommending the issue of the licences this had not actually been authorised and further that on receipt of this information the Company 's representatives instead of saying that no fraud had been practised and that Mr. Bilgrami was making a mistake in thinking that he had not authorised the issue of the licences and that perhaps his memory had failed him took refuge behind the plea that it was not the Company but some enemy of the Company who had perpetrated the fraud.
The petitioners ' representatives had also an interview with Mr. Sundaram on October 14, 1958.
While we have not got any statement of Mr. Sundaram himself as to what happened in that interview we find apart from Mr. Bilgrami 's affidavit in para.
24 that Mr. Sundaram also informed the petitioners ' representatives at that interview that the recommendations 421 against which the disputed licences were granted to the petitioners were not genuine, (which assertion was repeated in slightly different words in para.
29), the fact that the first respondent 's letter dated December 18, 1958, a copy of which Mr. Rangwala annexed to his affidavit in reply concluded with the following words: " It may be stated that the fact that the following letters referred to above were not genuine were mentioned to the representatives of your firm when they interviewed Shri D. R. Sundaram, Director, (Administration) on October 14, 1958.
" Though annexing a copy of this letter to his affidavit in reply Mr. Rangwala did not state that this statement in the concluding portion of the letter was not true.
This justifies the conclusion that Mr. Bilgrami 's assertion that Mr. Sundaram told the Company 's representatives that the forwarding letters containing the recommendations on the basis of which the licences had been issued were not genuine is true.
Mr. Bilgrami 's statement in para.
29 of his affidavit is that when Mr. Sundaram informed the Company 's representatives of this they had no explanation to give.
Dealing with para.
29 of this affidavit in para.
23 of his own affidavit Mr.
Rangwala did not state that Mr. Sundaram did not tell them that the licences issued were on the basis of documents which were not genuine, or that on being so told they had no explanation to offer.
On a consideration of the entire background in which the notice for cancellation was issued, what was stated by the petitioners in their letter dated September 27, and what we find to have taken place at the interviews on the 30th September and the 14th October, specially the fact that the Company 's reprepresentatives appeared to have been more concerned to show that the Company was not a party to the fraud than to show that there was no fraud practised at all, we are of opinion that the omission to give further particulars or inspection of papers did not deprive the petitioners of a fair chance of convincing Mr. Bilgrami that the grounds on which cancellation of the licences was proposed did not exist, or even if they existed, 54 422 they did not justify cancellation of the licences.
We are therefore of opinion that the opportunity that was given to the petitioners in the present case amounted to a reasonable opportunity of being heard against the action proposed.
The petitioners are therefore not entitled to any relief.
The petition is accordingly dismissed with costs.
SUBBA RAO J. I have had the advantage of perusing the judgment of my learned brother, Das Gupta, J.
I regret my inability to agree with his conclusion.
The facts are fully stated in the judgment of my learned brother and I shall, therefore, briefly restate only the material facts.
The first petitioner, M/s. Fedco (Private) Limited (hereinafter called the Company) is a Company registered under the Indian Companies Act having its registered office in Bombay.
It is engaged in the business of dyes, chemicals, plastics and various other goods.
The second petitioner is the Chairman and a Director of the first petitioner Company.
The Company sent five applications by registered post to the Chief Controller of Imports and Exports, New Delhi, (hereinafter called the Chief Controller).
Three of the applications were dated June 17, 1958, one was dated June 26, 1958, and the last was dated July 22, 1958.
In the said applications the Company prayed for the issue of import licences to enable them to place orders and import different types of goods from West In regard to each of these applications, received a letter purporting to be from the Chief Controller intimating them that their applications had be en forwarded to the Joint Chief Controller of Imports and Exports, Bombay, (hereinafter called the Joint Controller) with the necessary comments.
The Company acknowledged the receipt of these letters, Thereafter five licences were received from the Office of the Joint Controller, Bombay, and two of them were dated July 24, 1958, another two were dated August 16, 1958, and the fifth was dated September 4, 1958.
On the basis of the said licences, orders were 423 placed with a foreign company in West Germany and goods of considerable value actually arrived in the Bombay port.
By letter dated September 23, 1958, the Joint Controller asked the Company to return the said five licences granted to them without entering into any commitments.
After some correspondence between the Company and the Chief Controller, the former received a notice dated September 24, 1958, from the latter to the effect that the Government had reason to believe that the said licences were obtained fraudulently and therefore they proposed to cancel the said licences unless sufficient cause was shown against such action being taken within ten days of the issue of the said notice.
On October 16, 1958, the Company received an undated order from the Chief Controller purporting to cancel the said five licences.
The Com.
pany and their manager filed the present petition under Act.
32 of the Constitution praying for a writ of certiorari or other appropriate writ quashing the order of the Chief Controller cancelling the said five licences and directing the Collector of Customs, Bombay, to assess the goods of the Company which had been imported into India and allow them to clear the same.
Mr. Purshottam Trikamdas, learned Counsel for the petitioners in support of his contentions raised before us two points, viz., (1) cls.
9 and 10 of the Imports Control Order, 1955, (hereinafter called the Order) where under the licences were cancelled infringe the fundamental rights of a citizen under article 19(1)(f) and (g) of the Constitution inasmuch as the said provisions constitute an arbitrary and unreasonable restriction on the said rights; and (2) the Chief Controller has not complied with the provisions of cl. 10 of the Order as he failed to give the Company reasonable opportunity of being heard before the licences granted to them were cancelled and therefore the act of the Chief Controller in cancelling the licences infringes the rights of the Company under article 19(1)(f) and (g) of the Constitution.
The first point need not be considered as I am clearly of the view that no " reasonable opportunity " within the meaning of cl. 10 of the Order was given to the 424 petitioners by the Chief Controller.
The material parts of cls.
9 and 10 of the Order read: clause 9.
"Cancellation of Licences.
The Central Government or any other Officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective (a) if the licence has been granted through inadvertence or mistake or has been obtained by fraud or misrepresentation;".
Clause 10.
" Applicant or Licensee to be heard.
No action shall be taken under Clauses 7, 8 or 9, unless the licensee/Importer has been given a reasonable opportunity of being heard.
" It is not disputed that the Central Government delegated its powers to act under these clauses to the Chief Controller.
The first question is, what is the scope of the enquiry under cl. 10 of the Order ? Is it purely an administrative act or is it a quasi judicial act ? The criteria to ascertain whether a particular act is a quasijudicial act or an administrative one have been laid down with clarity by Lord Justice Atkin in Rex vs Electricity Commissioners, Ex Parte London Electricity Joint Committee Co.(1), elaborated by Lord Justice Scrutton Rex vs London County Council, Ex Parte Entertainments Protection Association Ltd. (2) and authoritatively restated by this Court in Province of Bombay vs Khusaldas section Advani (3).
They laid down the following conditions: (a) the body of Dersons must have legal authority; (b) the authority should be given to determine questions affecting the rights of subjects and (c) they should have a duty to act judicially.
All the three conditions are satisfied in this case.
Under the ,said clauses authority is conferred on the Central Government or any other officer authorized in this behalf to cancel any licence granted under the Order and the cancellation of a licence certainly affects the rights of subjects.
A clear duty to act judicially is imposed by cl. 10 on the said authority.
He has to give to the affected party " reasonable opportunity of of being heard ".
It is therefore clear that under (1) (2) (3) ; 425 cls.
9 and 10 of the Order, the Chief Controller performs a quasi judicial act and is therefore bound to follow the principles of natural justice in cancelling a licence.
Clause 10 clearly and without any ambiguity describes the principles of natural justice by using the three well known words and phrase, viz., ' reasonable opportunity " and " of being heard They imply that when the charge is one of fraud the affected party is entitled to know the particulars of fraud alleged, to inspect the documents on the basis of which fraud is imputed to him and to a personal hearing to explain his case and to absolve himself of the charge made against him.
Without these elementary safeguards provided by the authority, the opportunity to be heard given to the licensee becomes an empty formality.
With this background I shall scrutinize the relevant facts to ascertain whether any such reasonable opportunity was given to the petitioners in this case.
The question falls to be decided only on the affidavits filed by the parties.
I shall assume for the purpose of this petition that the affidavit filed by the Chief Controller represents what all had taken place between him and the representatives of the Company.
The notice dated September 24, 1958, issued to the petitioners laconically states that 'the licences granted by the Joint Controller to the Company were fraudulently obtained and therefore it was notified that the Government of India, in exercise of the powers specified in paragraph 9 of the Order proposed to cancel the said licences unless sufficient cause against the proposed action was furnished to the Chief Controller within ten days of the date of the issue of the notice.
On receipt of the said notice, the petitioner Company sent a telegram through their Solicitors requesting the Chief Controller not to publish the said notification.
On September 26, 1958, the Company 's Solicitors sent another telegram to the Chief Controller requesting him to give them the particulars of the alleged fraud and to give them an appointment for inspection of papers and documents relied upon by the Chief Controller.
On September 27, 1958, the Company sent a letter to 426 the Chief Controller pointing out the relevant facts and stating that the petitioner Company had accepted the licences honestly and had at no time any reason to doubt the bona fides of the grant of the licences to them; that they suspected they were victims of foulplay by some persons interested in causing damage to them and to their reputation; that Mr. B. K. Parekh, a Director of the petitioner Company, and the Company 's Solicitor, Mr. Hooseini Doctor, met the Chief Controller on September 30, 1958, and handed over the explanation to him and also personally told him that in the absence of any particulars of the alleged fraud and without inspection of the papers relied upon by the Chief Controller, it was not possible for the petitioner Company to give a complete explanation and that the petitioners reserved their right to give further explanation on getting the said particulars and inspection of the said papers.
They also requested the Chief Controller to give the Company a personal hearing to meet the charges after giving the necessary particulars and the inspection of papers asked for.
The Chief Controller told them that the issue of the licences had not been authorized by him as they purported to be and that they had been obtained fraudulently, though at that stage he was not able to say how exactly and by whom the fraud was committed.
He also did not give them the particulars of fraud.
The Director of the Company suggested that the fraud might have been committed by reason of the Gujarati Maharashtrian and anti Muslim feeling amongst the employees of the Company.
On behalf of the petitioner Company, the Chief Controller was told that it was not possible for the Company to give a complete explanation and that they reserved their right to give further explanation.
The petitioners were not allowed inspection of the papers.
By their letter dated October 3, 1958, the Company recorded what took place at the said interview and sent it to the Chief Controller.
The petitioners again wrote another letter to the ' Chief Controller reminding him that they had not received any particulars of the alleged fraud.
This letter was personally handed over to Mr. Sundaram, 497 the Director of Administration in the Office of the Chief Controller on October 14, 1958.
At that interview, Mr. Sundaram, told the petitioners that the recommendations against which the disputed licences were granted were not genuine.
On October 16, 1958, the Chief Controller cancelled the said five licences issued to the petitioner Company.
On the aforesaid facts, which we have assumed for the purpose of this petition, can it be said that the Chief Controller gave the petitioners a "reasonable opportunity of being heard " to enable them to establish that no fraud had been committed in getting the said licences ? The learned Solicitor General, appearing for the respondents, contended that the Company admitted the fraud, that their only defence was that the fraud might have been committed by reason of the Gujarati Maharashtrian and anti Muslim feeling amongst the employees of the Company and that therefore the fact that the Chief Controller told the petitioners that the issue of the licences had not been authorized by him and the fact that Mr. Sundaram told the petitioners on October 14, 1958, that the recommendations against which the disputed licences were granted to the petitioners were not genuine, were, in the circumstances, sufficient disclosure of the particulars of fraud and that, therefore, reasonable opportunity within the meaning of cl. 10 of the order had been given to the petitioners.
I find it very difficult to accept this argument.
The argument assumes that the petitioner Company accepted the version given by the Chief Controller or by Mr. Sundaram.
For the purpose of this petition it must be assumed that the petitioners were innocent.
The notice was given to them to show cause why the licences given to them should not be cancelled on the ground of fraud.
By letters and in person they requested the Chief Controller to give them the particulars of the fraud, and to allow them to inspect the relevant documents so that they might give a further explanation to show cause against the cancellation of the licences.
The affidavit filed by the Chief Controller only discloses that he, in his conversations with the Solicitor and the Director of 428 the Company, mentioned to them that he did not issue the licences.
In the affidavit he admits that they asked for particulars and for the inspection of the documents; but he says that the petitioners were told sufficiently what was against them and their demand for the inspection of the papers was mischievous.
But what he told them about the particulars of the alleged fraud is, in his own words: " I told them that the issue of the licences had not been authorised by me as they purported to be and that they had been obtained fraudulently, though at that stage I was unable to say how exactly and by whom the fraud was committed. " The conversation with Mr. Sundaram on October 14, 1958, does not carry the matter further.
He has not been authorized by the Central Government to make an enquiry and the fact that he told the petitioners that the recommendations against which the disputed licences were granted were not genuine, even if true, does not carry the matter any further.
The fact, therefore, remains that notwithstanding specific request by the petitioners no particulars were furnished to them, no facilities for inspection of the relevant documents given and no date was fixed for the enquiry in regard to the alleged fraud.
The learned Solicitor General asked, what was that that the petitioners could have gained if the particulars were given and if they were allowed to inspect the relevant documents? This is a lopsided way of looking at things.
The question should have been, what reasonable opportunity to be heard was given to the petitioners to establish their innocence ? That apart, without apportioning any blame either on the petitioners or on the respondents, many possibilities can be visualized, viz., (i) the petitioners were guilty of fraud; they knew that their applications were rejected by the Chief Controller, they got similar applications surreptitiously introduced in the Bombay Office with forged recommendations under the signature of the Deputy Chief Controller, New Delhi, Mr. M. L. Gupta, and obtained the licences by practising fraud on the Joint Chief Controller, Bombay; (ii) a third party, 429 presumably a rival businessman or members of the staff of the Company, evolved a complicated scheme of fraud to cause damage to the Company and their reputation.
the Company 's enemies came to know that the applications of the Company were rejected, then forged fresh applications, got them surreptitiously introduced in the Bombay Office and got the licences issued in favour of the petitioners: this is a rather far fetched theory; (iii) after the applications were rejected, fresh applications were filed in the New Delhi Office, got forwarded to the Joint Chief Controller, Bombay, with the directions issued by the Deputy Chief Controller, New Delhi; (iv) the original applications filed by the Com pany were ordered, and not rejected, by the Chief Controller or his Deputy and they were sent in due course along with the recommendations duly signed by the Deputy Chief Controller to the Joint Controller, Bombay, and that the licences were issued in the usual course: the Office of the Chief Controller New Delhi, after realizing that licences were issued contrary to rules or orders that licences should not be issued in respect of goods to be imported from soft currency areas, set up a false case of the original applications being rejected and the fresh applications substituted in the Bombay Office.
The aforesaid are some of the possibilities and there may be many others.
When notice was issued to the petitioners on the ground of fraud, they were certainly entitled to the particulars thereof.
The Chief Controller could have given the following particulars: (i) the petitioners ' applications were rejected on a particular date; (ii) the orders of rejection were communicated to them on a particular date; (iii) that he did not issue any letters to the petitioners as regards the forwarding of their applications or the recommendations to the Joint Chief Controller, Bombay; (iv) after the rejection of their applications, the Office of the Chief Controller did not receive any letters from the petitioners; (v) that the applications on which the licences were issued were not the same applications sent to the Delhi Office; (vi) that the signature of Mr. 55 430 M. L. Gupta was forged; and (vii) that there is nothing in the Bombay Office to show that they received any applications from the Delhi Office.
If these particulars were given to the petitioners, they might have by inspecting the documents proved that there was no fraud, that there was no order rejecting the applications, that the despatch book showed that the applications were forwarded to the Bombay Office and that the original applications were not in that Office, that the despatch book and the receipt book showed the correspondence that passed between the Chief Controller and the petitioners, and that the signature of Mr. Gupta on the recommendations was genuine.
It is not as if the petitioners admitted that they committed the fraud.
When they were confronted with the notice, unless the particulars were given to them and the documents shown to them, it was not possible for them to know whether a fraud was committed at all and, if committed, how was it committed.
Only for the purpose of explaining that no fraud was committed by them, they asked for the particulars, for inspection of the relevant documents and for a personal hearing: all these were denied to them.
In the circumstances, I find it not possible to hold that the petitioners were given reasonable opportunity of being heard within the meaning of cl. 10 of the Order.
The stakes are high and the order of cancellation was made arbitrarily and in utter disregard of the principles of natural justice.
I should not be understood to have expressed any opinion on the merits of the case.
It may be, or it may not be, that the petitioners were guilty of fraud; but they should have been given a reasonable opportunity of being heard before they were condemned as having committed the fraud and their licences were cancelled.
1, therefore, direct the issue of a writ of certiorari quashing the order of the Chief Controller cancelling the licences granted to the petitioners.
ORDER OF COURT In accordance with the opinion of the majority the Petition is dismissed with costs.
| A deed dated September 10, 1931, described as a sale deed, recited that the transferors were indebted and that to discharge the liability three items of immovable properties, described in the deed and separately valued, were conveyed in full ownership and that possession was delivered to the transferees.
The deed further provided, inter alia (1) that if the transferors demanded reconveyable of any or all of the items of the properties within 5 years, the transferees shall reconvey to them at their expense for the price mentioned in the deed, (2) that if within four years and six months the transferees did not exercise the right of reconveyance as aforesaid and the transferees did not desire to retain all or any of the properties, they had a right to get back the amount of consideration of the deed and return all the three or any of the properties in the condition in which by vis major, Government action or any reason whatsoever they may be, and 118 (3)that if the transferors failed to comply with the transferees ' request to take back the properties a breach of agreement of reconveyance rendering the transferors liable to pay damages shall be committed.
There was also a clause that the transferors shall lose the right of getting a reconveyance after the expiry of the period of 5 years.
On the same date as the deed of sale the transferors executed an agreement by which they undertook to pay the difference between the net rent to be recovered by the transferees from the properties and interest at the rate of nine per cent on the price till the date of reconveyance.
In a suit for redemption brought by the transferors on August 26, 1943, on the footing that the deed dated September 10, 1931, was A, mort gage by conditional sale, the transferees contended that by the transaction an absolute conveyance of the properties was intended and that the conveyance was subject to a condition of repurchase to be exercised within a period of five years from the date of the deed.
The evidence showed that the price paid for the properties under the deed was wholly inadequate.
Held, that the question whether a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties which has to be ascertained from the provisions of the deed viewed in the light of the surrounding circumstances.
In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified.
In a mortgage by conditional sale a relation of debtor and creditor is created, the transfer being a security for the debt.
Oral evidence of intention is not admissible in interpreting the convenants of the deed but evidence to explain or even contradict the recitals as distinguished from the terms of the document may be given.
Evidence of contemporaneous conduct is admissible as a surrounding circumstance, but evidence as to subsequent conduct of the parties is inadmissible.
Narasingerji Gyangerji vs Panuganti Parthasarathi and Others, (1924) L.R. 51 I.A. 305, relied on.
Held, further, that in the present case, the deed dated September 10, 1931, on a true construction in the light of the surrounding circumstances showed that the transaction was one of mortgage enabling the transferors to redeem the properties.
|
vil Appeal Nos. 207 208 (NT) of 1979.
From the Judgment and Order dated 10th August, 1977 of the Kerala High Court in T.R.C. Nos. 61 and 62 of 1976.
P.S. Poti and K.R. Nambiar for the Appellants.
T.S. Krishnamoorthy Iyer, S.B. Sawhney and V.B. Saharya for the Respondents.
The Judgment of the Court was delivered by section RANGANATHAN, J.
1.
A very interesting question as to the principles of interpretation of legislation by incorporation or references arises for consideration in these appeals arising out of certain assessments to sales tax in Kerala.
Section 9 of the Kerala General Sales Tax Act 1963 which came into force on 1.4.1963 granted exemption from sales tax on goods specified in the third Schedule to the said Act.
These included the following: 5.
Sugar as defined in item 1 of the First Schedule to the : 6.
Tobacco as defined in item 4 of the First Schedule to the and 7.
Cotton fabrics, silk fabrics woollen fabrics and rayon or artificial silk fabrics as defined in item Nos.
19. 20, 21 and 22 respectively of the First Schedule to the .
The question before us is whether, in respect of the assessment years 1971 72 and 1972 73, with which we are concerned, the exemption given to `cotton fabrics ' under item 7 above should be restricted to `cotton fabrics ' as defined in the Central Excises & Salt Act, 1944 (`the 1944 Act ') as it stood on 1.4.1963 or whether it would also cover goods falling under the said definition after its amendment in 1969.
Though we are concerned only with the interpretation of the Kerala General Sales Tax Act, 1963, it is necessary PG NO 605 to refer back to the earlier history of some Central as well as State legislations: (i) We start with the 1944 Act.
By this Act, excise duty was levied on the manufacture or production of various types of goods enumerated in the First Schedule to the Act.
Item 19 (originally item 12) of the First Schedule, as it stood on 1.4.1963, defined `cotton fabrics ' thus: "cotton fabrics `Cotton Fabrics ' mean all varieties of fabrics manufactured either wholly or partly from cotton and include dhoties, sarees, chadars, bed sheets, bed spreads, counter panes and table cloths, but do not include any such fabric xxx xxx xxx xxx Item 19 was amended by the Finance Act, 1969.
After amendment, it reads thus: "Cotton Fabrics `Cotton Fabrics ' means all varieties of fabrics manufactured either wholly or partly from cotton and includes dhoties, sarees, chaddars, bed sheets, bed spreads, counter panes, table cloths, embroidery in the piece, in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials but does not include xxx xxx" (Underlining ourS ) The question set out earlier assumes importance because the respondents assessees deal in "P.V.C. Cloth", an item of goods which is clearly covered by the amended definition but perhaps, not by the original one.
(ii) In 1957, there were certain legislations of Parliament affecting the levy of sales tax and excise duty.
The first of these was the (C.S.T. Act) passed in pursuance of Article1e 286 (3) of the Constitution of India which reads thus: "Any law of a State shall, in so far as it imposes or authorises the imposition of, a tax on the sale or purchase PG NO 606 of goods declared by Parliament by law to be of special importance in inter state trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.
" The C.S.T. Act received the assent of the President on 24.12.56.
section 14 of the Act declared certain goods to be goods of special importance in inter state trade or commerce.
(hereinafter referred to as `declared goods '.) These included, as on 1.4.1963, the following: "(ii a) cotton fabrics, as defined in Item No. 19 of the First Schedule to the Central Excises and Sait Act, 1944; xxx xxx xxx (vii) rayon or artificial silk fabrics, as defined in Item No. 22 of the First Schedule to the Central Excises and Salt Act, 1944(1 0f 1944) (viii) sugar, as defined in Item No. 1 of the First Schedule to the ( 1 of 1944) (ix) tobacco, as defined in Item No. 4 of the First Schedule to the ( 1 of 1944) (x) woollen fabrics, as defined in Item No. 21 of the First Schedule to the (xi) silk fabrics as defined in Item No 20 of the First Schedule to the .
The definitions of the above goods were thus related to their definitions under the 1944 Act.
section 15 of the Act imposed certain restrictions and conditions in regard to tax on sale or purchase of declared goods within a State.
It may be mentioned that this section, as originally enacted in 1956, had been amended w.e.f. 6.6.1957.
by Act 16 of 1957 and, again, by Act 31 of 1956, w.e.f.
1.10.1958.
(iii) About the same time as the C.S.T. Act, Parliament also enacted the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (`the 1957 Act ').
The statement of objects and reasons of this Act reads as follows: PG NO 607 " The object of this legislation is to impose additional duties of excise in replacement of the sales tax levied by the Union and the States on sugar, tobacco and mill made tex tiles and to distribute the net proceeds of these taxes, except the proceeds attributable to Union Territories, to the States.
The distribution of the proceeds of the additional duties broadly followed the pattern recommended by the Second Finance Commission.
Provision has been made that the States which levy a tax on the sale or purchase of these commodities after 1st April, 1958 to not participate in the distribution of the net proceeds.
Provision is made in the Act for including these goods in the category of goods declared to be of special importance in inter state trade or commerce so that, following the imposition of uniform duties of excise on them, the rates of sales tax, if levied by the State are subject from 1st April, 1958 to the restrictions in s 15 of the section 3 of this Act originally levied an additional excise duty on sugar tobacco, cotton fabrics, rayon or artificial silk and woollen fabrics and section 2(c) defined the above goods as having the meanings respectively assigned to them in item Nos. 8, 9, 12, 12A and 12B (subsequently changed as item 1, 4,19,12 and 22 respectively) of the First Schedule to the 1944 Act.
It ma be mentioned here that the Finance Act 1961 had amended section 14 of the C.S.T. Act by including, as item (xi): "silk fabrics as defined in item 20 of the First Schedule of the 1944 Act".
It also simultaneously amended the 1957 Act by adding a reference to `silk fabrics ' in section 3 (1), in the definition clause section 2 (c) as well in the Schedule.
However, in 1968 when the was amended against by deleting the reference to `silk fabrics '; there was no corresponding amendment in the 1957 Act.
The Finance (N0. , substituted the word "man made fabrics" for the words "rayon or artificial silk fabrics": w.e.f. 8.8.1977 and included a definition of he new expression in item 22 of the Schedule to the 1944 Act and the 1957 Act.
section 7 of the Act, as originally enacted, declared that the goods declared to by of special importance would, from 1.4.1968, be subject to the restrictions and conditions specified in section 15 of the .
This section was omitted, w.e.f. 1.10.1958.
by Act 31 of 1958 which also amended section 15 of the (iv) The levy of sales tax in Kerala was formerly governed by the (Act XI of 1125) PG NO 608 Malayalam Era 1125 corresponds to 1950 of the Gregorian Calendar.
This Act was amended by the General Sales Tax (Amendment) Ordinance, (No. 8 of 1957) w.e.f.
14.12.57, the Ordinance being replaced by the General Sales Tax (Amendment) Act VII of 1958 with retrospective effect from the same date.
This amendment Act inserted section 5A in the 1125 Act which exempted certain goods from the levy of sales tax.
Sub section (1) of this section read thus: "5A. Exemption of the tax on the sale of mill made textile (other than pure silk), tobacco and sugar: (1) The sale by any dealer of (i) mill made textile, other than pure silk, (ii) tobacco, and (iii) sugar; other than stock of such goods in his possession, custody or control immediately before the 14th day of December, 1957, shall, as from that date, be exempt from taxation under s . 3, sub s .
" Thus Act was replaced by the Kerala General Sales Tax Act, 1963 (`the 1963 Act '), as already mentioned w.e.f. 1.4.63.
(v) We have already referred to section 9 and item 7 of the Third Schedule to the 1963 Act.
The Kerala General Sales Tax (Second Amendment) Act, (Act 16 of 1967) amended item 7 of 1963 Act to reads as follow w.e.f. 1.9.1967; "7.
Cotton fabrics, woollen fabrics and rayon or artificial silk fabrics as defined in item nos.
19, 21 and 22 respectively of the First Schedule to the Central Excises & Salt Act, 1944.
In other words, the exemption granted to `silk fabrics ' was taken away mention may also be made that by reason of a later amendment, `silk fabrics ' was included as one of the items on which single point tax was leviable under the 1963 Act.
This item, in the First Schedule to the Act as it stood on 1.4.1980.
read: PG NO 609 "101 `Silk fabrics ', that is to say, all varieties of fabrics manufactured either wholly or partly from silk including embroidery in piece, in strips or in mofits, but not including such fabrics on which duty of excise is leviable under sub section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act (Central Act 58 of 1957)".
(vi) Reference may also be made to one more enactment, though it has no direct bearing on the issue before us.
This is the (Central Act 40 of 1978).
This Act charged an additional duty of excise in respect of various goods specified in the Schedule to the Act over and above the duty chargeable on them under the 1944 Act.
These goods included "cotton fabrics" "silk fabrics", "woollen fabrics ,"man made fabrics" and "wool tops" as defined in items 19,320,21,22 and 43 of the First Schedule to the 1944 Act.
These are the relevant statutory provisions.
On these the question to be considered is: What is the effect of the mention of the definition of "cotton fabrics" given in the 1944 Act in the Schedule to the 1963 Act? Does it attract only the said definition as on 1.4 1963 or also the subsequent amendments thereto? To appreciate the contentions urged, it is necessary to make a brief reference to the principles of interpretation of an enactment which for purposes of convenience.
refers to or incorporates a provision of another.
These have been discussed in various earlier decision viz, Secretary of State vs Hindustan Cooperative Insurance Society Ltd., [1931] 58 I .A. 259, Collector of Customs vs Nathella Sampathu Chetty & another; , , Ram Sarup vs State, Ram Kirpal vs State.
[1970] 3 S.C.R, New Central Jute Mills Co. Ltd. vs The Assistant Collector. ; , State of Madhya Pradesh vs Narasimhan, , Bhajva vs Gopikabai, ; , Mahindra & Mahindra Ltd. vs Union, and Western Coal Fields vs Special Area Development Authority. ; It unnecessary to make a detailed reference to these decisions.
It is sufficient to say that they draw a distinction between referential legislation which merely contains a reference to or citation of, a provision of another statue and a piece of referential legislation which incorporates within itself a provision of another statute.
In the former case, the provisions of the second statue, along with all its amendments and variations from time to time, should be read into the first statute.
In the later case, the position will be as outlined in Narasimhan, [1976] 1 S.C.R. where after PG NO 610 referring to Secretary of State vs Hindustan Cooperative Insurance Society Ltd., [1931] 58 I.A. 259, this Court summed up the position thus: "On a consideration of these authorities, therefore, it seems that the following proposition emerges: Where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act.
This principle, however, will not apply in the following cases: (a) where the subsequent Act and the previous Act are supplemental to each other; (b) where the two Acts are in pari materia; (c) where the amendment in the previous Act, if not imported into the subsequent Act also, would render the subsequent Act wholly unworkable and ineffectual; and (d) where the amendment of the previous Act, either expressly or by necessary intendment, applies the said provisions to the subsequent Act." Applying the above principles to the facts of the present case, the High Court in its judgment on a reference made to it under the 1963 Act (and reported in 4 1 S.T.C. 1) observed: "In the light of the principles thus formulated, it seems unnecessary for us to labour the point whether we are confronted in these cases with a "reference" or "citation" on the one hand, or an "incorporation" on the other, of the definition of `cotton fabrics ' in item 19 of the Schedule 1 of the Central Excise and Salt Act, into the provisions of Section 9 read with item No. 7 of the III Schedule of the General Sales Tax Act, 1963.
If the definition was merely by way of `reference or 'citation ', the referred or cited provision grows and shrinks with the changes in the parent.
Even in the case of an incorporated definition while the general principle is that the incorporated definition PG NO 611 remains static and is unaffected by the developments or fluctuations of the parental source from which it was incorporated, two of the well recognised exceptions formulated by the Supreme Court in State of M.P. vs M. V. Narasimhan; , seem to apply here, that is, exceptions (a) and (c), xxx.
The concept of `cotton fabrics ' in the seems to be integrally linked with the provisions of the General Sales Tax Act and we do not think that we would be justified in regarding the latter Act as unaffected by the growing concept of the term `cotton fabrics ' in the .
We feel too, that unless the extended definition of the is imported into the Sales Tax Act, the latter Act would become unworkable and ineffectual.
Sri Potti, learned counsel for the State of Kerala, submitted that the P.V.C. cloth manufactured by the respondents in this case was not entitled to exemption from sales tax if the earlier definition of the 1944 Act, before the amendment, were to apply.
He submitted that the 1963 Act has incorporated in its third schedule the definition of the 1944 Act as it stood at the time of its enactment and that this incorporation is unaffected by subsequent changes in the contested the correctness of the High Court 's observations that the concept of `cotton fabrics in the 1944 and 1963 Acts were integrally linked and that, unless the extended definitions of the former were imported into the latter, the latter Act would become unworkable and ineffectual.
According to him, the provisions of the CST Act and the 1957 Act have been unnecessarily brought into the discussion in order to forge a connection between the various enactments and in an attempt to lend strength to an argument that the exemption of an item of goods from the levy of sales tax by the State was correlated to the existence of a levy of additional excise duty in respect of those very goods under the 1957 Act.
He submits that this argument is not tenable and that there is no connection between the 1944 Act, the CST Act, the 1957 Act and the 1963 Act.
His submissions are these: (a) When the Kerala Act of 1125 M.E. was amended by Act VII of 1958 w.e.f. 14.12.1957, the Kerala State Legislature was fully alive to the proposals to introduce the CST Act and the 1957 Act; nevertheless, the description of items granted exemption from sales tax was worded differently and not correlated to the definitions of the 1944 Act; PG NO 612 (b) Silk fabrics were not eligible for exemption under the 1125 Act as amended in 1957 and remained liable to sales tax till 3 1.3.1963 though additional excise on them had been introduced w.e.f. 1.4.1963.
The exemption from sales tax was conferred only on 1.4.1963 by the 1963 Act.
Again, this exemption was taken away w.e.f.
1.9.1967 although such fabrics continued to be subject to additional excise duty.
Thus, though it is true that, between 14.12.1957 and 31.3.1961 there was sales tax but no additional excise duty on pure silk textiles and between 1.4.1863 and 31.8.1967 there was additional excise duty but no sales tax on silk fabrics, it is equally true that between 1.4.1961 and 31.3.1963 and again after 1.9.1967 they are liable to both sales tax and additional excise duty.
It is thus not possible to view the two levies as supplementary to, or inter dependent on, each other.
(c) The 1963 Act only incorporates a definition contained in the 1944 Act.
The 1957 Act is an independent Act, applicable to some of the goods to which the 1944 Act are applicable.
It has its own schedule, the descriptions in which need not be though they generally are identical with those in the schedule to the 1944 Act.
The 1944 and 1957 Acts may be somewhat inter linked but there is no justification to import that connection also for the purposes of the 1963 Act.
(d) The objects and reasons of the 1957 Act explicitly state that the levy of additional excise duty on goods thereunder does not preclude the State legislatures from levying any sales tax on only, such levy will be subject to the restrictions contained in the CST Act.
(e) It should not also be overlooked that the 1963 Act is an enactment of a State legislature.
To construe entry in its Schedule as authorising the applicability, not merely of the then current definition of the 1944 Act but its future amendments as well, will render it subject to the vice of excessive delegation.
In this context, our attention is drawn to the decisions of the Supreme Court in Shama Rao, Gwalior Rayon, 11974] 2 SCR 345 and International Cotton, To avoid such an infirmity we are asked to place a restrictive interpretation on the 1963 Act.
even assuming for purposes of argument that it may be capable of a wider interpretation .
PG NO 613 5.
There is some force in these contentions, but, after hearing both counsel, we are of opinion that the conclusion of the High Court should be upheld.
In the first place, we think it would be correct to say that the 1963 Act brings in the definitions of the 1944 act by way of reference or citation and not by way of incorporation.
For, a reading the Act shows that the Act intended to confer exemption on a number of goods set out in the Schedule.
Of these, since items 5 to 7 are defined in the 1944 Act, the Act refers to those definitions to ascertain the scope of these items.
There are no express words used by the statute which will justify an inference that the intention was to incorporate those definitions, as standing on that date, into the 1963 Act.
That apart, as pointed out by the High Court, the question whether it is an instance of reference or citation as contrasted with incorporation pales into significance if all the Central and State enactments referred to at the outset are really part of an integrated scheme evolved to achieve a particular purpose.
In this context, Sri Krishnamurthy Iyer, invited our attention to a passage from Hind Engineering Co. vs CST, [1973] 31 STC 115, dealing with an identical entry in regard to `cotton fabrics ' in Schedule of the Bombay Sales Tax Act, 1959, where a deivision bench of the Gujarat High Court traced the genesis of the exemption of `cotton fabrics ' from the liability to sales tax.
We do not think it necessary to extract the whole of it here, particularly as the provisions of the Bombay legislations in this context and their history are not identical with those of the Kerala statute.
It is clear, however, that the provisions of exemption from sales tax on the items with which we are concerned here and certain others cannot be understood in isolation but should be read in the background of certain historical developments pertaining to sales tax levy.
These may now be briefly referred to.
Article 286 of the Constitution of India imposed certain restrictions on the legislative powers of the States in the matter of levy of sales tax on sales taking place outside the State, sales in the course of import or export, sales in the course of interstate trade or commerce and sales of declared goods.
The Sales Tax Acts in force in several States were not in conformity with the provisions of the Constitution and attempts to bring those laws to be in conformity with these provisions gave rise to a lot of litigation.
This led to an amendment of Act.
Clause (2) of the article, as it stands, since 11th September, 1956, authorised Parliament to formulate principles for determining when sale or purchase of goods can be said to take place in the course of import or export or in the course of inter State trade or commerce Clause (3) was amended, in terms already set out to restrict the powers of PG NO 614 a State to impose sales or purchase tax on declared goods.
The C.S.T. Act, 1956 which came into force on 5:1.1957 formulated the principles referred to in Article 286(2).
As already mentioned, this Act was amended, alia, by Act 16 of 1957 w.e.f.
6.6. 1957 and by Act 31 of 1958 w.e.f.
1.10. 1958.
section 14 listed the goods which are considered to be of special importance in inter state trade or commerce which included the six items set out earlier.
section 15 of the Act, as originally enacted, was brought into force only w.e.f. 1.10.1958.
It stipulated that levy of sales tax on declared goods should not be at a rate exceeding 2% or be levied at more than one point in a State.
Before this section came into force, it was amended by Act 16 of 1957 which retained the first restriction and, so far as the second is concerned, provided that the tax should be levied only on the last sale or purchase inside the State and even that should not be levied when that last sale or purchase is in the course of inter state trade or commerce as defined.
Act 31 of 1958 amended section 15 to impose certain modified restrictions and conditions with the details of which we are not here concerned.
These restrictions clearly entailed loss of revenue to the States and it was considered expedient and desirable to compensate the State for the proportionate loss of sales tax incurred by them.
Thus, even before section 15 was brought into force, the Central Government decided to pass an Act to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of a part of the net proceeds thereof among the State in pursuance of the principles of distribution recommended by the Second Finance Commission in its report dated 30.9.1957.
This proposal to levy additional duties of excise on certain special goods was a part and parcel of an integrated scheme under which sales tax levied at different rates by the States on certain goods was ultimately substituted by the levy of additional duties of excise on such goods and the States were compensated by payment of a part of the net proceeds of the said additional levy on such goods.
That this clearly was the genesis and object of the 1957 Act also appears from its objects and reasons set out earlier.
Some of the items liable to excise duty were picked out from the Schedule to the 1944 Act.
They were listed among the declared goods of section 14 of the CST Act and also made liable to additional excise duty under the 1957 Act.
A perusal of the lists under these three enactments show that out of the items listed in the Schedule to the 1944 Act, sugar, tobacco, cotton fabrics, rayon or artificial fabrics and woollen fabrics were categorised as declared goods and subjected to additional excise duty.
When the numerical order of these items in the 1944 Act (originally 8, 9, 12, 12A, 12B) came to be changed in 1960 (as 1, 4, 19, 22, 21) a corresponding change was effected in the 1957 Act.
PG NO 615 `Silk fabrics ' as defined in item 20 of the 1944 Act was included in 1961 in the CST Act and the 1957 Act.
The fact that `cotton fabrics ' though listed as item 12 in the Schedule to the 1944 Act was not brought into the list in section 14 till 1.10.1958 or that `silk fabrics ' was dropped from the list in section 14 w.e.f. 11.6.1968 though it continues in the Schedule to the 1944 Act does not alter the position that these three acts are interconnected and that certain goods taken out from the Schedule to the 1944 Act were to be subjected to the special treatment outlined in the CST Act and the 1957 Act.
This may be so, says Sri Potti, but there is no justification to bring the 1963 Act into this group.
His short point is that the State legislature is completely free within its domain.
Its power to levy sales tax includes a power to levy a tax on sales of declared goods as well.
Nor is such power inhibited by the levy of an additional excise duty on certain goods.
The 1957 amendment to the 1125 Act made no reference even to the 1944 Act.
The 1963 Act makes no reference either to the CST Act or to the 1957 Act.
Sri Potti emphasises, pointing out to the practical effects of the two legislations (the 1963 Act and the 1957 Act) to which attention has been invited already, that it was not the policy of the Kerala State legislature to exempt from sales tax goods which suffered additional excise duty.
The sales tax exemption is conferred on a totally independent basis.
It is not linked to the fluctuations in, or variation of, the treatment under the CST Act and the 1957 Act.
The description of items 5, 7 and 8, by simply incorporating the definitions then readily available in the 1944 Act (not the CST Act or the 1957 Act), was not intended to bring about the result that these definitions should be read in the light of the changes that they may undergo for the purposes of the 1944 Act.
Sri Potti is certainly correct in saying that the wordings of the Acts do not show an exact correlation between the liability to pay additional excise duty and the exemption from the levy of sales tax under the 1963 Act.
But it would not be correct to say that the provisions of the latter can be interpreted without reference to the other two legislations.
The CST Act has a definite impact on the manner and extent of sales tax levy, in so far as declared goods are concerned for such levy cannot transgress the limitations and restrictions of section 15 thereof.
section 15 applies in respect of goods listed in section 14 which, in turn is linked to the list in the 1944 Act.
The 1957 Act also has a bearing on the sales tax levy of various States.
By levying sales tax on an item covered by the Schedule to the 1957 Act, the State will have to forego its share on distribution of the proceeds of the additional excise duty levied.
Whether it PG NO 616 should impose sales tax on an item of declared goods, limited by the restrictions in section 15 of the CST Act and at the risk of losing a share in the additional excise duty levied in respect of those very items, is for the State to determine.
As pointed out by Sri Potti, it was open to the Kerala Legislature to decide and it did so also that on some items there should be one or other of the levies or both of them and to modify these levies depending upon its own financial exigencies.
But these factual or periodical variations do not detract from the basic reality that the policy of sales tax levy on declared goods has to keep in view, and be influenced by, the provisions of the CST Act and the 1957 Act.
The reference to the 1957 Act definitions for purposes of grant of exemption in the 1963 Act as enacted originally as well as when the latter was amended in 1967 and the specific reference to the 1957 Act when the First Schedule to the 1963 Act was amended in 1980 are quite significant in this context.
We therefore, think that, though the 1963 Act referred only to the definitions in the 1944 Act, the entries in the Schedule have to be juxtaposed into the broad pattern or scheme evolved by the 1956 57 enactments set out earlier in the judgment.
Doing so, and even assuming that the reference in the items of the Schedule to the definitions in the 1944 Act is by way of incorporation and not reference, one cannot escape the conclusion that the circumstances are covered by the exceptions outlined in Narasimhan; , They certainly fall within the scope of exception (a) mentioned therein and also fall within exception (c) if we read "unworkable and ineffectual" to take in also "unrealistic and impractical".
We do not find much substance in arguments of Shri POtti based on Shama Rao This devision really concerned a delegation of power to the executive Government to decide contents of a legislation by allowing it a latitude in fixing a date for its commencement.
It cannot be understood as an authority for the proposition that a State legislature can adopt only the existing provisions of a statutes passed by another legislature but not is future amendments and modifications.
In the first place, such a proposition will strike at the very root of the concept of referential legislation as explained in the decisions referred to above and the distinction drawn by them between cases of mere reference or citation on the one hand and of incorporation, on the other.
Secondly, in Shama Rao only three of the five Judges expressed an opinion about this aspect of the case.
Their view point was presented by Shelat J. in the following words: "The question then is whether in extending the Madras Act in the manner and to the extent it did under sec.
(2)(1) PG NO 617 of the Principal Act the Pondicherry legislature abdicated its legislative power in favour of the Madras legislature.
It is manifest that the Assembly refused to perform its legislative functions entrusted under the Act constituting it.
It may be that a mere refusal may not amount to abdication if the legislature instead of going through the full formality of legislation applies its mind to an existing statute enacted by another legislature for another jurisdiction, adopts such an Act and enacts to extend it to the territory under its jurisdiction.
In doing so, it may perhaps be said that it has laid down a policy to extend such an Act and directs the executive to apply and implement such an Act.
But when it not only adopts such an Act but also provides that the Act applicable to its territory shall be the Act amended in future by the other legislature, there is nothing for it to predicate what the amended Act would be.
Such a case would be clearly one of non application of mind and one of refusal to discharge the function entrusted to it by the Instrument constituting it.
It is difficult to see how such a case is not one of abdication or effacement in favour of another legislature at least in regard to that particular matter.
" This conclusion has been explained and distinguished in the Gwalior Rayon, case ; in which Khanna J and Mathew J delivered separate but concurring judgments.
Khanna J. said: It would appear from the above that the reason which prevailed with the majority in striking down the Pondicherry Act was the total surrender in the matter of sales tax legislation by the Pondicherry Legislature in favour of the Madras Legislature.
No such surrender is involved in the present case because of the Parliament having adopted in one particular respect the rate of local sales tax for the purpose of central sales tax.
Indeed, as mentioned earlier, the adoption of the local sales tax is in pursuance of a legislative policy induced by the desire to prevent evasion of the payment of central sales tax by discouraging inter State sales to unregistered dealers No such policy could be discerned in the Pondicherry Act which was struck down by this Court.
PG NO 618 Another distinction, though not very material, is that in the Pondicherry case the provisions of the Madras Act along with the subsequent amendments were made applicable to an area which was within the Union Territory of Pondicherry and not in Madras State.
As against that, in the present case we find that the Parliament has adopted the rate of local sales tax for certain purposes of the only for the territory of the State for which the Legislature of that State had prescribed the rate of sales tax.
The central sales tax in respect of the territory of a State is ultimately assigned to that State under artcle 269 of the Constitution and is imposed for the benefit of that State.
We would, therefore, hold that the appellants cannot derive much assistance from the above mentioned decision of this Court.
" Methew J. observed: We think that the principle of the ruling in Shama Rao vs Pondicherry, (supra) must be confined to the facts of the case.
It is doubtful whether there is any general principle which precludes either Parliament or a State legislature from adopting a law and the future amendments to the law passed respectively by a State legislature or Parliament and incorporating them in its legislation.
At any rate, there can be no such prohibition when the adoption is not of the entire corpus of law on a subject but only of a provision and its future amendments and that for a special reason or purpose .
" We think that the principle of the ruling in Shama Rao vs Pondicherry, (supra) must be confined to the facts of the case.
It is doubtful whether there is any general principle which precludes either Parliament or a State legislature from adopting a law and the future amendments to the law passed respectively by a State legislature or Parliament and incorporating them in its legislation.
At any rate, there can be no such prohibition when the adoption is not of the entire corpus of law on a subject but only of a provision and its future amendments and that for a special reason or purpose .
We have attempted to show that the 1963 Act, on a proper construction, does indicate a policy that certain items which are subject to additional excise duty should be left out of sales tax levy except in cases where there is a specific indication or provision of the Act to the contrary.
The Kerala State legislature cannot be said to have attracted the 1944 Act definitions with their future amendments blindly and without application of mind.
On the other hand.
it has been done in pursuance of a scheme, a purpose and a policy.
It cannot, therefore, be said that there has been any abdication of its legislative functions by the Kerala legislature.
For the above reasons, we are of opinion, that the High Court was right in the view it took viz. that the scope of the exemption available under item 7 of the third PG NO 619 Schedule to the 1963 Act will vary according to the scope of the corresponding entry in the Schedule to the 1944 Act as it stands at the relevant time.
So far as assessment years 1971 72 and 1972 73 are concerned, the definition of `cotton fabrics ' in item 19 of the Schedule to the 1944 Act, as amended by the Finance Act 1969 w.e.f. 1.4.1969, will apply.
Sri Krishnamurthy Iyyer for the assessees contended that it is possible to spell out, from certain passages in the judgment of the High Court where judicial decisions are discussed, an inference that the High Court was inclined to the view that PVC Cloth would be covered even by the previous unamended definition in the 1944 Act.
He also attempted to support this view by citing certain cases.
Sri Potti contested the correctness of both these arguments.
In the view we have taken on the main issue, we consider it unnecessary to go into this question.
In any event, the High Court has returned no specific answer to this issue which was clearly an aspect of the questions posed for its consideration by the Tribunal (at page 42 of the paper book) and, even if we had accepted the contention of Sri Potti that only the definition as on 1.4.1964 works apply, we would have perhaps only left it to the High Court to consider this aspect of the matter afresh.
Sri Krishnamurthy Iyer also submitted that the certificate of fitness of appeal granted by the High Court (page l15 of the paper book) is defective inasmuch as it does not specify the substantial questions of law which, in the view of the High Court, needed consideration by this Court.
But we do not think we need go into this aspect or reject the appeal as defective.
Since the appeal does involve a substantial question of law of great importance (which we have discussed above), we have proceeded to dispose of the appeal on merits.
In the result, the appeal fails and is dismissed.
We, however make no order as to costs.
R.P.D. Appeal dismissed.
| Section 9 read with Third Schedule item 7 of the Kerala General Sales Tax Act 1963 granted exemption from sales tax to certain items including cotton fabrics.
`Cotton fabrics ' was defined as having the same meaning as assigned to it in item 19 of the first Schedule to the .
This definition of `cotton fabrics ' in 1944 Act was amended in 1969 by the Finance Act 1969.
In 1957, Parliament enacted the and Additional Duties of Excise ((Goods of Special Importance) Act, 1957 affecting the levy of sales tax and excise duty.
Definition of `cotton fabrics ' occurring in the aforesaid Acts was also related to its definition under the 1944 Act.
The respondent assessee was manufacturing PVC cloth, an item of goods which was clearly covered by the amended definition but, perhaps, not by the original one.
He claimed exemption from sales tax in respect of assessment years 1971 72 and 1972 73.
On a reference made to the High Court under the 1963 Act, it observed that the concept of `cotton fabrics ' in the seemed to be integrally linked with the provisions of the (General Sales Tax Act) the Act under which the levy of sales tax was governed, prior to enforcement of the 1963 Act), and that it would not be regarding the latter Act as unaffected by the growing concept of the term `cotton fabrics ' in the Central Excise PG NO 601 PG NO 602 and Salt Act, and that unless the extended definition of the imported into the Sales Tax Act, the latter Act would become unworkable and ineffectual.
In the appeals by certificate to this Court, it was submitted on behalf of the State appellant that the PVC cloth manufactured by respondent was not entitled to exemption from sales tax if the earlier definition of the 1944 Act, before the amendment, was to apply, and that the 1963 Act has incorporated in its Third Schedule the definition of the 1944 Act as it stood at the time of its enactment and that this incorporation is unaffected by the subsequent changes made in the 1944 Act, that the concept of `cotton fabrics ' in the 1944 and 1963 Acts were not integrally linked and that it is not appropriate to say that unless the extended definition of the former were imported into the latter, the latter Act would become unworkable and ineffectual.
On the question whether the exemption given to `cotton fabrics ' in item 7 should be restricted to `cotton fabrics ' as defined in the 1944 Act as it stood on 1.4.1963 or whether it would also cover goods falling under the said definition after its amendment in 1969.
Dismissing the appeals, this Court, HElD: ( 1 ) It would be correct to say that the 1963 Act brings in the definitions of the 1944 Act by way of reference or citation and not by way of incorporation.
For a reading of the Act shows that the Act intended to confer exemption on a number of goods set out in the Schedule.
Of these, since items 5 to 7 are defined in the 1944, Act, the Act referes to those definitions to ascertain the scope of these items.
There are no express words used by the statute which will justify an inference that the intention was to incorporate those definitions, standing on that date into the 1963 Act.
[613A C] Secretary of State vs Hindustan Cooperative Insurance Society Ltd., [1931] 58 I.A. 259; Collector of Customs vs Nathella .Sampathu Chetty & another; , ; Ram Sarup y. State; , ; Ram Kirpal vs States [ ; ; Ne Central Jute Mills Co. Ltd. vs the Assistant Collector, ; ; Bhajva vs Gopikabai, ; ; Mahindra & Mahindra Ltd vs Union, ; and Western Coal Fields vs Special Area Development, Authority, ; , referred to.
PG NO 603 (2) `Silk fabrics ' as defined in item 20 of the 1944 Act was included in 1961 in the CST Act and the 1957 Act.
The fact that `cotton fabrics ' though listed as item 12 in the Schedule to the 1944 Act was not brought into the list in section 14 till 1.10.1958 or that `silk fabrics ' was dropped from the list in section 14 w.e.f. 11.6.1968 though it continues in the Schedule to the 1944 Act does not alter the position that these three Acts are inter connected and that certain goods taken out from the Schedule to the 1944 Act were to be subjected to the special treatment outlined in the CST Act and the 1957 Act.[615A B] (3) Though the 1963 Act referred only to the definitions in the 1944 Act, the entries in the Schedule have to be juxtaposed into the broad pattern or scheme evolved by the 1956 57 enactments.
Even assuming that the reference in the items of the Schedule to the definitions in the 1944 Act is by way of incorporation and not reference, one cannot escape the conclusion that the circumstances are covered by the exceptions outlined in the decision of this Court in State of Madhya Pradesh vs Narasimhan! ; They certainly fall within the scope of exception (a) mentioned therein and also fall within exception (c) if `unworkable and ineffectual ' are read to take in also `unrealistic and impractical '.
[616D E] (3) The 1963 Act on a proper constructions does indicate a policy that certain; items which arc subject to additional excise duty should be left out of sales tax levy except in cases where there is a specific indication or provision of the Act to the contrary.
The Kerala State legislature cannot be said to have attracted the 1944 Act definition with their future amendments blindly and without application of mind.
On the other hand, it has been done in pursuance of a scheme, a purpose and a policy.
It cannot, therefore.
be said that there has been any abdication of its legislative functions by the Kerala Legislature.
[618F G] B .
Shama Rao vs The Union Territory of Pondicherry ; , distinguished.
Gwalior Rayon Silk Mfg.
(Wvg.) Co. Lnd.
vs The Asslstant Commissioner of Sale 's Tax and Ors., , referred to.
(5) The High Court was right in the view it took viz., that the scope of the exemption available under item 7 of the Third Schedule to the 1963 Act will vary according to the scope of the corresponding entry in the Schedule to the 1944 Act as it stands at the relevant time.
So far as assessment years 1971 72 and 1972 73 are concerned the definition of cotton fabrics in item 19 of the Schedule to PG NO 604 the 1944 Act, as amended by the Finance Act 1969 w.e.f. 1.4.1969, will apply.
[618H; 619A B]
|
Civil Appeal No. 262 of 1955.
Appeal by special leave from the, judgment and decree dated February 4, 1953, of the Calcutta High Court, in Appeal from original decree No. 68 of 1952 arising out of the judgment and decree dated ' January 14, 1952, of the said High Court, in Special Suit No. 2 of 1951.
571 N. C. Chatterjee, C. B. Agarwala and Sukumar Ghose, for the appellants.
B. Sen, section N. Mukherjee, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondents.
August 21.
The Judgment of the Court was delivered by WANCHOO J.
This is an appeal by special leave against the judgment of the Calcutta High Court.
The appellant is a company, incorporated in India, with its registered office in Calcutta dealing in jute.
It entered into a contract on June 18, 1945, with the respondent company, which is incorporated in England and has its registered office in London.
The contract was for the supply of five hundred bales of jute of crop 1945 46 to be shipped from Calcutta or Chittagong to Rio de Janeiro, when freight became available.
The contract provides that in the event of default of tender or delivery, the seller shall pay to the buyer as and for liquidated damages 10s.
per ton plus the excess (if any) of the market value over the contract price, the market value being that of jute contracted for on the day following the date, of default.
This date was to be the date in London on declaration of default by telegram or without such declaration if default was eventually made by lapse of time on the 21st day after expiry of the extended period.
There is also a provision for arbitration, which lays down that any claim or dispute whatever arising out of, or in relation to this contract or its construction or fulfilment shall be referred to arbitration in London in accordance with the bye laws of the London Jute Association, and it was open to either party to claim arbitration whenever and as often as disputes arose.
The contract also provides for an appeal by any party dissenting from an arbitration award to the London Jute Association in accordance with the regulations in force for the time being.
Lastly, it is provided that the contract would be construed according to the laws ,of England whatever the residence and nationality of the parties might be or become and would be deemed to be performed there.
The courts of England or 572 arbitrators, as the case might be, would have exclusive jurisdiction over all disputes which might arise under the contract, except for the purpose of enforcing in the Colonies or abroad any arbitration award made under this contract, On.
June 23, 1947, thirty nine bales of jute were consigned by the appellant to Rio de Janeiro in part performance of the contract and information of this was given to the respondent by letter on July 17, 1947.
It was said in this letter that difficulty had arisen because of the non availability of quota and it was hoped that the balance remaining under the contract would be shipped as soon as quota was available.
The respondent sent a reply to this letter on July 25, 1947, and the appellant wrote a further letter on August 1, 1947, in which it was said that the remaining amount of jute under the contract would be shipped as soon as the quota was available.
We do not know what happened thereafter till we come to August 1948.
It seems that the respondent received a cable on August 12, 1948, from the appellant stating that the contract stood cancelled long ago.
The respondent by its letter dated August 12, 1948, refused to %accept this position.
Thereafter there were disputes and differences between the parties and eventually the respondent claimed default on or about June 1949 in terms of the contract.
On or about July 14, 1949, the respondent referred the matter to the arbitration of the London Jute Association, which appointed two of its member as arbitrators.
The respondent filed its claim before the arbitrators on July 23, 1949.
On July 27, 1949, the arbitrators gave notice to the appellant to file its answer by August 19, 1949.
The appellant, however, filed no answer before the arbitrators.
What the appellant did in reply was to file an application under section 33 of the Indian (hereinafter called the ), on the original side of the Calcutta High Court, in which it made three prayers, namely (a) declaration that the arbitration agreement, if any, between the parties was void ab initio on the 573 ground of uncertainty and was not binding on the appellant; (b) declaration that there was in fact and in law no contract between the parties on account of mutual mistake of the parties; and (c) that the court might be pleased to adjudicate on the existence and/or validity of the alleged arbitration agreement and the effect of the same.
This application was moved on August 12, 1949.
It appears that on August 13, 1949, the appellant sent a cable to the respondent and the London Jute Association informing them that an application had been made in the Calcutta High Court challenging the submissions contained in the contract and that the arbitrators had become functus officio pending disposal of the application, which was fixed for August 29.
The appellant received a reply to its cable in which it was asserted that no such application as the appellant bad made to the Calcutta High Court could be made there and that the arbitrators would proceed with the adjudication on August 27 as already fixed.
On August 17, 1949, the appellant sent a letter to the London Jute Association in which it referred to its cable and the reply of the Association to that and reiterated its stand that any further steps taken in the arbitration proceedings pending disposal of the application under section 33 would be invalid under the .
The arbitrators, however, proceeded with the arbitration and gave their award on October 17, 1949.
No proceedings thereafter were taken by the appellant in London, nor does it appear that any steps were taken by it to have its application under section 33 decided, till we come to November 26, 1951.
On that date, an application was filed by the respondent in the Calcutta High Court under section 5 of the , (hereinafter called the Protocol Act).
Along with this application it filed the award dated October 17, 1949, and prayed that judgment be pronounced in accordance with the award and decree be passed accordingly.
Notice of this was issued to the appellant, which filed its reply on January 14, 73 574 1952, We do not think it necessary to set ' out the petition of the respondent under section 5 of the Protocol Act and the appellant 's reply thereto in detail, because when the matter came to be heard in court only two points were urged on behalf of the appellant, namely (1) that the award was made after the notice of filing of the petition dated August 10, 1949, under section 33 of the had been given to the respondent and the arbitrators, and consequently the award made after the receipt of the said notice and during the pendency of the said application was bad under section 35 of the ; and (2) that the award was bad on the face of it and could not therefore be enforced in view of the provisions of section 7(e) of the Protocol Act, which lays down that an award cannot be enforced in India if it is contrary to the law of India.
It was contended that the award was contrary to the law of India and this appeared on the face of it inasmuch as the arbitrators had purported to award such damages as could not be done under the provisions of the .
Both these contentions were negatived by the learned Single Judge and he ordered the award to be filed, in court and passed a decree in terms thereof.
The appellant then went up in appeal, which was heard by a Division Bench of the Calcutta High Court.
The grounds of appeal show that the same two points, which were urged before the learned Single Judge ' were reiterated therein.
When the matter came to be heard before the Division Bench, the same two points were raised on behalf of the appellant there also.
The Division Bench negatived the two contentions raised before it on behalf of the appellant and confirmed the judgment of the learned Single Judge.
It is curious, however ' to notice that though all these proceedings were being taken on the application under section 5 of the Protocol Act the appellant apparently took no steps to have its application under section 33 of the , which seems to have been adjourned sine die, decided along with the respondent 's application under section 5 of the Protocol Act, 575 This was followed by an application for a certificate to appeal to this Court, which was refused.
Then the appellant applied to this Court for special leave to appeal, which was granted.
In the special leave petition also the appellant raised the same to points, namely, (i) the construction of sections 33 and 35 of the and the application of these provisions to the facts of this case, and (ii) the construction of section 7 of the Protocol Act and the with respect to the damages awarded by the award.
In the statement of case also after narrating the facts and circumstances, the same two points were mentioned as the principal questions which arose for determination in the appeal, namely, (i) the effect of sections 33 and 35 of the on the facts and circumstances of this case, and (ii) the interpretation of section 7 of the Protocol Act in the light of sections 73 and 74 of the and their bearing on the damages awarded by the arbitrators and its effect on the validity of the award.
Learned counsel for appellant, however, wanted to raise before us other points arising out of section 7 of the Protocol Act.
We do not think that the appellant should be permitted to raise at this late stage any new point in addition to the two points which were urged before the learned Single Judge and which only have all along been raised in the appeal to the High Court and in the appeal before this Court.
We shall therefore confine the appellant to these two points only and proceed on the assumption in the same manner as has been done by the High Court, namely, that an application under section 33 of the would lie in the circumstances of this case and therefore the provisions of section 35 of the would be attracted.
The part of section 33 of the , relevant for our purpose, lays down that any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement or to have its effect determined shall apply to the court and the court shall decide the question.
It will thus be clear that 576 s.33 contemplates an application for three purposes, namely, (i) when it is desired to challenge the existence of an arbitration agreement, (ii) when it is desired to challenge its validity, and (iii) when it is desired to have its effect determined.
An arbitration agreement may come into existence in one of two ways; it may either arise out of an agreement which contains nothing else besides the arbitration agreement, or it may arise out of a term contained in a contract which deals with various other matters relating to the contract, which is the present case.
Where one is dealing with an arbitration agreement of the second kind, section 33 is concerned only with the term relating to arbitration in the contract and not with the other terms of the contract which do not arise for consideration on an application under that section.
Then we come to section 35.
It provides that no reference or award shall be rendered invalid by reason only of the commencement of legal proceedings upon the subject matter of the reference, but when legal proceedings upon the whole of the subject matter of the reference has been commenced between all the parties to the reference and a notice thereof has been given to the arbitrators or umpire, all further proceedings in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid.
It will be seen, therefore, 'that section 35 makes proceedings before the arbitrators invalid in the absence of an order under section 34 staying the legal proceedings, where whole of the subject matter of the reference is covered by any legal proceedings taken with respect to it.
In other words, an arbitrator can continue the proceedings and proceed to make the award on the reference, unless the whole of the subject matter of the reference is covered by the legal proceedings which have been instituted.
Assuming that the proceedings taken under section 33 are " legal proceedings ", mentioned in section 35, the question which immediately arises on the facts of the present case is whether the whole of the subject matter of the reference in this case was covered by the legal pro ceedings taken by the appellant by its application under section 33 of the .
577 In dealing with this aspect of the case, learned counsel for the appellant raised the question of frustration of the contract and the powers of the court and the arbitrator in that behalf.
It is true that the words " frustration of contract " have been used in paragraph 8 of the application.
But the prayers do not show that any relief was claimed on that ground, relief (c) being merely a repetition of the words of section 33 of the .
Learned counsel relied on Heymen vs Darwins Ltd. (1) in this connection.
We do not think we should permit the appellant to raise this contention at this late stage and would content ourselves by pointing out incidentally that even if the dictum in Heymen 's case (1) is accepted, it will not help the appellant, for on that dictum the question of frustration would be for the arbitrators to decide on the basis of the terms used in this contract which are of the widest amplitude and would not be a matter for consideration of the court.
On this basis there would be no identity of subject matter between what can be raised in an application under section 33 on the facts of this case and what can be decided by the arbitrators.
However, we do not propose to pursue this matter any further and to decide it.
Then we turn to prayers (a) and (b) of paragraph 9 of the application based on paragraphs 6 and 7 thereof.
These prayers undoubtedly cannot be the subject matter of arbitration, for they go to the very root of the contract and imply that there was no contract between the parties at all and therefore no arbitration agreement.
These prayers can certainly form the basis of an application under section 33, for they relate to the existence and validity of the arbitration agreement contained in the contract; but not being matters within the competence of the arbitrators, there can be no identity of the subject matter under reference to the arbitrators and the subject matter of prayers (a) and (b).
The conclusion, therefore, is that prayers (a) and (b) can be the subject matter of an application under section 33 but they cannot be the subject matter of the reference to the arbitrators.
Therefore, (1) [19421 2 A.C. 356.
578 the subject matter of the legal proceedings under section 33 in this case cannot and does not cover any part of the subject matter of the reference.
Section 35 in consequence can have no application and the award cannot be assailed as invalid on the ground that it violates section 35 of the .
The first contention, therefore, must fail.
The argument under this head is that the liquidated damages provided under cl.
(1 2) of the contract include not only the difference between the contract price and the market price on the date of default but also a further sum of 10s.
per ton.
Reference in this connection is made to sections 73 and 74 of the , and it is said that the extra amount of 10s.
per ton included in the sum of liquidated damages is against the provision of these, sections and therefore the award being against the law of India is bad on the face of it and should not be enforced in India.
Section 73 provides for compensation for loss or damage caused by breach of contract.
It lays down that when a contract has been broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Section 74, provides for breach of contract where penalty is stipulated for or a sum is named and lays down that when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
What cl.
(12) of the contract provides in this case is the measure of liquidated damages and that consists of 579 two things, namely, (i) the difference between the contract price and the market price on the date of default, and (ii) an addition of 10s.
per ton above that.
There is nothing in section 73 or section 74 of the Contract Act, which makes the award of such liquidated damages illegal.
Assuming that the case is covered by section 74, it is provided therein that reasonable compensation may be awarded for breach of contract subject to the maximum amount named in the contract.
What the arbitrators have done is to award the maximum amount named in the contract.
If the appellant wanted to challenge the reasonableness of that provision in cl.
(12) it should have appeared before the arbitrators and represented its case.
It cannot now be heard to say that simply because cl.
(12) provided for a further sum of 10s.
per ton over and above the difference between the contract price and the market price on the date of the default, this was per se unreasonable and was therefore bad according to the law of India as laid down in sections 73 and 74, of the Contract Act.
Both these sections provide for reasonable compensation and section 74 contemplates that the maximum reasonable compensation may be the amount which may be named in the contract.
In this case the arbitrators have awarded the maximum amount so named and nothing more.
Their award in the circumstances cannot be said to be bad on the face of it, nor can it be said to be against the law of India as contained in these sections of the Contract Act.
The second contention must also fail.
We, therefore, dismiss the appeal with costs to the respondent.
Appeal dismissed.
| The appellant company, incorporated in India, entered into a contract on June 18, 1945, for the supply of five hundred bales of jute, with the respondent company which was incorporated in England and which had its registered office in London.
The contract, inter alia, provided that in the event of default of tender or delivery, the seller shall pay to the buyer as and for liquidated damages 10s.
per ton plus the excess (if any) of the market value over the contract price, the market value being that of jute contracted for on the day following the date of default.
There was a provision for arbitration, under which any claim or dispute whatever arising out of, or in relation to this contract or its construction or fulfilment shall be referred to arbitration in London in accordance with the bye laws of the London jute Association.
Disputes having arisen regarding the performance of the contract the respondent referred the matter to the arbitration of the London jute Association, who appointed two of its members as the arbitrators.
The appellant did not reply to the notice given by the arbitrators but filed an application on 570 August 10, 1949, under section 33 Of the , in the Calcutta High Court, praying, inter alia, (a) for a declaration that the arbitration agreement was void on the ground of uncertainty, and (b) for a declaration that there was in fact and in law no contract between the parties on account of mutual mistake of the parties.
Notice was given by the appellant to the respondent and the London jute Association that further steps in the arbitration proceedings should not be taken pending disposal of the application under section 33 Of the .
The arbitrators, however, proceeded with the arbitration and gave their award on October 17, 1949.
On November 26, 195i, an application was filed by the respondent in the Calcutta High Court under section 5 of the , praying that judgment be pronounced in accordance with the award.
The appellant contended that the award was invalid on the grounds, inter alia, (i) that the award was bad under section 35 of the , as it was made after the receipt of the notice of filing of the petition dated August 10, 1940, under section 33 of the , by the respondent and the arbitrators and during the pendency of the said application, and (2) that the liquidated damages provided under the award included not only the difference between the contract price and the market price on the date of default but also a further sum of 10s.
per ton, that the extra amount was against the provisions Of sections 73 and 74 of the , and that, therefore, the award was bad on the face of it and could not be enforced in view of the provisions Of section 7(e) of the , which lays down that an award cannot be enforced in India if it is contrary to the Law of India.
Held: (i) that the subject matter of the legal proceedings under section 33 Of the , which relates to the existence and validity of the arbitration agreement, are not matters within the competence of the arbitrators, and do not therefore cover any part of the subject matter of the reference.
Consequently, section 35 of the is inapplicable.
(2) The award does not violate the provisions of sections 73 and 74 Of the , as the arbitrators have only awarded the maximum amount named in the contract.
|
Civil Appeal No. 1499 of 1985.
From the Judgment and order dated 18.9.84 of the High Court of Himachal Pradesh in C.W.P. No. 155/84.
K. Parasaran , Attorney General.
A. K. Ganguli and A.K Chakravorty , for the Appellant.
The Judgment of the Court was delivered by BHAGWATI , J.
This appeal by special leave is directed against 679 two orders made by a division Bench of the High Court of Himachal Pradesh , one dated 24th July , 1984 and the other dated 18 September 1984 , in so far as they direct the Chief Secretary to the Government of Himachal Pradesh to file an affidavit setting out what action has been taken by the State Government towards implementation of the recommendation contained in paragraph 16 of the Report of the Anti Ragging Committee.
The impugned orders are in our opinion wholly unsustainable and ordinarily we would not have taken time to deliver a reasoned judgment and merely set aside the impugned orders with a brief observation, but we think it necessary to state in some detail our opinion in regard to the directions given in the impugned orders , because we find that this is one of those few cases which demonstrates what we have often said before that public interest litigation is a weapon which has to be used with great care and circumspection and the judiciary has to be extremely careful to see that under the guise of redressing a public grievance it does not encroach upon the sphere reserved by the Constitution to the Executive and the legislature.
D It appears that the Chief Justice of the High Court received a letter dated 4th April , 1984 , from the guardian of a student of the Medical College in Shimla complaining about the ragging of freshers by senior students within as also outside the college campus and the hostel.
The guardian of the student had annexed along with his letter to the Chief Justice a letter dated 25th March, 1984 received by him from his son.
The Division Bench of the High Court presided over by the Chief Justice treated these two letters as constituting the Memo of Writ Petition but directed that these two letters should not be placed on the record of the proceedings in view of the request made in paragraph 6 of the letter of the guardian that the identity of the writer should not be disclosed on account of fear of reprisal and for the self same reason the Division Bench ordered that the identity of the student and the guardian should not be disclosed in the proceedings.
The Division Bench treating the two letters as a writ petition registered them as Civil Writ Petition No. 155 of 1984 and issued notice to the State Government , the Principal of the Medical College Simla , the Himachal Pradesh University and the Director of Health Services , Government of Himachal Pradesh who were arrayed as respondents Nos. 1 to 4.
On receipt of the notice of the Writ Petition , the Government of Himachal Pradesh filed an affidavit setting out the steps which the H 680 State Government and the college authorities had taken to check the ragging of freshers by senior students.
The Director of Medical Education cum Principal of the Medical College , Simla also filed an affidavit opposing the admission of the Writ Petition on the ground that the college authorities had taken various steps for the purpose of curbing the evil of ragging and in fact had taken action On at least two occasions awarding punishment to the students who indulged in ragging by suspending them for a period of 4 to 6 months , The Division Bench , on a consideration of this material placed before it , came to the conclusion that the practice of ragging was prevailing in the Medical College , Simla on a noticeable scale and that ragging took the form of subjecting freshers including female students to inhuman and humiliating treatment degenerating even into physical violence and that the college authorities had not been able to effectively control ragging with the result that the college administration had lost confidence of a sizeable section of student , parents and well wishers as regards its capacity to deal with the problem of ragging.
The Division Bench accordingly gave various directions which included a direction to the State Government to constitute a committee consisting of the Vice Chancellor of the Himachal Pradesh University and the Secretary to the Government , Health Department , interalia , to make "recommendations in regard to the curative, preventive and punitive measures to be adopted by the college authorities to control and curb the evil of ragging and the machinery to be set up to enforce these measures.
" This Committee which we shall for the sake of convenience refer to as the Anti Ragging Committee , was to complete its work and submit its report within a period of six months from the date of its constitution.
The Anti Ragging Committee submitted its Report to the High Court on 26th June , 1984.
The Report contained various recommendations intended to control and curb the ragging of freshers by senior students in the Medical College and its hostel.
We are concerned here with only one recommendation namely that contained in paragraph 16 of the Report which was in the following terms: "In quite a number of States in the country there are Acts on ragging which make ragging a cognizable offence 681 and prescribe the types of punishment commensurate with the crimes committed.
The Himachal Pradesh Government could be suggested to initiate such a legislation as early as possible.
Pending such a legislation by the State Government, the University authorities could think of incorporating some provisions relating to ragging in the relevant ordinance of Discipline in the Ordinance of the University.
The Division Bench by its order dated 24th July, 1984 gave directions for implementation of the various recommendations made in the Report and so far as recommendation contained in paragraph 16 of the Report was concerned, the Division Bench said: "The Chief Secretary to the State Government will file an affidavit within a period of 3 months from the date of receipt of the writ setting out the action proposed to be taken on the recommendation contained in paragraph 16 (First Part) of the relevant portion of the Report." Though this direction ostensibly did no more than call upon the Chief Secretary to inform the Court as to what action the State Government proposed to take on the recommendations to initiate legislation for curbing ragging, it was, in fact and substance, intended to require the State Government to Initiate legislation on the subject.
If this direction were merely an innocuous one intended to inform the court whether the State Government intended to take any action on the recommendation to initiate legislation against ragging, no objection could possibly be taken against it, because it would leave the Government free to decide whether or not to initiate legislation in regard to ragging without mandatorily requiring the State Government to do so But as the subsequent event would show, what the Division Bench intended to achieve by giving this direction was not just to obtain information as to what the State Government proposed to do in the matter but to actually require the State Government to initiate legislation against ragging.
That is why, when the Chief Secretary in deference to this direction filed an affidavit stating, inter alia, that the State Government had "taken notice of the recommendation to initiate legislation in this behalf, if found necessary and so advised", the Division Bench was not satisfied with this statement of the Chief Secretary and declined to close the proceeding so far as this particular aspect was concerned and proceeded, inter alia, to reiterate in its order dated 1 8th September 1984: 682 "The Chief Secretary to the State Government will file an affidavit within a period of 6 weeks from the date of receipt of the Writ setting out the further action taken in the direction of the implementation of the recommendation contained in paragraph 16 (First Part) of the relevant portion of the Report of the Anti Ragging Committee.
" When this direction was given by the Division Bench, it clearly implied that what the Division Bench wanted the State Government to do was to initiate legislation against ragging and for this purpose, time of 6 weeks was granted to the State Government The State Government thereupon preferred the present appeal with special leave obtained from this Court.
We may point out, even at the cost of repetition, that the direction given by the Division Bench in its order dated 24th July 1984 and reiterated in its order dated 18th September 1984 was not an innocuous direction issued merely for the purpose, of informing the Court as to what the State Governing proposed to do in regard to the recommendation in paragraph 16 of the Report to initiate legislation against ragging.
The Division Bench would have been certainly justified in enquiring from the Chief Secretary as to what action the State Government proposed to take in regard to the recommendation of the Anti Ragging Committee to initiate legislation on the subject of ragging.
Such enquiry could have been legitimately made by the Division Bench for the purpose of obtaining information on a matter which the Division Bench regarded, and in our opinion rightly, as necessary for eradicating the evil practice of ragging which is not only subversive of human dignity but also prejudicially affects the interests of the students and the discipline in the Campus and no exception could have been taken to it because it would have left the State Government free to decide whether or not to initiate any legislation on the subject and not mandatorily required the State Government to initiate any such legislation.
If such only were the purpose of the direction issued by the Division Bench and the Division Bench did not intend anything more, the Division Bench would have closed the proceedings when the Chief Secretary intimated in his affidavit that the State Government would initiate legislation in this behalf "if found necessary and so advised".
But despite this statement made by 683 the Chief Secretary on behalf of the State Government, the Division Bench persisted in reiterating its direction that the Chief Secretary should file an affidavit within a further period of 6 weeks setting out the further action taken by the State Government in the direction of implementation of the recommendation contained in paragraph 16 of the Report.
This persistence in reiterating the direction to file an affidavit setting out the action taken by the State Government towards implementation of the recommendation to initiate legislation against ragging, clearly shows that what the Division Bench intended was not merely to obtain information as to what action the State Government proposed to take but to obligate the State Government to take action by way of initiation of legislation against ragging.
The direction given by the Division Bench was really nothing short of an indirect attempt to compel the State Government to initiate legislation with a view to curbing the evil of ragging, for otherwise it is difficult to see why, after the clear and categorical statement by the Chief Secretary on behalf of the State Government that the Government will introduce legislation if found necessary and so advised, the Division Bench should have proceeded to again give the same direction.
This the Division Bench was clearly not entitled to do.
It is entirely a matter for the executive branch of the Government to decide whether or not to introduce any particular legislation.
Of course, any member of the legislature can also introduce legislation but the court certainly cannot mandate the executive or any member of the legislature to initiate legislation, howsoever necessary or desirable the Court may consider it to be.
That is not a matter which is within the sphere of the functions and duties allocated to the judiciary under the Constitution.
If the executive is not carrying out any duty laid upon it by the Constitution or the law, the Court can certainly require the executive to carry out such duty and this is precisely what the Court does when it entertains public interest litigation.
Where the Court finds, on being moved by an aggrieved party or by any public spirited individual or social action group, that the executive is remiss in discharging its obligations under the Constitution or the law, so that the poor and the under privileged continue to be subjected to exploitation and injustice or are deprived of their social and economic entitlements or that social legislation enacted for their benefit is not being implemented thus depriving them of the rights and benefits conferred upon them, the Court certainly can and must 684 intervene and compel the Executive to carry out its constitutional and legal obligations and ensure that the deprived and vulnerable sections of the community are no longer subjected to exploitation or injustice and they are able to realise their social and economic rights.
When the Court passes any orders in public interest litigation, the Court does so not with a view to mocking at legislative or executive authority or in a spirit of confrontation but with a view to enforcing the Constitution and the law, because it is vital for the maintenance of the rule of law that the obligations which are laid upon the executive by the Constitution and the law should be carried out faithfully and no one should go away with a feeling that the constitution and the law are meant only for the benefit of a fortunate few and have no meaning for the large numbers of half clad, half hungry people of this country.
That is a feeling which should never be allowed to grow.
But at the same time the Court cannot group the function assigned to the executive and the legislature under the Constitution and it cannot even indirectly require the executive to introduce a particular legislation or the legislature to pass it or assume to itself a supervisory role over the law making activities of the executive and the legislature We are, therefore of the vie that the Division Bench was clearly in error in issuing a direction to the Chief Secretary to file an affidavit within 6 weeks setting out the action taken by the State Government with a view to implementing the recommendation contained in paragraph 16 of the Report.
There is also one other error into which the Division Bench of the High Court seems to have fallen.
The Division Bench of the High Court treated the letter of the guardian of the student along with the letter addressed to the guardian by the student as constituting a memo of Writ Petition.
This was certainly within the jurisdiction of the High Court to do, since it is now settled law that this Court under Article 32 of the Constitution and the High Courts under Article 226 of the Constitution can treat a letter as a Writ Petition and take action upon it.
We may of course make it clear that it is not every letter which may be treated as a Writ Petition by the Supreme Court or the High Court.
It is only there a letter is addressed by an aggrieved person or by a public spirited individual or a social action group for enforcement of the constitutional or legal rights of a person in custody or of a class or group of persons who by reason of poverty, disability or sociallity 685 or economically disadvantaged position find it difficult to approach the court for redress that the Supreme Court or the High Court would be justified, nay bound, to treat the letter as a Writ Petition.
There may also be cases where even letter addressed for redressal of a wrong done to an individual may be treated as a Writ Petition where the Supreme Court or the High Court considers it expedient to do so in the interests of justice.
This is an innovative strategy which has been evolved by the Supreme Court for the purpose of providing easy access to justice to the weaker sections of Indian humanity and it is a powerful tool in the hands of public spirited individuals and social action groups for combating exploitation and injustice and securing for the under privileged segments of society their social and economic entitlements.
It is a highly effective weapon in the Armour of the law for reaching social justice.
: to the common man.
The Division Bench was, therefore, certainly right in entertaining the two letters as a Writ Petition and no exception can be taken to it, but it was wholly in error in directing that these two letters on which the Division Bench acted should not be placed on the record of the proceedings and the identity of the guardian and the student should not be disclosed It is difficult to see how any proceedings can be entertained by the Court keeping the petitioner before it anonymous or his identity secret.
If the identity of the petitioner is not disclosed, how would the respondent against whom relief is sought ever he able to verify the authenticity of the petitioner and the credibility of the case brought by him.
It would be contrary to all canons of fair play and violative of all principles of judicial propriety and administration to entertain a Writ Petition without disclosing the identity of the petitioner, though the court knows who the petitioner is.
We are, therefore, of the opinion that the procedure adopted by the Division Bench was wrong and the Division Bench was not justified in directing that the two letters on which action was initiated by the Division Bench should not be kept in the record of the proceedings and that the identity of the guardian and the student should not be disclosed.
We accordingly allow the appeal and set aside the orders dated 24th July, 1984 and 18th September, 1984 in so far as they direct the Chief Secretary to file an affidavit setting out the action taken by the State Government in implementing the recommendation contained in paragraph 16 of the Report of the Anti ragging Committee.
There will be no order as to costs of the appeal.
N.V.K. Appeal allowed.
| The Chief Justice of the High Court received a letter from the guardian of a student of the Medical College in Simla complaining about the ragging of freshers by senior students within as also outside the college campus and the hostel.
The guardian of the student had annexed along with the said letter to the Chief Justice , a letter received by him from his son.
The Division Bench of the High Court presided over by the Chief Justice treated these two letters as constituting the Memo of Writ Petition , but directed that these two letters should not be placed on the record of the proceeding in view of the request made by the guardian that the identity of the writer should not be disclosed in the proceedings.
The Division Bench registered the two letters as a Writ Petition , and issued notice to the State Government, and the Principal of the Medical College.
After bearing the respondents the Division Bench came to the conclusion that the practice of ragging was prevalent in the Medical College on a noticeable scale and that ragging took the form of subjecting freshers including female students to inhuman and humiliating treatment degenerating even into physical violence 677 and that the college authorities had not been able to effectively control such ragging.
It gave various directions which included a direction to the State Government to constitute a Committee Anti Ragging Committee to go into the question and make recommendations in regard to the curative , preventive and punitive measures to be adopted by the college authorities to control and curb the evil of ragging.
Anti Ragging Committee recommended that the State Government could initiate legislation which makes ragging a cognizable offence an l prescribe punishment commensurate with the crimes committed.
When the matter was taken up again for hearing the Division Bench directed the State Government to file an affidavit indicating the action taken on the Report.
An affidavit to the effect that the State Government had 'taken notice of the recommendations to initiate legislation this behalf if found necessary and so advised," was filed on behalf of the State Government.
The Division Bench further directed the State Government to initiate legislation against ragging and for this purpose granted the State Government 6 weeks ' time.
In the appeal by the State , to this Court it was contended that the Court could not give directions to the State Government to initiate legislation on ragging Allowing the Appeal.
^ HELD.
The Division Bench was clearly in error in issuing a direction to the Chief Secretary to file an affidavit within 6 weeks setting out the action taken by the State Government with a view to implementing the Committee 's recommendation.
[684] 2.
The direction given by the Division Bench was really nothing short of an indirect attempt to compel the State Government to initiate legislation with a view to curbing the evil of ragging.
[683C] 3.
It is entirely a matter for the executive branch of the Government to decide whether or not to introduce any particular legislation.
But the Court certainly cannot mandate the executive or any member of the legislature to initiate legislation , howsoever necessary or desirable the Court may consider it to be.
That is not a matter which is within the sphere of the functions and duties allocated to the judiciary under the Constitution.
[683E F] 4.
If the executive is not carrying out any duty laid upon it by the Constitution or the law , the Court can certainly require the executive to carry out such duty and this is precisely that the Court does when it entertains public interest litigation.
[683F] 678 section When the Court passes any orders in public interest litigation , the Court does so not with a view to mocking at legislative or exhaustive authority or in a spirit of confrontation but with a view to enforcing the Constitution and the law , because it is vital for the maintenance of the rule of law that the obligations which are laid upon the executive by the Constitution and the law should be carried out faithfully and no one should go away with a feeling that the Constitution and the law are meant only for the benefit of a fortunate few and have no meaning for the large number of half clad half hungry people of this country.
[684B C] 6.
It is now settled law that this Court under Article 32 , and the High Courts under Article 226 , can treat a letter as a Writ Petition and take action upon it.
It is not every letter which may be treated as a Writ Petition by the Supreme Court or the High Court.
It is on , y where a letter is addressed by an aggrieved person or by a public spirited individual or a social action group for enforcement of the constitutional or legal rights of a persons who by reason of poverty , disability or socially or economically disadvantaged position find it difficult to approach the court for redress that the Supreme Court or the High Court would be justified , nay bound , to treat the letter as a Writ Petition.
There may also be cases where even a letter addressed for redressal of a wrong done to an individual may be treated as a Writ Petition where the Supreme Court or the High Court considers it expedient to do so in interests of justice.
This is an innovative strategy which has been evolved by the Supreme Court.
It is a highly effective weapon in the armoury of the law for reaching social justice to the common man.
[684G H; 685A C] 7.
The Division Bench was , certainly right in entertaining the two letters as a Writ Petition , but it was wholly in error in directing that these two letters on which the Division Bench acted should not be placed on the record of the proceedings and the identity of the guardian and the student should not be , disclosed.
It would be contrary to all canons of fair play and violative of all principles of judicial propriety and administration to entertain a Writ Petition without disclosing the identity of the petitioner, though the court , knows who the petitioner is.
[685D F]
|
Appeal No. 806 of 1964.
Appeal by special leave from the judgment and decree dated July 13, 1962, of the Madras High Court in Appeal No. 347 of 1958.
449 C. B. Agarwala, B. Dutta, T. section Krishnaswamy Iyenr, P. L. Meyyappan and J. B. Dadachanji, for the appellant.
A. K. Sen and R. Ganapathji Iyer, for respondent.
No. 1.
K. R. Chaudhuri and K. Rajendra Chaudhury, for respondent No. 2.
The Judgment of the Court was delivered by Wanchoo, J.
This is an appeal by special leave against the judgment of the Madras High Court.
The facts are not now in dispute and may be briefly narrated.
A suit was brought by Nagappa Chettiar, respondent No. 1 (hereinafter referred to as the respondent) against Villiammi Achi appellant and Nachiammai Achi now dead and represented by her legal representative.
The respondent claimed two thirds share of the properties left by his father, Pallaniappa and prayed for a decree for separate possession of that share after partition.
The facts on which this claim was based are not now in dispute and are these.
The respondent is the adopted son of Pallaniappa.
having been adopted in 1941.
The appellant is the widow of Pallaniappa and Nachiammai Achi was Pallaniappa 's mother.
Pallaniappa 's father also named Nagappa had considerable properties.
This Nagappa made a will on June 10, 1934 by which after making certain dis positions, in favour of certain persons including his own wife he gave the residue of his property absolutely to Pallaniappa and appointed him as the executor of the will.
In one place the will stated that all the property except a small part was the exclusive and self acquired property of the testator while at the end the testator said that he had made the will with the full consent of his son Pallaniappa.
After Nagappa 's death in July 1934 Pallaniappa obtained probate of the will and after providing for the legacies to others as indicated therein came into possession of the residue of the property.
In 1941 the respondent was adopted by Pallaniappa.
In the trial court there was a dispute between the parties whether Pallaniappa and his father were members of a joint Hindu family and whether properties left by Pallaniappa 's father were the joint family properties of both.
But it has been found that all the properties left by Pallaniappa 's father were joint family properties of Pallaniappa and his father which Pallaniappa could acquire by survivorship on his father 's death.
This finding was upheld by the High Court and is not now in dispute.
We have to proceed on the basis that even though Pallaniappa 's father said in the will that the properties, except a small part, were his self acquired properties,.
in fact all the properties mentioned in the will of Pallaniappa 's, father were joint family properties of Pallaniappa and his father.
The case of the appellant was that even though the properties left by Pallaniappa 's father were joint family properties which MISup.
CI/67 15 450 Pallaniappa could acquire by survivorship, the conduct of Pallaniappa in obtaining probate of the will and carrying out its terms amounted to election and thereafter Pallaniappa became absolute owner of the residue of the properties bequeathed to him by the will.
The consequence of this was that when Pallaniappa adopted the respondent in 1941 long after he had become the absolute owner of the properties, the respondent acquired no interest in the properties left by his grand father by virtue of the adoption.
Pallaniappa died.
on September 16, 1956 after the Hindu Succession Act, (No. 30 of 1956) came into force.
As there was no joint family property of Pallaniappa and the respondent at the time of Pallaniappa 's ,death, the respondent could not claim half the property on the ground that it was joint family property of himself and Pallaniappa, as Pallaniappa 's election to take under the will of his father would bind the respondent also.
Reliance in this connection was placed ,on section 180 of the Indian Succession Act, (No. 39 of 1925) also.
The reply on behalf of the respondent to this contention was two fold.
In the first place, it was urged that there was no question of election even by Pallaniappa in this case and section 180 of the Indian Succession Act would not apply.
It was further urged that even assuming that there could be election by Pallaniappa the respondent would not be bound by that election as the property left by his grandfather was joint family property and the respondent would acquire interest therein as soon ;is he was adopted by Pallaniappa, even though Pallaniappa might have been the sole co parcener for sometime i. e. between 1934 and 1941.
This interest of the respondent in the joint family property was independent of his father Pallaniappa and even though Pallaniappa might be bound by any election that he might have made the respondent would not be so bound and would be entitled to treat the property as joint family property in the hands of, Pallaniappa in which he would acquire interest on being adopted.
In the second place the respondent 's case was that in any case after his adoption Pallaniappa threw the ,entire property into the family hotch pot and therefore it became joint family property by blending.
Two questions therefore arose for consideration in this case namely (i) whether there was election by Pallaniappa and if so whether the respondent would be bound by it, and (ii) whether Pallaniappa threw the entire property into the family hotch pot after adoption of the respondent and therefore it became joint family property in any case.
The trial court accepted the case put forward on behalf of the respondent and decreed the suit passing a preliminary decree giving two thirds share to the respondent and one sixth each to the appellant,, and the mother of Pallaniappa.
The appellant then appealed to the High Court.
The High Court dismissed the appeal.
On the question of election, the 451 High Court held that as Pallaniappa and his father were members of a joint Hindu family and as the entire property left by Pallanippa 's father was joint family property, Pallaniappa had interest in the residue as a survivor and in consequence there was no question of election by Pallaniappa for all the property he got by will would have come to him by survivorship.
In such a case there could be no question of election, for Pallaniappa had title to the property irrespective of the will.
The High Court also held that in any case the claim of the respondent as a member of the joint family was not under his father but independent of him and therefore the respondent would not be bound , even if Pallaniappa were held to have made an election.
The High Court also found in favour of the respondent on the question whether the property was thrown into family hotch pot after the adoption of the respondent and in the result dismissed the appeal.
The High Court having refused to grant a certificate to appeal to this Court, the appellant applied for and obtained special leave from this Court; and that is how the matter has come before us.
The same two questions, as indicated above, arise for consi deration in this appeal.
We shall first consider the question of election in the background of the fact that the entire property left by Pallaniappa 's father was joint family property of himself and Pallaniappa and that Pallaniappa had interest in that property as a member of a joint Hindu family.
Section 180 of the Indian Succession Act which enunciates the doctrine of election as known to English law for this country is in these terms : "Where a person, by his will professes to dispose of something which he has no right to dispose of, the person to whom the thing belongs shall elect either to confirm such disposition or to dissent from it, and, in the latter case, he shall give up any benefits which may have been provided for him by the will.
" It is urged on behalf of the appellant that section 180 would apply to the facts of the present case for the property willed by Pallaniappa 's father was not his which he could will away as it was joint family property in which Pallaniappa who was the residuary legatee had also equal interest.
Therefore Pallaniappa had either to confirm the disposition or dissent from it, and his conduct showed that he had confirmed it for he took out probate.
Therefore it must be held that after probate was taken out the residue became the absolute property of Pallaniappa and lost its character as joint Hindu family property.
Now it is clear from section 180 that after the legatee elects to dissent from the will he must give up any benefits provided for him by the will.
This shows that election under section 180 would only arise 452 where the legatee derives some benefit from the will to which he would not be entitled except for the will.
In such a case he has to elect whether to confirm the will or dissent from it.
But where there is no question of the legatee deriving any benefit from the will to which he would not be entitled except for the will, the fact that he confirms the will and accepts what the will provides would not amount to election, for he would have in any case got what the will gave him.
Thus election only arises where the legatee has to choose between his own property which might have been willed away to somebody else and the property which belongs to the testator and which the testator has given to the legatee by the will.
The matter is brought out in Halsbury 's Laws of England, Third Edition, Vol. 14, at p. 588, para 1091 in the following words "Where a testator by his will purports to give property to A which in fact belongs to B and at the same time out of his own property confers, benefits on B . in such cir cumstances B is not allowed to take the full benefit given him by the will unless he is prepared to carry into effect the whole of the testator 's dispositions.
He is accordingly put to his election to take either under the instrument or against it.
If he elects to take under the will he is bound and may be ordered to convoy his own property to A; if he elects to take against the will and to keep his own property, and so disappoints A, then, he cannot take any benefits under the will without compensating A out of such benefits to the extent of the value of the property of which A is disappointed.
" Following this principle the High Court held that as the property which the will gave to Pallaniappa would in any case have come to him as a member of the joint family, there was no question of election even by Pallaniappa in this case.
This view appears to us to be correct.
But even assuming that there was some kind of election by Pallaniappa we cannot see how the nature of the property left by Pallaniappa 's father would change merely because Pallaniappa 's father made a will giving the residue absolutely to Pallaniappa and Pallaniappa took out probate of the will.
The property being joint family property Pallaniappa 's father was not entitled to will it away and his making a will would make no difference to the nature of the property when it came into the hands of Pallaniappa.
A father cannot turn joint family property into absolute property of his son by merely making a will, thus depriving sons of the son who might be born thereafter of their right in the joint family property.
It is well settled that the share which a co sharer obtains on partition of ancestral property is ancestral property as regards his male issues.
They take an interest in it by birth whether 453 they are in existence at the time of partition or are born subsequently : [see Hindu Law by Mulla, Thirteenth Edition p. 249, para 223 (2) (4)].
If that is so and the character of the ancestral property does not change so far as sons are concerned even after partition, we fail to see how that character can change merely because the father makes a will by which he gives the residue of the joint family property (after making certain bequests) to the son.
A father in a Mitakshara family has a very limited right to make a will and Pallaniappa 's father could not make the will disposing of the entire joint family property, though he gave the residue to his son.
We are therefore of opinion,that merely because Pallanappa 's father made the will and Pallaniappa probably as a dutiful son took out probate and carried out the wishes of his father, the nature of the property could not change and it will be joint family property in the hands of Pallaniappa so far as his male issues are concerned.
Further it is equally well settled that under the Mitakshara law each son upon his birth takes an interest equal to that of his father in ancestral property, whether it be movable or immovable.
It is very important to note that the right which the son takes at his birth in the ancestral property is wholly independent of his father.
He does not claim through the father. " (see Mulla 's Hindu Law, Thirteenth Edition, p. 251, para 224).
It follows therefore that the character of the property did not change in this case because of the will of Pallaniappa 's father and it would still be joint family property in the hands of Pallaniappa so far as his male issue was concerned.
Further as soon as the respondent was adopted he acquired interest in the joint family property in the hands of Pallaniappa and this interest of his was independent of his father Pallaniappa.
In such circumstances even if Pallaniappa could be said to have made an election there can be no question of the respondent being bound by that election, for he is not claiming through his father.
In this view of the matter, it is unnecessary to consider the question whether Pallaniappa, after the, respondent 's adoption, threw the property into.
the family hotch pot.
The appeal therefore fails and is hereby dismissed with costs.
Y.P. Appeals dismissed.
| A Hindu died after making a will in respect of certain joint family properties and appointed his son as the executor.
The son obtained pro.
bate of the will, provided for the legacies indicated therein and came into possession of the residue of the property.
Thereafter, he adopted the plaintiff.
The adoptive father died after the Hindu Succession Act came into force and the plaintiff filed the suit claiming two thirds share of the properties left by his father.
The defendants (viz., the widow and mother Of the plaintiffs adoptive father) contended that the conduct of the plaintiff 's adoptive father in obtaining the probate of the will and carrying out its terms amounted to an election and therefore the father became absolute owner of the residue of the properties bequeathed to him by the will, and as the election to take under the will, would bind the plaintiff also he could not claim half the property on the ground that it was joint family property of himself and his father.
The trial Court decreed the suit, which in appeal was upheld by the High Court.
The defendants appealed to this Court.
HELD:The appeal must be dismissed.
The character of the property did not change because of the will and it would still be joint family property in the hands of the plaintiff 's father as far as his male issue was concerned.
Further, as soon as the plaintiff was adopted he acquired interest in the joint family property in the hands of his adoptive father and this interest of his was independent of that of his father.
In such circumstances even if his father could be said to have made an election there could be no question of the plaintiff being bound by that election, for he was not claiming through his father.
[453 C, E F] Election under section 180 of the Indian Succession Act, would only arise where the legate derives some benefit from the will to which he would not be entitled except for the will.
In such a case he has to elect whether to confirm the will or dissent from it.
But where there is no question of the legate deriving any benefit from the will to which he would not be entitled except for the will the fact at he confirms the will and accepts what the will provides would not account to election, for he would have in any case got what the will gave him.
Thus election only arises where the legate has to choose between his own property which might have been testator and which the testator has given to the legate by the will.
[451 H 452 C]
|
Appeal No. 583 ,of 1963.
Appeal by special leave from the Award dated June 18, 1962 of the Industrial Tribunal, Ernakulam, in Industrial Dispute No. 38 of 1960.
478 G. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant.
Janardan Sharma, for the respondents.
March 25, 1964.
The judgement of the Court was delivered by WANCHOO, J.
This is an appeal by special leave from the award of the Industrial Tribunal, Ernakulam.
A dispute arose between the appellant and its workmen as to payment of bonus for the years 1957 58 and 1958 59, and was referred for adjudication to the tribunal.
The respondents claimed bonus on two grounds: (i) on the basis of profits earned by the appellant, and (ii) on the basis that payment of some bonus at Christmas had become an implied condition of ser vice between the appellant and its workmen.
It may be men tioned that the claim was for four months ' wages for each year on the basis of profit bonus.
The alternative claim was for 1 1/2 months ' wages for each year on the basis of an implied term of service.
We may also mention that the appellant had paid two months ' basic salary as bonus for the year 1957 58, and one month 's basic pay as bonus for the year 1958 59.
The appellant contended that there was no surplus available on the basis of the Full Bench formula applied in such cases and therefore no profit bonus could be paid.
It also contended that no bonus was payable as an implied term of service.
The tribunal found on an application of the Full Bench formula that there was no available surplus in either of the two years and therefore no bonus was payable as profit bonus.
It then went into the question whether any bonus was payable as an implied condition of service and relying on the decision of this Court in Messrs. Ispahani Ltd. vs Ispahani Employees ' Union(1) held that payment of bonus at the rate of 1 1/21 months ' salary as an implied condition of service had been established.
It therefore ordered the appellant to pay that amount after taking into account one month 's salary already paid by it.
It is this award of the tribunal which has been brought before us by special leave.
The main contention on behalf of the appellant are two fold: (1) It is urged that the tribunal erred in holding that payment of bonus as an implied condition of service need not be attached to any festival; (2) On the undisputed facts of this case, the tribunal was not right in holding that a case had been made out for (1) [1960] 1 S.C.R. 24.
479 payment of some bonus as an implied condition of service, and in any case, even if a case had been made out for pay ment of some bonus, it could not be at the rate of 1 1/2 months ' salary.
Turning to the first contention raised on behalf of the appellant, we are of opinion that the tribunal was not right in holding that there could be an implied condition of service as to payment of bonus unconnected with any festi val.
In Ispahani 's case(1) the question raised was whether there was an implied condition of service for payment of some bonus at the time of puja festival in Bengal.
In that connection this Court laid down the tests for holding when it could be said that there was an implied condition of ser vice for payment of some bonus in connection with some festival.
This Court also pointed out that it was not necessary in order to establish an implied condition of service as to payment of some bonus at the time of a festival like puja in Bengal that the amount paid in connection with the festival should be uniform, and that in the absence of a uniform rate an implied agreement to pay something could be inferred.
Now where the payment is connected with a festival it is possible to infer that there is an implied condition to pay something at the time of the festival, even though the evidence discloses that in previous years payment has not been made at a uniform rate.
But it is difficult to see how the principle which applies to a case of payment at the time of a festival can be extended to infer an implied term of payment where the payment has been made entirely unconnected with any festival and at rates which have varied from year to year.
We are therefore of opinion that when this Court laid down that there was an implied condition of service to pay something about the time of puja festival in Ispahani 's case(2), it was clear that such implied condition of service could be inferred where the rate of payment was not uniform only when such payment was obviously connected with some festival.
In the present case also, the payment has not been uniform over the years and therefore before an implied term of service to pay bonus can be inferred it must be shown that the payment was connected with some festival.
It would in our opinion be impossible to infer an implied condition of service where payment has not been uniform in the past, unless such payment can be connected with some festival.
We are therefore of opinion that the tribunal was wrong in holding that an inference could be, drawn for payment of bonus as an implied condition of service in the circumstances of the present case when the payment was not uniform in the past even though it was not connected with any festival.
(1) [1960] 1 S.C.R. 24.
480 But that in our opinion does not dispose of the matter.
The evidence shows that payment of some bonus began to be made from the year 1945 46 in which year bonus varying from one month to 3 1/2 months ' salary was paid in this branch.
It may be added that the appellant has a number of other branches in other parts of the country.
What we are saying in this case is only concerned with the Cochin branch and may not necessarily be applicable to other branches of the appellant, the facts of which are not before us.
From 1946 47 to 1949 50, it appears that some lumpsum was paid, though the amount is not exactly known.
It is also not clear whether during the years 1945 46 to 1949 50 payment was made about Christmas time, as there is no evidence either way.
In 1950 51 it appears that 1 1/2 months ' salary was paid as bonus.
No payment appears to have been made in that year about Christmas time, though it is said that 1 1/2 months ' salary was paid as bonus sometime afterwards.
From 1951 52 right upto 1958 59, payment was made at the rate of one month 's salary to two months ' salary about Christmas time.
It is clear therefore that at any rate since 1951 52 payment is connected with Christmas festival, though there is no clear evidence as to the earlier payments being connected with Christmas.
At the same time there is no clear evidence that those payments were not connected with Christmas even though payment for the year 1950 54 might have been made sometime after Christmas.
On the whole therefore it seems to us that it is possible to infer that the payments which began from 1945 46 and have been made throughout upto 1958 59 were in all probability connected with Christmas festival.
This inference in our opinion is strengthened by the fact that from 1951 52 undoubtedly payments were connected with Christmas and were always made about Christmas time, even though there was adjustment on some occasions later on by payment of more amount or by reduction of the amount already paid by deducting some part of it from later salary.
We are therefore of opinion that we can infer from the evidence on the record that the payment in the present case is connected with Christmas festival.
Therefore even though the tribunal was wrong in holding that the payment need not be connected with any festival in a case like the present where the rate has not been uniform, the respondents have made out a case of payment of some bonus as an implied condition of service connected with a festival subject to what we say on the second contention raised on behalf of the appellant.
The appellant however contends that it has not been proved that the, payment of bonus was in connection with the Christmas festival on the undisputed evidence in this 481 case.
Now the evidence is that something used to be invari ably paid at least from 1951 52 about Christmas time.
Later on something mote was paid in some years.
In one year nothing more was paid and in three years the appellant took back part of the payment which had been made.
The appel lant 's contention is that the payment before Christmas which has been established in this case was only an advance in connection with the festival which was later adjustable from the salary of the workmen.
It is true that when the payment was made it was designated as an advance.
For example, when payment was made in December 1953, it was designated as an advance and it was stated in the notice that it would be treated as advance against any bonus and in the event of no bonus as advance against salary.
Even so, the evidence shows that the so called advance was never recovered in full.
Sometimes more was paid in addition to what had been paid in December.
Once nothing more was paid but the amount already paid in December was not recovered.
Three times something was recovered from what was paid in December; even so a minimum of one month 's salary out of the so called advance in December was always left with the workmen.
So though the amount paid in December was originally called an advance, at least one month 's salary out of the so called advance always remained with the workmen and was treated as bonus connected with Christmas festival.
The fact that the payment was originally called advance would not detract from the conclusion that some amount was really paid as bonus in connection with Christmas festival.
There is no evidence to show that this amount was paid ex gratia.
In this connection our attention is drawn to what happened in April 1954.
Then a notice was given about pay ment of additional bonus which was called ex gratia.
The evidence however shows that in 1953 54 one month 's salary was paid in December and in addition half a month 's salary was paid later on and it was this additional half month 's salary which was designated as ex gratia payment.
There is nothing to show that the payment made in December was ever designated as ex gratia payment.
It could hardly be so designated for it was usually called an advance which was claimed as recoverable though the whole of it was never recovered.
In spite of the payment made in December being called an advance, we are of opinion that on the evidence in this case it is clear that part of the advance was made as a bonus in connection with Christmas festival.
It is there fore established on the evidence that there was an implied condition of service between the appellant and its workmen that something would be paid every year about Christmas time as festival bonus.
L/P(D)ISCI 16 482 The next question to which we turn is the minimum amount which has to be paid as an implied condition of service.
Here again the evidence shows that the minimum that has been paid, at any rate since 1951 52, is one month 's salary.
Sometimes more has been paid, but one month 's salary seems to have been paid in connection with Christmas for an unbroken period of time, which is long enough to permit an inference that there is an implied condition of service for payment of one month 's salary as festival bonus.
connected with Christmas in this branch of the appellant.
We cannot agree with the tribunal that the evidence shows a minimum payment of 1 1/2 months ' salary at the time of Christmas.
It is true that if we take into account what was.
paid later also over the entire period from 1950 51, the minimum is 1 1/2 months ' salary , but in a case of payment which is not at a uniform rate we have to connect the payment with a festival (in this case Christmas).
We can therefore only look at the payment made in December to decide what is the minimum which may be treated as a condition of service.
Once it is proved that there was an implied condition of service, some amount has to be paid under the said implied term; what the minimum would be in that behalf must be decided as a question of fact.
On the evidence in this case it is clear that the minimum is only one month 's salary payable about Christmas time and this was actuallypaid in 1951 52 and 1953 54, though in other years more was paid which was later liable to adjustment.
We therefore hold that there is an implied condition of service between the appellant and its workmen that one month 's salary as the minimum would be paid as Christmas bonus to the workmen about Christmas time.
The decision of the tribunal therefore allowing 1 1/2 months ' salary as the minimum must be modified and We hold that payment of one month 's salary as Christmas bonus is proved as an implied condition of service between the appellant and its workmen on the admitted facts of the case.
The minimum of one month 's, basic salary has to be paid even if there is loss in any given year.
We may add that though this is the minimum, it would be open to the appellant to pay more if its profit position justifies the payment of more.
But we cannot agree with thetribunal that in the year 1958 59, the profit position of the appellant justifies payment of more than the minimum.
It has been found that in that year there was actually a small loss of Rs. 8,000/ suffered by the appellant.
Therefore even though the tribunal may be justified in awarding a reasonable amount as festival bonus once it is proved that something has to be paid as an implied condition of service towards such bonus, it cannot be said in this case that the tribunal was justified in giving anything beyond the minimum for 483 this was a year of loss.
We are therefore of opinion that the amount awarded as festival bonus for the year 1958 59 should be reduced to one month 's salary and order accord ingly.
Before we part with this appeal we should like to add that there was no stay order by this Court in this case.
The extra amount of 15 days ' salary awarded by the tribunal has already been paid to the workmen.
Mr. Pai has assured us that he would advise his client that the additional amount so paid may not be recovered back in the circumstances.
We therefore partly allow the appeal in the manner indi cated above.
In the circumstances we pass no order as to costs.
Appeal partly allowed.
| A Hindu undivided family carried on business in money lend ing and brocade.
On the 16th July, 1943, there was a partial partition amongst the members by which the brocade business was divided and its assets and liabilities were partitioned in equal shares between the members of the family.
On the next day the adult members of the family formed two partnerships admitting minors to the benefit thereof, and carried on the brocade business under two separate firm names though they continued to remain joint in status.
The Income tax Officer accepted the partial parti tion and treated the brocade business of the family as having been discontinued, but the Excess Profits Tax Officer held that as the main purpose of the partial partition was avoidance of tax, it was an artificial transaction, and, treating the business as unbroken, made adjustments under section 10 A of the Excess Profits Tax Act, by adding to the profits made by the assessees as a joint family till the date of the partition, the profits made by the two firms after partition during the chargeable accounting period : Held, (i) under sections 4 and 5 of the Excess Profits Tax Act, the Act can have no application to a business which did not make any profits during the relevant chargeable accounting period, and, as the old joint family business in brocade was discontinued and earned no profit during the chargeable accounting period in question, the appellants were not liable to be taxed as a Hindu undivided family in respect of that business; (ii)that the issue whether the Excess Profits Tax Act applies to a particular business must be determined solely with reference to section 5 of the Act, and section 10 A must be construed as applicable only to cases where, the business being found to be one to which the Act applies, a transaction of the kind referred to in the section has been effected; and in view of the finding that the old joint family business in brocade was wound up and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, the same business could not be 159 legally treated as having continued unbroken in respect of such periods for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act.
|
Civil Appeal No. 1649 (NT) of 1974 From the Judgment and Order dated 25.1.1974 of the Orissa High Court in S.J.C. No. 111 of 1972.
Govind Das and J.R. Das for the Appellant.
S.C. Manchanda, Miss A. Subhashini and K.C. Dua for the Respondent.
The Judgment of the Court was delivered by PATHAK J.
This appeal by special leave is directed against the judgment of the High Court of Orissa disposing of an Income tax Reference and answering the following question in favour of the revenue and against the assessee: "Whether in the facts and circumstances of the case, the loss of Rs.30,045 claimed by the assessee is a capital loss or a revenue loss?" The assessee is a private limited company carrying on business as a contractor.
In April 1964 it entered into a contract with the South Eastern Railway Administration for the execution of earth work, bridge work and other miscellaneous works required for the construction of a new railway yard.
As it was required to supply earth outsidethe railway land the assessee found it expedient to buy two pieces of land from which earth could be excavated and conveniently taken to the work site.
One piece of land was acquired at a cost of Rs.53,196 during the calendar year 1964 corresponding to the assessment year 1965 66, and the other piece of land was acquired for Rs.15,045 during the calendar year pertaining to the assessment year 1966 67, bringing 221 the total cost to Rs.68,241.
Soon after the work was over, the assessee sold both lands for a sum of Rs.23,000, thereby sustaining a loss of Rs.45,241.
The assessee treated this as the value of the excavated earth, and apportioned the amount in its accounts in the following manner, Rs.8,196 as the cost of the earth for the assessment year 1965 66, Rs.30,045 towards the earth excavated in the assessment year 1966 67, and Rs.7,000 towards the earth excavated for the assessment year 1967 68.
The Income tax Officer accepted the claim for the assesment year 1965 66.
The claim of the assessee to a deduction of Rs.30,045 for the assessment year 1966 67 was disallowed on the ground that it represented a capital loss.
The assessee proceeded in first appeal to the Appellate Assistant Commissioner of Income tax but the appeal was dismissed.
A second appeal was allowed by the Income tax Appellate Tribunal on the ground that the land formed a wasting asset and by constant digging of the earth the land had become unserviceable.
On a reference being made to the High Court of Orissa at the instance of the Commissioner of Income tax on the question of law set forth earlier the High Court held that the loss of Rs.30,045 claimed by the assessee was a capital loss and therefore, the assessee was not 'entitled to a deduction.
The question in this appeal before us is a short one.
Can it be said that the loss of Rs.30,045 is a capital loss or a revenue loss? It is not in dispute that the assessee did not deal in land.
It was a contractor and it had acquired the land for the purpose of obtaining a ready supply of earth in order to fulfil the contract with the Railway Administration.
The land was not its stock in trade.
What it needed as raw material for the purpose of the contract was loose earth and this it obtained by the process of excavation from the land.
Moreover, the two pieces of land were shown as fixed assets by the assessee itself in its balance sheet.
Learned counsel for the assessee relies on M.A. Jabbar vs Commissioner of Income tax, Andhra Pradesh, , 497 8 but that is a case where the land was taken on lease for a limited period of 11 months with the right to enter, occupy and use for a quarrying purpose and to render marketable and carry away sand within or on the land.
This Court held that the lease money paid by the assessee was deductible as revenue expenditure.
The Court referred to the short period of the lease, which indicated that the lease was not an asset of an enduring nature, that the only right under the lease was to take away the sand lying on the land, and in fact as the sand lay on the 222 surface no question arose of digging and excavating for the sand, and no operations were to be performed on the land.
The Court laid great emphasis on the circumstance that the assessee did not acquire the land.
Therefore, the Court held that the assessee "did not acquire any fixed or capital asset of an enduring nature.
" The facts in the present case are entirely different.
Here, the assessee was full proprietor of the two pieces of land and for an indefinite period.
The reason for acquiring the land was no doubt to provide a ready supply of earth to the work site nearby, but there was nothing to prevent the assessee from continuing as owner of the land even after the railway contract had been executed and putting it to any other use.
The land was treated by the assessee as its fixed asset.
In all the circumstances of the case, the two pieces of land must be regarded as capital assests, and the loss claimed by the assessee must be regarded as a capital loss.
The High Court is right in the view taken by it, and the appeal is liable to be dismissed.
The appeal is dismissed with costs.
A.P.J. Appeal dismissed.
| The assessee company while carrying on business as a Contractor entered into a contract with the Railway Administration, inter alia, for the execution of earth work required for the construction of a new railway yard.
For this purpose, the assessee purchased two pieces of land at a total cost of Rs.68,241.
Soon after the work was over, the assessee sold both lands for a sum of Rs.23,000, thereby sustaining a loss of Rs.45,241.
The assessee treated this as the value of the excavated earth, and apportioned the amount in its accounts in assessment years 1965 66, 1966 67 and 1967 68.
The claim of the assessee to a deduction of Rs.30,045 for the assessment year 1966 67 was disallowed by the Income tax Officer on the ground that it represented a capital loss.
The Appellate Assistant Commissioner dismissed the first appeal of the assessee.
The Income Tax Appellate Tribunal allowed the second appeal of the assessee on the ground that the land formed a wasting asset and by constant digging of the earth the land had become unserviceable.
In the Reference, on the question whether the loss of Rs.30,045 claimed by the assessee is a capital loss or a revenue loss, the High Court held that the loss of the said amount claimed by the assessee was a capital loss and, therefore, the assessee was not entitled to a deduction.
Dismissing the appeal of the assessee company to this Court, ^ HELD: The assessee was full proprietor of the two pieces of land and for an indefinite period.
The reason for acquiring the land was no doubt to provide a ready supply of earth to the work site nearby, but there was nothing to prevent the assessee from continuing as owner of 220 the land even after the railway contract had been executed and putting it to any other use.
The land was treated by the assessee as its fixed asset.
In all the circumstances of the case, the two pieces of land must be regarded as capital assets, and the loss claimed by the assessee must be regarded as a capital loss.[222B D] M.A. Jabbar vs Commissioner of Income tax, Andhra Pradesh, , 497 8 distinguished.
|
Appeal No. 215 of 1961.
Appeal by special leave from the judgment and decree dated January 22, 1958 of the Bombay High Court at Rajkot in Civil First Appeal No. 93 of 1956.
R. H. Dhebar, for the appellant.
H. K. Puri and Bishamber Lal, for the respondents Nos.
The Judgment of the Court was delivered by Shelat, J.
In 1947 and prior thereto the respondent carried on business as an exporter of fish in the State of Junagadh in the name and style of Ayub lqbal and Company.
In 1947 the Customs authorities of the, State of Junagadh seized two motor trucks, a station wagon and other goods belonging to the respondent on the grounds, (a) that the respondent had not paid import duties on the said trucks, (b) that they were used for smuggling goods in the State and (c) that some of the goods were smuggled goods.
The action was taken under the Junagadh State Sea Customs Act, II of S.Y. 1998 then in vogue in the State.
The respondent filed an appeal against tbis order to the Home Member of the State as provided in the said Act.
Pending the appeal, the State of Junagadh merged in the United States of Saurashtra which ultimately was converted into the State of Saurashtra.
The State of Saurashtra thereafter merged with the former State of Bombay and on bifurcation of the Bombay State became part of the State of Gujarat.
In the meantime the appeal was transferred to the Revenue Tribunal which was constituted by the State of Saurashtra and which was the competent forum to hear such appeals.
On February 6, 1952, the Revenue Tribunal set aside the said order of confiscation of the Customs authority and directed the return of the said vehicles to the respondent.
On March I '), 1952, the respondent applied for the return of 'the said vehicles but was informed that they had been disposed of under an order of a Magistrate passed under section 523 of the Code of Criminal Procedure and that the sale proceeds viz., Rs. 2213/8/ were handed over to a creditor of the respondent under an attachment order passed in his favour.
On February 5, 1954, the respondent filed 940 the present suit for the return of the said vehicles or in the alternative for their value viz., Rs. 31786/8/ on the ground that pursuant to the said order of the Tribunal, which in the absence of any proceedings against it had become final, the State Government was bound to hand over the said vehicles.
In its written statement the State Government denied the respondent 's claim 'Lind took up diverse pleas.
It is not necessary to go into the details of these pleas except to say that the State Government did not raise any contention therein 'that it was not liable for any tortious act committed in respect of the said goods and vehicle s by any one of its servants.
On these pleadings the trial court raised various issues.
No issue with regard to the absence of liability for the tortious act of any servant of the Government was or could be raised in the aforesaid state of pleadings.
The evidence led by the State and in particular of the police officer Trambaklal Naranji showed (a) that the said vehicles were seized in 1947 by the Customs Officer of the State of Junagadli, (b) that somehow they were kept in an open space opposite to the police station at Veraval, (c) that they remained totally uncared for from 1947 to October, 1951 with the result that the greater part of the machinery of the vehicles, tyres and even some wheels were pilfered away leaving only the skeletons of the vehicles, (d) that no entries were made in any of the registers maintained at the police station to show as to how these vehicles came to be kept in the said open space or whether the customs authority had handed over the said vehicles to the police for safe custody, (e) that in October, 1951, witness Trambaklal who was then incharge of the police station reported to his superior officers the fact of these vehicles lying in the said open space as uncared and unclaimed vehicles, (f) that on October 3, 1951, directions were given to him to apply to the Magistrate for disposal of the said Vehicles as unclaimed property under section 523, (g) that on October 21, 1951, the police recorded a Panchanama as regards the condition of the said vehicles, and (h) that on October 29.
1951 pursuant to the said directions, the police officer made an application which mentioned the fact that these vehicles were seized by the Port Commissioner in 1947 from Memon Mahomed Haji Hasam of Veraval, the respondent.
It is clear that in spite of the police authorities being aware that the said vehicles were seized from the respondent, his name having been mentioned in the said application, no notice was served upon him of the said application which, as aforesaid, was made on the footing that the said vehicles were unclaimed property.
The only notice which was issued by the Magistrate was a public notice which was ordered to be pasted at a public place.
Clearly, the respondent was right when he said that he was not aware of the said proceedings or the order passed by the Magistrate therein.
It appears from the Rojkam of the Magistrate 's court that on February 9 41 5, 1952, the said vehicles were auctioned in the condition in which they were and only Rs. 2,000 and odd were realised from that auction.
The trial court found that the customs officer was competent to seize the said vehicles on a suspicion that a custom offence tinder the said Act had been committed.
It held, however, that after the Tribunal had set aside his order and directed the return of the said property to the respondent it was the duty of the State Government to return the said property and on failure to do so the respondent had a cause of action and the suit was maintainable.
On these findings, the trial court passed a decree against the State Government for Rs. 26797/8/ .
The State Government thereupon filed an appeal in the High Court of Bombay at Rajkot taking a number of grounds in its memorandum of appeal.
In the memorandum of appeal the State Government inter alia raised the following grounds : "The learned Civil Judge ought to have decided that the State is not liable for any acts tortious or otherwise of its servants and of the customs or the police authorities".
The High Court held that no such plea having been taken in its written statement nor any issue having been raised in the trial court, the State Government was not entitled to raise the contention for the first time in the appeal.
The High Court confirmed the said decree except for a slight reduction in the decretal amount from Rs. 26797/8/ to Rs. 25532/10/ .
The High Court found (1) that the said vehicles were sold on February 5, 1952 while the appeal before the Revenue Tribunal was still pending, (2) that the said vehicles were sold at the instance of the police officer under section 523 on the footing that they were unclaimed property, (3) that such an assumption was wrong as the vehicles were lying with the authorities while the appeal was still pending and when the issue, whether the said vehicles were liable to confiscation, was not finally decided, (4) that the said vehicles could not be sold by auction because they were liable to be returned in the event of the Tribunal holding that the said seizure and confiscation were illegal and directing the vehicles to be returned to the owner.
The High Court hold (a) that the Junagadh Customs Act which applied to the instant case provided an appeal against an order of seizure and confiscation, (b) that there being a provision for appeal in the said Act there was a statutory duty on the State to see that the property which was seized was kept intact till the appeal was disposed of, (c) that there was an implied obligation to see that the said property was not tampered with during the pendency of the appeal in which the order of confiscation was under scrutiny, (d) that the breach of the said obligation gave a cause of action to the respondent, and (e) that 942 the cause of action on which the said suit was grounded was the respondent 's right to the return of the said property and that the relief claimed on that cause of action was the return of the said property or in the alternative the value thereof and not damages for any negligence either of the State Government or of any of its servants.
It is against this judgment and decree of the High Court that this appeal by special leave is directed.
It is clear that both the trial court and the High Court concurrently found that the said vehicles were seized by the customs authority, that between 1947 and October, 1951 when they were disposed off they were lying uncared for in an open space, that they were disposed of at the instance of the Police as unclaimed property, that when they were sold most of the valuable parts were missing and lastly that they were sold while the appeal against the order of seizure and confiscation was still pending.
Mr. Dhebar 's contention was that since they were seized by a ,competent officer the seizure was lawful and that the utmost that ,could be alleged in the circumstances was that one or the other servants of the State Government was guilty of negligence.
Fe ,contended that the State Government was not liable for any tor tious act of any of its servants.
Before we proceed to consider this contention it is necessary to examine some of the provisions of the said Act which both the parties conceded was the relevant law applicable to the present ,case.
Section 150 lays down various offences under the Act and the respective penalties therefor.
Clause (8) of section 150 provides that if any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from the Junagadli 'State contrary to such prohibition or restriction, or if any attempt is made so to import or export any such goods, or if any such goods are found in any package produced to any officer of Customs as containing no such goods etc., such goods shall be liable to confiscation and any person concerned in any such offence shall be liable to a penalty as set out therein.
Section 160 provides that a thing liable to confiscation under this Act may be seized in 'any place by an officer of Customs or other person duly employed for the prevention of smuggling.
Section 163 provides that when a thing is seized the officer making such seizure shall on demand of the person in charge of the goods so seized give him a statement in writing of the reasons for such seizure.
Section 166 provides for adjudication of confiscation and penalties.
Section 172 providas for an appeal from a subordinate Customs officer to the Chief Customs authority and section 175 provides a revision by the Ruler of the Junagadh State.
The power of revision under section 175 includes the power to reverse or modify the decision or, order in the exercise of His Highness 's extraordinary revisional jurisdiction.
943 It would appear from these provisions that the seizure of the said vehicles was carried out with jurisdiction and the order of confiscation was also made, apart from the question as to its merits, by a competent officer with jurisdiction.
It is also possible to contend that as the said vehicles were sold pursuant to a judicial order no liability can be attached on the State Government for their disposal by public auction.
But between their seizure and the auction there was a duty implicit from the provisions of the Act to take reasonable care of the property seized.
This is so because .the order of confiscation was not final and was subject to an appeal and a revision before the Home Member and later on before the Revenue Tribunal after Junagadh merged in the State of Saurashtra in 1948 49.
The appellant State was aware that the order of seizure and confiscation was not final being subject to an appeal and was liable to be set aside either in appeal or in revision.
It was also aware that if the said order was set aside, the property would have to be returned to the owner thereof in the same state in which it was seized except as to normal depreciation.
In spite of this clear position, while the appeal was still pending before the Revenue Tribunal and without waiting for its disposal, it allowed its police authorities to have it disposed of as unclaimed property.
The State Government was fully aware, firstly, by reason of the pendency of the appeal and secondly because the application under section 523 expressly mentioned the person from whom the said vehicles were seized, that the vehicles were and could not be said to be unclaimed property.
In the circumstances, the State Government was during the pendency of the appeal under a statutory duty to take reasonable care of the said vehicles which on the said appeal being decided against it were liable to be returned to their owner.
The contention that the order of disposal was a judicial order or that the respondent could have filed a revision application against that order and have it set aside would be beside the point.
There being a statutory obligation under the Act to return the property once the order of seizure and confiscation was held to be wrong, the respondent could rely on that obligation and claim the return of the said vehicles.
On behalf of the respondent, the contention urged was that though the seizure might be lawful and under the authority of the Statute, the State Government was from the time that the said goods were seized until the decision of the appeal, in a position of a bailee and was, therefore, bound to take reasonable care of the said vehicles.
That no such reasonable care was taken and the vehicles remained totally uncared for is not in dispute.
Mr. Dhebar 's reply was that there was no bailment nor can such bailment be inferred as section 148 of the Contract Act requires that a bailment can arise only under a contract between the parties.
That contention is not sustainable.
Bailment is dealt with by the Contract Act only 944 in cases where it arises from a contract but it is not correct to say that there cannot be a bailment without an enforceable contract.
As stated in "Possession in the Common Law" by Pollock and Wright, p. 163, "Upon the whole, it is conceived that in general any person is to be considered as a bailee who otherwise than as a servant either receives possession of a thing from another or consents to receive or hold possession of a thing for another upon an understanding with the other person either to keep and return or deliver to him the specific thing or to (convey and) apply the specific thing according to the directions antecedent or future of the other person". 'Bailment is a relationship sui generis and unless it is sought to increase or diminish the burdens imposed upon the bailee by the very fact of the bailment, it is not necessary to incorporate it into the law of contract and to prove a consideration"(1).
There can, therefore, be bailment and the relationship of a bailee in respect of specific property without there being an enforceable contract.
Nor is consent indispensable for such a relationship to arise.
A finder of goods of another has been held to be a bailee in certain circumstances.
On the facts of the present case, the State Government no doubt seized the said vehicles pursuant to the power under the Customs Act.
But the power to seize and confiscate was dependent upon a customs offence having been committed or a suspicion that such offence had been committed.
The order of the Customs Officer was not final as it was subject to an appeal and if the appellate authority found that there was no good ground for the exercise of that power, 'the property could no longer be retained and had under the Act to be returned to the owner.
That being the position and the property being liable to be returned there was not only a statutory obligation to return but until the order of confiscation became final an implied obligation to preserve the property intact and for that purpose to take such care of it as a reasonable person in like circumstances is expected to take.
Just as a finder of property has to return it when its owner is found and demands it, so the State Government was bound to return the said vehicles once it was found that the seizure and confiscation were not sustainable.
There being thus a legal obligation to preserve the property intact and also the obligation to take reasonable care of it so as to enable the Government to return it in the same condition in which it was seized, the position of the State Government until the order became final would be that of a bailee.
If that is the correct position once the Revenue Tribunal set aside the order of the Customs Officer and the Government became liable to return the goods the owner (1) "Law of constract "by Chesire and Fi foot,pp./73,74.
94 5 had the right either to demand the property seized or its value, if, in the meantime the State Government had precluded itself from returning the property either by its own act or that of its agents or servants.
This was precisely the cause of action on which the respondent 's suit was grounded.
The fact that an order for its disposal was passed by a Magistrate would not in an ,, way interfere with or wipe away the right of the owner to demand the return of the property or the obligation of the Government to return it.
The order of disposal in any event was obtained on a false representation that the property was an unclaimed pro perty.
Even if the Government cannot be said to be in the position of a bailee, it was in any case bound to return the said property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it either by its own act or by any act of its agents and servants.
In these circumstances, it is difficult to apperciate how the contention that the State Government is not liable for any tortious act of its servants can possibly arise.
The decisions in State of Rajasthan vs Mst.
Vidh yawati(l) and Kasturilal Jain vs The State of U.P.(2) to which ,Mr.
Dhebar drew our attention have no relevance in view of the pleadings of the parties and the cause of action on which the respondent 's suit was based.
In our view, the High Court was right in conferming the decree passed by the trial court on the basis that there was an obligation on the State Government either to return the said vehicles or in the alternative to pay their value.
The appeal is dismissed with costs.
G.C. Appeal dismissed.
( 1) [1962] Suppl.
2 S.C.R. 989.
| Two trucks and a station wagon belonging to the respondent were seized by the customs authorities of the State of Junagarh under the provisions of the Junagarh State Sea Customs Act of S.Y. 1998.
The Junagrah State was merged into the United States of Saurashtra and after further changes became part of the present Gujarat State.
The respondent 's appeal against the aforesaid seizure of his goods succeeded before the Revenue Tribunal which ordered the return of the said vehicles to the respondent.
When however he applied for the return of the vehicles he was informed that they had been disposed of under an order of a Magistrate under section 523 of the Code of Criminal Procedure, and that the sale proceeds had been paid to a creditor of the 'respondent under an attachment order.
The respondent thereupon filed a suit for the recovery of the value of the vehicles.
It appeared in the evidence that the vehicles were kept for several in an.
open place outside the police station at Veraval so that most of their parts were pilfered away and only the skeletons of the vehicles were left.
Finally on the report of the officer incharge of the aforesaid police station they were sold it an auction as unclaimed property after obtaining the order of a Magistrate.
The trial court on the above evidevice decreed the respondent 's suit and the High Court upheld the decree though partly reducing the amount.
The State appealed to this Court It wits contended on behalf of the appellant that the sale was under a judicial order and therefore there was no liability to pay; at the most one or the other officers of the Government could be held guilty of negligence.
It was further contended on behalf of the State that it could not be treated as a bailee because a bailment could arise only under a contract.
HELD : (i) The State Government no doubt seized the said vehicles pursuant to the power tinder the Customs Act.
But the power to seize and confiscate was dependent upon a customs offence having been committed or a suspicion that such offence had been committed.
The order of the Customs Officer was not final as it was subject to appeal and if the authority found that there was no good ground for the exercise of that power the property Could no longer be retained and had under the Act to be returned to the owner.
Thus there was a clear obligation to return the vehicle to the owner if the appeal went his favour.
[944E] There was also an implied legal obligation to preserve tile property intact and to take reasonable care of it so is to enable it to be returned 93 9 in the same condition in which it was seized.
The position of the State Government until the order became final was therefore that of a bailee.
There can be bailment and the 'relationship of a bailor and bailee in respect of specific property without there being an enforceable contract.
Nor is consent indispensable for such a relationship to arise.
Even a finder of goods of another becomes a bailee in certain circumstances.
1.944A D; F H] The High Court was right in confirming the decree passed by the trial court on the basis that there was an obligation on the State Government either to return the said vehicles or in the alternative to pay their value.
[945 E] State of Rajasthan vs Mst.
Vidhyawati, [1962] Supp. 2 S.C.R. 989 and Kasturilal Jain vs State of U.P. ; , held inapplicable.
|
Civil Appeal No. 478 of 1957.
Appeal from the judgment and decree dated August 17, 1954, of the Punjab High Court, Circuit Bench at Delhi, in Regular First Appeal No. 76 of 1952, arising out of the judgment and decree dated December 15, 1951, of the Court of Sub Judge, 1st Class, Delhi in Suit No. 169 of 1949/409 of 1950.
77 Ganapathy Iyer and D. Gupta, for the appellant.
Gurbachan Singh and Harbans Singh, for the respondent.
October 28.
The Judgment of the Court was delivered by SUBBA RAO J.
This appeal on a certificate granted by the High Court of Judicature for Punjab at Chandigarh is directed against its judgment confirming that of the Subordinate Judge, First class, Delhi, in a suit filed by the respondent against the appellant for the recovery of compensation in respect of non delivery of goods entrusted by the former to the latter for transit to New Delhi.
On August 15, 1947, India was constituted into two Dominions, India and Pakistan; and soon thereafter civil disturbances broke out in both the Dominions, The respondent and others, who were in government employment at Quetta, found themselves caught in the disturbances and took refuge with their household effects in a government camp.
The respondent collected the goods of himself and of sixteen other officers, and on September 4, 1947, booked them at Quetta Railway Station to New Delhi by a passenger train as per parcel way bill No. 317909.
Under the said bill the respondent was both the consignor and consignee.
The N. W. Railway (hereinafter called the Receiving Railway) ends at the Pakistan frontier and the E. P. Railway (hereinafter called the Forwarding Railway) begins from the point where the other line ends; and the first railway station at the frontier inside the Indian territory is Khem Karan.
The wagon containing the goods of the respondent and others, which was 'duly seated and labelled indicating its destination as New Delhi, reached Khem Karan from Kasur, Pakistan, before November 1, 1947, and the said wagon was intact and the entries in the " inward summary." tallied with the entries on the labels.
Thereafter it traveled on its onward march to Amritsar and reached that place on November 1, 1947.
There also the wagon was found to be intact and the label showed that it was bound to New Delhi from Quetta.
On November 2, 1947, it reached Ludhiana and remained 78 there between November 2, 1947 and January 14, 1948; and the " vehicle summary " showed that the wagon bad a label showing that it was going from Lahore to some unknown destination.
It is said that the said wagon arrived in the unloading shed at New Delhi on February 13, 1948, and it was unloaded on February 20, 1948; but no immediate information of the said fact was given to the respondent.
Indeed, when the respondent made an anxious enquiry by his letter dated February 23, 1948, the Chief Administrative Officer informed him that necessary action would be taken and he would be addressed again on the subject.
After further correspondence, on June 7, 1949, the Chief Administrative Officer wrote to the respondent to make arrangements to take delivery of packages lying at New Delhi Station, but when the respondent went there to take delivery of the goods, he was told that the goods were not traceable.
On July 24, 1948, the respondent was asked to contact one Mr. Krishan Lal, Assistant Claims Inspector, and take delivery of the goods.
Only a few articles, fifteen in number and weighing about 61 maunds, were offered to him subject to the condition of payment of Rs. 1,067 8 0 on account of freight, and the respondent refused to take delivery of them.
After further correspondence, the respondent made a claim against the Forwarding Railway in a sum of Rs. 1,62,123 with interest as compensation for the non delivery of the goods entrusted to the said Railway, and, as the demand was not complied with, he filed a suit against the Dominion of India in the Court of the Senior Subordinate Judge, Delhi, for recovery of the said amount.
The defendant raised various pleas, both technical and substantive to non suit the plaintiff.
The learned Subordinate Judge raised as many as 15 issues on the pleadings and held that the suit was within time, that the notice issued complied with the provisions of the relevant statutes, that the respondent had locus stand to file the suit and that the respondent had made out his claim only to the extent of Rs. 80,000; in the result, the suit was decreed for a sum of Rs. 80,000 with proportionate costs.
79 The appellant carried the matter on appeal to the High Court of Punjab, which practically accepted all the findings arrived at by the learned Subordinate Judge and dismissed the appeal.
In this Court the appellant questions the correctness of the said decree.
Learned Counsel for the appellant raised before us the following points: (1) there was no privity of contract between the respondent and the Forwarding Railway, and if he had any claim it was only against the Receiving Railway; (2) the suit was barred by limitation both under article 30 and Art 31 of the Indian Limitation Act and it was not saved by any acknowledgement or acknowledgements of the claim made within section 19 of the Limitation Act; and (3) the notice given by the respondent under section 77 of the Indian Railways Act, 1890, did not comply with the provisions of the said section inasmuch as the claim for compensation made thereunder was not preferred within six months from the date of the delivery of the goods for carriage by the Railway.
The third point may be taken up first and disposed of shortly.
Before the learned Subordinate Judge it was conceded by the learned Counsel for the defendant that the notice, exhibit P 32, fully satisfied the requirements of section 77 of the Indian Railways Act, and on that concession it was held that a valid notice under section 77 of the said Act bad been given by the respondent.
In the High Court no attempt was made to question the factum of this concession; nor was it questioned by the appellant in its application for special leave.
As the question was a mixed one of fact and law, we would not be justified to allow the appellant at this very late stage to reopen the closed matter.
We, therefore, reject this contention.
The learned Counsel for the appellant elaborates his first point thus : The Receiving Railway, the argument, proceeds, entered into an agreement with the respondent to carry the goods for consideration to their destination i.e., New Delhi, and in carrying out the terms of the contract it might have employed the agency of the Forwarding Railway, but the consignor was not in any way concerned with it and if loss was 80 caused to him by the default or neligence of the Receiving Railway, he could only look to it for compensation and he had no cause of action against the Forwarding Railway.
This argument is not a new one but one raised before and the Courts offered different solutions based on the peculiar facts of each case.
The decided cases were based upon one or other of the following principles: (i) the Receiving Railway is the agent of the Forwarding Railway; (ii) both the Railways constitute a partnership and each acts as the agent of the other; (iii) the Receiving Railway is the agent of the consignor in entrusting the goods to the Forwarding Railway: an instructive and exhaustive discussion on the said three principles in their application to varying situations is found in Kulu Ram Maigraj vs The Madras Railway Company (1), G. I. P. Railway Co. vs Radhakisan Khushaldas (2 ), and Bristol And Exeter Railway vs Collins (3); (iv) the Receiving Railway, which is the bailee of the goods, is authorized by the consignor to appoint the Forwarding Railway as a sub bailee, and, after such appointment, direct relationship of bailment is constituted between the consignor and the sub bailee; and (v) in the case of through booked traffic the consignor of the goods is given an option under 'section 80 of the Indian Railways.
Act to recover compensation either from the Railway Administration to which the goods are delivered or from the Railway Administration in whose jurisdiction the loss, injury.
destruction or deterioration occurs.
Some of the aforesaid principles cannot obviously be applied to the present case.
The statutory liability under section 80 of the Indian Railways Act cannot be invoked, as that section applies only to a case of through booked traffic involving two or more Railway Administration in India; whereas in the present case the Receiving Railway is situated in Pakistan and the Forwarding Railway in the Indian territory.
India and Pakistan are two independent sovereign powers, and by the doctrine of lex loci contractus, section 80, cannot (1) I.L.R. (2) I.L.R. (3) VII H L.C. 194.
81 apply beyond the territories of India; nor can the respondent rely upon the first two principles.
There is no allegation, much less proof, that there was any treaty arrangement between these two states governing the rights inter se in the matter of through booked traffic.
This process of elimination leads us to the consideration of the applicability of principles (iii) and (iv) to the facts of the present case.
The problem presented can only be solved by invoking the correct principle of law to mould the relief on the basis of the facts found.
We shall first consider the scope of the fourth principle and its applicability to the facts of this case.
Section 72 of the Indian Railways Act says that the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to the other provisions of the Act, be that of a bailee under sections 151, 152 and 161 of the .
Section 148 of the defines " bailment " thus: " A 'bailment ' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them." G.W. Patson in the book "Bailment in the Common Law" says, at p. 42, thus: " If a bailee of a res sub bails it by authority, then according to the intention of the parties, the third person may become the immediate bailee of 'the owner, or he may become a sub bailee of the original bailee".
At p. 44 the learned author illustrates the principle by giving as an example a carrier of goods entrusting them to another carrier for part of the journey.
One of the illustrations given by Byles J. in Bristol.
And Exeter Railway vs Collins (1) is rather instructive and it (1) VII H.L.C. 194,212, 11 82 visualises a situation which may be approximated to.
the present one and it is as follows: The carrier receiving the goods may, therefore, for the convenience of the public or his customers, adopt a third species of contract.
He may say, We do not choose to undertake responsibilities for negligence and accidents beyond our limits of carriage, where we have no means of preventing such negligence or accident; and we will not, therefore, undertake the carriage of your goods from A. to B., but we will be carriers as far as our line extends, or our vehicles go, and we will be carriers no further; but to protect you against the inconveniences and trouble to which you might be exposed if we only undertook to carry to the end of our line of carriage, we will undertake to forward the goods by the next carriers, and on so doing our liability shall cease, and our character of carriers shall be at an end; and for the purpose of so forwarding and of saving the trouble of two payments, we will take the whole fare, or you may pay as one charge at the end; but if we receive it we will receive it only as your agents for the purpose of ultimately paying the next carriers.
" We may add to the illustration the further fact that the Forwarding Railway is in India, a foreign country in relation to the country in which the Receiving Railway is situate.
Relying upon the said passages, an argument is advanced to the effect that the consignor i.e., the respondent, authorised his bailee, namely, the Receiving Railway, to entrust the goods to the Forwarding Railway during their transit through India to their destination and the facts disclosed in the case sustain in the said plea.
There is no document executed between the respondent and the Receiving Railway hereunder the Receiving Railway was expressly authorized to create the Forwarding Railway the immediate bailee of the owner of the goods.
exhibit P 50, the railway receipt dated September 4, 1947, does not expressly confer any such power.
But the facts found in the case irresistibly lead to that conclusion.
There 83 was no treaty between the two countries in the matter of through booked traffic; at any rate, none has been placed before us.
What we find is only that the Receiving Railway received the goods of the respondent and delivered the wagon containing the said goods to the care of the Forwarding Railway, and the latter took over charge of the wagon, carried it to New Delhi and offered to deliver the goods not lost to the respondent on payment of the railway freight.
In the absence of any contract between the two Governments or the, Railways, the legal basis on which the conduct of the respondent and the Railways can be sustained is that of the respondent delivered the goods to the Receiving Railway with an authority to create the Forwarding Railway as his immediate bailee from the point the wagon was put on its rails.
The same result could be achieved by approaching the case from a different perspective.
Section 194 of the says : " Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub `agent, but an agent of the principal for such part of the business of the agency as is entrusted to him.
" The principle embodied in this section is clearly stated by Thesiger L. J. in De Buasche vs Alt (1) at p. 310 thus : " But the exigencies of business do from time to time render necessary the carrying out of the instructions of a principal by a person other than the agent originally instructed for the purpose, and where that is the case, the reason of the thing requires that the rule should be relaxed, so as, on the one hand, to enable the agent to appoint what has been termed " a sub agent " or " substitute " ; and, on the other hand, to constitute, in the interests and for the protection of the principal, a direct privity of contract between him and such substitute.
" The aforesaid facts clearly indicate that the respondent appointed the Receiving Railway as his agent to 1. , 310.
84 carrv his goods on the railway to a place in India with whom Pakistan had no treaty arrangement in the matter of through booked traffic.
In that situation the authority in the agent must necessarily be implied to appoint the Forwarding Railway to act for the consignor during that part of the journey of the goods by the Indian Railway; and, if so, by force of the said section, the Forwarding Railway would be an agent of the consignor.
If no such agency can be implied, in our view, a tacit agreement between the Receiving Railway and the Forwarding Railway to carry the respondent 's goods to their destination may be implied from the facts found and the conduct of all the parties concerned.
If the Receiving Railway was not an agent of the Forwarding Railway, and if there was no arrangement between the two Governments, the position in law would be that the foreign railway administration, having regard to the exigencies of the situation obtaining during those critical days, brought the wagon containing the goods of the respondent and left it with the Forwarding Railway; and the latter consciously took over the responsibility of the bailee, carried the wagon to New Delhi and offered to deliver the goods to the respondent.
The respondent also accepted that relationship and sought to make the Forwarding Railway responsible for the loss as his bailee.
On these facts and also on the basis of the course of conduct of the parties, we have no difficulty in implying a contract of bailment between the respondent and the Forwarding Railway.
We may also state that section 71 of the permits the recognition of a contract of bailment implied by law under circumstances which are of lesser significance than those present in this case.
The said section reads: A person who finds goods belonging to another and takes them into his custody, is subject to the same responsiblity as a bailee.
" If a finder of goods, therefore, accepts the responsibility of the goods, he is placed vis a vis the owner of the goods in the same position as a bailee.
If it be held 85 that the Railway Administration in Pakistan for reasons of policy or otherwise left the wagon containing the goods within the borders of India and that the Forwarding Railway Administration took them into their custody, it cannot be denied that their responsibility in regard to the said goods would be that of a bailee.
It is true there is an essential distinction between a, contract established from the conduct of the parties and a quasi contract implied by law; the former, though not one expressed in words, is implied from the conduct and particular facts and the latter is only implied by law, a statutory fiction recognized by law.
The fiction cannot be enlarged by analogy or otherwise.
As we have held that the Receiving Railway was authorized by the respondent to engage the Forwarding Railway as his agent or as his bailee, this section need not be invoked.
But we would have had no difficulty to rely upon it if the Forwarding Railway was equated to a finder of goods within the meaning of the section.
If so, the next question that arises is what is the extent of the liability of the appellant in respect of the goods of the respondent entrusted to it for transit to New Delhi.
We have held that, in the circumstances of the present case, the application of the provisions of section 80 of the Indian Railways Act is excluded.
If so, the liability of the Forwarding Railway is governed by section 72 of the said Act.
Under that section the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to the other provisions of the Act, be that of a bailee under sections 151, 152 and 161 of the .
Under section 151 of the , the bailee is bound to take such care of the goods bailed to him as a man of ordinary prudence would under similar circumstances take of his own goods of the same bulk, quality and value of the goods bailed; and under section 152 thereof, in the absence of any special contract, he is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken such amount 86 of care of it as described in section 151.
In other words, the liability under these sections is one for negligence only in the absence of a special contract.
Generally goods are consigned under a risk note under which the Railway Company is absolved of all liability or its liability is modified.
No such risk note is forth coming in the present case.
The question, therefore, reduces itself to an enquiry whether, on the facts, the Forwarding Railway observed the standard of diligence required of an average prudent men.
The facts found by the High Court as well as by the Subordinate Judge leave no room to doubt that the Forwarding Railway was guilty of negligence in handling the goods entrusted to its care.
The wagon reached Khem Karan intact.
D. W. 4 deposed that he received from the guard of the train that brought the wagon to the station the inward summary and that on checking the train with the aid of that summary he found that the wagon was intact according to the summary.
He also found the seals and labels of the wagon intact and that the 'inward summary ' tallied with the entries on the labels.
It may, therefore, be taken that when the Forwarding Railway took over charge of the goods they were intact.
The evidence of P. W. 1,Thakar Das, establishes that even at Amritsar the wagon was intact.
But, thereafter in its onward march towards New Delhi it does not appear on the evidence that the necessary care was bestowed by the railway authorities in respect of the said wagon.
The said wagon remained in the yard of Ludhiana Station between November 2, 1947, and January 14, 1948 and also it appears from the evidence that when it reached that place the label showed that its destination was unknown.
What happened during these months is shrouded in mystery.
It is said that the said wagon arrived at New Delhi on February 13, 1948, and that the Goods Clerk, Ram Chander, unloaded the goods in the presence of the head watchman, Ramji Lal and head constable, Niranjan Singh, when it was discovered that only 15 packages were in the wagon and the rest were lost.
The Goods Clerk, Ram Chander (D.W, 4), the head watchman, Ramji Lal (D. W. 7), 87 the Assistant Train Clerk, Krishan Lal (D. W. 8), and the head constable, Niranjan Singh (D. W. 16), speak to the said facts, but curiously no contemporaneous relevant record disclosing the said facts was filed in the present case.
We cannot act upon the oral evidence of these interested witnesses in the absence of such record.
No information was given to the respondent about the arrival at New Delhi of the said wagon.
Only on June 7, 1948, i.e., nearly four months after the alleged arrival of the wagon, the respondent received a letter from the Chief Administrative Officer asking him to effect delivery of the packages lying in New Delhi Station; but to his surprise, when the respondent went to take delivery no goods were to be found there.
Only on August 18, 1948 the appellant offered to the respondent a negligible part of the goods in a damaged condition subject to the payment of the railway freight, and the respondent refuse to take delivery of the same.
From the said facts it is not possible to hold that the railway administration bestowed such care on the goods as is expected of an average prudent man.
We, therefore, hold that the Forwarding Railway was guilty of negligence.
Then remains the question of limitation.
The relevant articles are articles 30 and 31 of the Indian Limitation Act.
They read: Description of suit period of Time from limitation.
wich period begins to run 30 Against carrier for compensation for losing or injuring One year When the loss or injury goods.
occurs.
Against a carrier for compensation for non delivery of, or One year When the goods ought delay in delivering to be delivered.
goods.
Article 30 applies to a suit by a person claiming com pensation against the railway for its losing or injuring his goods; and article 31 for compensation for nondelivery or delay in delivering the goods.
The learned Counsel for the appellant argued that article 30 would apply to the suit claim, whereas the 88 learned Counsel for the respondent contended that article 31 would be more appropriate to the suit claim.
We shall assume that article 30 governed the suit claim and proceed to consider the question on that basis.
The question now is, when does the period of limitation under article 30 start to run against the claimant ? The third column against article 30 mentions that the said claim should be made within one year from the date when the loss or injury occurs.
The burden is upon the defendant who seeks to non suit the plaintiff on the ground of limitation to establish that the loss occurred beyond one year from the date of the suit.
The proposition is self evident and no citation is called for.
Has the defendant, therefore, on whom the burden rests to prove that the loss occurred beyond the prescribed period, established that fact in this case ? The suit was filed on August 4, 1949.
In the plaint the plaintiff has stated that loss to the goods has taken place on the defendant railway, and, therefore, delivery has not been effected.
Though in the written statement there was a vague 'denial of this fact the evidence already noticed by us established beyond any reasonable doubt that the goods were lost by the Forwarding Railway when they were in its custody.
But there is no clear evidence adduced by the defendant to prove when the goods were lost.
It is argued that the goods must have been lost by the said Railway at the latest on February 20, 1948, when the goods are alleged to have been unloaded from the wagon at the New Delhi Station; but we have already discussed the relevant evidence on that question and we have held that the defendant did not place before the Court any contemporaneous record to prove when the goods were taken out of the wagon.
Indeed, the learned Subordinate Judge in a considered judgment held that it had not been established by the Forwarding Railway that the goods were lost beyond the period of limitation.
The correctness of this finding was not canvassed in the High Court, and for the reasons already mentioned, on this material produced, there was every justification for the findings.
If so, it follows that the 89 suit was well within time.
In this view it is not necessary to express our opinion on the question whether there was a subsequent acknowledgment of the appellant 's liability within the meaning of art 19 of the Indian Limitation Act.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
| The respondent booked certain goods on September 4, 1947, with the N. W. Railway at Quebec in Pakistan to New Delhi.
The wagon containing the goods was received at the Indian border station of Khem Karan on November 1, 1947, duly sealed and labelled indicating its destination as New Delhi.
It reached New Delhi on February 3, 1948, and was unloaded on February 20, 1948, but no immediate information was sent to the respondent.
On June 7, 1948, the respondent was asked by the E. P. Railway to take delivery of the goods lying at New Delhi station but when the respondent went there the goods were not traceable.
Again, on July 24, 1948, the respondent was asked to take delivery of the goods when only a small portion of the goods 76 were offered to him subject to the payment of Rs. 1,067 8 0 as freight but the respondent refused to take delivery.
On August 4,1949, the respondent filed a suit for Rs. 1,62,123 with interest as compensation for non delivery of goods against the Dominion of India.
The trial court found that the E. P. Railway was guilty of negligence in handling the goods and decreed the suit for Rs. 80,000, and on appeal the High Court confirmed the decree.
The appellant contended that there was no privity of contract between the respondent and the E. P. Railway and he could only have a claim against the N. W. Railway in Pakistan, and that the suit was barred by limitation.
Held, that there was an implied contract of bailment between the respondent and the E. P. Railway and that Railway was liable for the loss.
The conduct of the parties indicated that the respondent delivered the goods to the N. W. Railway with an authority to create the E. P. Railway as his immediate bailer from the point the wagon was put on its rails.
The N. W. Railway must be deemed to have had implied authority to appoint the E. P. Railway to act for the consignor during the journey of goods by the E. P. Railway and by force of section 194 of the , the E. P. Railway became an agent of the consignor.
The N. W. Railway left the wagon with the E. P. Railway and the latter consciously took over the responsibility of the bailer, carried the wagon to New Delhi and offered to deliver the goods to the respondent.
The respondent also accepted this relationship.
From these facts, even if an agency could, not be implied, a tacit agreement between the two Railways to carry the respondents goods to New Delhi could be implied resulting in a contract of bailment between the E. P. Railway and respondent.
Kulu Ram Maigraj vs The Madras Railway Company, I.L.R. , G.I.P. Railway Co. vs Radhakisan Kushaldas, I.L.R. , Bristol and Exeter Railway vs Collins, VII H.L.C. 194 and De Bussche vs Alt, (1878) L.R. 8 Ch.
D. 386, referred to.
Held, further that the suit was not barred by limitation.
Even if article 30 of the Indian Limitation Act applied, as contended for by the appellant, the burden was on the appellant, who sought to non suit the respondent, to establish that the loss occurred beyond one year from the date of the suit.
Thus the appellant had failed to establish by any clear evidence.
|
minal Appeal No. 115 of 1960.
Appeal from the judgment and order dated September 18, 1.959, of the Calcutta High Court in Government Appeal No. 14 of 1956.
48 B. L. Anand, Ganganarayan Chandra and D. N. Mukherjee and P. K. Bose, for the appellant.
K. B. Bagchi, section N. Mukherjee and P. K. BOSE for the respondent.
April 12.
The Judgment of the Court was delivered by KAPUR, J.
This is an appeal against the judgment and order of the High Court of Calcutta in which a preliminary objection has been taken that the certificate under article 134 (1) (e) is not a proper certificate and should therefore be cancelled.
A further question would arise as to whether it is a case in which special leave to appeal should be granted under article 136 if we find that the preliminary objection is well founded.
The appellant was tried for murder under section 302 of the lndian Penal Code in the court of the Additional Sessions Judge at Alipore sitting with a jury.
The jury returned a verdict of not guilty and the appellant was acquitted.
Against that order the State took an appeal to the High Court and the Division Bench found that there was mis direction in the charge to the jury and therefore after consideration of the evidence it set aside the verdict of the jury, allowed the appeal and sentenced the appellant to imprisonment for life.
The appellant then applied to the High Court for a certificate under article 134 (1) (c) which was granted by another Division Bench of the Court which had not heard the appeal.
Three points were urged before the Bench hearing the applioation for certificate; (1) that there was unusual delay in delivering the judgment and the Division Bench hearing the appeal forget to consider many of the question of fact which were raised and argued before it.
(2) that the High Court had no power to substitute its own estimate 49 of the evidence in an appeal against the order of acquittal in a trial by jury and (3) that as a matter of fact there were no such misdirection as caused a failure of justice or a mistrial and therefore the High Court was not entitled to examine the evidence.
The learned Judges were of the opinion that there was no substance in points Nos. 2 and 3 but the first points did raise a question of importance.
The learned Chief Justice observed: "The delay in delivering judgment is certainly a very unusual fact, and it may lead to the result that some of the points which were argued on behalf of the petitioner before the Division Bench were lost sight of by that learned judges while delivering their judgment.
As already stated, these points have been summarised by the petitioner in that paragraph 18 of the petition.
The points raised in that paragraph may or may not be good points, but if these points were advanced on behalf of the petitioner, the learned Judges of the Division Bench owed it to themselves to come to a decision on those points.
In the arguments before us, it is not denied on behalf of the State that the points which have been summarised in paragraph 18 of the petition were canvassed by the defence Counsel at the hearing of the appeal and having regard to that fact, I am inclined to hold that the petitioner is entitled to a certificate under Article 134 (1) (c) of the Constitution on that ground".
This is the ground on which the certificate was granted.
This Court has had occasion to consider the grounds on which a certificate can be granted under Art.134 (1) (c) of the Constitution.
hi Haripada Dey vs The State of West Bengal(1) it was held that the High Court has no jurisdiction to grant (1) ; , 641.
50 a certificate under article 134 (1) (c) on a mere question of fact and it is not justified in passing on such a question to the Supreme Court for further consideration thus converting the Supreme Court into a Court of Appeal on facts.
Bbagwati J., there said: "Whatover may have been the misgiving" of the Learned Chief Justice.
in the matter of a full and fair trial not having been held we are of the opinion that he had no jurisdiction to grant a certificate under article 134(1) (c) in a case where admittedly in his opinion the question involved was one of fact where in spite of a full and fair trial not having been vouchsafed to the appellant, the question was merely one of a further consideration of the case of the Appellant on facts".
In a later case Sidheswar Granguly vs The State of West Bengal(1) the High Court of Calcutta granted a certificate on the ground that because of the summary dismissal of the appeal the appellant did not have the satisfaction of having been fully heard and it was held by this Court that was no ground for the grant of a certificate and that no certificate should be granted on a mere question of fact.
In that case Sinha J., (as he then was) said ; "This Court has repeatedly called the attention of the High Courts to the legal pos ition that under article 134 (1) (c) of the Constitution, it is not a case of "granting leave" but of "certifying" that the case is a fit one for appeal to this Court.
"Certifying" is a strong word and therefore, it has been repeatedly pointed out that a High Court is in error in granting a certificate on a mere question of fact, and that the High Court is not justified in passing on an appeal for determination by this Court when there are no (1) ; 51 complexities of law involved in the case, requiring the authoritative interpretation by this Court.
" In the present case the High Court has granted leave on the mere ground that there was delay in delivering the judgment of the court and it may have led to the result that some of the points urged by counsel were lost sight of while delivering judgment.
Those points 'were all questions of fact.
The High Court observed that the questions which were sought to be raised in the petition might or might not be good points but if those points were advanced the judges " 'owed it to themselves to come to a decision on those points".
After the pronouncements of this Court in two judgments it is some what surprising that the High Court should have granted a certificate on the mere ground of delay in pronouncing a judgment and the equally slender ground that some of the questions which were raised were forgotten at the time of the judgment.
If the appellant did have any such real grievance it was open to him to apply to this Court under article ' 136 but the mere ground of delay is not a ground on which the High Court can certify a case to be fit one for appeal to this Court.
In Banarsi Parshad vs Kashi Krishna Narain (1) and Radhakrishna Ayyar vs Swaminatha Ayyer(2) the Privy Council in construing section 109 (c) of the Code of Civil Procedure pointed out that under that clause for a certificate to be granted a case had to be of great or wide public importance.
A mere ground of delay in giving a judgment does not, in our opinion, fall within the words "fit one for appeal to the Supreme Court" even if it is felt by the High Court that the delay might have led to omission to consider arguments on questions of fact and law.
It is not open to a High Court to give certificates of fitness under this clause merely (1) [1900] L.R. 28 1 A. 11 (2) (1920) L.R. 48 I. A. 31.
52 because in its opinion the judgment of the court delivered by another Bench suffers from an error in regard to certain facts.
In our view the certificate granted by the Calcutta High Court was not a proper certificate and must be cancelled.
It was then urged that special leave should be granted under article 136 and the appeal be beard as the record had been printed and on that material if leave were to be granted the appeal could be properly argued.
We have heard counsel for the appellant and we see no reason to grant special leave in this case.
The appeal is therefore dismissed.
Appeal dismissed.
| 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.
Section 344 of the Criminal Procedure Code requires a Magistrate, if he chooses to adjourn a case, " to remand by warrant the accused if in custody " and provides further that every order made under this section by a Court other than a High Court shall be in writing.
Where a trying Magistrate adjourned a case by an order in writing but there was nothing in writing on the record to show that he made an order remanding the accused to custody: Held, that the detention of the accused after the order of adjournment was illegal.
Those who 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.
|
ition Nos.
4146 of 1978 and 546 47 of 1983.
(Under Article 32 of the Constitution of India .) Rajinder Sachhar, Govind Das, T.S. Krishnamurthy lyer, A.K. Sanghi, Ravinder Bana, R.B. Misra, Miss A. Subhashini, Bhisamber Lai and Miss Gitanjali Mohan for the appearing parties.
The Judgment of the Court was delivered by SAWANT, J.
These three petitions raise some common issues, and hence they are being disposed of by this common judgment.
W.P. No. 4146of 1978.
This petition is filed by the promotee Income Tax Offi cers Group A seeking to challenge the Seniority Rules of 1973 on the ground that they were framed pursuant to a direction given by ,this Court in Bishan Sarup vs Union of India & Ors., decided on August 16, 1972.
According to the petitioners, the said direction was given because for want of sufficient material, the Court had come to the conclusion that the quota for recruitment of the direct recruits and the promotees had broken down as the promotees were appointed in excess of their entitlement in the quota.
According to the petitioners, the requisite material showing the contrary was in the possession of the Government but did not come forth, then.
The said material shows that in fact the appointments of the promotees were short of their quota.
The petitioners, therefore, claim that not only the 999 Seniority Rules of 1973 should be set aside, but the ap pointments of the promotees be made and their seniority be fixed, according to the Rules prevailing prior to the said Rules.
The relevant facts necessary to dispose of the peti tion are as follows.
Pursuant to the Rules propounded in their letter of September 29, 1944, the Government reorganised the existing Income Tax services into Class I and Class II.
The Rules, among other things, laid down that the recruitment to the cadre of Income Tax Officers Group A will be from two sources, viz., direct recruitment and promotion, the quota for the two being 80% 20% respectively.
In 1945, the Government framed fresh Recruitment Rules for the said cadre of Class I and Class II ITOs.
Rule 3 of the said Rules reiterated that the recruitment to the said cadre will be from the two sources, viz., direct recruitment and promotion.
Rule 4 of the said Rules, however, provided that the recruitment from the said sources will be made as per the discretion of the Government.
This provision had the effect of virtually keeping in abeyance the recruitment quotas for the direct recruits and the promotees laid down in the Recruitment Rules of September 29, 1944.
On September 9, 1949, the Government framed Seniority Rules.
Rule 1(f)(iii) thereof provided that the promotees who had been certified by the Federal Public Service Commis sion in any calendar year shall be senior to all direct recruits who completed their probation during that year or after, and are confirmed with effect from the date in that year or after.
On January 1, 1950, the Seniority Rules were revised and the aforesaid Rule 1(f)(iii) was amended as follows: "(f) The seniority of direct recruits recruited on the results of the examinations held by the Federal Public Service Commission in 1944, and subsequent years, shall be reckoned as follows: (i) Direct recruits of an earlier examination shall rank above those recruited from subsequent examination.
(ii) Direct recruits of any one examination shall rank inter se in accordance with the ranks obtained by them at that examination.
1000 (iii) The promotees who have been certified by the Commis sion in any calendar year shall be senior to all direct recruits who complete their probation during that year or after and are confirmed with effect from a date in that year or after.
Provided that a person initially recruited as Class II Income Tax Officer, but subsequently appointed to Class I on the results of a competitive examination conduct ed by the Federal Public Service Commission shall, if he has passed the departmental examination held before his appoint ments to Class I service, be deemed to be promotee for the purpose of seniority.
By its letter of October 18, 1951, the Government revised the quotas of direct recruits and promotees (which was earlier laid down in their letter of September 29, 1944), from 80% and 20% to 66 2/3% and 33 1/3%.
On September 5, 1952 the Government also revised further the Seniority Rule 1(f)(iii) of January 24, 1950 as follows: "(f) The seniority of direct recruits recruited on the results of the examinations held by the Federal Public Service Commission in 1944, and subsequent years, shall be reckoned as follows: (i) Direct recruits of an earlier examination shall rank above those recruited from a subsequent examination.
(ii) Direct recruits of any one examination shall rank inter se in accordance with the ranks obtained by them at that Examination.
(iii) Officers promoted in accordance with the recommenda tion of the Departmental Promotion Committee before the next meeting of the Departmental Promotion Committee shall be senior to all direct recruits appointed on the results of ' the examinations held by the Union Public Service Commission during the calendar year in which the Departmental Promotion Committee met and the three previous years.
" It will thus be clear that this revision,,among other things, gave to the promotees, a weightage of three years in seniority.
These Rules continued to operate till 1959.
1001 4.
It appears that between 1959 and 1960, about 114 posts were upgraded to those of Income Tax Officers Group A, and the promotees were appointed to the said posts during the relevant period.
One Jaisinghani, a direct recruit challenged the constitutional validity of Seniority Rule 1(f)(iii) and (iv) of 1952 Seniority Rules which had in effect given three years ' weightage to the promotees in the matter of fixation of their seniority, and also the improper implementation of the quota by the Government, by filing a writ petition before the Punjab High Court.
The High Court rejected the writ petition, and in the appeal filed against the said decision, this Court, by its decision in S.G. Jaisinghani vs Union of India & Ors., ; held that the quota was fixed by the Government by its letter of October 15, 1951 in exercise of the power given to it under Rule 4 of the Recruitment Rules of 1945 and hence it was valid and proper.
The Court also upheld the weightage given to the promotees under the Seniority Rules of 1952.
The Court, however, directed that for future years, the roster system should be adopted by framing an appropriate rule for working out the quota between the direct recruits and the promotees, and that a roster should be maintained indicating the order in which appointments are made by direct recruitment and by promotion, in accordance with the percentage fixed under the statutory Rules for each source of recruitment.
The Court gave these directions because the Court came to the conclu sion that the promotees were in excess of the prescribed quota for each of the years 1951 to 1956 and onwards, and that they had been illegally so promoted.
The Court further held that the appellant Jaisinghani was entitled to a writ commanding the respondents to adjust the seniority of the appellant and other officers similarly placed like him, and to prepare a fresh seniority list in accordance with law after adjusting the recruitment for the period 1951 to 1956 and onwards, in accordance with the quota rule prescribed in the Government letter of October 18, 1951.
The Court, howev er, made it clear that the said order would not affect such Class II officers who had been appointed permanently as Assistant Commissioners of Income Tax.
Pursuant to the direction given by the Court, the Government prepared a Seniority List on July, 15, 1968.
This Seniority List was challenged in Delhi High Court in two separate writ petitions, one filed by one B.S. Gupta, a promotee of 1962 and another by one M.C. Joshi, a direct recuit.
The Delhi High Court by its decision of July 29, 1970 dismissed Gupta 's petition and substantially allowed Joshi 's petition and gave directions to prepare a fresh seniority List.
Against the 1002 decision in both the petitions, Gupta filed two separate civil appeals.
By its decision dated August 16, 1972 in the said appeals in B.S. Gupta case (supra) briefly known as 1st Gupta case, this Court held that the Seniority List was valid with regard to the promotions made upto January 15, 1959, since it was prepared on the basis of the quota rule of October 18, 1951 and the Seniority Rule 1(f)(iii) of 1952 Seniority Rules.
The Court, however, held that the said List would not be valid for the period thereafter.
The Court, therefore, set aside the said list to the extent it con cerned the period from 16.1.
1959 onwards and directed the Department to prepare a fresh seniority list, in the light of the observations made in the judgment.
The Court also directed that the seniority list from January 15, 1959 should be prepared in accordance with a seniority rule to be framed afresh by the Government.
The Court observed that the proceedings will have to be kept pending till such seniority list was prepared and filed before the Court.
It is neces sary to state here that the Court had given the said direc tion because it had come to the conclusion that with the upgrading of a large number of posts and the appointments of the promotees made to them, the quota rule had collapsed, and with that, the seniority Rule giving weightage to the promotees had also collapsed.
The decision to upgrade 100 posts was taken in January 1959 and the remaining 114 posts in the year 1960.
The Court, therefore, held that the quota rule came to an end on January 16, 1959 when sanction to upgrade 100 temporary posts was given by the President and with that went the seniority Rule.
In pursuance of the above direction, the Government framed the impugned Seniority Rules of 1973, and prepared a fresh seniority list on February 9, 1973, giving retrospec tive effect to the said Rules from January 15, 1959.
The gist of the 1973 Seniority Rules was that the seniority of the direct recruits and promotees appointed on and from January 16, 1959 was to be fixed as follows: First promotee and then direct recruit and so on.
The result of these Rules was that not only the seniority Rule but also the quota of the direct recruits and the promotees was changed from 66 2/3% and 33.1/3% to 50% and 50% or 1: 1.
It may be mentioned here that the new seniority list was prepared by fixing the seniority upto 15th January, 1959 according to the old Seniority Rules, and the seniority from 16th January 1959 on the basis of the new Rules.
However, 73 of the promotees who were promoted in excess of their quota between 1956 58 could not be accommodated as per the earlier quota rule, in the list of seniority prepared upto 15th January, 1959, and hence the seniority of the said 73 promotees was fixed according to the new seniority Rules which 1003 applied to the appointments made from 16th January, 1959.
Both the new Rules and the new Seniority List were filed in this Court as per the earlier direction.
The same Shri B.S. Gupta challenged both the validity of the new Seniority Rules of 1973 and as well as the new Seniority List.
This Court by its decision dated 16th April, 1974 in Bishan Sarup Gupta etc.
vs Union of India & Ors. etc.
; , , known as 2nd Gupta case, upheld both the Seniority Rules as well as the Seniority List.
It further appears that one Kamal Kanti Dutta and others had also filed an independent writ petition challeng ing the Seniority List of February 9, 1973.
It was dismissed by this Court by its decision dated 23rd April, 1980 in Kamal Kanti Dutta & Ors.
vs Union of India & Ors., ; upholding the validity of the said Seniority List.
While disposing of the said writ petition, this Court made the following observations on which a strong reliance is placed by the present petitioners: "It shall have been noticed that we have refused to recon sider our decisions not so much because of the view taken in the various cases cited by the learned Solicitor General, like Sajjan Singh vs State of Rajasthan, ; , 947,948 that this Court should not review its decisions too readily, as because on merits, we see no justification for reconsidering the judgment already rendered by this Court.
No fresh facts are brought to our notice by way of discovery of new and important evidence which would justify reconsid eration of the decisions already rendered by this Court after the most careful examination of the competing conten tions.
The Report of the Rajya Sabha Committee on petitions shows, as already indicated that the relevant files are still 'not traceable" That judgment was by a majority with Justice D.A. Desai delivering a dissenting judgment.
Since the petitioners here are relying also upon some observations made in the dissent ing judgment, we may reproduce them here: "In the light of the materials now placed especially the files which were withheld from the Court and the Committee, the only view that I express is that enough compelling and 1004 necessary material has been placed on record making out a strong case for reconsideration of these decisions.
" The Committee referred to in the aforesaid observation is the Rajya Sabha Petition Committee.
The present petition had also come to be dismissed erroneously along with the Writ Petition of Kamal Kanti Dutta (supra).
It was restored for hearing on September 9, 1980.
On July 28, 1982, the Parliamentary Committee on Subordinate Legislation published its 12th Report wherein it referred to a letter of February 4, 1976 from the Minister of State for Finance.
The Committee stated that the Seniori ty Rules of 1973 were unfair and hence they should be scrapped with effect from January 15, 1959 and that fresh equitable seniority rules be framed.
The Committee recom mended that the artificial distinction between the ITO Group A and Group B should be abolished as they were per forming identical functions and were working on interchange able posts.
The Committee also recommended the grant of the same weightage in seniority to the promotees from 15th January, 1959 as was available to them before that date.
The Committee, further recommended an increase in the quota of promotions from Group B to Group A on account of an unprece dented stagnation of Group B service, as a direct result of the Seniority Rules of 1973.
It does not appear that these recommendations were accepted.
We are referring to these recommendations of the Committee because the petitioners have made a reference to them and not because they are legally binding.
Thereafter, on February 16, 1983, the accompanying Writ Petitions, viz., Nos.
546 47 of 1983 were filed chal lenging (i) the validity of Section 117 of the Income Tax Act, 1961, (ii) the classification of Income Tax Officers in GroUp A and Group B Officers, (iii) the Seniority Rules of 1973 and (iv) the Seniority List prepared on their basis.
The last two reliefs claimed in the said petitions are common to the present petition and hence they will be dis posed of along with the judgment in the present case.
The first two reliefs and the reliefs claimed incidental thereto will be dealt with separately.
It is further necessary to note that while admitting the accompanying petitions, the Court had passed the follow ing order: 1005 "Subject to the specific condition that the petitioners shall not be permitted to reopen whatever classification was made in the cadre of ITOs, in the past as also inter se seniority between direct recruits and promotees which had been upheld by the decisions of this Court in S.C. Jaising hani, B.S. Gupta and KK Dutta 's case, rule nisi limited to the question whether the classification of ITOs, into Group A and Group B section 117 of the IT Act, 1961 is viola tive of Articles 14 and 16 of the Constitution.
Even if the issue is answered in affirmative, the petitioners will be entitled to the relief, if any, only prospectively for future implementation of the decisions from the date of the judgment in the Petition.
This order will not preclude any contention that can and may be raised in the Writ Petition No. 4 146/78 H.K. Sajnani vs UOI & Ors., to be examined on merits.
On May 3, 1983, this Court passed an order in CMP Nos.
13200 and 6762 of 1983 in both the present and the accompanying writ petitions as follows: "In allowing prayer (i) of CMP No. 6762/83, we direct Writ Petition Nos.
546 47/83 be heard alongwith Writ Petition No. 4146/78 and that the grounds challenging the validity of seniority rule 1973 as taken in Writ Petition Nos.
546 47/ 83 are allowed to be taken in Writ Petition No. 4146/78 in so far as the prayer (iii) of CMP is concerned, we direct the Government to file a statement in this Court before July 15, 1983 as to the result of the examination of the recom mendation of the Committee on Subordinate Legislation and decision and other measures taken by the Government thereon.
On February 27, 1985, the Court gave direction to the Government in CMP No. 1903 of 1983 in the present Writ Petition to allow the petitioners inspection of the files relating to the vacancies.
The inspection was completed on October 7, 1985 which according to the petitioners shows the following facts: (i) that the relevant record is available and was always available with the Government and that its production was deliberately withheld from this Court, (ii) that the promotions were all within quota and that there was no excess.
Rather there was a deficiency in promotions, (iii) that the quota rule was adhered to from year to year right from the year 1951 upto the date of the judgment in the 1st Gupta case (supra), (iv) that the quota rule did 1006 not collapse on 15.1.1959, (v) that as required by the exigencies of the service, the quota rule was amended/re laxed in the years 1958 and 1959, (vi) that in applying the quota rule in pursuance of the man~ damus, the Government did not follow the principles decided by this Court in 1st Gupta case (supra) and committed the following errors: (a) The Government did not apply the quota to the vacancies existing at a particular point of time.
Instead of doing so.
it misinterpreted the quota rule of 66 2/3% and 33.1/3% as if it required that a ratio of 2:1 had to be maintained in the cadre of Income Tax Officers and as if there had to be one promottee against every 2 direct recruits.
This erroneous interpretation was applied in clear breach of the principle laid down by this Court in the 1st Gupta case (supra).
(b) Another error committed by the Government in applying the quota rule in violation of the principles decided by this Court in the 1st Gupta Case (supra) was that the sub stantive vacancies in the temporary posts which were a regular part of the cadre and which eventually became perma nent were not taken into account while applying the quota rule, with the result that the promotees were denied their share in such vacancies.
The most harmful thing done by the Government was that it did not take into account substantive vacancies in temporary posts till 1963 for applying the quota rule and worked out the excess in promotions ignoring such vacancies.
But, they started taking into account those very vacancies for direct recruitment from 1963 onwards.
If such vacancies were taken into account prior to 1963 and the quota rule was applied to them, there would have been no excess in promotions as was erroneously worked out.
On the contrary, there was a deficiency in promotions because of the incorrect application of the quota rule.
(c) The promotees were not given their full quota even in the permanent vacancies which should have bee given to them inrespective of whether the direct recruitment was made in full.
There was under utilisation of quota of direct re cruits with the result that the promotees were denied their legitimate share even in permanent vacancies.
In these circumstances, the actual appointments were taken as vacan cies and were bound to result inevitably into excess of promotions.
On the basis of these facts, which according to the petition 1007 ers were revealed in their inspection, their case is that their allegation, that the relevant files were available and yet were not produced before the Court and the further allegation that there were no excess promotions were borne out.
This shows that the direction given in the 1st Gupta case (supra) to frame new rules and, hence, the new Seniori ty Rules of 1973 framed pursuant to these directions, were unwarranted, unjust and illegal.
The petitioners further contend that the principle that the vacancies mean those the Government wants to fill is not compatible with the principle laid down in the 1st Gupta case (supra) that the promotees should get their share of the quota irrespective of whether the direct recruits ' quota is filled, or not.
But in the present case, the con trary has happened, viz., the promotees ' quota is calculated on the basis of the appointments of the direct recruits causing thereby injustice to the promotees by depriving so many of them of their chances of promotion which were other wise available.
It is also the contention of the petitioners that in fact, there were vacancies and the Government wanted to fill those vacancies.
This is evidenced by the fact that when new posts were created for the purpose of assessment work, the direct recruits were not available and hence, the promotions were made from Group B to Group A, and even Group B Officers were appointed against Group A posts and they performed identical functions as of Group A Officers.
This contention has also a bearing on the issue involved in Writ Petitions Nos.
546 47 of 1983 and we will deal with it in that con text, later.
While these petitions were pending, the Government on January 24, 1988 amended the Income Tax Act, 1961 with effect from April 1, 1988 and, among other things, changed the designation of Income Tax Officers and Assistant Commis sioners as follows: Pre Amendment Post Amendment (a) Income Tax Officers Income Tax Officers (Group B) (b) Income Tax Officers Assistant Commissioners (Group A) (c) Assistant Commisioners Deputy Commissioner.
The amendment also substituted Sections 116, 117, 118 and 120 with 1008 effect from the same date, i.e., April 1, 1978 and autho rised the Central Board of Direct Taxes to issue notifica tions authorising Chief Commissioners and Commissioners of Income Tax to classify the work of newly designated Income Tax Officers and Assistant Commissioners, and to provide for the jurisdiction of the Income Tax Officers and Assistant Commissioners on the basis of quantum of income.
According to the petitioners, this was done to destroy the cause of action Writ Petition Nos.
546 47 of 1983.
On May 12, 1988, the Government framed New Rules of Recruitment, among other things, providing for quota of 50% each to the promotees and direct recruits.
In consequence, an application for amendment of Writ Petitions Nos.
546 47 of 1983 was filed raising additional grounds.
It will thus be apparent that the whole foundation of the case of the petitioner promotees in the present petition is that the Seniority Rules of 1973 were made by the Government pursuant to the direction of this Court in the 1st Gupta case (supra) on August 16, 1972 and that direction was given by this Court because on the basis of the material produced by the Government, this Court had come to the conclusion that the promotees were promoted in excess of their quota.
According to them, however, the new material which they have discovered shows that in fact there were not only no excess promotees but in fact there was a shortfall in their promotions as per their entitlement in the quota.
Both on behalf of the Government as well as the respondent Union of India and the direct recruits, it is pointed out to us that the so called new material produced on behalf of the petitioner promotees far from proving their allegation, supports the conclusion to which this Court had arrived at in the 1st Gupta case (supra).
In this connec tion, it is pointed out that admittedly, there were at the relevant time Class I and Class II posts of Income Tax Offi cers corresponding to Group A and Group B posts.
Class I or Group A consisted of Grade I and Grade II Officers whereas Class II or Group B consisted of Grade II Officers.
Group B Officers were entitled to be promoted first to Group A Grade II posts.
Hence, the vacancies available for promotion to the promotees which ought to be taken into consideration at any point of time are the vacancies in Grade II posts of Class I or Group A.
However, it is obvious from page 32 of Volume II of their petition, that the petitioner promotees have taken into consideration vacancies not only in Grade II posts but also in Grade I posts to show 1009 that in fact not only they were not promoted in excess but their promotions were short of the vacancies which were available to them in their quota.
We may reproduce herein below the relevant table of the sanctioned strength, the vacancies, the quota for promotees, the actual number of promotions made and their deficit or excess in the quota since 1951 to 1958 as calculated by the petitioners on the said page 32.
According to the petitioners, the figures in the table are taken from the newly discovered files: VACANCY POSITION FROM 1951 1958 Year Total Working Total Quota Actual Def Sanctioned Strength Vacancies of pro No. of icit Strength Gr.
II motions promo ( ) tions.
or Grade I Grade II Exc ess(+) 1951 216+200 = 416 77 + 98 = 175 241 80 1952 224+221 = 445 83 +113 = 196 249 83 49 ( ) 34 1953 224+221 = 445 130 +129 = 259 186 62 38 ( ) 24 1954 224+221 = 445 169 +157 = 326 119 40 31 ( ) 9 1955 224+221 = 445 154 +217 = 371 74 25 24 ( ) 1 1956 224+221 = 445 187 +214 = 401 44 15 25 (+) 10 1957 287+248 = 535 224 +184 = 408 127 42 26 ( ) 16 1958 290+248 = 538 213 +202 = 415 123 41 28 ( ) 13 97 10=87 Net Deficiency 23.
It is clear from the above table that the petition er promotees have calculated the posts in the sanctioned strength not only in Grade II posts but also in Grade I posts.
When the posts available to them for promotion were only in Grade II.
Hence, their further calculations of the working strength, the vacancies and the quota available to them in the vacancies and of the deficiencies or the excess in the quota are erroneous.
On behalf of the Government, the following calculations have been made for the relevant period from 1951 to 1958 on the basis of the actual vacan cies in the sanctioned strength of Grade II posts of Group A (Class I).
These calculations show that in fact during the said period, the promotees were promoted to Grade II posts of Group A (Class T) in excess to the extent of 93.
There fore, the deficiency of 97 which they have shown in their appointments during the said period is obviously wrong.
The said table first handed over to us by Shri Govind 1010 Das, Counsel for the Government is prepared on the basis of the very same figures on page 32 of the Writ Petition.
It, now, forms an annexure to the additional affidavit dated 23rd January, 1990 filed by one Ravi Kumar, Under Secretary, Department of Revenue, Ministry of Finance.
The table is as follows: Year Sanctioned Working Vacancies Quota Actual Excess Grade II Strength of pro promo Class I Gr.
II,Cl.
I motion tion as 33% stated at 32.
1951 200 98 102 34 1952 221 113 108 36 49 13 1953 221 129 92 31 38 7 1954 221 157 64 21 31 10 1955 221 217 4 1 24 23 1956 221 214 7 2 25 23 1957 248 184 64 22 26 4 1958 248 202 46 15 28 13 93 24.
The figures shown in the above table are self explanatory.
Confronted with these figures, the petitioners came out with another .
chart the relevant extract of which is as follows: Total Vacancies Direct Recruits Promotees Year Sanc Work Va Quo Actu Excess/ Quota Act Exce tion ing can ta als Shortage tual ss/ ed Stren cies pro Shor in Gr.
in Gr.
in Gr.
motio tage II II II ns. 1 2 3 4 5 6 7 8 9 10 1952 221 113 108 72 33 ( )39 36 49 (+) 13 1953 221 129 92 61 28 ( )33 31 38 (+) 7 1954 221 157 64 43 52 (+) 9 21 31 (+) 10 1955 221 217 4 3 53 (+)50 1 24 (+) 23 1956 221 214 7 5 48 (+)43 2 25 (+) 23 1957 248 184 64 43 27 ( )16 21 26 (+) 5 1958 248 202 46 31 99 (+)68 15 28 (+) 13 385 258 340 + 82 127 221 + 94 1011 By producing this chart the attempt of the petitioners, is to show that the direct recruits were appointed in excess of their quota to the extent of 82 during the relevant period.
The interesting feature of this chart, however, is that the petitioners admit that they were also appointed in excess of their quota during the period to the extent of 94 as against 93 shown in the chart prepared on behalf of the respondent Union of India (the difference of one being on account of the calculation of the excess as 5 for the year 1957 as against 4 calculated by the respondents for the same year).
On the basis of this chart, it is contended that in view of the fact that both direct recruits and promotees were ap pointed in excess of their quota, it could not be said that the quota had broken down.
In the first instance, the chart prepared by the petitioners themselves shows that the conclusion which was arrived at by this Court in the 1st Gupta case that the promotees were appointed in excess of their quota is cor rect, and demolishes the very foundation of their case in the present petition namely, that the newly discovered material shows that not only they were not appointed in excess of their quota, but were in fact short of it.
Second ly, assuming that their figures of the appointment of direct recruits during the relevant period are correct (since so far, it was never their contention that the direct recruits were appointed in excess of their quota and, therefore, the respondents had no opportunity to meet it), that only strengthens the conclusion of this Court in the 1st Gupta case that the quota rule had broken down.
The quota rule does not collapse only when the appointments from one source alone are disproportionately deficient or in excess.
It was then contended on behalf of the petitioners that the Government 's method of working out the vacancies was wrong.
It is not necessary for us to go into this alle gation and to find out the correct way of working out the vacancies.
This is so because firstly, the petitioners have come to this Court by the present petition on the basis of the vacancies worked out by the Government but which vacan cies according to the petitioners, were suppressed.
Second ly, their own chart shows that the vacancies were worked out by the Government by deducting the annual working strength from the sanctioned strength, every year.
The quota of the promotees shown by the petitioners in their chart is further on the basis of the vacancies so arrived at and is not on the basis of the appointment of the direct recruits as is alleged by them which allegation is the basis of their other contention in the petition.
Thirdly, it is to be remembered that in the present petition it 1012 is the petitioners ' contentions that the new figures of the deficiencies in the promotions have been worked out by the petitioners on the basis of the notings made in the missing files which were not available at the time this Court decid ed the 1st Gupta case (supra).
Hence, even assuming that these notings have an intrinsic evidentiary value to prove the annual vacancies available on the relevant dates, the petitioners ' contentions stand disproved even on the basis of the said notings.
Lastly, and this according to us is an equally damaging fact as far as the petitioners ' present case is concerned, the figures of the sanctioned strength and the vacancies which are worked out by this Court in the 1st Gupta case (supra) are almost identical with the figures shown by the petitioners themselves in their new chart with only a negligible difference at some points.
This fact strikes at the very root of the present petition because the only ground on which the petitioners have approached this Court by way of this petition is that the figures of the annual vacancies were suppressed by the respondents from this Court and it is this suppression which had led this Court to come to the conclusion that the promotees were in excess of their quota and to give a direction to frame the new Seniority Rule and to prepare the fresh Seniority List.
The so called new material, on the other hand, proves that the directions given in the 1st Gupta case (supra) were based on proper calculations and were justified.
It is also not correct to say that this Court had given the direction in question only because there was an absence of material to show the annual vacancies in a year.
This is clear from the following passage in the decision in the 1st Gupta case (supra) at pp 501 502: "In the absence of any material which gives us the actual vacancies in a year, we think that in order to imple ment the mandamus as far as it can possibly be done, it would be reasonable to accept the figures of appointments in those years as substantially representing the actual vacan cies.
There is ' also a subsidiary reason why those figures may reasonably be accepted.
It is true that the quota rule refers to vacancies but the vacancies are those vacancies which the Government wants to fill.
It is the prerogative of the Government, reflected further in Rule 4 referred to above, whether any vacancy may be filled at all or not.
Even if there are 100 vacancies in a particular year the Govern ment is not bound to fill all those vacancies.
It may fill only 90 of them and nobody can insist that the Government shall fill up all the vacancies.
Therefore, when 1013 the quota rule refers to vacancies it is implicit in the rule that the vacancies are vacancies which the Government wants to fill, whatever may be the actual number of vacan cies.
The actual appointments are, therefore, in the absence of any evidence to the contrary, the correct measure of the vacancies which the Government wanted to fill.
From that point of view also it will be permissible to proceed on the footing that the actual appointments represent the actual vacancies which the Government wanted to fill.
For example, if in the year 1953, 53 posts were filled by direct recruits and 38 by promotees the total vacancies sought to be filled would be 91 in which case the promotees would be entitled to 30 vacancies.
That is how the Government has proceeded to determine the excess for each year from 1953 to 1957 as shown at Annexure 'N ' (p. 26 Vol. 1 in C.A. No. 2060(n) 1971).
In our opinion the procedure adopted by the depart ment in determining the excess number of promotees appointed in the several years is substantially correct.
Annexure 'N ' begins with the year 1953.
It should begin with the year 1952 and not 1953.
Indeed the 5 year period starts from 1951 and ends with 1956 but since there was no promotion in 1951 the question of excess in that year does not arise.
For the purposes of the mandamus the seniority list will have to be resettled from the year 1952 showing not merely the excess from the years 1953 to 1956 but from 1952 to 1956.
At the end of 1956 the progressive total of the excess over the quota will be known and this excess, as already pointed out, is liable to be absorbed in the quota of the years succeed ing 1956." (Emphasis supplied) This is apart from the fact that as we have shown earli er, in fact the actual vacancies worked out by the Court approximated the actual appointments.
And in any case, the quota for the promotees worked out on the basis of the said vacancies and the calculation of the excess of promotions on the basis of the said quota was very nearly correct and the so called new material would not have made any difference to the conclusion which was arrived at in that case.
The other contention of the petitioners, namely, that while calculating the vacancies, the Government had calculated only the permanent posts and not the temporary posts has also no substance in it.
It is not suggested that the figures of the sanctioned and the working 1014 strength of and the vacancies in Grade II posts of Group A (Class I) shown by the petitioners on page 32 of their petition or in the new chart do not include temporary posts.
What is more, in fact in the 1st Gupta case (supra) one of the contentions of the direct recruits was that the quota rule should relate to vacancies only in permanent posts and not temporary posts.
That contention was not accepted in that case either by the promotees or the Government.
The court also pointed out in that case that there was nothing in the Rules of 1945 or the quota Rule of 1951 which said that the vacancies must be vacancies in permanent posts.
The Court observed that indeed the whole cadre had consisted of permanent and temporary posts for years, and there was a difference between permanent vacancies in permanent and temporary posts on the one hand and the permanent and tempo rary posts on the other.
It was also pointed out that a11 the direct recruits from 1948 onwards were initially ap pointed against temporary posts.
The Court had, therefore, rejected in that case the direct recruits ' contention that the vacancies referred to in the quota Rule were vacancies only in the permanent posts.
This shows that the Government had always counted the vacancies both in the permanent and the temporary posts and the promotees had accepted this as a fact then.
There is no material placed before us to show that this was not so then.
On the contrary, whatever materi al the petitioners have annexed to their petition and to which our attention was invited shows that in fact the Government had always calculated the vacancies on the basis of the sanctioned strength of both the permanent and tempo rary posts.
We may refer only to two Annexures in this connection.
The extract from File No. 20(22)56/Ad.
VI which is Annexure 7 on page 125 of the petition shows that as on 1st July, 1956 the total sanctioned strength of Grade II posts of ITO (Class I) were calculated as 248 consisting of 207 permanent and 41 temporary posts.
So also the nothing from File No. 22/4/58/Ad.
VI which are Annexure 11 on page 155 of the petition mention the actual strength of Grade II posts of ITO (Class I) as 248 which consists of 207 perma nent and 41 temporary posts.
Both the charts produced by the petitioners which we have discussed earlier show the sanc tioned strength of the said cadre for the years 1957 and 1958 each as 248.
The vacancies and the quota of the direct recruits and promotees have also been worked out by the petitioners on the basis of this strength in both the said charts.
This material, therefore, belies the petitioners ' contention that the Government had not taken into considera tion the temporary posts for working out the vacancies during the relevant period.
In his affidavit dated January 31, 1967 filed in Jaisinghani case 1015 (supra), Shri R.C. Dutta, the then Finance Secretary had further clearly stated that the vacancies were calculated with reference to the following information: (i) addition to cadre strength, temporary or permanent as the case may be, and (ii) vacancies arising during a particular period as a result of death, retirement, promotion, resignation, removal etc.
of the officers in particular posts.
This has been the stand of the respondent Union of India from the beginning, and beyond making a bare allegation to the contrary, the petitioners have not placed any material in support of their said contention.
The Chart produced by them on the contrary proceeds on the footing that the vacancies in both the temporary and the permanent posts had to be calculated.
Much has also been made of the fact that the Parlia mentary Committee on Subordinate Legislation had, as pointed out above, recommended the reconsideration of the Seniority Rules and the Seniority List of 1973, as allegedly they had done injustice to the promotees.
Apart from the fact that the said recommendations have not legally binding effect, they were also not accepted by the Government.
In his letter of October 31, 1976 addressed to the Chairman of the Commit tee on Subordinate Legislation, the then Minister of Finance had stated as follows: "I have gone through the Eighth Report of the Committee on Subordinate Legislation submitted to the Lok Sabha on 7th May, 1986.
I am afraid, however, there is hardly any scope for the Government to take any significant action in the matter as the alleged grievances of the promotee officers of the Income tax Department are unreal and imaginary.
In the past, the prospects, position and power enjoyed by the promotees happened to be better only because of a systematic and persistent violation of Rules.
The said violation of Rules itself led to prolonged litigation which repeatedly went upto the Supreme Court.
It was finally laid to rest in B.S. Gupta 's case when the Supreme Court approved the Seniority Rules, 1973 and Seniority List.
These Rules and the Seniori ty List were prepared in accordance with the Supreme Court 's own directive and were approved by it after giving ample opportunities to both the sides to present their case.
These Rules were declared by the Supreme Court to be 'just and fair '.
It is significant that 1016 the promotees themselves admittedly could not propose a better alternative.
The Seniority Rules, therefore, call for no change.
As for quota, originally the promotees were given only 20% of the Group 'A ' vacancies.
Unfilled vacancies were to be carned over as part of direct recruitment quota for the subsequent year.
The intention obviously was to maintain certain standard of quality in the personnel sanctioned to the service.
Between 1951 to 1958 the quota was raised to 1/3rd in favour of the promotees.
In 1973, the promotion quota was raised to 30% which is the highest in any service under the Central Government.
The question of weightage is inextricably linked with that of quota.
The weightage allowed to the promotees earli er was in view of the low quota of 20% or 33 1/2% available to them at that time.
When the Rules were revised and thee quota of promotees was enhanced to 50% the weightage given in the matter of promotion was simultaneousIy withdrawn.
The Supreme Court itself upheld its abolition and observed that the promotees could not "after obtaining the benefit of a higher percentage of recruitment to Class I service, legiti mately object to the abolition of weightage enjoyed formerly in the matter of seniority.
" The letter is annexed to the additional Affidavit of Ravi Kumar (supra).
It will thus be seen that even the Government had inde pendently come to the conclusion as early as in 1986 that neither the Rules of Seniority nor the Seniority List of 1973 had done injustice to the promotees.
In fact, the Rules of 1973 had raised the quota of the promotees from 33 1/3% to 50%.
The seniority of the promotees was adjusted upto 15th January, 1959 on the basis of the earlier quota Rule and the seniority of those who were appointed later and of those who were found in excess of their quota upto that date, were adjusted according to the new Rules.
Two other contentions advanced on behalf of the petitioners on the basis of the alleged new material were that firstly, while calculating the vacancies in the post of Grade II Officers in Group A, the vacancies in all the posts above the said post were not taken into 1017 account, and secondly, the number of vacancies should not have been equated with the number of posts the Government filled but should have been calculated on the basis of their actual existence.
According to the petitioners, if both these factors had been taken into consideration at the time of the decision in the 1st Gupta case (supra), the Court would not have found promotees in excess of their quota.
To some extent these contentions are interlinked.
The first contention proceeds firstly on the basis that the notings in the relevant files made by the Officer con cerned have an intrinsic evidentiary value to prove the actual vacancies in the different categories and secondly presumes that the number of vacancies as calculated in Grade II posts of Group A there did not already reflect the vacancies in the higher posts.
In the absence of sufficient material before us, it is not possible to accept such pre sumption.
The second contention need not even be considered in the present case, for as has been pointed out earlier, the actual vacancies approximated the appointments made during the relevant period.
Hence, whether the quota was calculated on the basis of the actual vacancies or on the basis of the appointments made, it would have made no difference to the conclusion that this Court had arrived at in the 1st Gupta case (supra) that the promotions were in excess of the quota.
What is more, even this argument has been answered by this Court in that case as shown above, and we see no reason to differ from the view taken there on the point.
There appears to be an obvious confusion on the part of the peti tioners with regard to what this Court has stated in the earlier part of the judgment in the 1st Gupta case (supra).
Read with the passage which we have quoted from the said judgment, what this Court wanted to convey in the earlier part of the judgment was that when the Government decides to fill in the vacancies, it is not necessary to defer the appointments from one source pending the appointments from the other source.
But that is when the Government decides to fill in the vacancies and not before it.
In the result, we find no substance in the petition and dismiss the same.
The Rule stands discharged.
In the circumstances, however, there will be no order as to costs.
WRIT PETITION NOS.
546 47 OF 1983.
As stated earlier while narrating the facts of the earlier petition, these petitions are filed by two Income Tax Officers for them 1018 selves and as the representatives of the All India Federa tion of Income Tax Gazetted Service Association.
The Federa tion represents all the Group B ITOs and all ITOs in Group A, Assistant Commissioners and Commissioners promoted from Group B. Among the parties to the petitions is respondent No. 4 the Indian Revenue Service Association representing directly recruited Group A Officers and Assistant Commis sioners and Commissioners promoted from directy recruited Group A ITOs.
The main grievance of the petitioners is that the classification of ITOs into two classes, namely, Group A and Group B is discriminatory and violative of Articles 14 and 16 of the Constitution because (a) the classification is not made on an intelligible differentia and (b) the differentia has no relationship to the object sought to be achieved by the Income Tax Act, 1961 inasmuch as the Officers belonging to the two Groups do identical work and perform identical functions.
It is also the contention of the petitioners that their work and posts are interchangeable, and in practice they form one cadre.
By maintaining the differentiation, allege the petitioners, the Government in effect is denying equal opportunity, equal pay and equal status to Officers doing identical work and performing identical functions.
To attack the classification, the petitioners had also chal lenged the constitutional validity of Section 117 of the Income Tax Act, 1961 before its amendment by the Direct Tax Laws (Amendment) Act, 1987.
After the amendment of the said section by the amending Act of 1987, they have amended their petition and have challenged not only the amended provision of the said section but also the amendment made to Section 116, 118 and 120, and the Recruitment Rules of 1988 and the notifications, circulars and orders issued pursuant thereto.
The attack against the amended sections and the Rules of 1988, notifications etc.
is on the ground that they are violative of Articles 14 and 16 of the Constitution.
In addition, they have also challenged the amended provisions on the ground that they are mala fide and are enacted to destroy the cause of action in their petition.
In this context, they have also attacked the Seniority Rules and Seniority List of 1973.
In support of their contention that the amended provisions of the Act are mala fide they contend that by amending the Act, the Government took the power to itself to frame the new Recruitment Rules of 1988 and to issue the relevant notifications, circulars and orders whereby the classification of the Income Tax Officers in Class I and Class II could be justified.
In this connection, it is pointed out that it is by virtue of these new powers that the Government for the first 1019 time got an authority to demarcate the jurisdiction of the powers of Class A and Class B ITOs and thus to justify the said classification.
In the absence of the amendment and the Rules, Notifications, Circulars and Orders issued pursuant thereto, the said classification was unjustifiable in law and was liable to be struck down.
It is, therefore, also contended that the said classification assuming it is justi fied, can only act prospectively from 1st April, 1988 from which date it is brought into operation, and would not justify the classification of Officers prior to the said date, and hence those Officers who belonged to Group B on the day prior to the coming into operation of the amended provisions, should be treated as belonging to Group A. 35.
We are not impressed by this contention.
In the first instance, the presumption underlying this contention is that the provisions of the Act prior to its amendment by the amending Act of 1987 did not permit such classification, which presumption is patently incorrect.
While the provi sions of sub section (1) of Section 117 prior to its amend ment gave power to the Central Government to appoint, among others, the Income Tax Officers of Class I service, the provisions of sub section (2) thereof vested power in the Commissioner to appoint as many ITOs of Class II service as might be sanctioned by the Central Government.
It was, however, contended that in spite of these clear provisions of sub sections (1) and (2) of the unamended Section 117, they had to be read down to deny the power to appoint ITOs of Class II or Group B.
This was so because, according to the petitioners, the provisions of Sections 116, 118 and 124 as they stood then, only referred to Income Tax Officers as one class and did not make a distinction between them as Class I and Class II Officers.
In the first instance, it is an elementary rule of the interpretation of Statutes that no provision of a statute should be read as redundant.
No reason is ascribed by the petitioners to ignore the specific provisions of Section 117(1) and (2) except that the two classes of officers mentioned therein were not referred to in the other provisions of the Act.
Secondly, when the legislature had made a special provision for the two classes vesting in two different authorities the power to appoint them, it must be presumed that the legislature had a defi nite objective in view.
While making the provision for Class II ITOs, the legislature seemed to be aware of the fact that there may be different categories of assessees and assessments requiring different standards of equipment, skill and talent to deal with them, and it was therefore necessary to invest the Central Government with the power to appoint and to sanction the appointment of the different classes of officers to meet the requirement.
This power vested by the legislature to appoint different classes 1020 of officers carried with it also the power to demarcate the duties, functions and responsibilities of the two.
Whether in fact there is such a division of powers, functions and responsibilities or not, has nothing to do with the validity of the power to make the classification.
If in spite of such classification, the different classes in fact exercised the same powers and performed the same duties and functions, it may invite abolition of the classification.
But it cannot invalidate the power to classify.
Hence, we are not im pressed by the contention that the legislature had no power to classify the Income Tax Officers into two classes under the unamended provisions of the Act.
If therefore the legislature had itself classified the Officers into two grades or categories and given the power to the Government to appoint, and/or to sanction their appointments, as the case may be, under the unamended provi sions of the Act, it can hardy be argued that the amending Act was passed mala fide to destroy the cause of action in the present petitions.
This is apart from the fact that no legislation can be challenged on the ground that it is mala fide.
Hence the challenge to the amended provisions of the Act and the Rules, notifications, circulars and orders issued pursuant to it, must fail.
1t is not further suggest ed that the Rules, notifications, circulars, orders etc.
are ultra vires the Act.
There is, therefore, no merit in this attack.
Coming now to the second contention 'which is the main foundation of the present petitions, namely, that the Officers of the two classes in fact perform the same func tions and duties, and exercise the same powers and have the same jurisdiction and, therefore, there is no justification for the said classification, it is first necessary to exam ine the facts relied upon by the petitioners in support of this contention.
According to the petitioners, the Officers of the two classes were always performing the same duties and function, and exercising the same power and jurisdic tion.
Their posts were also interchangeable.
In fact, many of the Officers belonging to Group B functioned as Officers belonging to Group A. Even after the amendment, which has demarcated the jurisdiction of the two classes on the basis of income, the basic function of making the assessment remain the same and there is no change in the nature of job performed by them.
It is also submitted that once a case comes under the jurisdiction of an Income Tax Officer, the Officer continues to exercise his jurisdiction over the said case even if in subsequent years the same assesee files a return of higher income.
Hence, the very classification of Officers based on the return of income is totally arbitrary and violative of the petitioners ' fundamental rights under Articles 14 and 16 of the Constitution.
It is 1021 further pointed out that in fact the number of regular promotions from Group B to Group A during the period 1973 to 1982 were only 585 as against the ad hoc promotions of 1197 during the same period.
Similarly, during the period 1982 to 1985, the number of regular promotions were 262 as against the further ad hoc promotions of 200 during the same period.
This shows that the Income Tax Officers of Group B were doing the work of Officers belonging to Group A in a large number though on an ad hoc basis.
This further shows that although there was a need for regular promotion of the Officers from Group B to Group A, the Government was using Group B Officers in a large number to perform the duties of Group A Officers without giving them regular promotion and was thus maintaining an artificial distinction between the two groups without justification.
As has been stated in the affidavit filed on behalf of respondents 1 & 2, although both Group A and Group B Officers have equal powers, the ITOs of Group A are general ly placed in charge of important wards and cases carrying higher responsibilities, whereas the Officers belonging to Group B are normally entrusted with less important wards and cases.
A large majority of them have to deal with summary assessments only.
It is further pointed out that under the Act, prior to its amendment of 1987, the power to appoint the Officers belonging to Group A, i.e. Class I was vested in the Central Government while the power to appoint Offi cers belonging to Group B, i.e., Class II was vested in the Commissioner of Income Tax.
The same distinction in the appointing authorities continues even after the amendment.
The Assistant Commissioner, i.e., the former ITOs of Group A are appointed by the Central Government whereas the power to appoint Income Tax Officers, i.e., the former Group B Offi cers, can be vested by the Central Government in the Board or a Director General or a Chief Commissioner or a Director or Commissioner.
The respondents further deny that there was ever an interchangeability of the two posts, and contend that they always remained separate.
They point out that in fact, the post of Group A. Officers has two grades, i.e., Grade I and Grade II.
Grade II post of Group A has always been a promotional post for Group B Officers.
Their scales of pay have also been different and have been fixed keeping in view the distinction between the two Groups which belong to two different cadres.
This Court had in fact in K.M. Bakshi vs Union of India, AIR 1962 SC 1139 gone into the matter pertaining the distinction between the two Groups of Officers, and had upheld the said classification.
There is further no dispute that the posts of Income Tax 1022 Officer Group A junior scale or Grade II, are filled 50% by direct recruitment through the Civil Service Examination held by the Union Public Service Commission and 50% by promotion on the basis of selection by the Departmental Promotion Committee from Income Tax Officers Group B who have rendered not less than 5 years ' service in that post.
The appointments to the posts of Income Tax Officers Group B are made 100% by promotion from Income Tax Inspectors who belong to Grade C or Class I11 service.
The appointment to the posts of Income Tax Inspectors are made 33 1/3% by direct recruitment and 66 2/3% by promotion from the lower group of Class C service.
The result has been that the present strength of about 2,500 ITOs of Group B consists of all but 185 promotees (who were recruited ad hoc only in one year, i.e., in 1969) from the lower GroupC posts.
What is more, as pointed out above, the Income Tax Officers Group B, and Income Tax Officers Group A junior scale, belong to two different cadres and not to the same cadre of Income Tax Officer.
Hence those who joined the lower Group C service cannot claim equality in conditions of service with Group A Officers who are either recruited directly on the basis of the Civil Services Examination or are promoted from Group B on the basis of seniority cum merit.
It is also pointed out on behalf of the respondents that after changing the designation of the Income Tax Au thorities and designating the former ITOs of Group A and Group B as Assistant Commissioners and ITOs respectively, their jurisdictions have been regulated.
The basic principle followed in demarcating the jurisdiction of the two classes of Officers is the quantum of the return of income/loss as on 1st April of the Financial Year.
If the return of income/loss is of Rs.5 lakhs and above, it goes to the Deputy Commissioner; if of Rs.2 lakhs and above but below Rs.5 lakhs, it goes to the Assistant Commissioner (i.e., the former Group A Officers); and if it is below Rs.2 lakhs, it goes to the Income Tax Officers (the former Group B Offi cers).
It is also pointed out that the Government has since issued a notification on March 30, 1988 making the Income Tax Officers and Tax Recovery Officers subordinate to the Assistant Director or Assistant Commissioner.
Further, whereas Assistant Commissioners of Income Tax (former ITOs of Group A) are now empowered to writ off a sum upto Rs. 1,000 if they are convinced that the amount is irrecovera ble, in similar circumstances, the ITOs, i.e., former Offi cers belonging to Group B, are empowered to writ off an amount upto Rs.500 only.
When the assessment is made under sub section (3) of Section 143 or Section 147 for the rele vant assessment year, the power to issue notice under Sec tion 148 is vested only in an Assessing Officer of the rank of 1023 Assistant Commissioner or Deputy Commissioner.
Section 274(2) of the Act prescribes monetary limits regarding the powers of the Income Tax Officer and Assistant Commissioner for imposing penalty.
That provision shows that Income Tax Officer (i.e., the former Group B Officer) has authority to impose penalty upto Rs. 10,000, whereas the Assistant Com missioner (former Group A Officer) has the authority to impose penalty upto Rs.20,000 without the prior approval of the Deputy Commissioner.
The material placed on record by the respondents, thus, shows that the distinction between Group A and Group B Officers has been in existence from the very beginning.
The distinction has been maintained statutorily with distinct powers and jurisdiction, hierarchical position and eligibil ity qualifications.
The sources of their appointment and the authorities vested with the power to appoint them have also been different.
The distinction between the two further has been made on the basis of the class of work and the respon sibility entrusted to each.
The work which is of more than a routine nature and which involves a detailed investigation either on account of the class of the assessees or of the complexities of the returns filed, is entrusted to the Officers belonging to Group A (now Assistant Commissioners) while the assessment work of a summary or routine nature or of the assessees filing routine returns or returns involving simple transactions is entrusted to Officers belonging to Group B (now ITOs).
Although, therefore, apparently the outfit of the function and its procedural part is the same, in practice the assessments differ from assessees to asses sees, summoning different degrees of knowledge, application of mind, resourcefulness, acumen and taken to scrutinize them.
Hence, merely because sometimes, on account of the exigencies of work the Officers belonging to Group B were entrusted with the work of the Officers of Group A, it cannot be claimed that the two posts are of an equal rank.
The handling of the higher category of work may entitle an Officer of the lower rank to emoluments of the higher post.
But that cannot obliterate the distinction between the two posts.
To accept the plea of the petitioners to equate the two posts or to merge them on that account, is to negate the whole statutory scheme and also to ignore the fact that the Group B post (i.e., the present post of the ITO) is an intermediate post between that of the Income Tax Inspector and the Group A post (i.e, the present post of Assistant Commissioner) which is a promotional post for Officers belonging to Group B.
The Group A post is further a selec tion post and the promotee has to satisfy certain qualifica tions to be eligible for being considered for the said post.
The two posts, therefore, always belonged to 1024 two different cadres carrying different scales of pay and other service conditions.
Thus, this is not a case of the two posts being equal in status or of belonging to the same class.
The distinction between the two is ordained by the Statute and is necessary for its proper implementation.
By the very nature of the operation involved, the administra tion has to have the power to classify the work and to appoint personnel with different skill and talent to execute the different types of work.
The legislature being mindful of this need has deliberately created the two classes of officers as is evident from the provisions of Section 117 even prior to its present amendment.
Even after the amend ment the said distinction has been maintained.
The fact that this distinction has all along been real and not nominal is clear from the difference in the power and jurisdiction statutorily vested in the two classes of Officers.
Hence, the intention of the legislature to have the two classes of Officers to discharge different types of work is manifest and in practice the distinction has always been maintained.
It is only when the exigencies of the work required that some officers belonging to Group B were promoted on ad hoc basis to the posts of Group A officers.
Such exigencies occur in every organisation, and to cope up with them the authorities have to improvise.
That, however, cannot equate the two unequal posts.
The very same argument for equating these two class es of Officers was advanced in K.M. Bakshi vs Union of India, (supra).
It was pointed out by this Court in that case that the Income Tax services were reconstituted by an order of the Government of India dated September 29, 1944, and later on in 1953, Section 5 of the Income Tax Act was amended to give effect to this reconstitution.
One of the features of the reconstitution was that in place of one class of Income Tax Officers two classes came into exist ence, namely, Class I and Class II ITOs.
Class I Officers were eligible to be promoted to the higher post of Commis sioners and Assistant Commissioners, and Class II Officers could obtain such promotion only after having first reached the status of Class I Officers.
A percentage of the vacan cies in the posts of Class I Officers was to be filled by promotion of Class II Officers, and the rest by direct recruitment.
It was also pointed out that Class I post being a promotional post for Class II Officers, the two posts were not equal.
Dealing with the argument of equal pay for equal work, the Court pointed out that if that argument were to be accepted literally, even the incremental scales of pay fixed dependent upon the duration of an Officer 's service could not be justified.
It appears that in that case the Court was called upon to deal with a bland assertion that the two posts were equal and it was not contended that 1025 the duties and functions discharged by them were equal in nature and hence the Court had no occasion to deal with the said contention.
We have already pointed out above that there is a difference in the nature, scope and responsibili ty of the duties entrusted to the two Officers justifying the differentiation.
This is apart from the fact that the matter has now been set at rest by the Rules, notifications, circulars and orders which have been issued demarcating clearly the functions and jurisdiction of the two.
As has been held in Federation of All India Customs and Central Excise Stenographers (Recognised) & Ors.
vs Union of lndia & Ors.
; , the differentiation in two classes can be justified on the basis of "the nature and the type of the work done . .
The same amount of physical work may entail different quality of work, some more sensitive, some requiring more tact, some less it varies from nature and culture of employment.
The problem about equal pay cannot always be translated into a mathemat ical formula.
If it has a rational nexus with the object sought for . . a certain amount of value judgment of the administrative authorities who are charged with fixing the pay scales has to be left with them and it cannot be interfered with by the Court unless it is demonstrated that either it is irrational or based on no basis or arrived mala fide either in law or in fact".
The Court there found that in the light of the averments made and the facts point ed out, it was not possible to say that the differentiation there was based on no rational nexus with the object sought to be achieved.
The Court noted that the differentiation was justified on the dissimilarity of the responsibility, confi dentiality and the relationship with public etc.
though there was similarity in the functional work.
The court further observed there that often the difference in the functions and the responsibilities is a matter of degree and the administration is required to make a value judgment while classifying the posts and fixing the different condi tions of service for them.
So long as the value judgment is made bona fide, it is not questionable.
The same view has been reiterated by this Court in V. Markendeya & Ors.
vs State of Andhra Pradesh & Ors.
, ; 44.
At the cost of repetition, we may state that in the present case the distinction between the two posts is made by the statute itself and that distinction has been in existence since long.
The appointing authorities of the two posts are different.
In fact, the Group A post (the present post of the Assistant Commissioner) had two grades, viz., Grade I and Grade II, and Grade II post was a promotional post for 1026 officers belonging to Group B (the present ITO).
The nature of work entrusted to the two classes of posts, the responsi bility which goes with it and the power and jurisdiction vested in them vary.
The mere fact that some Group B offi cers are capable of performing the work of Group A officers and in fact on some occasions in the past they were appoint ed ad hoc or otherwise, to discharge the work of Group A officers cannot equate the two posts.
Such a demand, to say the least, is irrational for if this contention is accepted, in no organisation the hierarchy of posts can be justified.
After the 1987 Amendment, further, the situation has changed and the duties, functions, jurisdiction and power of the officers have been rationalised clearly demarcating the spheres of work of the two.
In an organisation of this kind, with contrywide offices dealing with various categories of assessees and incomes, some dislocation, functional overlap ping and want of uniformity in the assignment of work during some period is not unexpected; and it does appear that during some period, the situation in the Department was out of joint.
That is why steps were taken to straighten it out by amending the Act and making the rules and issuing the relevant notifications.
circulars and orders.
If during this period on account of the exigencies of service, some ad hoe appointments of Group B officers were made to Group A posts, Grade II or Group B officers were required to perform the same functions and discharge the same duties as Group A officers, they can at best claim the emoluments of Group A officers, but certainly not the equalisation of the two posts on that account.
Since the alleged equality of posts was the founda tion of the other contentions raised in the petitions, the said contentions must also fail and need not be dealt with separately.
The contentions which are common to the earlier petition have already been dealt with.
In the circumstances, we find no substance in these petitions.
The petitions are, therefore, dismissed and the rule granted in each is discharged with no order as to costs.
Before parting with these petitions, we cannot help observing that although the issues raised in a11 these petitions were set at rest by this Court conclusively earli er, the petitioners thought it necessary to tax the precious time of the Court by approaching it once again on grounds which were least justified.
We hope and trust that this decision puts a final lid on the alleged grievances of the petitioners and no new pretexts are found hereafter to take up the same contentions under other garbs.
Y.LaI Petitions dismissed.
| The petitioner tenant was let out the demised premises by the landlord for a period of three years, with permission of Controller under section 21 of the Delhi Rent Control Act, the landlord died before the expiry of period of tenan cy.
After the expiry of the period, his legal representa tives made an application for recovery of possession.
This application was resisted by the tenant on the ground that proceedings for recovery of possession under section 21 could not be initiated and continued by legal representa tives of the landlord who had obtained permission.
Having failed before the High Court, the petitioner has filed petition for special leave.
It was contended on his behalf that 'landlord ' in second part of section 21, enti tling him to claim vacant possession, should be confined to the person who had obtained permission on the premise that he "does not require the whole or any part of the premises for a particular period.
" Dismissing the special leave petition, this Court, HELD: (1) Section 21 is a self contained code.
The purpose and objective of its enactment as provision of short duration tenancy or periodical tenancy in Rent Control Act of Delhi is unique amongst such legislations.
What was unique of it was not short duration tenancy but a fresh look on eviction.
[27G; 28G] Shiv Chand Kapoor vs Amar Bose, ; , referred to.
(2) Since section 21 is an exception to section 14 and it mandates restoration of possession, "notwithstanding any other law" it has to be construed strictly and against any attempt to frustrate it.
[28G] 26 (3) Recovery of possession under section 21 is not hedged, by any inquiry or opportunity, if permission is not challenged on any of the exceptions which have been carved out by courts, obviously to uphold fairness and honesty the core of our jurisprudence.
Right to get vacant possession is thus absolute.
[29D] S.B. Noronah vs Prem Kumari Khanna, ; ; V.S. Rahe vs Smt.
Rem Chamben, ; Shiv Chand Kapoor vs Amar Bose, ; , referred to.
(4) The expression "for the time being" in section 2(e) makes it clear that landlord has to be understood in presen ti.
That is anyone entitled to receive rent is the landlord.
It does not visualise, past or future landlord.
Therefore, the word "landlord" on plain reading of Section 21 does not warrant construction of the word in any other manner.
[29G] (5) Constructionally, Section 21 is in two parts: one creation of short term tenancy and other its execution after expiry of time.
Both stand on their own and operate inde pendently.
Non requirement of premises for time being fur nishes basis for entering into agreement for periodical tenancy.
Truth of it or its genuineness are relevant consid erations for granting permission.
And the permission granted continues unabated, unaffected irrespective of variation in requirement.
[30D E] (6) Vacation is not linked with landlord but with time.
Expiry of it obliges tenant to vacate.
If he does not then whosoever is the landlord at the time of afflux of tenancy may approach Controller for putting him in vacant posses sion.
Death of landlord does not either shorten or enlarge period nor the consequences envisaged are altered or affect ed.
[30F] (7) The doctrine of actio personalies moritur cum per sonna does not apply to Rent Control Acts.
Its applicability was generally confined to actions for damages for defama tion, seduction, inducing a spouse to remain apart from the other and adultery.
[31D C] Supreme Bank vs
P.A. Tindulcar; , ; Shanti Lal Thakur Das & Ors.
vs Chaman Lal Magan Lal Lala, Phool Rani vs Naubat Rai, , referred to.
(8) An action for eviction abates only if the cause of action does 27 not survive.
The cause of action for granting permission was the nonrequirement by the landlord of the premises for the time mentioned in the agreement whereas cause of action for eviction is non vacation by the tenant after the expiry of period.
Therefore, it is immaterial who is the landlord at the time when the action for vacation arose.
[31F G] (9) Permission in the instant case was granted on state ment of parties in regard to their necessity or non require ment of the premises.
Such necessity to let out or non requirement by the landlord could not be brought into those exceptions which invalidated permission.
Therefore, death of the landlord was immaterial as even the reason for letting out did not die with death of landlord.
[32A B]
|
vil Appeals Nos.
1358 61 of 1979.
From the Judgment and Order dated 6.9.78 of the Allaha bad High Court in I.T.R. No. 114/78.
Ahuja, K.C. Dua and Miss. A. Subhashini for the appel lants.
842 S.C. Manchanda, Mrs. A.K. Verma and Joel Pares for the respondent.
The Judgment of the Court was delivered by PATHAK, CJ.
These appeals by special leave are directed against the judgment of the High Court at Allahabad dispos ing of an Income tax Reference in favour of the assessee and against the Revenue.
The assessee is a co operative society running a sugar mill.
For the assessment year 1968 69 it claimed payment of interest amounting to Rs. 1,81,7 16.
This was interest paid to the accounts of its members, who had deposited certain amounts with the assessee in accordance with Bye law No. 50 and it was debited by the assessee to its profit and loss account.
In the initial years of the working of the Society, certain partly paid shares were allotted to its farmer members.
With a view to inducing these members to make further contribution to the capital of the Society, bye law No. 50 was incorporated in the Bye laws of the Society.
The bye law as amended provides: "50.
There shall be established a 'Loss Equalisation & Capital Redemption Reserve Fund ' in the society.
Every producer shareholder shall deposit every year a sum not less than 0.32 paise and not more than 0.48 paise per quintal of the sugarcane supplied by him to the society, as may be determined by the Board until the shares to be subscribed by the members are fully paid up.
The amount standing to the credit of this fund presently or to be credited in future, shall be used for making the partly paid shares fully paid up.
The balance of the said amount shall be refunded to the members soon after the present loan from the Industrial Corporation of India is repaid, whereafter the fund shall cease to exist.
" The money available in the 'Loss Equalisation and Capi tal Redemption Reserve Fund ' was utilised by the assessee for the purpose of its business.
A part of the amount was also utilised for converting the partly paid up shares into fully paid up shares.
On 8 September, 1967 the Board of Directors of the Society decided in their meeting to pay interest at 6% on the balance available in the aforesaid Fund to its various members to whom the balance money be longed.
It was on this account that the Society claimed an amount of Rs. 1,18,716 for the assessment year 1968 69.
843 The claim was rejected by the Income Tax Officer.
He took the view that the amounts deposited by the members of the Society in the 'Loss Equalisation and Capital Redemption Reserve Fund ' did not represent loans taken by the assessee but constituted a contribution by the members to convert partly paid up shares into fully paid up shares and they could not be considered as capital borrowed for the purpose of its business.
He held that section 36(1)(iii) of the Income tax Act did not apply to such interest and that it was not admissible as a deduction in computing the total income of the assessee.
For the assessment years 1969 70 to 1972 73 the claim to deduction on this account was as follows: 1969 70 .
Rs. 1,34,609 1970 71 .
Rs. 1,34,609 1971 72 .
Rs. 1,34,609 1972 73 .
Rs. 1,34,609 The Income Tax Officer took the same view for these assess ment years as he did for the assessment year 1968 69.
In appeals preferred by the assessee the Appellate Assistant Commissioner of Income tax confirmed the disallow ance for the assessment year 1968 69 on the ground that Bye law No. 50 did not provide for the refund of the amount standing to the credit of the members at any time before the payment of the loan to the Industrial Finance Corporation of India, that the loan was still outstanding on 30 June 1967, the last day of the previous year relevant to the assessment year 1968 69, and moreover the Bye law did not provide for payment of interest at all.
He observed that the Directors could not pay any interest unless the Bye law was amended by the members of the assessee.
He observed that the interest paid must be regarded as an exgratia payment to the producer members of the society who had contributed to the Fund, and that it was not made for the purpose of the business of the assessee or on the ground of commercial expediency.
The same order was passed by the Appellate ASsistant Commissioner on the appeals for the remaining years.
In second appeals filed by the assessee for all the assessment years the Income Tax Appellate Tribunal held that the amount standing to the credit of the 'Loss Equalisation and Capital Redemption Reserve Fund ' which was utilised by the assessee for the purpose of its business represented moneys borrowed for the purpose of its business and that interest paid on such moneys was eligible for deduction under 844 section 36(1)(iii) of the Income tax Act, 1961.
The Appellate Tribunal negatived the contention of the Revenue that only such deposits could constitute 'capital borrowed ' within the meaning of section 36(1)(iii) of the Act which were initially borrowed with the stipulation to pay interest thereon.
The Appellate Tribunal observed that the expression 'capital borrowed ' had not been defined in the Income tax Act and that its ordinary meaning would have to be gathered in construing the meaning of section 36(1)(iii).
It said that it was not necessary that borrowing must contain an element of payment of interest and that even if a deposit was made by the members of the society which was utilised for the pur poses of the business of the assessee, the funds represented by such deposit would be 'capital borrowed ' for the purposes of section 36(1)(iii) of the Act.
The Appellate Tribunal also recorded that it was not disputed that the deposits were taken for the purposes of the business.
In the circum stances, the Appellate Tribunal held that when the Board of Directors of the assessee considered it proper to pay inter est on those deposits, such interest was admissible under section 36(1)(iii) of the Act.
During the heating of the appeals for the assessment years 197071 and 197 1 72, it was pointed out by the Revenue that the auditors of the assessee had observed in their audit report that the payment of interest on the 'Loss Equalisation and Capital Redemption Reserve Fund ' should not have been made by the assessee in view of section 57 of the Uttar Pradesh Co operative Societies ' Act, which reads: "Fund not to be divided: Except as otherwise specifically provided in this Act, no part of the Funds other than the net profits of a co operative society shall be paid by way of bonus or dividend or otherwise distributed among its members: Provided that a member may be paid remuneration on such scale as may be laid down in the bye laws for any services rendered by him to the co operative society." The Appellate Tribunal held that section 57 was not relevant as the payment of interest to the shareholders, on the amounts deposited by them, did not represent any payment by the Society by way of bonus or dividend or otherwise, of any part of its funds other than its net profits.
The Appellate Tribunal also observed that the interest paid by the asses see to the 'Loss Equalisation and Capital Redemption Reserve Fund ' was met from out of the net profits of the assessee.
It was found that the assessee had sufficient income out of which the interest 845 could be paid by it.
For these reasons, it held that the payment of interest was not affected by section 57 of the Uttar Pradesh Co operative Societies Act.
At the instance of the Revenue the following two ques tions in respect of the five assessment years were referred by the Appellate Tribunal to the High Court at Allahabad for its opinion.
Whether the credit balances in the Loss Equalisation and Capital Redemption Reserve Fund which were actually used by the assessee for the purposes of its business represented capital borrowed by the assessee for the purpose of its business within the meaning of section 36(1)(iii) of the Act? 2.
Whether the Tribunal was right in law in allowing inter est on such balances standing to the credit of the Loss Equalisation and Capital Redemption Reserve Fund as a deduc tion in computing the total income of the assessee?" A further question common to the assessment years 1969 70 to 1972 73 was also flamed.
It reads: "Whether the Tribunal was right in law in holding that the impugned payments of interest did not contravene the provi sions of section 57 of the Uttar Pradesh Co operative Societies Act, 1965?" The High Court agreed with the view taken by the Appel late Tribunal and answered the questions in favour of the assessee and against the Revenue.
Before us, the parties have confined themselves to the first two questions and it is requested that we need not consider the third question.
In these appeals the question is whether the claim to deduction under section 36(1)(iii) of the Income tax Act can be allowed.
Section 36(1)(iii) of the Act provides that in computing the income chargeable under the head 'profits and gains of business or profession ' a deduction shall be al lowed of the amount of interest paid in respect of capital borrowed for the purposes of the business or profession.
Can it be said that the credit balance in the 'Loss Equalisation and Capital Redemp 846 tion Reserve Fund ' represents capital borrowed by the asses see for the purposes of its business? What is 'borrowed money ' has been construed by the Courts in England in a number of cases.
In Port of London Authority vs Commissioner of Inland Revenue, Lord Stemdale, M.R. observed that in order that there be borrowed money there must be a borrower and a lender, and later, when the Revenue took the case in appeal to the House of Lords, the House of Lords laid down in Commissioners of Inland Revenue vs Port of London Authority, that to constitute bor rowed money there must be "a real borrowing and a real lending".
Again in Inland Revenue Commissioners vs Rowntree & Co. Ltd., , the Court of Appeal considered the meaning of the words 'borrowed money ' and observed that the words should not be given a strained meaning and that it should be considered whether in ordinary commercial usage the relationship was that of a borrower and a lender and the transactions were loan transactions.
These cases were relied upon by the Gujarat High Court in Commis sioner of Incometax, Gujarat Iv.
Rajkot Seeds, Oil & Bullion Merchants Association Ltd., in support of the conclusion that on the facts of the case before the High Court there was no relationship of borrower and lender between the Rajkot Seeds and Oil and Bullion Merchants Association and its members in so far as deposits by the members were concerned.
It was held that the amounts were deposited by way of security taken for the due performance of the, obligation of a member under the Rules of the Asso ciation for the discharge of his obligations to the Associa tion and to the other members of the Association.
There was no loan or borrowing at all.
This question had in fact been considered by the Calcutta High Court as long ago as Commis sioner of Excess Profits Tax, Central, Calcutta vs Bhartia Electric Steel Co. Ltd., in the context of the third proviso to Rule 5A of Schedule I to the Excess Profits Tax Act, 1940.
The money in question in that case had been obtained by the issue of shares, and it was held that it could not possibly be said that the persons who had taken up the deferred shares had ever intended to grant a loan or that the Company which had obtained money on the shares had ever intended to borrow.
This Court in Bombay Steam Navigation Co. (1953) Private Ltd. vs Commissioner of Income tax Bombay, , was dealing with a claim to deduction under section 10(2)(iii) of the Indian Income tax Act 1922 in a case where under an agreement certain assets were to be taken over by the assessee from the Scindia Steam Navigation Company Ltd., and part of the consideration was paid by the assessee while the balance remained unpaid.
For agreeing to deferred payment of the balance of the consideration, the Scindias 847 were to be paid interest.
This Court observed: "An agreement to pay the balance of consideration due by the purchaser does not in truth give rise to a loan.
A loan of money undoubtedly results in a debt, but every debt does not involve a loan.
Liability to pay a debt may arise from diverse sources, and a loan is only one of such sources.
Every creditor who is entitled to receive a debt cannot be regarded as a lender.
If the requisite amount of considera tion had been borrowed from a stranger, interest paid there on for the purpose of carrying on the business would have been regarded as a permissible allowance, but that is wholly irrelevant in considering the applicability of clause (iii) of sub section (2) to the problem arising in this case.
The legislature has under clause (iii) permitted as an allowance interest paid on capital borrowed for the purposes of the business: if interest be paid, but not on capital borrowed, clause (iii) will have no application .
" The point was also discussed by this Court in Madhav Prasad Jatia vs Commissioner of Income tax, U.P., ; where the question was whether the interest claimed under section 10(2)(iii) of the Indian Income tax Act, 1922 related to borrowing for the purpose of the business.
In the present case, Bye law No. 50 indicates that deposits were to be made by the producer members in the 'Loss Equalisation and Capital Redemption Reserve Fund ' for the purpose of making the partly paid shares fully paid up, and it was understood that the balance of the amount would be applied to the loan taken from the Industrial Finance Corporation of India and thereafter whatever remained would be refunded to the depositing members resulting in the extinction of the Fund.
It is apparent that the deposits made by the members cannot be regarded as loans advanced by the members to the assessee.
The moneys deposited represent ed contribution by the members for converting the partly paid up shares into fully paid up shares and thereafter for delaying the loan taken from the Industrial Finance Corpora tion of India.
Any balance remaining was to be refunded to the members.
The circumstances that there was no certainty that any balance would remain for refund to the members would in itself indicate that the deposits could not be regarded as loans.
A loan necessarily supposes a return of the money loaned.
Even under the original Bye law No. 50, which provided for deposits by the members to the 848 'Loss Equalisation and Capital Redemption Reserve Fund ', it was contemplated that the deposits would be accumulated and be utilised for repayment of the initial loan taken from the Industrial Finance Corporation of India and thereafter for redeeming the 'Government share ', and the balance of the deposit after meeting losses would be converted into share capital and each producer member would be issued shares of the assessee.
There was never any intention between the assessee and its members to treat the deposits made by the members as loans and that the relationship between the assessee and the members should be that of borrower and lender.
The High Court erred in holding that the claim to deduction on account of interest paid by the assessee to its members was admissible under section 36(1)(iii) of the Act.
It is urged by learned counsel for the assessee that if the claim to deduction cannot be rested on section 36(1)(iii) of the Act, it should be regarded as admissible under section 37 of the Act.
We are not satisfied that all the facts necessary for considering a claim for deduction under section 37 are before us.
It will be noticed in Madhay Prasad Jatia (supra) that the question of law expressly took in the claim to deduction not only with reference to section 10(1)(iii) but alternatively with reference to section 10(2)(xv) of the Indian Income tax Act, 1922.
Whether or not it is still open to the assessee to raise that question before the Appellate Tribunal when the case goes back to it for disposing it of in conformity with the opinion expressed by this Court in these appeals is a question on which we propose to express no view at this stage.
In the result the appeals are allowed, the impugned judgment of the High Court in all these cases is set aside and the first and the second questions framed by the Appel late Tribunal are answered in the negative, in favour of the Revenue and against the assessee.
There is no order as to costs.
R.S.S. Appeals allowed.
| Reliance Industries Ltd. (RIL) and Reliance Petrochemi cals Industries Ltd. (RPL) are inter connected and repre sented Companies in the large industrial house known as Reliance Group.
RIL had promoted RPL.
RPL was incorporated on 11.1.1988 and has been a cent percent subsidiary of RIL.
It was claimed that RPL would set up the largest petrochemi cal complex in India with foreign collaboration.
RPL pro posed to issue convertible debentures for raising capital for the project.
The Controller of Capital Issues (CCI), who functions under the had, on 15th September, 1984 by way of press release issued certain non statutory guidelines for approval of issue of secured con vertible and non convertible debentures.
These guidelines were subsequently amended on 8.3.1985.
Guidelines were also given by the CCI for issue of convertible cumulative prefer ence shares, and for employees stock option scheme.
RPL had, on 4.5.1988, made an application to CCI for issue of debentures of the face value of Rs.200 crores fully convertible into equity shares on the following terms: A sum of Rs. 10 being 5% of the face value of each deben tures by 44 way of first conversion immediately into one equity share at par on allotment; (ii) A sum of Rs.40 being the 20% of the face value of each debenture by way of second conversion after three years but before four years from the date of allotment at a premi um to be fixed by the Controller of Capital Issues; (iii) The balance of Rs. 150 representing 75% of the face value of each debenture as third conversion after five years but not later than seven years from the date of allot ment at a premium to be fixed by the Controller of Capital Issues.
The CCI accorded his sanction for the issue of deben tures on 4.7.1988.
However, the sanction was amended on 19th July, 1988.
The amendment put a non transferability condi tion on the preferential share holders of RPL.
It was limit ed to the corporate shareholders of RIL and relaxed for individual share holders of RIL.
The amendment also stipu lated that the Company should obtain prior approval of the Reserve Bank of India, Exchange Control Department, for the allotment of debentures to the non residents as required under the Foreign Exchange Regulation Act, 1973.
On 26th July 1988, there was another amendment which restricted the transfer of shares allotted to the employees of RPL and RIL.
The consent orders issued by the CCI were challenged in various High Courts, by way of writ petitions and a suit.
Some High Courts issued injunctions restraining the issue of the debentures.
This Court, on 19th August, 1988, restrained the afore said issuance of injunctions by the High Courts, and issued directions for the issue of debentures.
The cases pending in various High Courts were transferred to this Court.
In these transferred cases the consent orders of the CCI were challenged mainly on the grounds that: Despite the fact that RPL did not fulfil the require ments of a proper application and the necessary consent and approval, RPL 's application was.
entertained and processed by the CCI with undue expedition and without application of mind; The guidelines issued by the CCI himself were deviated from; 45 The CCI had processed the application of RPL in a hurry, within two months; The CCI did not take into account the fact that RIL had earlier issued debentures for manufacture of identical products; The CCI failed to note that RPL did not have the neces sary licences, consents and approvals, from the relevant departments of the Government of India; The CCI failed to consider the financial soundness and feasibility of the project of RPL; The CCI did not take adequate care to examine the terms of the issue and had blindly accepted the terms as proposed by RPL; RPL in its brochures has misled the public by describing the debentures as fully secured convertible debentures; The security for the debentures was inadequate; RPL has been permitted to create securities which would have priority over the securities available to the present debenture holders and without their consent; RPL has misled the public in that in its prospectus it had stated that security would be provided to the satisfac tion of the trustees; The CCI had failed to examine whether RIL had misused the funds raised on its debentures; There has been a discrimination in favour of RIL in that RIL would be entitled to allotment of shares of the face value of Rs.57.50 crores, whereas only 5% of the investment of the debenture holders could be converted; Whereas RIL 's loan of Rs.50 crores would be converted into shares at par, the debenture holders would have to pay premium to be fixed by the CCI at the time of second conver sion of 20% of the debentures; and In the application filed by RPL, no shares were ear marked for the employees of RIL and RPL, but ultimately it was done.
46 On behalf of the petitioners, it was contended inter alia that the issue of the debentures in question was detri mental to public interest, and that public interest had been ignored.
On behalf of Respondents it was argued that the sanction issued by the CCI had been genuine and valid, and that no irregularity had been committed.
It was submitted that it was a misconception that the CCI had not followed his own guidelines relating to sanction of the issue of the deben tures, and it was incorrect to say that there had not been proper security.
Dismissing the writ petitions and the suit, this Court, HELD: 1.1.
The CCI functions under the , an Act to provide for control over the issue of capital.
The purpose of the Act must be found from the language used.
The scheme and the language used, strict ly speaking, do not indicate any positive role for the CCI in discharging his functions in respect of grant of sanc tion.
But it has to be borne in mind that he is a part of State instrumentalities committed to the endeavours of the constitutional aspiration to secure justice social and economic and also under Article 39(b) & {c) of the Consti tution to ensure that the ownership and control of the material resources of the community are so distributed as to best subserve the common good and that the operation of the economic system does not result in concentration of wealth and means of production to the common detriment.
Yet, every instrumentality and functionary of the State must fulfil its own role and should not trespass or encroach/entrench upon the field of others.
Progress is ensured and development helped if each performs his role in the common endeavour.
[90B; 124F H; 125A] 1.2.
In the changed socio economic conditions of the country one who is charged to ensure capital investment has to perform a social role in capital formation and to protect the interest of the capital market, and to oversee the growth of industrialisation and investment in such a manner as to ensure employment and demand in the national economy, to prevent wasteful investment and to promote sound methods of corporate finance.
In recent years, there has been a vast increase in the number of members of public who have surplus money to invest.
The size of the issues has assumed macro proportions and the type of investments are also more so phisticated.
Entrepreneurs with expert legal assistance could easily trap unwary investors and the development of a public interest lobby that can scrutinise issues carefully and advise prospective investors may be desirable.
[125A, B, F, G] 47 1.3.
The guidelines are only a guide and nothing more.
The application of mind by the CCI before sanction must be in the perspective for which he is enjoined by the Act.
He must endeavour to secure a balanced investment of the coun try 's resources in industry, agriculture and social serv ices.
The Controller should perform the role of social control and fulfil the social purpose in conjunction with other authorities and functionaries.
It is necessary for him in the discharge of his functions to ensure that there is not too much concentration of particular industries in particular areas, and that there is a scientific development and proper investment in key and core projects.
[125C D] 1.4.
The duties of the CCI have to be construed in the context of the above, particularly when there is no clear cut delineation of their scope in the enactment.
This is also reinforced by the expanding scope of the guidelines issued under the Act from time to time and the increasing range of financial instruments that enter the market.
The responsilbilities of the CCI in this direction should not be widened beyond the range of expeditious implementation of the scheme of the Act and should, atleast be restricted and limited to ensuring that the issue to which he is granting consent is not, patently and to his knowledge, so manifestly impracticable or financially risky as to amount to a fraud on the public.
While it is true that some procedure may have to be evolved to ensure that the CCI gets the benefit of the comments, suggestions and objections from the public before arriving at his decision whether to grant consent or not, and if so, on what terms and conditions, it will be too cumbersome to have a provision that the details of every proposed application for consent should be publicised to the maximum extent by the CCI, that objections and comments from the public should be called for, that there should be public hearing by the CCI and that he should pass a reasoned order granting or withholding consent.
That would delay the whole process of approvals which should be as expeditious as possible.
[93C E; 125G H; 126A B] 1.5.
The CCI has also a role to play in ensuring that public interest does not suffer as a consequence of the consent granted by him.
To go beyond this and require that the CCI should probe in depth into the technical feasibili ties and financial soundness of the proposed projects or the sufficiency or otherwise of the security offered and such other details may be to burden him with duties for the discharge of which he is as yet ill equipped.
[93D F] 1.6.
Being non statutory in character, the guidelines are not judicially enforceable.
A policy is not law.
A statement of policy is not a 48 prescription of binding criterion.
The competent authority might depart from these guidelines where the proper exercise of his discretion so warrants.
In the instant case, the statute provided that rules can be made by the Central Government only.
And according to section 6(2) of the Act, the competent authority has the power and jurisdiction to con done any deviation from even the statutory requirements prescribed, under sections 3 and 4 of the Act.
The CCI applied his mind to the facts of this case and the factors in general.
The CCI did not act malafide or on extraneous consideration.
[122D F; 124B D] Fernandez vs State of Mysore, ; ; R. Abdullah Rowther vs State of Tansport, etc., AIR 1959 SC 896; Dy.
Iron & Steel Controller vs Manekchand Pro prietor; , ; Andhra Industrial Work vs CCI & E, ; ; K.M. Shanmugham vs S.R.V.S. Pvt. Ltd., ; ; Sagnata Investments Ltd. vs Norwich Corpn., ; British Oxygen Co. vs Board of Trade, ; , relied on.
Ramanna Dayaram Shetty vs International Airport Authori ty; , ; Motilal Padampat Sugar Mills vs Uttar Pradesh, ; ; Ex P. Khan, [1981] 1 All.
E.R. 40; IRC vs National Federation, ; ; Reqina vs Preston Supplementary, ; Council of Civil Service Unions & Others vs Minister for the Civil Service, , referred to.
Foulkes ' Administrative Law, 6th Edn.
pp 181 to 184, re ferred to. 2.
As regards the contention that the sanction of the CCI was accorded with undue haste and favouritism, in the first place, an application of this type is intended to be disposed of with great expedition.
In a project of the type proposed to be launched by the petitioner, passage of time may prejudicially affect the applicant and it is not only desirable but also necessary that the application should be disposed of within as short a time as possible.
It is, therefore, difficult to say that the period of two months taken in granting consent in the present case is so short that an inference of haste must follow.
Secondly, on behalf of the Union of India, a list of various applications re ceived and disposed of by the office of the CCI between September, 1987 and September, 1988 has been produced to show that, generally speaking, these applications are dis posed of within a month or two.
It is true that none of these issues is of the same colossal magnitude as the present issue.
Nevertheless, the CCI could hardly keep the application pending merely because the amount involved is heavy.
It is not possible therefore to say merely from the 49 short span of time that there was a hasty grant of consent in the present case.
[73G H;74A C] 3.1.
The consent of the CCI was not accorded in igno rance of the facts pertaining to the G series of RIL deben tures.
The application for consent makes it clear that the petitioner company is a new company promoted by RIL and that RIL was promoting this company to manufacture High Density Polyethylene (HDPE), Poly Vinyl Chloride PVC and Mono Ethyl ene Glycol (MEG).
The application refers to the fact that the total cost of the project was expected to be Rs.650 crores and that this cost had been approved earlier in 1985.
Considering that RPL had come into existence only on 11.1.1988, this was a clear indication that the projects for which the debenture issue was being proposed were projects which had been mooted even by the RIL as early as 1985.
Again in the detailed application form submitted by the RPL it has been mentioned that the RIL had already obtained approval of the Central Government for implementation of the aforesaid projects under the MRTP Act.
In part C of the application form it has been mentioned that the promoter company had made necessary applications for endorsement in favour of the company of the Letter of Intent/Industrial Licences already issued by the Central Government under the Industries (Development & Regulation) Act, 1951, in the name of the holding company, viz., RIL.
It is, therefore, ex tremely difficult to agree that the fact of issue of the earlier series of debentures by the RIL or the purposes thereof could have escaped the notice of the CCI, particu larly, when it is remembered that the issue of G series of debentures by the RIL was quite recent and had also attract ed a lot of publicity.
[74D H; 75C D] 3.2.
The CCI was not performing the role of a social mentor taking into account the purpose of RIL.
If RIL has misutilised any of its funds or the funds had not been utilised for G series, then RIL would be responsible to its shareholders or to authorities in accordance with the rele vant provisions of the .
This aspect does not enter into sanctioning the capital issue for the new project in accordance with the guidelines.
Even if RIL and RPL have to be treated as one for this purpose and the grant of consent for earlier debenture issues in favour of RIL are to be taken into account in judging the necessity of the issues, there is no illegality or irregularity in the grant of consent to RPL.
RIL had not been able to utilise any part of the 'G ' series of debentures on the MEG project as there had been a cost overrun and it was decided to have a wholly owned subsidiary.
Hence the projects are those of the RIL to be implemented by RPL.
The additional finances were needed for the extension, expansion and diversification of 50 the projects originally envisaged.
This is one of the ob jects for which a debenture issue is permissible under the guidelines.
[101F H; 102A, B] 4.1.
So far as HDPE is concerned, it appears that there was a valid licence; and it may be mentioned that on 24th August, 1985 pursuant to an application made by RIL under section 22(3)(a) of the MRTP Act, the Govt.
granted approval for the establishment of a new undertaking for manufacture of HDPE.
[77F] 4.2.
Regarding foreign collaboration, an application was made by RIL in 1984 for approval of foreign collaboration with M/s Du Pont Inc. Canada, for manufacture of HDPE.
The approval was given and the validity was extended and the foreign collaboration approval was endorsed in favour of RPL on 12th October, 1988.
Similar other consents were there.
Finally, capital goods clearance was endorsed in favour of RPL for the PVC project on 12th August, 1988.
Capital goods clearance was also endorsed in favour of RPL for HDPE project on 23rd August, 1988.
Thus, it will be seen that all the basic groundwork had already been done by the RIL.
[77G, H; 78A] 4.3.
On 16th June, 1987 by a Press Note issued by the Deptt.
of Industrial Development in the Ministry of Industry of the Govt.
of India declared that where a transferee Company is a fully owned subsidiary of the Company holding the Letter of Intent or licence, the change of the Company implementing the project would be approved.
It is in the light of this that the Board of RIL on 30th December, 1987 passed a resolution to incorporate a 100% subsidiary Company whose main objects were to implement the licences/Letters of Intent received by RIL and to carry on the activities relat ing to production and distribution.
The resolution approved the name of the Company as RPL.
On 11th January, 1988 the RPL was incorporated and the Certificate of Incorporation was issued.
Thereafter, on 12th January, 1988 letters were written by RIL for endorsement of licences/Letters of Intent in favour of RPL.
The certificate of commencement of busi ness was thereafter issued.
[78B E] 4.4.
The Press Note is clear that the transfers from one company to an allied company were considered unexceptionable except where trafficking in licences is intended.
In this situation the change of name from RIL to RPL, of the li cences, letter of intent and other approvals was only a matter of course and much importance cannot be attached to the fact that CCI did not insist upon these endorsements being obtained even before the letter of consent is granted.
In any event the letter of 51 consent is very clear.
Clause (h) of the conditions attached to the consent letter makes it clear that the consent should not be construed as exempting the company from the operation of the provisions of the Monopolies & Restrictive Trade Practices Act, 1969, as amended.
Clause (c) makes it clear that it is a condition of this consent that the company will be subject to any measures of control, licensing, or acqui sition that may be brought into operation either by the Central or any State Government or any authority therein.
Under clause (t) the approval granted is without prejudice to any other approval/permission that may be required to be obtained under any other Acts/laws in force.
Having regard to the above and also to the terms and conditions of the consent letter, the grant of consent itself being condi tioned on RPL obtaining the necessary approvals, consents and permissions before embarking on the project, there was no impropriety in the CCI granting the consent without waiting for the formal endorsement of the various licences, letters and approvals in favour of RPL.
Moreover, CCI is aware of the progress of the various applications made by the company.
The Controller is also aware that the ICICI had looked into the financial soundness and feasibility of the project and there is material to show that the comments of the ICICI were made available to him.
When a project is being appraised by the institution like the ICICI and when the CCI is also aware, by reason of the participation of his representatives at the meetings of the Department of Indus try and the Department of Company Affairs about the stage or outcome of the proposals made under the IDR and MRTP Acts, it is clear that the CCI did not overlook any crucial aspect and that his grant of consent in anticipation of the neces sary transfers to the RPL was based on a practical appraisal of the situation and fully in order.
[78F H; 79A, B; 80B D] 5.
There has been sufficient compliance with the guide lines on the quantum of issue, debt equity ratio, interest rate and the period of redemption.
There was sufficient security for the debentures in the facts and circumstances of this case.
The preference in favour of shareholders of RIL was justified and based on intelligible differentia.
Indeed, if one considers the role of the CCI, he is primari ly concerned to ensure a balanced investment policy and not to guarantee the solvency or sufficiency of the security.
Most of the criticisms directed against deviation from guidelines were misplaced.
[94G, H; 95A, B] 6.1.
The discrimination alleged is on two grounds.
The first is that RIL is entitled straightaway to the allotment of shares of the face value of Rs.57.50 crores whereas only 5% of the investment by the debenture holders can be con verted into shares at par simultaneously 52 with the issue.
The second is that a loan of Rs.50 crores advanced by RIL to RPL will be converted into shares at par at the end of 3 years whereas the debenture holders will have to pay a premium even for converting 20% of their debentures into shares by that time.
These allegations do not bear scrutiny.
So far as the first ground is concerned, there is no justification for a comparison between these two categories of investors.
RIL is the promoter company which has conceived the projects, got them sanctioned, invested huge amounts of time and money and transferred the projects for implementation to RPL.
It is, therefore, in a class by itself and there is nothing wrong if it is allotted certain shares in the company, quite independently of the debenture issue, in lieu of its investments.
So far as the second ground is concerned, it overlooks certain disadvantages attached to RIL in regard to the loan of Rs.50 crores ad vanced by RIL as compared with the investor in the deben tures.
Firstly, RIL 's advance is interest free for 3 years whereas the debenture holders got interest at the rate of 12.5% during the period.
Secondly, the debenture loan is secured while the RIL 's are not.
Thus the debenture holders have certain benefits which RIL does not have and, if the debenture holders have the disadvantage of having to pay a premium, that cannot constitute basis for a ground of dis crimination.
[103E H; 104 A, B] 6.2.
RPL is a company not the State or a State instru mentality that is issuing the shares and debentures.
It is entirely for the company to issue the shares and debentures on such terms as they may consider practicable from their point of view.
There is no reason why they should not so structure the issue that it confers certain great advantages and benefits on the existing share holders or promoters than on the new subscribers.
It is not permissible for the CCI to withhold consent only for this reason or to stipulate that consent can be given only if the share holders and promoters as well as prospective debenture holders are all treated alike.
The subscribers to the debenture are only lenders to the company who have an option to convert their debt into equity on certain terms.
It is perfectly open to the sub scribers to balance the pros and cons of the issue and to desist from taking the debentures if they feel that the dice are loaded unfavourably in favour of the "proprietors" of the company.
[104B E] 7.1.
In the present case, a legal mortgage has been created by RPL in favour of the trustees in respect of its immovable and movable assets, except book debts, in respect of which financial institutions will hold a first charge on account of foreign loan.
RPL does not have any existing loans.
Therefore, the charge in favour of the debenture holders 53 iS presently the first charge.
No further borrowing is contemplated at this stage except the foreign currency loan to the extent of Rs.84 crores.
Even if the value of the foreign currency which has been sanctioned in principle by the three financial institutions is taken into account, the assets coverage goes down at each stage and does not make any critical difference to the value of the security of the debenture holders under the Trust Deed.
The purposes of borrowings, namely, term loan borrowings, deferred payment credits/guarantees and borrowing for financing new projects do not, on analysis, raise any difficulty.
There are suffi cient in built checks and controls.
The company, being an MRTP company would have to obtain both MRTP permission for creating any security irrespective of its value and fresh CCI consent under the CCI Act, except in case of exempted securities.
[119G, H; 120A C] 7.2.
With the escalation in the value of the fixed assets due to passage of time on the one hand and the re demption of a good portion of the debentures by the end of three years on the other, the security provided is complete and, in any event, more than adequate to safeguard the interests of the debenture holders.
[96G, H] 8.
Clauses 5 and 6 are only enabling clauses and in the nature of permitting the Company, despite the mortgage in favour of the debenture holders, to carry on his business normally.
What is referred to therein as residual charge is really a floating charge.
The Company 's normal business activities would necessarily involve alienation of some of its assets from time to time such as goods manufactured by it as well as procurement and discharge of loan and accommo dation facilities from banks, financial institutions and others.
The entire progress of the company would come to a standstill in the absence of such enabling provisions.
They are not only usual but essential because the basic idea is that the finances raised by the debentures should be em ployed for running the project profitably and thereby gener ate more and more funds and assets which will also be avail able to the debentures holders.
Further what the clauses provide is only that the consent and concurrence of the debenture holders need not be obtained by the company before creating securities that may have priority over the present issue of debentures.
But the trustees for the debenture holders have to concur before the company can raise any future borrowings and create, therefor, the security which will have priority over the security available to the present debenture holders.
The ICICI is not only a financial institution in the public sector but also one of the insti tutions financing the project and thus has a stake in its success and so can be trusted to safeguard the interests of the debenture holders.
The debenture trust 54 deed also contains a provision by which at the time of creation of any future charge the terms and ranking have to be agreed upon between RPL and ICICI.
Clause 16 of the trust deed authorises the trustees to intervene and crystallise the charge in certain circumstances and stultify an attempt by the company to create higher ranking charges.
There are also restraints on the company under the and the MRTP Act involving the consent of public financial institutions, Commercial Banks, the term lenders, share holders, the MRTP Commission, the Central Govt.
and the CCI before the creation of such securities.
[98B H; 99A, E, F] 9.
In certain brochures and pamphlets issued by RPL, the debentures were described as "fully secured convertible debentures".
The company admitted that there was such a description but explained that this was due to an oversight; the words "fully secured convertible debentures" were print ed in some brochures instead of the words "secured fully convertible debentures" without meaning or intending any change.
It was stated that the company 's representation was that the debentures were "secured fully convertible" ones.
This is also what had been set out in the application for consent.
Though the company did claim that the debentures were also fully secured, the emphasis in the issue was that the debentures were fully convertible and secured.
This explanation is plausible.
No importance or significance need be attached to the different description in some places.
particularly.
in the context of the nature of security actually provided for the debentures.
[95F H; 96A] 10.
Prospectus issued by RPL is not misleading because it stated that security will be provided to the satisfaction of the trustees and the CCI accepted that statement in the application for consent.
The debenture trustees are well known financial institutions and it is not possible for the CCI to ensure more than the usual practice which was fol lowed in the present case.
[100D, E] 11.
The CCI modified paragraph 5 of the consent by his letter of the 19th July, 1988 to say that allotment to the employees shall not exceed 50 debentures per individual.
It does not appear that the restriction of the allotments to the employees was at the instance of the Company; nor does it seem that any discrimination was intended in respect of the allotments to the employees.
Nor has attention been invited to any legal requirements or guidelines prescribing any fixed or minimum quota of allotment to the employees of the Company.
Under the circumstances, the question of dis crimination does not arise.
[107C, D] 55 12.
The consent order of the CCI clearly indicated that the consent conveyed in the letter shall lapse on the expiry of 12 months from the date thereof.
The consent order cate gorically stated that the approval was without prejudice to any other aPproval/permission that may be required to be obtained under any other Acts and laws in force.
It neces sarily follows that the obligation to obtain other permis sions continued.
There was no legal conditions that other approvals should be examined by the CCI before grant of its own consent.
As defined in the , a debenture need not be secured.
Therefore, guideline 10 means that security should be provided as is customarily adopted in corporate practice.
In the present case, the debentures are compul sorlly convertible and so no repayment is really involved.
The debenture is essentially an acknowledgement of debt with a commitments to repay the principal with interest.
The question of security becomes relevant for the purpose of payment of interest only in the unlikely event of winding up.
The guidelines did not provide for the quantum and the nature of the security.
A debenture may, therefore, be secured or unsecured.
An ordinary debenture has to be dis tinguished from a mortgage debenture which necessarily creates mortgage on the assets of a Company.
A compulsorily convertible debenture does not postulate any repayment of the principal and so does not constitute a debenture in the classic sense.
Even a debenture which is only convertible at option has been recognised as a hybrid debenture.
The guide lines for the protection of debenture holders issued on 14.1.1987 recognise the basic distinction between converti ble and non convertible debenture.
Compulsorily convertible debentures in corporate practice were adopted in India sometime after 1984.
Wherever the concept of compulsorily convertible debenture is involved, various guidelines issued by the Government of India treat them as equity and not as loan or debt.
Even a non convertible debenture need not always be secured.
In fact, modern tendency is to raise loan by unsecured stock which does not create any charge on the assets of a Company.
Whenever a security is created, it is invariably in the form of a floating charge.
In addition they are frequently secured by a trust deed as in the present case where specific property/land etc.
has been mortgaged to the trustees.
In the instant case, if the permission of the debenture holders were required or is insisted upon to create future security, 2.5 million debenture holders have to be informed and invited for the meeting.
The extravagant effects of this course would be collosal especially when a shareholders meeting is also additionally called for the same 56 body of persons.
It is, therefore, incorrect to say that a floating charge creates an illusory charge because future securities can be created ranking in priority over it.
[118D E] The British India Steam Navigation Co: vs The Commis sioner of Inland Revenue, ; Re.
Colonial Dusts Corporation, ; Speyar Brothers vs The Commissioner of Inland Revenue, ; Lemon vs Austin Friars Investment Trust Ltd., ; Flor ence Land & Public Works Co., ; Re.
Panama, New Zealand, and Australian Royal Mail Co., ; Re. Standard Manufacturing Co., ; Re.
Borak Foster vs Borax Co., ; Creatnor Maritime Co. Ltd. vs Irish Marine Management Ltd., referred to.
Palmer 's Company Law, 24th Edn.
672, 675, 676, 706; The Encyclopaedia of Forms and Precedents, 4th Edn., Vol.
6 p. 1094, 1095, 1097, 1098, referred to.
The Court, would be reluctant to interfere simply because one or more of the guidelines have not been adhered to even where there are substantial deviations unless the deviations are by nature and extent such as to prejudice the interests of the public which it is their avowed object to protect.
Per Contra, the Court would be inclined to overlook or ignore such deviations, if the object of the statute and public interest warrant, justify or necessitate such devia tions in a particular case.
Judicial control takes over only where the deviation either involves arbitrariness or dis crimination or is so fundamental as to undermine a basic public purpose which the guidelines and the statute under which they are issued are intended to achieve.
In the in stant case, there is no such infraction of the norms re quired to be followed in granting the sanction.
[123F H; 124A, B] 15.
Before the Courts grant any injunction they should have regard to the principles of comity of courts in a federal structure and have regard to self restraint and circumspection.
It may be impossible to lay down hard and fast rules of general application because of the diverse situations which give rise to problems of this nature.
Each case has its own special facts and complications and it will be a disadvantage, rather than an advantage, to attempt and apply any stereo typed formula to all cases.
Perhaps in this sphere, the High Courts themselves might be able to intro duce a certain amount of discipline having regard to the principles of comity of courts administering the same gener al 57 laws applicable all over the country in respect of granting interim orders which will have repercussion or effect beyond the jurisdiction of the particular courts.
Such an exercise will be a useful contribution in evolving good conventions in the federal judicial system.
[126F, G; 127A] [Having considered the facts and circumstances of the present cases, this Court directed refund of the sum of Rs.one lakh deposited RPL as ordered by the Court on 9.9.1988.
The deposit amount was meant for payment to the petitioners in case they were to spend unduly.]
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